In my recent New Yorker article, I proposed this winner take all loop, and thought it would make for a nice graphic visual. For me this loop is going to be key in a world which is getting more and more connected. I am working on a follow up piece, which will address some of the questions raised on Twitter, Facebook and in other publications.
As Uber was one of the companies I focused on in my original piece, for now, I want to focus on this piece in the New York Times about Lyft, which recently raised $1 billion in new funds including $500 million from General Motors. The article (which generously links to The New Yorker piece) there and in other publications seems to suggest that Lyft is happy being number two in the ride sharing market.
John Zimmer, co-founder and president of Lyft told the Times that “We’re gaining share in the United States. That’s not what happens when one player has a complete monopoly.” It isn’t clear what kind of marketshare they have or how much money they are losing. I am guessing since Uber is losing a lot to gain an upperhand, Lyft must be leaking cash like a broken firehose as well.
The New York Times article has some investors defending the second spot companies. “Microsoft has a decent search business. A lot of Yahoo’s profits still come from searches on Yahoo properties,” said Roelof Botha, a partner at Sequoia Capital, told the Times. Yahoo has 17.3 percent of the search market share in 2010. It was down down to 12.5 percent towards the end of 2015. Yahoo’s Q4 2015 revenues are estimated to be $1.19 billion. Google’s are estimated at $20.73 billion.(Microsoft reported that Bing had revenues of $1 billion (and change) during the fiscal first quarter of 2016.)
So perhaps, when Botha says that “it’s more of a ‘winner takes most’ than a ‘winner takes all’ phenomenon,” he really means, winner takes mostly all, leaving scraps for others. Zimmer and Co. should be sleeping with one eye open!