According to the shareholder letter from Lyft’s co-founders: “In those early days, we were told we were crazy to think people would ride in each other’s personal vehicles.”
Yea, crazy like a fox. Of course, on Friday Lyft pulled off its IPO, raising about $2.34 billion. The stock price ended the day up 8.74% to $78.29 – putting the valuation at $26.5 billion.
“Very few companies can claim 100% growth year over year at the scale they are operating at,” said Jamie Sutherland, who is the CEO and co-founder of Sonix. “It’s pretty amazing. True, it’s costing them an arm and a leg, but the nature of the industry — which is still evolving — is that there will be a handful of winners. Lyft is clearly in that camp.”
Lyft, which posted $2.2 billion in revenues in 2018, has the mission of improving “people’s lives with the world’s best transportation.” But this is more than just about technology or moving into adjacent categories like bikes and scooters. Lyft sees ride-hailing as a way to upend the negative aspects of autos. Keep in mind that they are the second highest household expense and a typical car is used only about 5% of the time. There are also 37,000 traffic-related deaths each year.
AI And The Lyft Mission
Despite all the success, Lyft is still in the early phases of its market opportunity, as rideshare networks account for roughly 1% of the miles traveled in the US. But to truly achieve the vision of transforming the transportation industry, the company will need to be aggressive with AI. And yes, Lyft certainly understands this.
For some time, the company has been embedding machine learning into its technology stack. Lyft has the advantage of data on over one billion rides and more than ten billion miles – which allows for training of models to improve the experience, such as by reducing arrival times and maximizing the available number of riders. But the technology also helps with sophisticated pricing models.
But when it comes to AI, the holy grail is autonomous driving. For Lyft, this involves a two-part strategy. First of all, there is the Open Platform that allows third-party developers to create technology for the network. Lyft believes that autonomous vehicles will likely be most effective when managed through ridesharing networks because of the sophisticated routing systems.
Next, Lyft is building its own autonomous vehicles. For example, in October the company purchased Blue Vision Labs, which is a developer of computer vision technology. There have also been a myriad of partnerships with car manufacturers and suppliers.
So what is the time line for the autonomous vehicle efforts? Well, according to the S-1: “In the next five years, our goal is to deploy an autonomous vehicle network that is capable of delivering a portion of rides on the Lyft platform. Within 10 years, our goal is to have deployed a low-cost, scaled autonomous vehicle network that is capable of delivering a majority of the rides on the Lyft platform. And, within 15 years, we aim to deploy autonomous vehicles that are purpose-built for a broad range of ridesharing and transportation scenarios, including short- and long-haul travel, shared commute and other transportation services.”
This is certainly ambitious as there remain complex technology and infrastructure challenges. Furthermore, Lyft must deal with societal issues.
“According to an AAA study, 71% of Americans do not feel comfortable riding in fully autonomous vehicles,” said David Barzilai, who is the executive chairman and co-founder of Karamba Security. “Similarly, recent cyber security attacks have been shaking that trust as well and significantly decreasing consumer willingness to enter an autonomous vehicle.”
But hey, the founders of Lyft have had to deal with enormous challenges before. And besides, the company has the resources and scale to effectively pursue AI.
“Lyft is doing a tremendous job of pushing self-driving technology ahead,” said Aleksey Medvedovskiy, who is the founder of Lacus and president of NYC Taxi Group. “Self-driving cars will help to eliminate traffic and potential accident problems. In my opinion, self-driving technology is much safer and better than many drivers who are currently on the roads.”