Connect with us

Technology

Lyft might drop shared rides, stay focused on basics under new CEO

Published

on

Lyft might once again drop its shared rides offering, just one of several changes the company’s newly appointed CEO could make in a bid to focus on its core ride-hailing business and become profitable.

David Risher, who is taking over as Lyft’s CEO in mid-April, told TechCrunch in a wide-ranging interview that other features may also be axed. For instance, the Wait & Save feature, which allows riders in certain regions to pay a lower fare if they wait for the best-located driver, may end, he said.

“It’s possible that maybe we don’t need both of those anymore and that we can focus all our resources on doing a fewer number of things better,” Risher, the former Amazon executive, told TechCrunch. “Maybe it’s time for us to say the shared rides were great for a time, but it’s time to let that go.”

Lyft, co-founded by Logan Green and John Zimmer, launched shared rides in 2014 on a small scale before expanding the service. Uber launched Uber Pool the same year. Both companies dropped their carpooling services during the pandemic before reinstating new versions later. For Uber and Lyft, carpooling has historically been a money pit, a loss-generating ploy to attract riders with cheap fares.

While nothing is yet decided, the potential move is an example of how Lyft’s new management hopes to stem its losses and, eventually, pry some market share back from its main competitor and oft-described big brother Uber. Instead of adding new products like delivery or even selling the company (both of which Risher says aren’t going to happen), Lyft is going back to basics.

“The first order of business here is to focus on the basics of ride-share,” Risher said. “The reason I say that is because in this type of marketplace where you have competitors, you can’t be losing share to the other guy if you want to be around long term. And I think this duopoly is a good thing. In so many other markets, you really want, as a customer, some choice, and I think as a driver, you want choice. It keeps us honest and allows us to play off one another a bit.”

Uber, already a larger company, has taken more U.S. market share from Lyft in recent years, through an all-of-the-above approach that includes food delivery and even transit services. Today Uber’s market share has grown from 62% at the start of 2020 to about 74% today versus Lyft’s 26%, according to YipitData.

Another study from Similarweb shows that Uber leads in monthly active users (MAUs), and that lead has grown over time. In February 2023 alone, Uber had 9.4 million MAUs, a 62% lead over Lyft’s MAU of 5.8 million. This time last year, Uber only had a 48% advantage over Lyft. Similarweb’s data also shows that Uber outranks Lyft on both Apple’s and Google’s app stores, and that over the past 12 months, its Android downloads were 22% higher than Lyft’s.

Uber has taken a different approach to Lyft in pursuit of profits. While Lyft has stuck with ride-hailing, Uber has expanded into delivery through its UberEats platform and added a a slew of new products as it aims to attract users but also create a closed business loop wherein each product feeds customers back into other Uber channels.

“We are actively cross-selling food delivery consumers into grocery, grocery consumers into alcohol, and actually back now to mobility,” said Uber CEO Dara Khosrowshahi during the company’s third quarter 2022 earnings call held November 1. “All of the cross-sell that we have across the platform continues to increase, drive new customers and drive retention, as well.”

Risher said Lyft won’t try to compete with Uber by introducing a delivery product to the app, in part because he doesn’t consider delivery to be either a customer or driver-driven decision.

“From a driver’s perspective, they’re now shuttling in their mind between picking up a person versus picking up a pizza,” said Risher. “And when I pick up a pizza, I have to double park at the restaurant with seven other people, then I get a ticket once every couple of weeks, then I gotta get in my car again and drive, then get out and ring the doorbell. It’s a very different cycle than, ‘I’m picking people up and I’m just transporting them.’”

He also said riders might not want to be in a car that just dropped off a couple of pizzas.

The first order of business

“I think for a lot of people, Lyft has gone from top of mind to a little bit on the side, so it’s our job to remind people we exist and really give them a great experience,” said Risher.

That might mean ensuring Lyft doesn’t charge more than the competition and that its drivers pick up and drop off customers on time. In the past, Lyft was an attractive option because it offered cheaper rides than Uber. Now, after the post-COVID driver shortage, Lyft’s average price per mile is on par with Uber’s, according to more research from YipitData.

Risher didn’t say if Lyft will cut its workforce in an effort to rein in costs. However, CFO Elaine Paul hinted at taking such measures during the company’s fourth quarter 2022 earnings call. Paul also suggested Lyft shift to hiring workers outside the U.S. who are less likely to expect equity as part of compensation.

Risher seems most focused on creating more demand for the services, while making operations more efficient. Those efforts extend to increasing demand for Lyft’s micromobility business through some method of cross pollination between the two verticals, according to Risher.

“I don’t think we’ve given riders or bikers enough of a good reason to come and try us out on ride-share, as an example,” he said, noting that he is an avid cyclist. “If we have both of these ways for people to get around, how can they reinforce each other, because right now they’re a little too parallel.”

