The Strategy Question at the Center of Lyft’s IPO

Lyft released the filing for its public offering today, and though many of the headlines focus on how quickly it’s growing (it now has 18.6 million active riders), on how much money it’s losing (nearly $1 billion last year), or on its dual-class share structure, it raises an important question about competitive strategy. In the filing’s section on risk factors it notes that, “Network effects among the drivers and riders on our platform are important to our success,” and that “if we are not able to continue developing our… network effects our business could be adversely affected.”