Sep 7, 2017

Should Lyft IPO before Uber?

Dan Primack, author of Pro Rata

Rebecca Zisser / Axios

When new Uber CEO Dara Khosrowshahi last week told the troops not to expect an IPO until at least 18 months from now, it sparked an interesting question: Should Lyft accelerate its own IPO plans, in order to gain a first-mover advantage?

  • The argument here seems to be one of creative destruction. A publicly-traded Lyft could effectively reset Uber's private valuation, thus causing cap table chaos, more board disputes, unhappy employees, etc.
  • Even if it doesn't raise again privately, the public comp could delay Uber's own IPO (i.e., make it wait to grow into its private valuation).
  • Plus, Lyft wouldn't have to go public in the shadow of Uber's much larger numbers (at least not fully-audited ones).

A partial comp on that latter point might be Box going out before Dropbox (hey Drew, we're still waiting!). Had the larger Dropbox gone out first and then traded poorly, then it might have made it harder for Box to price. Box going early also let it better dictate its own narrative.

But... None of this is terribly compelling. Not even to folks close to Box and Dropbox, who I asked about the Lyft/Uber situation. They all feel that, once both companies are eventually public, the "who went first" issue becomes largely meaningless.

Note that this is pure game theory. A Lyft source tells me: "I'm not sure their plans should influence ours — it's not the way we're thinking about it for sure."

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