[Team MIAS] Initial Presentation

Lyft Valuation Case Team MIAS

Executive Summary

1. Overview 2.Diagnosis 3.Proposal

•  Factors that determine supplies (Drivers)

•  Factors that determines demand (Passengers)

•  Factors that determined better matching and paring (Current strategy)

•  Appropriately locate the brand

•  Accurately target costumers according to platform’s characteristics and advantage

•  Feature innovation helps winning the market

•  Building customer community

•  Ride-sharing market, along with traditional taxi market, now becomes a huge industry

•  But it seems to be a winner-take-all market

•  UBER has already occupied a lion share of market

Market Overview

4%

Annual market growth

11billion

Net revenue of U.S market in 2014

241million

Annual taxi passengers

Ride-Sharing

Industry

2014

[PERCENTAGE]

15%

Market Share

UBER Lyft

Ride-Sharing market, with Taxi market, generated huge

integrated industry

However, this industry seems to be a winner-take-all market

Growth History & Current Valuation

2.5 billion

valuation

90k weekly revenue

55 Countries, 200 Cities

40 billion

valuation

900 k Weekly revenue

U.S. 65 Cities

0.3 1.5 7.5 22.5 82.5 332.5

862.5 862.5

0.2 1.5 12.5 49.5 307.5

1507.5

4307.5 4507.9

0

1000

2000

3000

4000

5000

SEED 1 SEED 2 SERIES A

SERIES B

SERIES C

SERIES D

SERIES E

SERIES F

FUND GROWTH

Lyft UBER In million $

•  Lyft received 862.5 million fund, while UBER collected 4.5 billion.

•  Also, UBER is valued 16 times larger as Lyft.

•  Market Valuation reflects investors expectation of these two companies.

•  The subsequent parts would exam possible factors resulting the valuation gap, and consequently give our solutions.

Diagnosis Objectives

Attract more drivers

Attract more

customers

Find better matching &Pairing

Build a better

community

•  To compare, Lyft needs to look into 3 key aspects:

Diagnosis Flowchart

Secondary concerns

Primary concerns

Elements

Platforms Lyft vs. Uber

Driver

Regulation Compensation

Culture and Community

Other Benefits

Customer

App Convenience Price Safety

Brand Awareness

Product Line etc.

Waiting Time

Higher Requirement for Lyft Drivers

Lyft Uber Who is More Strict

Drivers’ Age 21+ 21+ Tie

Driver’s Experience 1 year + Not required Lyft

Cars’ Condition 2003 or newer 2005 or newer UBER

Background Check

Yes Yes Tie

Driver Ride Exam Yes No Lyft

Need own phone Yes No Lyft

•  Compared to UBER, Lyft has significantly fewer drivers to provide services*. •  We now look into drivers’ concerns when considering which company they prefer to drive for.

•  1. Lyft Got Higher Driver Requirement, Which may hinder drivers from offering the service.

Drivers Compensation

60

84 90

126 120

170

0

20

40

60

80

100

120

140

160

180

Uber Lyft

Drivers’ Income --- Measured as Number of Rides to Earn 50k,75k, and 100k annually

50K 75K 100K

*data from US news 2014.Dec

11.48

15.97

0 5 10 15 20

Lyft

Uber

Avg. Hourly Pay

hr rate

•  After deducting gas, insurance and maintenance cost, Lyft drivers’ income is less than UBER drivers’.

•  However, Lyft Drivers usually get 10-15% tips, while

UBER drivers seldom receive customers’ tips.

12.5

0

0 5 10 15

Lyft

Uber

Avg. Tip Rate

tip rate

Other Benefit

• “Accelerate ”Program: Riders Reward with healthcare options, gym membership,etc.

• “Momentum "Program: Partner rewards with AT&T, Verizon, healthcare option, maintenance, etc.

Cultural and Community

Lyft Uber

Culture Customer Friendly Professional

Drivers Blog Sharing personal experience outside working

Working-related discussion

Community Forum Company news, drive’s instruction, program overview, ect.

Discussion about people, stories and advices

Community Event Frequently held, diversified events

Less or rare

•  Both platform out effort in community building •  Lyft is more success in building community cohesion

Price Comparison •  Price is always customers’ first concern. Let’s take a look at prices in LA.

Uber X Lyft UberXL Lyft +

Santa Monica -- LAX

$12 $17 $25 $25

Westwood -- LAX $15 $19 $32 $28

Westwood -- Downtown

$19 $24 $40 $36

Beverly Hills -- Disneyland (In-city Long range)

$45 $54 $93 $80

LA -- San Diego (Inter-City)

$119 - $160 Ave: $140

$160 $245 - $327 Ave: $286

$239

•  UBER X’s Price is lower than Lyft’s Price

•  However, for larger cars request, Lyft+ provides lower fare

•  Consider that customers use regular services(Uber X and Lyft) more often, Lyft is losing its ground here.

App Evaluation:

App download

Register

Service Option

Pare Estimation

Payment

Evaluation

VS

•  Disadvantage: listed behind Uber on Apple store •  Tie: similar complexity and time taking

•  Disadvantage: Uber has more car type choices •  •  Disadvantage: Lyft only estimate pare for Line

but not other service

•  Tie: Similar payment method

•  Disadvantage: Both can evaluate drivers, only Uber can evaluate customers

Customer Satisfaction

UBER Lyft

Background Check

Anonymous Feedback

Cashless Transaction

Driver Profiles

Insurance

Vehicle Standard

•  Several aspects are important to consider: Safety & Waiting Time.

