Lyft forgoes global expansion in favor of U.S. market domination

http://www.mercurynews.com/business/ci_28566633/lyft-forgoes-global-expansion-favor-u-s-market?source=infinite

by prostoalex • 11 years ago

44 55 11 years ago

Disappointing. Really wanted more choice and competition in the areas where Uber is the only 'on demand' transportation service.

blfr• 11 years ago

The only advantage of going international is just to be bigger

This is not the only advantage. Another is being able to serve international travelers. You can step off a plane in another country and keep using Uber. These users may be relatively few in numbers but they have an outsized influence.

dylanjermiah4• 11 years ago

And serve international customers.

SyneRyder2• 11 years ago

That's exactly why I initially joined Uber: I was overseas, and if I'm travelling I don't have to learn how the local taxi system works, I just continue using Uber. It's a bit like McDonalds, it's similar enough in every country that you can rely on it and you know what you'll get. I use Uber a fair bit at home, but my heaviest use of Uber is when I'm travelling to other cities & countries.

keithpeter• 11 years ago

Well should you find yourself in Birmingham UK you will be using the local taxi system - the Uber cars are also licenced private hire vehicles. You will see two stickers on the car. Best of luck.

Frondo5• 11 years ago

When I travel, I like using the local system. The differences and element of surprise makes for fun adventure.

To each their own, I guess.

eisa01• 11 years ago

Yup, I was also introduced to Uber overseas.

I love that you don't need to worry if the taxi takes credit cards, or if the driver will complain when you want to pay by credit card.

Not having to save a paper receipt is also a nice bonus when you need to expense the fare

x5n1• 11 years ago

but they have an outsized influence.

some proof needed.

secure• 11 years ago

Yeah. It’s note-worthy that as foreigner, I can’t use Lyft at all currently, even when I’m in the states, as none of their payment methods work: they don’t accept credit cards outside the US/canada, they don’t accept Google Wallet if your account is non-US and their PayPal payment option just said “Server error”.

cft• 11 years ago

Anecdotally, I installed Uber while visiting Mexico city from San Francisco. I have been using Uber in San Francisco since, and before the visit I was only using Lyft here.

daniel-levin• 11 years ago

Another advantage: Uber is robust to changes in country-specific conditions such as legislation and disruption by ordinary taxi drivers. If Uber is made illegal in one country, it can still exist a business in other countries.

threeseed• 11 years ago

Seems like a very smart strategy to me.

Uber is dealing with regulatory fights in almost every country it operates in. May as well let them spend all their time and money establishing the playing field before joining in. Lyft is after all only a few minute download away so getting people to switch isn't going to be as difficult as it could. Especially with Uber's appalling business practices continuing to make headlines.

bsdpython• 11 years ago

How can you entirely discount marketplace dynamics? If Uber has all of the drivers signed up then the users try switching to Lyft but no drivers are available then they will go right back to Uber. Uber has raised billions and are seemingly making a lot of money so they can easily afford to fight legal battles around the world.

consz• 11 years ago

Wouldn't drivers just be on both apps? Most of the drivers I've talked to just run on both and get the first customer from either one.

prostoalex3• 11 years ago

They pretty much have to allow the drivers to drive for competing networks, or qualify "partner" as an employee. So Uber marketing budget in some ways helps Lyft, Sidecar and Wingz.

IshKebab• 11 years ago

Yeah but by establishing the playing field Uber can become dominant in the rest of the world. Taxi apps are subject to network effects so it's going to be very difficult for Lyft to supplant Uber in markets where they are dominant (e.g. the UK).

prostoalex3• 11 years ago

Taxi apps are subject to network effects

Network effect is limited to local. Them adding 5 more drivers in NYC does not benefit riders or drivers in Portland or Barcelona.

colmvp• 11 years ago

Funnily enough, my experience with Lyft has dropped significantly over the last year.

In the last few months alone, I had an where the Lyft driver who was supposed to pick me up at SFO didn't know where I was despite following the instruction that Lyft texted me. And even after I explicitly told him where I was he just did not understand. Meanwhile everyone else who was waiting for a ride got picked up by Uber without much of a hitch.

On that same trip in SF, I requested a ride while downtown, only for the person not to show up at all.

It's a real shame because barely more than two years ago, Lyft was my preferred choice since the drivers seemed quite friendly and it was that quirky kid on the block. Now that they've toned back their branding and character, it's really no different than Uber. Except sadly, my experience with Uber has been more consistent than Lyft.

brownbat• 11 years ago

I had a no pickup with Uber recently, despite the car circling around our spot at a metro park and ride for five minutes. We messaged the driver to try to help, but he simply didn't respond. Because he waited to cancel, we were initially charged $5 for the driver's inability to find us. Uber ultimately reversed the charge, so that's the silver lining, but it was annoying to have wasted about 20 minutes of our time and then assume we wanted to pay $5 for the privilege.

I've also had great service with Uber too. I'd like to see each each company publish their missed connections numbers, see the data on which has more confused no shows.

cseales6• 11 years ago

I recently flew from NYC to Seattle. When I arrived in Seattle, I wanted to use Uber to reach my destination. However, the driver it booked for me was still in NYC. We talked for twenty minutes until I just asked him where he was at, and he replied "La Guardia".

applecore2• 11 years ago

Unfortunately for Lyft, it's a winner-takes-all market: “First prize is a Cadillac Eldorado. Second prize is a set of steak knives.”

