Lyft is a transportation network company based in San Francisco, California. It develops, markets and operates the Lyft car transportation mobile app. Launched in June 2012, Lyft operates in approximately 300 U.S. cities, including New York, San Francisco and Los Angeles and provides 1 million rides a day, 18.7 million rides a month. The company was valued at US$7.5 billion as of April 2017 and has raised a total of US$2.61 billion in funding. Lyft will be expanding into Canada in December 2017 to compete with Uber.
Operation
Riders must download the Lyft mobile app to their iOS or Android-based phone, sign up, enter a valid phone number, and enter a valid form of payment (either a credit card, or link to an Apple Pay, Google Wallet or PayPal account). Passengers can then request a ride from a nearby driver. Once confirmed, the app shows the driver’s name, ratings by past passengers, and photos of the driver and car. Drivers and passengers can add personal information to their profiles about their hometown, music preferences, and other details to encourage drivers and passengers to converse during the ride. After the ride is over, the rider is given the opportunity to provide a gratuity to the driver, which is also billed to the rider’s payment method.
Lyft offers four types of rides within the app:
- Lyft Line, which is not available in all cities, is the cheapest option and will match passengers with other riders if they are going in the same direction.
- Lyft is the basic and most popular offering that matches passengers with nearby drivers.
- Lyft Plus matches passengers with a six-seater car.
- Lyft Premier matches passengers with a more Premium ride with seating for four.
- Lyft Lux matches passengers with a luxury car (ie: SUVs with highly rated drivers).
Safety
One tenet of Lyft’s platform is establishing trust among its users. All drivers undergo the following screening processes:
- Department of Motor Vehicle, sex offender registries in the United States, and personnel-type criminal background checks. The criminal background check goes back seven years and includes national and county-level databases, as well as national sex offender registries.
- In-person interviews with current Lyft drivers.
- Drivers must be 21 years or older and have had a driver’s license for more than 1 year.
- Zero-tolerance drug and alcohol policy.
Ratings
After a ride is completed, drivers and passengers are given the opportunity to rate each other on a scale of 1 to 5 stars. Any driver averaging a low rating by users is dropped from the service. Lyft does not allow passengers to know their rating.
Insurance
Although Lyft drivers are classified as independent contractors, Lyft also insures each driver with a US$1 million commercial liability policy that is primary to a driver’s personal policy. Additional coverage includes:
- Contingent comprehensive and collision coverage up to $50,000 with a $2,500 deductible. (Applies from the time a driver accepts a ride request until the time the ride is ended in the app.)
- Contingent liability coverage up to $50,000 per person/$100,000 per accident/$25,000 property damage. (Applies from the time when a driver flips into driver mode until the driver accepts a ride request.)
- Uninsured/underinsured motorist coverage up to $1 million. (Applies from the time a driver accepts a ride request in the app until the time the ride is ended in the app.)
History
Lyft was launched in the summer of 2012 by computer programmers Logan Green and John Zimmer as a service of Zimride, a long-distance intercity carpooling company focused on college transport that they founded in 2007 after Green shared rides from the University of California, Santa Barbara campus to visit his girlfriend in Los Angeles and was seeking an easier way to share rides.
In May 2013, the company made the decision to change its name from Zimride to Lyft. Later that year, Lyft sold the original Zimride service to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, to enable the company to focus exclusively on the growth of Lyft.
Lyft’s marketing strategy included large pink furry mustaches that drivers attached to the front of their cars and encouraging riders to sit in the front seat and fist bump with drivers upon meeting. In November 2014, the company distanced itself from the fist bump. In January 2015, Lyft introduced a small, glowing plastic dashboard mustache it called a “glowstache” as an alternative to the large fuzzy mustaches on the front of cars. The transition was to help overcome the resistance of some riders to arrive at destinations, such as business meetings, in a car with a giant mustache.
In April 2014, Lyft hired two lobbying firms, TwinLogic Strategies, and Jochum Shore & Trossevin, to address the regulatory barriers and opposition it had received since its launch. Due to regulatory hurdles in New York City, the company altered its business model when establishing Lyft on the East Coast of the United States. Lyft’s launch in New York City occurred on the evening of July 25, 2014, and, by the Taxi and Limousine Commission (TLC) and the approval of the Manhattan Supreme Court, only drivers registered with the TLC were permitted to drive Lyft-branded vehicles in New York City.
In August 2014, the company introduced a shared ride concept, which provides cheaper fares.
In December 2017, Lyft expanded into Canada, with operations in the Toronto, Hamilton and Ottawa metropolitan areas.
In March 2018, Lyft partnered with Allscripts to create a platform allowing healthcare providers to arrange rides for patients who lack transportation to appointments. The service would be available to 2,500 hospitals, 180,000 physicians, and approximately 7 million patients. Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike, in November 2018. The company also announced plans to add 28,000 Citi Bikes and expand its service.
In March 2019, Lyft became a public company via an initial public offering, raising $2.34 billion at a valuation of $24.3 billion. The company set aside some shares to be given to long-time drivers.
In March 2020, Lyft acquired Halo Cars which pays drivers to display digital advertisements on their vehicles. In April 2020, Lyft laid off 982 employees and furloughed an additional 288 to reduce operating expenses and adjust cash flows due to the COVID-19 pandemic in the United States. The company continued to offer scooters for rent in San Francisco, while Miami government asked Lyft to halt operations.
In August 2020, Lyft partnered with rental car company Sixt to let users access rental cars. Most of the rental cars are owned and operated by Sixt, with 85 locations in the US. Lyft receives commissions from rentals.
In December 2020, Lyft announced plans to launch a multi-city U.S. robotaxi service in 2023 with Motional. Lyft sold its self-driving car division to Toyota for $550 million in April 2021. The division had partnerships with General Motors, NuTonomy, Ford Motor Company, GoMentum Station, and Magna International. It also owned Blue Vision Labs, a London-based augmented reality startup, acquired in 2018 for $72 million.
In April 2022, Lyft announced an agreement to acquire PBSC Urban Solutions, a Canadian bike-share equipment and technology supplier. In November 2022, the company announced layoffs of approximately 700 employees, or about 13% of its staff.
Competition
Lyft faces competition from: Fasten, Haxi, Uber, Via, and other car service startups. Lyft’s global alliance includes China’s Didi Chuxing, India’s Ola Cabs, and Southeast Asia’s Grab, Go-Jek.
Reception
In 2013, San Francisco Mayor Ed Lee proclaimed July 13 as Lyft Day.
Beyond its fundraising and user adoption numbers, investors and commentators have praised Lyft’s sense of “community”. In May 2013, Scott Weiss of Andreessen Horowitz said the venture capital firm ultimately decided to invest in Lyft because of its strong community and transparency. 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.”
In September 2012, Drew Olanoff of TechCrunch wrote, “You feel like you’re in the car with a friend, and that’s no mistake…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.” In May 2013, Jessica Gelt wrote in the Los Angeles Times, “Lyft’s marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic.” Others have protested the impact of Lyft and its competitors on the taxicab industry.
