In­vestors fuel multi­bil­lion-dol­lar rideshar­ing frenzy

Daily Sabah (Turkey) - - Business -

IN­VESTORS in­clud­ing Ja­pan’s SoftBank and Google-par­ent Al­pha­bet are fu­el­ing a drive to a rideshar­ing fu­ture, bet­ting on star­tups such as in­dus­try gi­ants Uber and Lyft that have so far failed to de­liver prof­its. The fren­zied pace of in­vest­ment sug­gests op­ti­mism over a new model that has dis­rupted lo­cal taxi and trans­port oper­a­tions around the globe. A re­cent Gold­man Sachs study pro­jected that the world­wide rideshar­ing mar­ket could grow eight­fold by the year 2030, reach­ing $285 bil­lion an­nu­ally. Lyft, which is Uber’s main ri­val in the United States, raised a bil­lion dol­lars in a re­cent in­vest­ment round led by an in­vest­ment arm of Al­pha­bet. That means the Google par­ent now has in­vest­ments in both Uber and Lyft. Mean­while Uber’s board of di­rec­tors has ap­proved a plan that opens the door to a colos­sal in­vest­ment by Ja­panese telecom­mu­ni­ca­tions gi­ant SoftBank. An­other ma­jor player in the sec­tor, Didi Chux­ing in China, bought Uber’s oper­a­tions in that coun­try last year and has in­vested in Lyft and In­dia’s Ola as well. Didi has be­come Asia’s most valu­able startup, worth some $50 bil­lion based on a re­cent fund­ing round. Uber’s new CEO has vowed to take the com­pany, val­ued pri­vately at nearly $70 bil­lion, pub­lic with a stock mar­ket de­but by the year 2019. Lyft, with a val­u­a­tion near $11 bil­lion, is re­ported to be mulling a strat­egy to also go pub­lic. De­spite the stag­ger­ing pri­vate valu­a­tions, smart­phone-sum­moned ride ser­vices have yet to prove they can turn prof­its, and have re­peat­edly run into road­blocks from reg­u­la­tors and tra­di­tional taxi op­er­a­tors in sev­eral coun­tries. Aside from clashes with en­trenched in­dus­try pow­ers, proudly dis­rup­tive Uber has earned a sul­furous rep­u­ta­tion with a litany of scan­dals, law­suits and in­ves­tiga- tions. Uber lost about $600 mil­lion in the sec­ond quar­ter of this year, af­ter los­ing $2.8 bil­lion in all of 2016. Rid­er­ship nev­er­the­less is soar­ing.

Such red ink on bal­ance sheets has not de­terred in­vestors with the re­sources of Al­pha­bet or SoftBank, with amounts they have sunk into rideshar­ing star­tups con­sid­ered “pretty mod­est,” Jack Gold of J.Gold As­so­ciates told Agence FrancePresse (AFP). Gold said that high-pow­ered in­vestors may be less in­ter­ested in quick returns from the day-to-day busi­ness of on-de­mand rides, and keener on get­ting their hands on data gath­ered by the oper­a­tions.

“There is a ma­jor amount of data to be had for anal­y­sis from all of the Lyft and Uber driv­ers,” Gold said. “So in­vest­ments in these com­pa­nies are about find­ing ways to lever­age the in­stalled base of driv­ers and less about any fi­nan­cial re­ward from ex­ist­ing oper­a­tions.”

Rideshar­ing ser­vices get to know about travel habits, sched­ules, and pro­files of pas­sen­gers and driv­ers, typ­i­cally an­a­lyz­ing in­for­ma­tion with soft­ware to an­tic­i­pate de­mand and im­prove ser­vice. Such data can also be a trea­sure trove to mine in the de­vel­op­ment of self-driv­ing cars, which have been touted as the fu­ture of ur­ban trans­port. Rideshar­ing ser­vices are seen as promis­ing early users of the tech­nol­ogy, let­ting peo­ple shun ve­hi­cle own­er­ship in fa­vor of sim­ply sum­mon­ing rides when­ever they wish with the ma­chines do­ing all the work. With cars nav­i­gat­ing them­selves, pas­sen­gers will likely spend more time im­mersed in on-board en­ter­tain­ment or ser­vices, likely streamed via wire­less in­ter­net con­nec­tions. Google and other on­line ti­tans would profit from go­ing along for the ride. Hu­man driv­ers are con­sid­ered a prime ex­pense for rideshar­ing firms. Fully au­ton­o­mous ve­hi­cles could elim­i­nate about 6.2 mil­lion driv­ers in the work­force, ac­cord­ing to Gold­man Sachs. The self-driv­ing car is ex­pected to be “the trig­ger to trans­form” rideshar­ing oper­a­tions, ac­cord­ing to Gold­man Sachs. A Lyft unit de­voted to the tech­nol­ogy col­lab­o­rates with U.S. car maker Ford, as well as with Al­pha­bet’s self-driv­ing car sub­sidiary Waymo. Uber has also been in­vest­ing in au­ton­o­mous cars, its col­lab­o­ra­tions in­clud­ing one with Gen­eral Mo­tors, which is among Lyft in­vestors.

Didi has be­come Asia’s most valu­able startup, worth some $50 bil­lion based on a re­cent round of fund­ing.

Newspapers in English

Newspapers from Turkey

© PressReader. All rights reserved.