||This article appears to be written like an advertisement. (September 2013)|
|Founder(s)||Logan Green, John Zimmer|
|Headquarters||San Francisco, USA|
|Key people||Logan Green, John Zimmer|
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. Unlike traditional taxis, Lyft drivers do not charge fares but instead receive "donations" from their passengers. Lyft's tagline is "your friend with a car." According to the company, Lyft generally costs about 30% less than the price of a similar-length cab ride. Lyft currently operates in 19 US cities, including San Francisco, Los Angeles, San Diego, Sacramento, Seattle, Chicago, Washington D.C., Boston, Charlotte, Denver, Dallas, Atlanta, Baltimore, Phoenix, St. Paul, St. Louis, Indianapolis, Nashville, and Pittsburgh, with plans to expand both domestically and internationally.
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. Zimride focused on ridesharing for longer trips, often between cities. Zimride helped build trust among drivers and passengers by facilitating rides through Facebook Connect. This trust helped increase ridesharing's popularity, and ultimately propelled Zimride to become the largest rideshare program in the United States. In doing so, Zimride achieved Green and Zimmer's goals of helping travelers save money, reducing carbon dioxide emissions, and helping bring communities together, as some Zimride users even developed lasting friendships.
Lyft was created by Green and Zimmer to bring the benefits of ridesharing to drivers and passengers traveling locally within cities. From their experience with Zimride, Green and Zimmer realized that 80% of seats in cars on the road are empty.
Similar to Zimride, Lyft requires all drivers and passengers to sign up with the service through their Facebook account. Drivers and passengers rate each other on a five-star scale after each ride. The ratings serve to establish driver and passenger reputations within the network. Lyft aims to build a fun community through, among other things, affixing a fuzzy pink mustache to the front of Lyft cars, which the company says represents a smile. 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.
Since its launch, Lyft has exploded in popularity, growing to more than 100,000 registered users and facilitating more than 30,000 rides per week within its first 12 months. The service has more than 300 drivers in San Francisco alone, who report earning as much as $30 to $35 an hour.
In May 2013, Green and Zimmer officially changed the name of the company from Zimride to Lyft. 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. In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, for the primary purpose of enabling the company to focus exclusively on the growth of Lyft.
One key to Lyft's success has been establishing trust among its users. Lyft claims that its safety precautions are more stringent than those performed by taxi and limousine companies, and that it only accepts 6% of its driver applicants. In addition to requiring every driver to join Lyft through their personal Facebook account and subjecting drivers to a five-star rating from passengers following each ride, the company carefully vets potential Lyft drivers through the following screening processes:
- Department of Motor Vehicles and criminal background checks
- In-person interviews by Lyft employees
- Vehicle inspections and a two-hour training and safety session
- Drivers must be 23 years or older and have had a driver's license for more than 3 years
- Zero tolerance drug and alcohol policy
Although Lyft drivers are classified as independent contractors, Lyft also insures each driver with a $1 million per-occurrence liability policy. Any driver averaging less than a 4.5 star rating by users is dropped from the service. The company believes that these safeguards, as well as its community focus, account for the facts that the service has earned the trust of its users and that the majority of its passengers are females aged 18 to 35.
To request a Lyft car, riders must 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. 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, the app shows the driver's name, his or her rating by past passengers, and photos of the driver and their car. Next, the Lyft driver will arrive and likely greet the passenger with a welcoming fistbump. After the ride is complete, payment is made through the app. The requested payment includes a pickup fee and a ride fee based on time and distance. The cost per mile and cost per minute vary by city, with a $5 minimum and a $5 cancellation fee. The passenger can increase or decrease the dollar amount by tapping a virtual pencil to edit the donation. The company takes a 20% cut of the fare. Finally, a passenger must rate the driver before he or she can request another Lyft. Drivers also rate passengers to help prevent abusive or unruly passengers, which increases driver safety.
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, including taxi services. 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 that reversed those actions. 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.
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.
Results and reception
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 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." Techcrunch wrote, "You feel like you're in the car with a friend, and that's no mistake." 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." The Los Angeles Times wrote, "Lyft's marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic."
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