Lyft

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Lyft
Type Private
Industry Transportation Network Company (TNC)
Founded 2012; 2 years ago (2012)
Founders Logan Green, John Zimmer
Headquarters San Francisco, USA
Key people Logan Green, John Zimmer
Website lyft.com

Lyft is a privately held, San Francisco–based American transportation network company. The company's mobile-phone application facilitates peer-to-peer ridesharing by enabling passengers who need a ride to request one from available "community drivers".[1][2][3] Lyft's tagline is "your friend with a car"[4] and the company claims that its service generally costs about 30% less than the price of a similar-length cab ride.[5][6] Lyft drivers are distinguished by a pink, fuzzy mustache placed on the front of their vehicle.

As of April 2014, Lyft operates in 60 US cities, including San Francisco, Los Angeles, San Diego, Sacramento, Seattle, Chicago, New York City, Washington D.C., Boston, Charlotte, Denver, Dallas, Atlanta, Baltimore, Phoenix, Minneapolis/St. Paul, St. Louis, Columbus, Indianapolis, Nashville, Milwaukee, Pittsburgh and Orlando.[3][7][8][9]

Business model[edit]

This company offers the services of a transportation network company.

History[edit]

Lyft’s distinctive pink mustache

Establishment[edit]

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,[10] and linked drivers and passengers through the Facebook Connect application.[11] Zimride eventually became the largest rideshare program in the United States (U.S.)[12] and some Zimride users developed lasting friendships.[13]

Similar to Zimride, Lyft requires all drivers and passengers to sign up with the service through their Facebook account or now with their phone number.[14] Drivers and passengers rate each other on a five-star scale after each ride,[15] and the ratings establish the reputations of both drivers and passengers within the network.[15] Unlike traditional taxis, Lyft drivers do not charge fares and instead received "donations" from their passengers.[16]

In May 2013, Green and Zimmer officially changed the name of the company from Zimride to Lyft.[17] In June 2013, Lyft completed a US$60 million Series C venture financing round led by Andreessen Horowitz, increasing the total amount raised to US$83 million—the other investors were Founders Fund, Mayfield Fund, K9 Ventures, and Floodgate.[18][10] In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, to enable the company to focus exclusively on the growth of Lyft.[19]

A promotional stunt was run by Lyft in November 2013, whereby drivers dressed in zombie costumes on Halloween. The promotion only involved 50 San Francisco-based drivers, who also distributed candy and Lyft discount codes.[20] During this month, the company also announced that it planned to discard its donation-based system in the state of California, after a decision from the California Public Utilities Commission (CPUC) rejected the claim that payment for Lyft's transportation services is voluntary for passengers.[1]

In late 2013, Lyft trialled the "Prime Time Tips" concept in the city of Los Angeles, providing drivers with a surcharge of up to 25 percent during peak traffic hours. The company explained that the surcharge concept aimed to provide Lyft drivers with "a greater incentive to drive when the community needs them most".[1]

Following the launch of the "Happy Hour" discount feature on March 18, 2014,[21] a US$250 million funding round was announced by Lyft on April 2, 2014, with pre-existent investors providing further support to the company. New investors were also secured for the funding round and were identified as Coatue, Alibaba Group and Third Point Management.[22]

Due to regulatory barriers in New York City, the company eventually decided to significantly alter its business model to establish Lyft in the East Coast location. The relaunch of the company, which had previously attempted to operate in the state of New York, occurred on the evening of July 25, 2014 and, in accordance with 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. Lyft's signature pink mustaches remained in use for the relaunch.[23]

Lobbying firm[edit]

To address the regulatory barriers and opposition that Lyft has received since its launch, the company employed the services of two lobbying firms with strong links to the Republican Party, an action that was revealed in disclosure forms filed with the United States Senate in April 2014. Lyft's engagement of the two firms—TwinLogic Strategies and Jochum Shore & Trossevin—occurred six months after ridesharing competitor Uber hired a lobbying firm, with both occurring during a period in which ridesharing companies faced intense pressure from municipal boards and state legislators throughout the U.S.[24]