4:10 4:16

AVG. Waiting Time

•  No significant Difference in these two aspects

Matching and Pairing

Lyft Strategy Uber Strategy

•  Prime Time 25%-200% price increase

•  Hotspots redistribution

•  Surge Price 200% -700% of fare

•  Matching and Pairing strategies of Lyft and Uber are controversial •  “Price gauging” is more severe problem for Uber

Comparisons

Price

App Convenience

Satisfication

Matching & Pairing

UBER Lyft

Payment

Requirement

Other Benefit

Community

UBER Lyft

Consumer Side Driver Side

Takeaway

Less customers

Less Drivers

Less geographic coverage and

Saturation

Less brand Awareness

•  By comparing Lyft with Uber, the discrepancy between attractions offered by two platforms that drivers and customers will concern did existed but are NOT very significant

•  Instead of only “doing well at what Uber does ”, Lyft strategy should focus on “doing well at what Uber does NOT do”

Lyft Current Vicious Cycle

Our Solutions

•  Establishing a unique brand image should be the breakthrough point of Lyft’s future growth.

•  Locate new groups of customers, and create new growth of demand. •  Innovate functions to keep customer stickiness •  Finally, integrate drivers and customers to build up a vivid community!

Brand Positioning

Customer targeting

Feature Innovation

Community-on-Wheel

Create a Differentiated Brand Image

Brand Positioning Customer targeting Feature Innovation Community-on-Wheel

Pink & Blue Color Theme Black & White

Creative Car Interior Design Monotonous & Standard

Interactive Driver-Rider Relation Distant

Casual Target Travel Type Business

An interesting ride, get to know people, and HAVE FUN

What riders get Just a ride

Capture a Niche Market with the Brand Image

Business Travel Market: Red Ocean! l  Uber has significant market

share.

l  Lyft has very low market share. Extremely difficult to compete with Uber in this market

l  Avoid too much investment in this market

source: Brad Stone, Bloomberg


Capture a Niche Market with the Brand Image

Social Activity Market for young people: Blue Ocean l  Uber has not yet have any specific

strategy to capture this niche market

l  The brand image of Lyft – young and creative – caters to this niche market.

l  Focus on this market to breakthrough the whole industry

l  Concentrate power to enter and capture this niche market

l  Lead a fashion trend – encourage drivers to

creatively decorate their cars.

l  Pinpoint target customers

–fashionable young people.


Pinpoints Young Riders

Partnerships

Lyft Events

l  Where young people go, where our partnerships go

ü  Fraternity & Sorority ü  Clubs & Bars ü  Coachella & etc.

After having fun in these places, go home with a FUN Lyft ride!”


Pinpoints Young Riders

Partnership

Lyft Events

l  Lyft initiates and sponsors

promotion activities: ü  “Pink Mustache Day” ü  “Lyft Car Design

Competition” ü  “Lyft Adventurous Rides” l  Lyft’s App recommends

other events to customers

Don’t passively wait for riders. Rather, actively introduce rides to customers.”


Ride like a Boss

Loyalty Programs (VIP status) ➠ Increase customer stickiness ➠ Both monetary / non-monetary rewards

🔻 Lyft event discounts 🔻 Free upgraded vehicle

➠ Substantial switching costs


Lyft-You-Up At the Right Time

Scheduled pick-up service ➠ Effectively reduce down-time for drivers ➠ Instant ride for customer

🔻 Operationally efficient ➠ Event-driven

🔻 Sync with iOS calendar / TripIt 🔻 Drivers can offer ride prior to request


Leverage Big Data to Create New Experiences

Place Recommendation

Event Recommendations

Lyft Recommendations

➠ Direct partnership ➠ Massive opportunity to direct eager crowds to places they want to go ➠ In an instant of a ride

➠ “Looking for something to do tonight?” ➠ List of events along with discounts

🔻Activity Discount 🔻Pair the ride with free drinks

“We bring the place and events together plus we offer the ride!”


Communities-On-Wheel

Community-on-Wheel

• Identity Verification

• Security purpose

Profile

• Driver/Rider acquaintance

• Pre-selection • Post-Rating

system

Network Group Find your interests and make friends with other with similar interests!



Rider / Driver Acquaintance • Follow each other and make friends on Lyft profile page • Break traditional identities of guest and owner

Pre-selection • Gender, age (Approximate range), Interest • Customized choice of driver or rider

Post-rating system

• Feedback with Yelp’s Star rating and Linkedin’s recommendation • Two way between driver to rider



Party Yoga Picnic

Ride for Fitness Ride for fun Ride for the thrill

We Cater for All

“You Will always Find Your Group with Lyft Communities-on-Wheel” Brand Positioning Customer targeting Feature Innovation Community-on-Wheel

Projection:

More customer

More Diver

More geographic coverage and

Saturation

More brand Awareness

•  Brand position •  Market Targeting •  Demand

Enhancing

•  Community on wheel

•  Profit driven

•  Profit Driven

Lyft Future

Virtuous Cycle

Revenue Projection

u  Revenue Projection:

u  Our projection is based on 3 points

u  Revenue induced by exploring youth market;

u  Efficiency improvement by community integration;

u  Brand reposition and popularity increase by providing all-inclusive catering

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

REVENUE

Lyft In million $

As a comparison, UBER project 2015 revenue to be 10 B.

Risk Factors

u  Possible failure of brand reposition because of imprecise market trend recognition.

u  Youth customers’ popularity does not necessarily convert into revenue because temporarily lack of buying power.

u  Feature innovation could be cost effective due to technology restrains and competition pressure.

u  Integrating community may cause privacy impeachment, which could further lead to the collapse of brand reputation.

THANK YOU ! PRESENTED BY MIAS

[Team MIAS] Initial Presentation

Documents

Transcript of [Team MIAS] Initial Presentation