Lyft

Lyft

Type	Private
Industry	Ridesharing
Founded	2012
Founder(s)	Logan Green, John Zimmer
Headquarters	San Francisco, USA
Key people	Logan Green, John Zimmer
Website	lyft.me

Lyft is a privately held, San Francisco–based Transportation Network Company whose mobile-phone application facilitates peer-to-peer ridesharing by enabling passengers who need a ride to request one from drivers who have a car.^[1][2] Unlike traditional taxis, Lyft drivers do not charge "fares" but receive "donations" from their passengers.^[3] Lyft's tagline is "your friend with a car."^[4] According to the company, Lyft generally costs about 30 percent less than the price of a similar-length cab ride.^[5][6] Lyft currently operates in 19 cities including San Francisco, Los Angeles, San Diego, Sacramento, Seattle, Chicago, Washington D.C., Boston, Charlotte, Denver, Dallas, Atlanta, Baltimore, Phoenix, St. Paul, Indianapolis, and Nashville with plans to expand both domestically and internationally.^[2][7][8]

As of June 2013, Lyft has raised $83 million from Andreessen Horowitz, Founders Fund, Mayfield Fund, K9 Ventures, and Floodgate.^[9]

History

Lyft’s distinctive pink mustache

Lyft was launched in the summer of 2012 by Logan Green and John Zimmer as a service of Zimride, a ridesharing company the two founded in 2007.^[4] Zimride focused on ridesharing for longer trips, often between cities.^[9] Zimride helped build trust among drivers and passengers by facilitating rides through Facebook Connect.^[10] This trust helped increase ridesharing's popularity, and ultimately propelled Zimride to become the largest rideshare program in the United States.^[11] In doing so, Zimride achieved Green and Zimmer's goals of enabling travelers to save money, reducing harmful CO2 emissions and helping to bring communities together,^[12] as some Zimride users even developed lasting friendships.^[13]

Lyft was created by Green and Zimmer to bring the benefits of ridesharing to drivers and passengers traveling locally within cities.^[14] From their experience with Zimride, Green and Zimmer realized that 80 percent of seats in cars on the road are empty.^[9][15]

Similar to Zimride, Lyft requires all drivers and passengers to sign-up with the service through their Facebook account.^[16] Drivers and passengers rate each other on a 5-star scale after each ride.^[17] The ratings serve to establish driver and passenger reputations within the network.^[17] Lyft aims to build a fun community^[18] through, among other things, affixing a fuzzy pink mustache to the front of Lyft cars,^[15] which the company says represents a smile.^[19] Passengers are invited to sit in the front seat, and to give the driver a fistbump, which is designed to evoke the experience of riding with a friend, or at least a fellow Lyft user, as opposed to a professional driver.^[18]

Since its launch, Lyft has exploded in popularity,^[17] growing to more than 100,000 registered users^[20] and facilitating more than 30,000 rides per week within its first 12 months.^[9] The service has more than 300 drivers in San Francisco alone,^[21] who report earning as much as $30 to $35 an hour.^[22]

In June 2013, Lyft completed a $60 million Series C venture financing round led by Andreessen Horowitz, bringing its total amount raised to $83 million.^[23] In May 2013, Green and Zimmer officially changed the name of the company from Zimride to Lyft.^[24] In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, for the primary reason of enabling the company to focus exclusively on the growth of Lyft.^[25]

Safety

A Lyft driver with passenger being fined on Market Street in San Francisco for a traffic violation

One key to Lyft's success has been establishing trust among its users.^[17] Lyft claims that its safety precautions are more stringent than those performed by taxi and limousine companies,^[26] and that it only accepts 6 percent of its driver applicants.^[27] Beyond requiring every driver to join Lyft through their personal Facebook account and subjecting drivers to a 5-star rating assessment from passengers following each ride, the company carefully vets potential Lyft drivers^[3] through performing the following additional screening functions:

• DMV and criminal background checks^[17]
• In-person interviews by Lyft employees^[17]
• Vehicle inspections and a two-hour training and safety session^[17]
• Drivers must be 23 years or older and have a driver's license for more than 3 years;^[1]
• Zero tolerance drug and alcohol policy^[19]

Although Lyft drivers are classified as independent contractors,^[28] Lyft also insures each driver with a $1 million per-occurrence liability policy.^[29] Finally, any driver averaging less than a 4.5 star rating by users is dropped from the service.^[3] The company believes that these safeguards, as well as its community focus, account for the fact that the service has not only earned the trust of its users, but also explains why the majority of their passengers are females aged 18 to 35.^[30]

Lyft drivers often greet their passengers with a welcoming fistbump

Operation

In order to request a Lyft car, riders need to download the Lyft app to their iPhone or Android-based phone, sign-in through Facebook Connect, and enter a valid phone number and credit card details.^[3] When a passenger wants a ride, he or she opens the app and sees a map displaying the locations of the nearest Lyft drivers. After tapping to request a ride,^[31] the app shows the driver's name, his or her rating by past passengers, and photos of the driver and their car.^[3] Next, Lyft driver will arrive and likely greet the passenger with a welcoming fistbump.^[32] After the ride is complete, payment is made through the app in the form of a new payment system charges passengers a $2.50 pickup fee, $1 safety fee, and ride fee based on time and distance. Cost per mile is $1.90, cost per minute is 40 cents. There's also a $6 minimum and a $5 cancellation fee. ^[33] The passenger can increase or decrease the dollar amount by tapping a virtual pencil to edit the donation.^[18] The company takes a 20 percent cut of the fare.^[34] Finally, a passenger must rate the driver before he or she can request another Lyft.^[35]

Regulatory opposition and approval in California

Like many peer-to-peer startups, Lyft faces an uncertain legal and regulatory landscape, and has been criticized by entrenched commercial enterprises, which in Lyft's case, includes taxi services.^[17] In the fall of 2012, the California Public Utilities Commission issued a cease and desist letter to Lyft (along with rideshare companies Uber and Sidecar) and fined each $20,000. However, in 2013 an interim agreement was reached reversing those actions.^[36] In September 2013, the CPUC unanimously voted to make the agreement permanent, creating a new category of service called "Transportation Network Companies" to cover Lyft, UberX, and Sidecar, and making California the first state to recognize such services.^[37]

In June 2013, Lyft, Uber and Sidecar were served with cease and desist letters by the Los Angeles Department of Transportation. Despite this, all three companies continue to operate and offer their services in Los Angeles.^[38][39]

Results and reception

San Francisco Mayor Ed Lee has proclaimed July 13 as "Lyft Day." ^[40]

Beyond its fundraising and user adoption numbers, Lyft has received acclaim for creating a community that makes transportation a more uplifting and fun experience. Scott Weiss of Andreessen Horowitz said they ultimately decided to invest in Lyft because of their strong community and transparency.^[23] He wrote in his blog, "Lyft is a real community — with both the drivers and riders being inherently social — making real friendships and saving money."^[41] Techcrunch has written "You feel like you're in the car with a friend, and that's no mistake."^[18] Adding further, "Whether it's bringing someone a sandwich for the ride or letting them choose the music in the car, Lyft drivers have their own budding community growing."^[18] And the Los Angeles Times writes that it's clear "that Lyft's marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic."^[42]

Lyft faces competition from Uber, Sidecar and other ridesharing startups.^[43]

References

External links

• Official website

ftp://ftp.cpuc.ca.gov/carriers/PUCode226and5353.pdf

• http://www.octap.net/CPUC_Presentation.pdf