Safety[edit]

Lyft identifies the following screening processes for the purpose of ensuring safety:

  • Department of Motor Vehicle and personnel-type criminal background checks[15]
  • In-person interviews by Lyft employees[15]
  • Vehicle inspections and about a one-hour training and safety session[15]
  • Drivers must be 21 years or older and have had a US driver's license for more than 1 year [25]
  • Zero tolerance drug and alcohol policy[26]

Although Lyft drivers are classified as independent contractors,[27] Lyft also insures each driver with a US$1 million "excess" per-occurrence liability policy.[28] Any driver averaging less than a 4.5 star rating by users is dropped from the service.[16] The company claims that its safety precautions, as well as a community focus, has led to a trustworthy reputation, whereby the majority of Lyft passengers are females aged 18 to 35.[29]

Operation[edit]

Riders must download the Lyft app onto their iPhone or Android-based phone, sign in through Facebook Connect, and as of summer 2014 they can use their phone numbers to sign up, and then they enter their info and credit card details.[16] Upon opening the app, a map displays the locations of the nearest Lyft drivers. After a request is made,[30] the app shows the driver's name, the ratings of previous passengers, and photos of the driver and car.[16] You can track the driver coming to you from within the App (GPS on) and you can even zoom in on the vehicle as it's on its way.

Regulatory issues in the United States[edit]

As of July 2014, Lyft continues to negotiate legislative and regulatory issues, and has been criticized by established commercial enterprises, such as taxi services, and government bodies.[15]

California[edit]

In the second half of 2012, the CPUC issued a cease and desist letter to Lyft, as well as ride-share companies Uber and Sidecar, and fined each US$20,000; however, a 2013 interim agreement reversed the Commission's action.[31] In September 2013, the CPUC unanimously voted to make the agreement permanent, creating a new category of service called "Transportation Network Companies" (TNC) to cover Lyft, UberX, Summon, and Sidecar, making California the first state to recognize such services.[32] As part of the September 2013 ruling, the CPUC also rejected Lyft's business model, whereby "payment for rides arranged through their apps is voluntary," explaining that it believes the company is engaged in compensation-based transportation. Lyft subsequently informed the media that it planned "to move away from a donation-based model in California".[1]

A cease and desist letter was sent to Lyft from the San Francisco International Airport (SFO) in March 2013, explaining that the airport is operated by the City and County of San Francisco and the Airport Commission, and Lyft does not possess a permit to operate on SFO premises. Similar to the CPUC issue, the employment of community drivers who are not licensed by the San Francisco Municipal Transportation Agency or the California Public Utilities Commission was the salient concern.[33] Airport Director John Martin said in May 2014 that Lyft was able to apply for a permit in April 2014, but the application was not received by the SFO.[34] In June 2014, Lyft was a cosignatory to a letter sent to San Francisco Mayor Ed Lee, calling upon him to facilitate a meeting with SFO representative, who had not responded to requests from Lyft. While Lee is an open supporter of TNCs such as Lyft, his response to the letter stated that he decided to defer the matter to "highly respected Airport Director John Martin and the Airport Commission."[35]

In June 2013, Lyft, Uber, and Sidecar were served with cease and desist letters by the Los Angeles Department of Transportation, but all three companies continued to operate and offer their services in the city of Los Angeles.[36][37]

New York[edit]

On July 9, 2014, two days before Lyft's planned debut in New York City, the TLC declared Lyft an "unauthorized service", as the company did not have an operation agreement with regulators to demonstrate compliance with "safety requirements and other licensing criteria" in the city.[38] Additionally, a cease-and-desist letter was received from the New York State Department of Financial Services, in which the agency stated:

Lyft has not complied with TLC's safety requirements and other licensing criteria to verify the integrity and qualifications of the drivers or vehicles used in their service, and Lyft does not hold a license to dispatch cars to pick up passengers.[39]