At this point, with over $1 billion invested, the most viable opportunity left for Lyft investors is to pressure Uber or someone else into acquiring Lyft.

http://bits.blogs.nytimes.com/2014/08/12/accusations-fly-bet...

andy_ppp3• 11 years ago

Love the reference... For those who haven't seen this, worth watching... "Coffee is for closers only."

https://www.youtube.com/watch?v=v9XW6P0tiVc

SilasX• 11 years ago

Wha? The context is a guy using dubious (and increasingly dishonest) tactics to motivate a sales team, not a realistic scenario that illustrates the essential dynamics of winner-take-all markets.

How does the context add to the GP's point? I don't think they were saying the dynamics here are the same as in GGR.

jballanc3• 11 years ago

I've heard this multiple times with no real evidence to back it up. Why? Why is it winner-takes-all?

Natural barriers to entry? Nope, all you need is a half-way decent mobile app and some people with cars. Yes, the bigger your fleet the larger an area you can cover, but there's no need to serve an entire metropolitan area if covering just some of it is enough to turn a profit. (For example, if I were going to enter the ride-for-hire market in NYC today, I'd put all my drivers at JFK, Laguardia, and Times Square.)

Artificial barriers to entry? There used to be, in the form of TLC monopolies and regulations around medallions. The nice thing about Uber's success, though, is that they're bearing the brunt of breaking down these barriers, leaving the path open for those that will follow.

Network effects? Mmm...some, but only for those that travel frequently. That is, if you often find yourself in a new city, your first act might be to open the Uber app because you can count on them providing service in a new, unfamiliar local. I'd wager that's the minority of ride-for-hire customers, though. Each city has its own local mass transit, and there hasn't been a push to standardize across regions. (Though wouldn't it be nice if your Metro Card worked on BART?)

On the flip-side, I see a lot of opportunity for new competitors to differentiate themselves. For example, let's say you decide to focus on the "regular customer": someone who travels roughly the same route most days of the week, a commuter or someone with a daily or semi-weekly appointment to keep. Imagine you could tune your service to get the same driver for these customers most days. Now you have a familiar face picking you up, who knows where you're going, what route you prefer, what station you like on the radio, etc. If I was that customer, I'd take that service over Uber in a heart-beat.

So, again, why should it be winner-takes-all?

dylanjermiah4• 11 years ago

I've also been asking exactly why it's a 'winner take all market' and have yet to receive a definitive answer. I'd like there to be a #2 even #3. Although I think Uber might be akin to Google in terms of market share, sitting at mid to high 60%.

applecore2• 11 years ago

Uber is a software company that happens to have a network of cars attached; empirically, success in software always follows a power-law distribution.

pbreit6• 11 years ago

The barriers to entry are so high that it's nearly impossible for new entrants. The advantage of liquidity in both drivers and riders is very large. You underestimate this drastically.

pbreit6• 11 years ago

While the market does have strong network effects, it appears that Lyft can gain a sufficient presence in an area to compete effectively with Uber. If it continues to differentiate the experience, I think it can survive as a strong, much smaller #2 (as you apparently might agree with the Glengarry quote).

prostoalex3• 11 years ago

Unfortunately for Lyft, it's a winner-takes-all market

That does not seem to work out worldwide. GetTaxi and Yandex.Taxi are still leading apps in Moscow, Cabify and Hailo dominate Madrid and Didi Kuaidi enjoys its first-mover advantage in China despite Uber expanding in all those markets.

andy_ppp3• 11 years ago

How do Uber/Lyft etc. get away without paying Apple's 30% tax on in app purchase? I'll be surprised if Apple don't show up one day asking for a big check, every month, forever...

EDIT: Thanks for the clarity here, external goods and services are excluded from in app purchase. Makes sense, but surely represents a loop hole... that I think something I'm building might be able to exploit :-)

loceng• 11 years ago

Apple needs to first launch a competing service or acquire one of them before they'd pull that move I imagine?

cshenoy• 11 years ago

The Apple commission is for in-app purchases that are mostly digital goods.

flipmonk• 11 years ago

Because you're not buying features or consuming what you're buying through the app.

Is Amazon supposed to give 30% of all purchases made through the Amazon app? ofcourse not. If Amazon made additional search features an optional upgrade for the app, I'd imagine Apple would want a piece of that.

dylanjermiah4• 11 years ago

You can purchase a Kindle, but not the books.

Jacqued• 11 years ago

I think it has to do with the fact that customer's are paying for an offline service, not something that happens inside the application.

Likewise, I don't think e-commerce apps have to hand Apple a 30% cut of everything they sell.

raverbashing• 11 years ago

Does this applies to non-digital products and services?

pbreit6• 11 years ago

Sounds like you don't know much about the market so good luck with you're loop-hole exploiting product.

mlesee• 11 years ago

Because they obtain the user's credit card information independently. Developers who use the CC associated with someone's Apple ID are the ones paying the in-app purchase commission.

pbreit6• 11 years ago

Prudent move. If Lyft can figure out how to grow in markets already dominated by Uber it will be a much stronger company than if it waters down all its resources playing Uber's game. In fact, a lot of Lyft drivers and riders prefer the Lyft experience. If Lyft can maintain the service differentiation, it can grow to a strong, if smaller number 2 player. And eventually in any market it chooses to go into. Perhaps like a Southwest Airlines.

pbreit6• 11 years ago

Kudos to the Mercury News for writing a pretty decent analysis article on "Silicon Valley". The Merc and Chronicle never really seemed to take their role as covering the most booming industry in the past few decades very seriously.

jimjamjim• 11 years ago

comical pr spin...

Lyft forgoes global expansion in favor of U.S. market domination

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