Especially in Europe, you have seen some competitors enter the ride business and have a lower take rate and try and, supposedly, give value back to the drivers. What is your view on how Uber could react to those lower take rate competitors?

The good thing about Uber is that they have very deep pockets now. They are a public company; they have $11 billion in cash. In any of those markets, if a competitor comes, they have a deep pocket, to compete with those players. For example, let’s say that a player comes along with 10% take rate and Uber’s take rate is 20%. Firstly, because efficiency on Uber’s platform is around 60% to 70%, the other player, if they are charging 10% take rate, but their efficiency is only 30%, then the drivers will be making the same amount of money on Uber’s platform, as compared to the competitor’s platform.

The other platform, therefore, needs to invest a lot of money to generate the rider-side demand and, unless they have very deep pockets, they will have a tough time to sustain that for a long period of time. But what Uber can do, in this particular case, is if the take rate on the other platform is 10% as opposed to Uber’s of 20%, rather than changing the fundamental structure of the take rate, they can provide a short-term subsidy to the drivers and also short-term promotions to the riders. The battle, between those two players, will continue for a while, until the time that the other players realize that it’s very hard for them to continue to burn the money, against a player who has deep pockets and who has high market share and high efficiency and better technology and infrastructure, to provide a better product and a better service.

So, I think, in Uber’s case, the right strategy would be to continue to execute on your longer-term vision, with a great service, a great product. In the short term, you might have to provide some more incentives and promotions, to compete with the players, so that you can still continue to work towards a certain market share, in that market.

This is where scale actually provides a real competitive advantage for Uber?

Yes, that is correct. I think that is why the market, where, for example, in London or France, or some of the Latin American markets and some of the cities in the US and, let’s say, Didi in China or Grab in South East Asia, if they have certain scale and have a certain market share, it’s very hard to displace that. However, in the US, because, in certain cities, Lyft also has the equivalent market share, that’s why there are a lot more promotions and subsidies for Uber in US marketplaces, which are a bit more competitive. Lyft is also a public company and they also have access to capital.

But yes, if you are in a market where you have achieved scale, where you have significant market share and you have deep pockets, it’s very hard for a competitive player to come and compete with you.

How would you price the ride-hailing business for Lyft?

I think that’s a tough question because, ultimately, if Uber already has a 70% to 80% market share, in that case, they have a better product, better scale and it’s very tough to compete with them. The only thing that could work, in Lyft’s favor, is focus and continuing to do product innovation and product development. Uber is definitely focused on multiple areas. For example, ride sharing, Uber Eats, etc. The focus on innovation is practiced across multiple areas. One thing that Lyft could do is spend a bit more on the product innovation side. I don’t think that they can do much on the pricing side. Whatever they do on the pricing side, Uber can continue to do a similar thing themselves. The good thing is, both of them are public companies in the US market and both of them need to show a path to profitability to their investors. That’s why there is a bit more sensibility in the market.

My response would be that it would be very hard for Lyft to do anything on the pricing side. The two things that they can do is, they can do more product innovation and a bit more investment in the loyalty programs or some of the Amazon Prime type of products. It’s more the innovation and being quick to the market. Because of their focus, specifically on the US ride-sharing market, those should be their focus areas. Other than that, it will be very hard for Lyft to continue to price it very differently from Uber.

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