The company responded by stating that their "safety standards…are more strict than what New York City taxi cabs or hired vehicles go through" and that they still planned to start service in the city by July 11,[38] and Zimmer informed the TechCrunch publication on July 10, 2014 that the planned launch event, to be held in Bushwick on July 11, would proceed.[39] However, city officials threatened to seize Lyft vehicles and took the company to New York Supreme Court on the day of their planned launch. The company then reversed course, promising "to work on a new version of Lyft that is fully licensed by the TLC, and we will launch immediately upon the TLC's approval".[40]

On July 25, 2014, Lyft announced the resumption of the New York City operation, albeit as a service that does not qualify as ride-sharing due to TLC regulations. The company also announced that services in Rochester and Buffalo would be suspended as of August 1, 2014 pending the resolution of insurance and regulatory issues. The company's blog post states that the suspension will remain in place "while we work with the Attorney General’s Office and Department of Financial Services to align New York State’s insurance laws and regulations with emerging technologies of the 21st century." The company informed the media that it still intends to eventually transform their services in New York so that ride-sharing becomes available to customers in the state.[23]

Virginia[edit]

Upon expansion into Virginia in April 2014, the Virginia Department of Motor Vehicles levied a US$9,000 civil penalty against Lyft for failure to register as a transportation broker. The Department previously communicated with the company, informed management that Lyft needed to register to provides services inside the Commonwealth.[41]

Reception[edit]

Scott Weiss, of Andreessen Horowitz, said that the decision to invest in Lyft was ultimately based on the company's strong community and transparency: "Lyft is a real community—with both the drivers and riders being inherently social—making real friendships and saving money."[18][42] 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."[43] The Los Angeles Times' review reads: "Lyft's marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic."[44]

Like other ride-sharing services, Lyft has received criticism from state government officials in multiple states for operating a perceived "unlicensed" taxi service. The most vocal opponents in the U.S. have been taxi and limousine operators and municipal taxicab commissions.[45]

References[edit]

