Tech Brew Ride Home - Fri. 03/01 - Lyft Files For Its IPO

Episode Date: March 1, 2019

Lyft officially files for its IPO and do the numbers reveal concern for Uber, New York wants Jeff Bezos to reconsider, Tesla slashes prices, physical sales trump downloads when it comes to music, and the weekend longreads suggestions. Sponsors: Tiny.website DatadogHQ.com/ridehome Links: Lyft's financials show a $911 million loss ahead of its IPO (CNBC) Amazon stops selling Dash buttons, goofy forerunners of the connected home (CNET) U.S. Music Industry Posts Third Straight Year of Double-Digit Growth as Streaming Soars 30% (Variety) Andrew Cuomo Speaks With Jeff Bezos, Hints of ‘Other Ways’ to Clear Path for Amazon’s Return (NYTimes) The $35,000 Tesla Model 3 has arrived—but it comes with a price (TechCrunch) Weekend Longreads Suggestions: Do You Trust Your VPN? Are You Sure? (Slate) Is Cloudflare a privacy champion or hate speech enabler? Depends who you ask (Fast Company) The Car That Killed Glamour (The Atlantic) How Disney Built Star Wars, in real life (TechCrunch) THE TRAUMA FLOOR (The Verge) Outgrowing Advertising: Multimodal Business Models as a Product Strategy (A16Z/Connie Chan) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the tech meme ride home for Friday, March 1st, 2019. I'm Brian McCullough. Today, Lyft officially files for its IPO and do the numbers reveal concern for Uber. New York wants Jeff Bezos to reconsider. Tesla slashes prices, physical sales, Trump downloads when it comes to music, and the weekend long read suggestions. Here's what you miss today in the world of tech. Let the parade of big tech IPOs begin. Lift officially filed its S-WK&E. one this morning, and that means we finally get to look under the hood, as it were, of Lyft as a business, quoting from CNBC. Lift released its long-awaited IPO prospectus Friday, revealing that

the Uber-Arch rival lost $911 million on $2.1 billion in revenue last year. The number two ride-hailing company, however, expects sales to grow faster than losses, and it posted a growing share of the market. Here's how the company said it did in 2018. Net loss, 911 million, an increase of 32% from 2017. Revenue, $2.2 billion, double the revenue at Saul in 2017. Bookings, $8.1 billion, an increase of 76% from 2017. Lyft didn't specify the amount it hopes to raise in the public offering, instead opting for a placeholder amount of $100 million. Reuters reported earlier that Lyft expects to be valued between $20 billion and $25 billion in its IPO. Uber, which has been releasing unaudited financials for several quarters,

was said to seek valuation as high as $120 billion for its upcoming IPO, end quote. Some super interesting observations in no particular order. Lyft has gross margins around 45%, which is pretty, pretty good. Lyft served 30.7 million riders in the U.S. and Canada last year. It says it has 1.9 million drivers and did one billion drivers, and did one billion. billion rides. Lyft does around 30 rides per rider per year. Revenue per active writer was $36.4.4 per rider in 2018. That is up from $15.88 per rider in 2016. And indeed, that is what is super interesting. The numbers are all going in the right direction for Lyft. As Biz Carson noted,

Lyft specifically called out Q1 and Q2 of 2017 as a time when they started to grow rides and revenue. And interestingly, market share. U.S. ride sharing market share for Lyft was 39% in December 2018 up from 22% two years earlier. What happened in that interim? That whole hashtag delete Uber thing happened. Or as Lyft put it in the prospectus, it's quote brand and our values resonated with writers, end quote. As Jason Lemkin tweeted, I didn't think going out first mattered. He means IPOing before Uber. But if you are ripping market share away from the number one player in the market, seems pretty smart. Amazon has decided to discontinue those Amazon dash buttons, those little buttons you could get and press to automatically reorder laundry detergent or whatever when you ran out.

Amazon will continue supporting orders made through existing dash buttons, so if you have them and use them, you still can. The dash buttons were always a thirsty little project. on Amazon's part. And yet, in a weird way, the dash buttons are going away because they were successful, because they helped usher in an era where, as CNET puts it, you can now reorder bread from your toaster, essentially. Daniel Rauch, an Amazon vice president in charge of the dash program, said that the remit of the original dash buttons was to make shopping disappear. Quote, dash button was an awesome stepping stone into the world of connected home, Roush told CNET. We never imagined a future where customers had 500 buttons in their home. We imagined a future

where the home was taking care of itself, including replenishing everyday items that customers would rather not worry about, end quote. Now the whole smart home universe is on the cusp of taking over. So this intermediate step of a little funny button that you stick somewhere is no longer needed, I guess. There's no doubt, Roush said, that that core mission of dash buttons succeeded, end quote. Speaking of intermediate steps, according to the RIAA, U.S. revenue for recorded music grew 12% in 2019 to $9.8 billion, largely due to a 30% surge in streaming revenue. Streaming revenue now accounts for 75% of the total U.S. music industry revenue picture, with the next largest part of the pie coming from good old physical sales to the tune of 12%. And this is why I mentioned intermediate steps, because the report also notes that digital downloads now only account for 11% of sales. meaning that CDs and vinyl now generate more sales than the iTunes store and its brethren.

