Sep 29, 2017 · 4 minutes

For at least a year, I’ve had an ongoing debate with folks in the Valley about why Lyft doesn’t just go public already.

People bring up LinkedIn, who went public before Facebook; Box who went public before Dropbox… there’s a decent case to be made for the smaller #2 company in a market going first.

The opposite case-- as articulated to me by more than one Lyft investor-- was that unlike those other categories Lyft and Uber are commodity products. I feel like I make this point in every article about why Lyft and Uber can’t follow the same playbook as a Google or a Facebook, but it still gets lost on folks. They have the same product, same price, similar experience, same delivery, and literally the same drivers doing the driving in major cities. There is almost no differentiation, except one acts pretty evil in its corporate dealings. But the drivers are basically the same, so if you don’t care about voting with your wallet, that doesn’t even matter.

That means whoever has the most money in the bank at any given time will win market share.

Now, that distinction would favor an IPO at pretty much any other point in startup history. But this is the era of mega-rounds and unfathomable Softbank funds that can give every unicorn $500 million with no strings attached and still have some money left over. The era of terminally put off reckoning. The reality check that seems to have gotten lost on the way.

So in a world where raising $1 billion more of private money is as easy as, well, summoning a car to your house in three minutes, a smaller competitor choosing to take the more arduous route of going public would be asking for a world of pain. As Lyft investors have articulated to me: During the roadshow, Uber could just raise $1 billion and give everyone in America free Ubers and excessive driver bonuses for a month and decimate Lyft. “It’s as easy as pushing a button!” as Travis Kalanick may have pitched it to its board.

Lyft was already operating an unfair disadvantage given Uber’s greater cash trove and the whole commodity market thing. By opting into stricter rules, a constantly fluctuating stock price, a world of short sellers and activists, that becomes a living hell.

Or that was the argument before Uber’s disastrous and self-inflicted 2017. In recent months Lyft has sprung to life. The app has been updated with new features, there’s talk of a $1 billion investment from Alphabet, a partnership with Ford on self-driving cars, and the company has enjoyed a surge of positive PR around its diversity efforts.

And now Reuters says Lyft may be eyeing an IPO.

Lyft Inc is close to hiring an initial public offering (IPO) advisory firm, in the first concrete step by the second biggest U.S. ride service company to become publicly listed, according to people familiar with the matter.

Lyft’s IPO preparations come as its larger competitor, Uber Technologies Inc, is attempting to recover from a range of scandals. In August, Uber’s new CEO Dara Khosrowshahi set a new tentative timeline for Uber’s IPO of between 18 and 36 months.

The laws of operating in a commodity market duopoly are certainly not lost on Lyft. Uber is not only in the middle of a shareholder lawsuit, a multi-billion dollar lawsuit over trade secret theft, a fired CEO controlling the board that a new “nicer” CEO is supposed to report to, just got banned in one of its only thriving international markets, but it’s reportedly been circling around a new private deal that would both slash it’s sky high valuation and arguably still leave it wildly over-valued at the same time.

Uber has launched a 180 days of trying to be slightly nicer campaign -- which has also been a 180 days of trying to cut that damn burn rate. Among moves it’s made this week are ending its predatory lease program. Only the company says the decision was made for cost savings, not because the program made drivers into indentured servants.

In a commodity market, there is no running your own race. The market hasn’t changed, the dynamics haven’t, but Uber has. Uber has to cut costs. Uber can still undoubtedly raise large amounts of cash, but not at the same price, and not without major haggling over Travis Kalanick’s board control.

That means the cash comes with different strings than Lyft’s cash going public, but strings for the first time nonetheless.

And Lyft has two advantages Uber will never be able to compete with: It isn’t losing billions of dollars failing in other parts of the world and it has a comparatively reasonable valuation.

The moment has come. The “LinkedIn/Box” strategy finally makes sense not in spite of Lyft and Uber being commodity products but because of it.