  1. ^ a b c d Patrick Hoge (18 November 2013). "Lyft and Sidecar replace voluntary donations with set prices". San Francisco Business Times. American City Business Journals. Retrieved 13 July 2014. 
  2. ^ Alsever, Jennifer (3 Oct 2012). "The "mega trend" that swallowed Silicon Valley". CNN Money. Retrieved 17 July 2013. 
  3. ^ a b Lawler, Ryan (31 May 2013). "Lyft Hits The East Coast With A Launch In Boston, Its First Big Post-Funding Expansion City". TechCrunch. Retrieved 17 July 2013. 
  4. ^ a b Farr, Christina (23 May 2013). "Lyft team gets $60M more; now it must prove ride-sharing can go global". VentureBeat. Retrieved 17 July 2013. 
  5. ^ Gannes, Liz (22 May 2012). "Zimride Turns Regular Cars Into Taxis With New Ride-Sharing App, Lyft". All Things D. Retrieved 17 July 2013. 
  6. ^ Fehrenbacher, Katie (22 May 2012). "Zimride launches mobile real time ride sharing via Lyft". Gigaom. Retrieved 17 July 2013. 
  7. ^ Baker, Chris (2 July 2013). "Is Lyft Too Cool to Go National". Fast Company. Retrieved 17 July 2013. 
  8. ^ "Mayor Kevin Johnson Welcomes Lyft to Sacramento". Lyft Blog. 8 November 2013. Retrieved 8 November 2013. 
  9. ^ "Lyft Launches 24 Cities in 24 Hours (on the 24th)". Lyft Blog. 24 April 2014. Retrieved 29 April 2014. 
  10. ^ a b Green, Tomio (23 May 2013). "Lyft Raises $60 Million As Ride Sharing Competition Heats Up". Forbes. Retrieved 17 July 2013. 
  11. ^ Kincaid, Jason (25 Mar 2009). "Zimride: A Carpooling Startup That Actually Makes Money". TechCrunch. Retrieved 17 July 2013. 
  12. ^ Boyd Myers, Courtney (16 Jun 2012). "2012: The Summer of Ridesharing with Zimride, Ridejoy, Carpooling and more". The Next Web. Retrieved 17 July 2013. 
  13. ^ Lyon, Cody (3 Aug 2012). "Zimride expands its ride-share business". Upstart Business Journal. Retrieved 17 July 2013. 
  14. ^ Associated Press (4 Feb 2013). "Ride-hailing apps offer new way around town". USA Today. Retrieved 17 July 2013. 
  15. ^ a b c d e f Gustin, Sam (23 May 2013). "Lyft-Off: Car-Sharing Start-Up Raises $60 Million Led by Andreessen Horowitz". Time Magazine. Retrieved 17 July 2013. 
  16. ^ a b c d Lane, Patrick (27 Oct 2012). "A Sense of Place". The Economist. Retrieved 17 July 2013. 
  17. ^ Yeung, Ken (12 Jul 2013). "Lyft founders sell Zimride, their carpooling startup, to Enterprise Rent-a-Car's parent company". The Next Web. Retrieved 17 July 2013. 
  18. ^ a b Lagorio, Christine and Markowitz, Eric (23 May 2013). "Lyft's New $60M: How the Deal Went Down". Inc. Magazine. Retrieved 17 July 2013. 
  19. ^ Gannes, Liz (12 Jul 2013). "Lyft Sells Zimride Carpool Service to Rental-Car Giant Enterprise". All Things D. Retrieved 17 July 2013. 
  20. ^ Kurt Wagner (1 November 2013). "Lyft Zombies Rise From Dead to Give Out Candy, Spooky Rides". Mashable. Mashable. Retrieved 13 July 2014. 
  21. ^ Kurt Wagner (19 March 2014). "Lyft Announces Happy Hour, the Opposite of Surge Pricing". Mashable. Mashable. Retrieved 13 July 2014. 
  22. ^ Kurt Wagner (3 April 2014). "Lyft Raises $250 Million for Domestic, International Expansion". Mashable. Mashable. Retrieved 13 July 2014. 
  23. ^ a b CHRISTINE LAGORIO-CHAFKIN (25 July 2014). "Lyft in New York City: Let's Try This One More Time". Inc. Monsueto Ventures. Retrieved 27 July 2014. 
  24. ^ Christina Wilkie (16 April 2014). "Lyft Prepares To Fight Ride Share Regulation By Hiring GOP-Linked Lobbyists". The Huffington Post. Retrieved 13 July 2014. 
  25. ^ https://www.lyft.com/drivers
  26. ^ "Lyft-Off: Celebrating One Year Together". Lyft Blog. 23 May 2013. Retrieved 17 July 2013. 
  27. ^ "Lyft Terms of Service". Lyft Terms. 30 April 2013. Retrieved 17 July 2013. 
  28. ^ McBride, Lisa (9 Jul 2013). "Lyft enthusiasts rally to save LA rideshares". ABC News Los Angeles. Retrieved 17 July 2013. 
  29. ^ Primack, Dan (23 May 2013). "Why Andreessen Horowitz gave a $60 million Lyft". Retrieved 17 July 2013. 
  30. ^ Lawler, Ryan (18 Oct 2012). "Ride-Sharing Service Lyft Adds A Waitlist, Cancellation Fee, And More Drivers To Meet Growing Demand". Retrieved 17 July 2013. 
  31. ^ Lawler, Ryan (31 Jan 2013). "A Day After Cutting A Deal With Lyft, California Regulator Reaches An Agreement With Uber As Well". TechCrunch. Retrieved 17 July 2013. 
  32. ^ Geron, Tomio (9 Sep 2013). "California Becomes First State To Regulate Ridesharing Services Lyft, Sidecar, UberX". