This is shaping up to be a year in which many popular tech start-ups make their highly anticipated initial public offerings, turning tech-employee equity into cold hard cash and minting fresh millionaires overnight. First on the docket, apparently, is Lyft, the rideshare app that many know for its distinctive quality of not being Uber.
The company’s S-1 gives us some hard numbers about its financial state, none of which are particularly surprising. The main thing to know is that Lyft still isn’t profitable (in a very substantial way) and may never be. Last year, the company lost $911 million, bringing in $2.2 billion in revenue. $911 million, according to some back-of-the-envelope math I just did, is enough money to buy 911 million Arizona iced tea tallboys.
Losing nearly a billion dollars in a year is not exactly a great business proposition, and the future of Lyft is unclear, to say the least. Among the risk factors cited in its filing, the first is an open admission: “Our limited operating history and our evolving business makes it difficult to evaluate our future prospects.” The second: “We have a history of net losses and we may not be able to achieve or maintain profitability in the future.”
Some other stats: Lyft had 30.7 million riders in 2018 and 1.9 million people drove cars for Lyft. Ninety-one percent of Lyft drivers drive less than 20 hours per week, meaning that most of its fleet is comprised of people who are working for the company to supplement their main sources of income. Thirty-four percent of drivers are over the age of 45 and 9 percent are veterans.
“Our business depends largely on our ability to cost-effectively attract and retain qualified drivers and increase utilization of our platform by existing drivers,” the company states. In other words, the company’s business model relies on a gig-economy model in which drivers continue to drive for Lyft without treating the service as an employer that owes drivers a living wage. “If the contractor classification of drivers that use our platform is challenged, there may be adverse business, financial, tax, legal and other consequences,” states another risk-factor bullet point.
Aside from the threats of an as-yet-unproven business model and low-paid drivers ditching the service (or, scarier still for Lyft, organizing to demand benefits and workplace protections), there looms another complicating factor: driverless cars. “If we are unable to efficiently develop our own autonomous vehicle technologies or develop partnerships with other companies to offer autonomous vehicle technologies on our platform in a timely manner,” the S-1 states, “our business, financial condition and results of operations could be adversely affected.” General Motors is a significant stakeholder in Lyft and has partnered with the start-up on developing autonomous vehicles.
While Lyft maintains that it is difficult to evaluate its own future, the general arc of its ambition seems pretty apparent. Continue to scale up and get more people to rely on Lyft for transportation, keep drivers happy without paying them too much, and then, hopefully, launch a fleet of driverless cars so that they won’t have to pay any drivers at all. Uh, good luck!