It's funny. Selling those songs at 99 cents apiece was the thing that ushered in the modern gadget era, but it was always just a temporary stopgap, a path out of the music piracy mess, and training wheels for consumers to get used to not having a physical music collection. The future, as the Napster guys told me on the Internet History podcast, was always streaming, and they knew that back in 1999. And as I say in my book, Unlimited Selection, Instant Gratification,

that was always going to be the end result for media once digital distribution became possible. Unfortunately, Napster couldn't get us there. But now the instant gratification, unlimited selection, reality is here. And Netflix, YouTube, Spotify, everyone can thank Napster for blazing the trail. As they say, the leaders often end up with arrows in their backs. Tesla made a whole bunch of announcements yesterday afternoon. the highlight of which was the unveiling of its $35,000 Model 3. This is the mass market price point that Tesla has been working toward for years,

going back to Elon Musk's secret master plan, so-called, back in 2006. The $35,000 Model 3 will have 220 miles of range and can reach a top speed of 130 miles per hour. But the also significant news was the announcement of price cuts across the whole range of the the other Tesla models. However, there are consequences to those cuts. Quoting TechCrunch, Tesla said that to achieve this lower price, it will shift all sales globally to online only, meaning the company will be closing many of its stores over the next few months. The stores that remain in high traffic locations will be turned into information centers, Musk said on a call with reporters. There will be some layoffs as a result.

Musk later said they would be hiring more service technicians. Quote, shifting all sales online combined with, with other ongoing cost efficiencies will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected, the company wrote in a post. Quote, I'm excited to finally meet this goal, which has been insanely difficult, Musk said on a call with reporters. Back to that closing of stores and showrooms and moving all sales online. What about a test drive in such a scenario? Is the test drive out? well, they have a solution for you.

Basically, just order a Tesla. Just order it, take delivery of it. That's your test drive. New Tesla customers will now be able to own a car for a full week and drive it for as much as 1,000 miles and return it. No questions asked if they don't want to continue owning it. That's why we're going to essentially allow somebody to use the car for free for a week and return it for a full refund, Musk said.

And we're going to make it super easy to get. get a refund, like one-click refund, end quote. New York Governor Andrew Cuomo wants Jeff Bezos back. The New York Times is reporting that Cuomo has talked with Bezos personally about reconsidering Amazon's HQ2 plans, and the state took out a full-page ad in today's New York Times to that effect as well. The governor has had multiple phone conversations with Amazon executives, including Mr. Bezos, over the past two weeks, according to two people with knowledge of the efforts. In those calls, Mr. Cuomo said he would navigate the company. through the Byzantine governmental process. Mr. Cuomo did not offer a new location, but rather guarantees of support for the project.

One person said Amazon executives gave no sense the company would reconsider, end quote. Time for the weekend. Long Reads suggestions beginning with the podcast suggestion, of course. This is a super interesting one, the Rideshare Guy podcast. Harry Campbell is the Rideshare guy. He's a professional rideshare driver himself, and via his blog and the RideShare Guy podcast. He's basically become the voice of the rideshare driver industry. He's been featured in Wired. He interviewed the Uber CEO.

I'm not sure how many of you out there are moonlight as rideshare drivers, but even if you don't, I found this podcast fascinating. The Rideshare guy looks at Uber and Lyft and the whole industry from a completely different side of the table than we usually do. It's super timely. Maybe download the latest episode to see if he's got recent news about this Lyft stuff. Check out this podcast. It's twice a month, about 30 minutes long. The Rideshare Guy interviews drivers, investors, and leaders in the Rideshare and mobility space. If you want to learn what's going on in the Rideshare and Mobility Industries on a deeper level,

definitely check out the Rideshare Guys podcast. First up for the Long Reeds. With all the stories of everyone snooping on everything you're doing, the virtual private network or VPN is becoming an increasingly mainstream product, sort of like how ad blockers did a couple years ago. VPNs are becoming so popular, in fact, that two of them recently cracked the top 30 of the iOS App Store. Some estimate that VPN usage worldwide quadrupled between 2016 and 2018.

So what VPN should you choose? I've actually had this question myself. Well, Slates Will Aramis asked this question for himself, and quote, The search for a VPN I could rely on led me on a convoluted journey through accusations and counter-accusations, companies with shadowy leadership and those with conflicts of interest, and VPN ratings, sites that might be even shadier than the companies they're reviewing. Many VPNs appear to be outright scams. Others make internet browsing sluggish.

