Lyft seizes opportunity as Uber tries to outrun troubles

SAN FRANCISCO — When management upheaval, allegations of corporate espionage, and revelations of sexual harassment sent Uber into a public relations sinkhole, its long overshadowed rival Lyft shifted into overdrive.

The company seized the opportunity to recruit disillusioned drivers so it could be more responsive to passengers searching for a ride-hailing alternative to Uber. It upgraded its smartphone app, stepped up marketing efforts to attract more riders and expanded its U.S.-only service into 160 more cities for a total of about 350.

On Thursday, Lyft made a big expansion move by announcing that it is adding statewide coverage to 32 states, bringing its total to 40.

The aggressive tactics cast the much smaller Lyft in a new light. After five years of being content in its role as the fun-loving, pink-moustached underdog of ride hailing, Lyft is proving to be a wily opportunist and a more imposing threat to Uber.

But a huge chasm still separates the foes in terms of financial resources, ridership and breadth of operations. While Lyft’s rides are in the millions per year and only in the U.S., Uber makes 10 million trips per day worldwide and has carried more than five billion passengers in over 80 countries since 2009.

For its part, Uber is doing all it can to keep its lead. The company this week hired Expedia CEO Dara Khosrowshahi as its top executive. And while it concedes that this year’s missteps have slowed its growth, it says ridership is still rising because customers value the service. It’s in the midst of self-proclaimed “180 days of change” in an effort to alter a culture that fostered rapid growth but also encouraged bad behaviour.

Yet the ground that Lyft has been gaining can’t be ignored. By the time Uber’s board ousted abrasive CEO Travis Kalanick in June, Lyft had more than doubled its ridership from the first six months of last year. At the end of June, it had passed 2016’s full-year ride total of 162.5 million.

Logan Green and John Zimmer, Lyft’s low-key 33-year-old founders, insist they haven’t done much except adhere to a belief that passengers should be treated like guests at a friendly hotel or even Disneyland. Both dress casually and blend into the headquarters’ workforce. While they are careful not to gloat, they concede that the turmoil at Uber is accelerating Lyft’s growth.

“As we get service levels to parity and pickup times are equal, people prefer using Lyft,” Green said in an interview at the company’s offices near San Francisco Bay.

“They like that we treat our drivers better. They like that we treat our customers better. And they like that we have a brand that sort of stands for taking care of people, where Uber has done a lot to build the opposite type of brand.”

Lyft’s growth probably has more to do with customer demand for service than a backlash against Uber, according to analyst Jan Dawson of Jackdaw Research.