Why GM + Lyft Is About the End of Car Brands
Self-driving cars + ride sharing means car manufacturers become less relevant
Who made the last airplane you flew on? Who manufactured the last bus or train you took? Unless you’re unusually curious or observant, it’s not only that you don’t remember — I bet it never even occurred to you to ask.
But more likely than not, you do remember the brand(s) of the company(ies) that operated those vehicles and sold you your tickets. And that’s why GM invested in Lyft.
Why self-driving cars + ride sharing = the end of car manufacturers’ brands
Self-driving cars will push down prices for ride-sharing to insanely low levels. My car was stolen last year, and already, doing the math that everyone’s now doing, I’m saving money (and hassle) by not replacing it and taking Uber and Lyft everywhere (and Zipcar for longer drives). Given that drivers collect 70% to 80% of UberX fares, the advent of self-driving cars could reduce the average ride-sharing fare to well below 50% of current rates.
When that happens, ride/car-sharing becomes more the norm, at least in urban areas. (Will buying a car one day be like buying a tractor?) Which means traveling in a car becomes more like traveling in an airplane or a bus — an on-demand experience that separates riders from manufacturers and their brands. In that world, the brands that matter most are the ones that sell you your tickets, operate the cars, and tell you how soon they will arrive.
GM’s Lyft investment is a play against intermediation
In the early days of the Internet, there was a lot of talk about disintermediation as the force of disruption. Manufacturers, for example, would be able to sell their goods directly, without going through expensive intermediaries. That has certainly played out (Warby Parker, Apple, etc.), but the more interesting phenomenon — and what’s happening now in the car industry — is intermediation.
The introduction of intermediaries into a supply chain usually removes value, which is why new intermediaries are rare. But when superior ways of buying and consuming emerge, a new intermediary can jump in and add value. That’s what Netflix did, and it now poses an existential threat to traditional programming networks.
In that context, GM investing in Lyft is a little like when those traditional networks invested in Hulu. (Or, as Jeff Fedor aptly points out, like when record labels invested in Spotify.) The result, at least initially, was that Hulu was constrained by its owners’ fear of cannibalization. It’ll be interesting to see if GM’s ownership similarly holds Lyft back, or if, conversely, Lyft can keep the GM brand relevant in a world in which, more and more, people won’t give much thought to who makes cars.
About Andy Raskin:
I help leadership teams nail strategic messaging and positioning — for fundraising, sales, marketing, and recruiting. My clients include companies backed by Andreessen Horowitz, KPCB, First Round Capital and other top-tier investors. I also lead storytelling workshops for teams. More at http://andyraskin.com.