Free versions bombard you with ads. It's a world so thicketed that the leading firms and experts can agree on the basic criteria for what counts as reputable, let alone which companies best meet that description, end quote. Spoiler alert, Will didn't end up settling on a VPN to go with, but reading the piece at least gives you the parameters that you would need to do a search of your own. Next, slightly different kettle of fish, but content delivery networks or CDNs, are companies that route traffic around the internet to make sure that that web page or streaming video or whatever you want loads in milliseconds.

But that also means they can essentially provide services for things like hate speech and terrorism. To what extent are CDNs just pipes? And to what extent are they platforms or enablers? Fast Company has an interesting look at Cloudflare, one of the biggest CDNs in the world, and its balancing act as a free speech champion or hate speech enabler. Lots of Tesla news yesterday. And in the Atlantic, Ian Bogost has a provocative piece. piece up that makes the argument that Tesla, among other things, has killed the glamour of

especially super sporty automobiles. I've been arguing for years that gadgets stole the crown from cars when it comes to object lust years ago. In a way, Ian is arguing that Tesla is accelerating this trend. Quote, the Tesla is perhaps the first supercar actively to eschew the lust once inseparable from the segment. It's not unattractive, but it sure is humdrum, its ordinary lines rehearsing ordinary deeds. Car and driver called the new Aventador Super Velocci, quote, the very definition of a bedroom poster car. Everyone may want a Tesla, but nobody wants one adorning their wall. This is a practical dream stripped of carnal passion, a supercar with love handles instead of haunches, end quote. Don't at me, you car folks. I don't know

enough about the space to agree or disagree with this take, but like I said, it's a provocative one. Next, when Disney bought Lucasfilm, we knew they'd start churning out new movies in the Star Wars universe, and that's been happening now for several years, for better or worse. But we also knew at some point they would also rig up some sort of Star Wars experience as well in a Disney theme Park, or three, tech crunch checks in on how that's going. Quote, over the course of the past five years, Walt Disney Imagineering has been hard at work making the world of Star Wars a reality on Earth. In two locations, California and Florida, Black Spire outposts on the planet of Batu is

now under construction. It's an enormous several billion dollar bet that people will want to visit a place very similar to the ones that they've seen on the screen for decades. In some ways, this project seems like the safest bet ever. The confluence of rabid fans of Star Wars and Disciples of Disney's particular flavor of amusement park alone feels like it could fuel the demand for the two park additions for years. But the ambitions of Walt Disney imaginering staff and parks management are stratosphericly high for what is the largest single land expansion ever in a U.S. Disney Park. And the financial results required from these additions will require Disney to draw not just the loyalist crowd, but to convince a wide and deep array of park visitors to spend the day in a hyper-faithful reconstruction of a fictional far-away galaxy, end quote.

Next, I did want to put in another word for Casey Newton's Long Read story about the hidden world of Facebook content moderators that we spoke about on Tuesday. One of the weekend bonus episodes this week will be a deeper dive with Casey about this piece, so it would be useful to read ahead of time. And the last Long Read is also going to be fodder for a bonus episode. this weekend. On this show, I sometimes bemoan one-trick ponyism among tech companies. You know, go for scale, engineer for more, more, more, more usage, more sharing, viral growth. Get to a billion users, slap on some ads, and that's it. You're done. It's jarring sometimes to remember how much even the biggest tech behemoths are one-trick ponies. Facebook, Twitter, snap, even Google. 80 to 95 percent of the revenues for all of those companies, it's just advertising.

There's seemingly only one other business model, the latest hotness of subscriptions, but is that it? Is that all the vaunted internet revolution has been about outside of e-commerce? Is it really just two relatively simplistic and banal business models that we can choose from? And by the way, those two business models are increasingly tough to break into because you have a bunch of large 800-pound gorillas who have basically sewn those markets up? Well, I've been sitting on this piece for a while now. Andresen Horowitz's general partner, Connie Chan, had a post-up on the Andresen Horowitz's website

where she sketched out a new possible reality. Check out her piece entitled Outgrowing Advertising, Multimodal Business Models as a Product Strategy. If you do nothing else, scroll down to the pie chart that breaks down the revenue distribution of Tencent. It's an almost perfectly balanced pie of gaming revenue, subscription, revenue, advertising revenue, payments, and fee revenue, and commerce. And this sort of balanced business model of multiple revenue streams instead of just one big one is increasingly becoming common among Chinese internet startups. Not only is this a potential vision for a more interesting internet, but it's also possibly

a model future entrepreneurs should study partially out of necessity but partially out of opportunity. We'll talk to Connie about this. more over the weekend. That is all for today. It's Friday. I'm fried. Nothing pithy to say. Just go get the weekend on. I know I am. Talk to you on Monday.