Lyft currently offers the Lyft Pink membership program that provide riders with ride-hail perks like free priority pickup upgrades and relaxed cancellations, as well as bike and scooter discounts. The membership also includes free Grubhub+ for a year and SIXT car rental upgrades, which represent a half-hearted attempt to capture more of the transportation market through partnerships.

Analysts are still wary on Lyft’s recovery

Lyft went public in March 2019 at a value of $24 billion. Today, Lyft’s market capitalization is around $3.35 billion. Uber’s market cap is $60.44 billion. Investors initially reacted favorably to Risher’s appointment, pushing its share price to $10.14 immediately following the announcement. But the positive reaction has been short-lived. Lyft’s share price has fallen 11.4% from Tuesday’s high to close Wednesday at $8.98.

Tom White, senior research analyst at D.A. Davidson, told TechCrunch he remains neutral on the company with a $12.50 price target.

“We’ll admit the news came as somewhat of a surprise to us, but perhaps it shouldn’t have given the relative underperformance of LYFT shares and in Lyft’s core ride-sharing business in recent quarters,” said White.

Lyft’s Q1 2023 revenue outlook remained unchanged by Risher’s appointment, but analysts recall that Lyft’s target ($975 million) was lower than what they had expected ($1.09 billion).

Lyft attributed the reduced outlook to colder weather, which leads to fewer ride-hail rides, shorter trips and a major dip in micromobility usage. Since Lyft is only active in North America, the company lacks the ability to balance poor ridership in one wintry part of the world with increased usage in other, warmer places.

Although Lyft’s strategy so far lacks the dazzle of shiny new products that might directly compete with Uber, Risher has some pretty good incentives to turn the company around (that is, aside from the pride of a job well done).

“As part of his equity compensation, [new CEO John Risher] received 12.25 million performance-based restricted stock units, broken into nine tranches, each vesting separately at LYFT price hurdles from $15.00 to $80.00,” said Ben Silverman, director of research at investment research management firm VerityData. “The vesting schedule is vastly different from the founders’ awards received by Logan [Green] and [John] Zimmer in 2021 and 2022 which only vest if LYFT hits or exceeds $100.00. Clearly, that aspirational view has been muted. Regardless, Risher is tasked with a massive turnaround and if fully successful, can earn $980 million.”

Technology

Tesla more than tripled its Austin gigafactory workforce in 2022

Published

on

Tesla’s 2,500-acre manufacturing hub in Austin, Texas tripled its workforce last year, according to the company’s annual compliance report filed with county officials. Bloomberg first reported on the news.

The report filed with Travis County’s Economic Development Program shows that Tesla increased its Austin workforce from just 3,523 contingent and permanent employees in 2021 to 12,277 by the end of 2022. Bloomberg reports that just over half of Tesla’s workers reside in the county, with the average full-time employee earning a salary of at least $47,147. Outside of Tesla’s factory, the average salary of an Austin worker is $68,060, according to data from ZipRecruiter.

TechCrunch was unable to acquire a copy of the report, so it’s not clear if those workers are all full-time. If they are, Tesla has hired a far cry more full-time employees than it is contracted to do. According to the agreement between Tesla and Travis County, the company is obligated to create 5,001 new full-time jobs over the next four years.

The contract also states that Tesla must invest about $1.1 billion in the county over the next five years. Tesla’s compliance report shows that the automaker last year invested $5.81 billion in Gigafactory Texas, which officially launched a year ago at a “Cyber Rodeo” event. In January, Tesla notified regulators that it plans to invest another $770 million into an expansion of the factory to include a battery cell testing site and cathode and drive unit manufacturing site. With that investment will come more jobs.

Tesla’s choice to move its headquarters to Texas and build a gigafactory there has helped the state lead the nation in job growth. The automaker builds its Model Y crossover there and plans to build its Cybertruck in Texas, as well. Giga Texas will also be a model for sustainable manufacturing, CEO Elon Musk has said. Last year, Tesla completed the first phase of what will become “the largest rooftop solar installation in the world,” according to the report, per Bloomberg. Tesla has begun on the second phase of installation, but already there are reports of being able to see the rooftop from space. The goal is to generate 27 megawatts of power.

Musk has also promised to turn the site into an “ecological paradise,” complete with a boardwalk and a hiking/biking trail that will open to the public. There haven’t been many updates on that front, and locals have been concerned that the site is actually more of an environmental nightmare that has led to noise and water pollution. The site, located at the intersection of State Highway 130 and Harold Green Road, east of Austin, is along the Colorado River and could create a climate catastrophe if the river overflows.

The site of Tesla’s gigafactory has also historically been the home of low-income households and has a large population of Spanish-speaking residents. It’s not clear if the jobs at the factory reflect the demographic population of the community in which it resides.

