RIDE-HAILING SERVICE GETS A LYFT, BIZSMART
Ride-sharing underdog upgrades, boosts reach
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 said it would add 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, pinkmustached 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 5 billion passengers in more than 80 countries since 2009. Uber has raised nearly $14 billion in capital since its inception, compared with Lyft’s $2.6 billion. For its part, Uber is doing all it can to keep its lead. The company last 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 behavior.
Yet, the ground that Lyft has been gaining can’t be ignored. By the time Uber’s board ousted abrasive then-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.
To be sure, Lyft was already growing fast before Uber went into self-destruct mode. Lyft’s share of the U.S. ride-hailing market in the past two years grew at double the rate of Uber, rising from 12 percent to just over 30 percent, according to Lyft’s internal metrics.
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 the soft-spoken Green and more animated Zimmer 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 a recent interview at the company’s airy offices in a block-long complex 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.”
Internally, Uber has been making adjustments to treat its drivers and employees better. It recently matched Lyft by letting riders tip drivers on its app. It’s also hired thousands of people to better distribute the workload and started serving its free dinners 90 minutes earlier at its San Francisco headquarters so workers don’t stay as late. “Tiny, tiny symbolism, but it matters to people,” said Liane Hornsey, Uber’s chief human resources officer. The company also recently fired 20 employees after a report by former U.S. Attorney General Eric Holder found rampant misbehavior and urged Uber to clean things up. But problems for Uber continue to linger. Just last week, the company agreed to stop using its app to track people after their rides have ended in response to privacy concerns. 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. “It is so tempting to think Lyft is gaining because people are taking a stand against Uber, but convenience usually trumps morality,” he said. And Uber is usually more convenient because its service still has more drivers than Lyft in most major U.S. cities, Dawson said.