Daily Tech Snippet: Monday, August 22

• Lyft Is Said to Seek a Buyer, Without Success: It is not an easy thing to be an independent ride-hailing company these days. For one, it takes billions of dollars and hundreds of employees to spread to new cities, to market the service and to recruit drivers. Legislators and local laws are often not in your favor. And competitors with deep pockets from all over the world are waiting to cheer if you happen to fail. Lyft, the second-biggest ride-hailing company in the United States behind Uber, is grappling with those forces — but has found that its options are limited. The company, which is based in San Francisco, has in recent months held talks or made approaches to sell itself to companies including General Motors, Apple, Google, Amazon, Uber and Didi Chuxing, according to a dozen people who spoke on the condition of anonymity because the discussions were private. Lyft’s discussions were most serious with G.M., which is one of the ride-hailing company’s largest investors. Still, G.M. never made a written offer to buy Lyft, said the people, and in the end, Lyft did not find a buyer. Lyft is not in danger of closing down and has a cash cushion of $1.4 billion, some of these people added, so the company will continue as an independent entity. Still, the talks underline how difficult it has become to operate in the ride-hailing market, where people can book rides from drivers through a smartphone app. While ride-hailing companies do not own fleets of cars and instead rely on drivers who have their own vehicles, the business is highly capital-intensive. Venture capitalists and other investors have poured billions of dollars into the companies.

• Uber Tells Investors It Wouldn’t Pay Above $2 Billion for Lyft: As Lyft Inc. was gauging interest from prospective acquirers, executives from Uber Technologies Inc. told investors in the past few weeks that the company wouldn't pay more than $2 billion to purchase its main U.S. ride-hailing competitor, said people familiar with the matter. Uber didn't make a formal offer, said the people, who asked not to be named because the discussions were private. Uber had previously considered purchasing Lyft as far back as 2014, and the two San Francisco companies have discussed the prospect informally, one of the people said. Despite executives floating the $2 billion price tag, Uber Chief Executive Officer Travis Kalanick has said privately that he would not support such a deal because he believes it would face intense regulatory scrutiny, the person said. Regardless, Lyft wouldn't consider $2 billion to be a credible offer, said another person familiar with the matter. Recode reported on Friday that Lyft sought as much as $9 billion but failed to secure serious interest. As fierce rivals, Uber has every incentive to downplay Lyft's value to investors and has done so in the past. Lyft and Uber declined to comment.

• Hampton Creek, Maker of Just Mayo, Is Said to Be Under Inquiry: Hampton Creek, a prominent start-up that is trying to bring tech industry panache to the world of mayonnaise, ranch dressing and other food products, has come under scrutiny by regulators for its business practices. The Securities and Exchange Commission has opened a preliminary inquiry into Hampton Creek, according to a person briefed on the situation who asked not to be named because it had not been announced publicly. The S.E.C. inquiry is a response to a recent report from Bloomberg News that described an organized effort by Hampton Creek to buy large quantities of its Just Mayo product — a mayonnaise that uses a plant-based ingredient instead of eggs — by sending undercover contractors into stores.Bloomberg’s report said the product buyback effort, which took place in 2014, made Just Mayo seem more popular than it was, not long before Hampton Creek raised $90 million from venture capitalists and other private investors. The basic details of the program were confirmed by a former Hampton Creek employee, who asked for anonymity because of confidentiality restrictions with his onetime employer. The inquiry may be only the start of tougher questions facing Hampton Creek. The company is believed to be losing significant amounts of money. It is raising up to $220 million from investors, according to a Delaware filing provided by Equidate, which tracks private company shares. It’s not uncommon, of course, for start-ups to bleed red ink in their early days. But Hampton Creek, founded in 2011, faces some basic challenges with the manufacturing costs for its products. According to one former employee, in 2014 the company had negative gross margins of about 20 percent on Just Mayo, meaning that the raw cost to the company for every $1 it got in sales was about $1.20. The issue arises from Hampton Creek’s use of premium ingredients in its products without charging shoppers the often eye-popping prices attached to such food products. The vegetable oil used in Just Mayo, for example, does not come from genetically modified organism sources, which adds significant cost, according to the former employee. But on Walmart.com on Friday, a 30-ounce jar of Just Mayo was selling for $3.66 — 32 cents less than a jar of Hellmann’s mayonnaise of the same size.