Continue Reading

Technology

Launch startup Stoke Space rolls out software tool for complex hardware development

Published

on

Stoke Space, a company that’s developing a fully reusable rocket, has unveiled a new tool to let hardware companies track the design, testing and integration of parts. The new tool, Fusion, is targeting an unsexy but essential aspect of the hardware workflow.

It’s a solution born out of “ubiquitous pain in the industry,” Stoke CEO Andy Lapsa said in a recent interview. The current parts tracking status quo is marked by cumbersome, balkanized solutions built on piles of paperwork and spreadsheets. Many of the existing tools are not optimized “for boots on the ground,” but for finance or procurement teams, or even the C-suite, Lapsa explained.

In contrast, Fusion is designed to optimize simple inventory transactions and parts organization, and it will continue to track parts through their lifespan: as they are built into larger assemblies and go through testing. In an extreme example, such as hardware failures, Fusion will help teams connect anomalous data to the exact serial numbers of the parts involved.

Image credit: Stoke Space

“If you think about aerospace in general, there’s a need and a desire to be able to understand the part pedigree of every single part number and serial number that’s in an assembly,” Lapsa said. “So not only do you understand the configuration, you understand the history of all of those parts dating back to forever.”

While Lapsa clarified that Fusion is the result of an organic in-house need for better parts management – designing a fully reusable rocket is complicated, after all – turning it into a sell-able product was a decision that the Stoke team made early on. It’s a notable example of a rocket startup generating pathways for revenue while their vehicle is still under development.

Fusion offers particular relevance to startups. Many existing tools are designed for production runs – not the fast-moving research and development environment that many hardware startups find themselves, Lapsa added. In these environments, speed and accuracy are paramount.

Brent Bradbury, Stoke’s head of software, echoed these comments.

“The parts are changing, the people are changing, the processes are changing,” he said. “This lets us capture all that as it happens without a whole lot of extra work.”

Continue Reading

Technology

Amid a boom in AI accelerators, a UC Berkeley-focused outfit, House Fund, swings open its doors

Published

on

Companies at the forefront of AI would naturally like to stay at the forefront, so it’s no surprise they want to stay close to smaller startups that are putting some of their newest advancements to work.

Last month, for example, Neo, a startup accelerator founded by Silicon Valley investor Ali Partovi, announced that OpenAI and Microsoft have offered to provide free software and advice to companies in a new track focused on artificial intelligence.

Now, another Bay Area outfit — House Fund, which invests in startups with ties to UC Berkeley — says it is launching an AI accelerator and that, similarly, OpenAI, Microsoft, Databricks, and Google’s Gradient Ventures are offering participating startups free and early access to tech from their companies, along with mentorship from top AI founders and executives at these companies.

We talked with House Fund founder Jeremy Fiance over the weekend to get a bit more color about the program, which will replace a broader-based accelerator program House Fund has run and whose alums include an additive manufacturing software company, Dyndrite, and the managed app development platform Chowbotics, whose most recent round in January brought the company’s total funding to more than $60 million.

For founders interested in learning more, the new AI accelerator program runs for two months, kicking off in early July and ending in early September. Six or so companies will be accepted, with the early application deadline coming up next week on April 13th. (The final application deadline is on June 1.) As for the time commitment involved across those two months, every startup could have a different experience, says Fiance. “We’re there when you need us, and we’re good at staying out of the way.”

There will be the requisite kickoff retreat to spark the program and founders to get to know one another. Candidates who are accepted will also have access to some of UC Berkeley’s renowned AI professors, including Michael Jordan, Ion Stoica, and Trevor Darrell. And they can opt into dinners and events in collaboration with these various constituents.

As for some of the financial dynamics, every startup that goes through the program will receive a $1 million investment on a $10 million post-money SAFE note. Importantly, too, as with the House Fund’s venture dollars, its AI accelerator is seeking startups that have at least one Berkeley-affiliated founder on the co-founding team. That includes alumni, faculty, PhDs, postdocs, staff, students, dropouts, and other affiliates.

There is no demo day. Instead, says Fiance, founders will receive “directed, personal introductions” to the VCs who best fit with their startups.

Given the buzz over AI, the new program could supercharge House Fund, the venture organization, which is already growing fast. Fiance launched it in 2016 with just $6 million and it now manages $300 million in assets, including on behalf of Berkeley Endowment Management Company and the University of California.

At the same time, the competition out there is fierce and growing more so by the day.

Though OpenAI has offered to partner with House Fund, for example, the San Francisco-based company announced its own accelerator back in November. Called Converge, the cohort was to be made up of 10 or so founders who received $1 million each and admission to five weeks of office hours, workshops and other events that ended and that received their funding from the OpenAI Startup Fund.

Y Combinator, the biggest accelerator in the world, is also oozing with AI startups right now, all of them part of a winter class that will be talking directly with investors this week via demo days that are taking place tomorrow, April 5th, and on Thursday.

Continue Reading

Trending