Date post: | 22-Jan-2018 |
Category: |
Documents |
Upload: | canglong-allen-cai |
View: | 195 times |
Download: | 0 times |
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
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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.
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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!”
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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.”
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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!”
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
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!
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
Communities-On-Wheel
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
Brand Positioning Customer targeting Feature Innovation Community-on-Wheel
Communities-On-Wheel
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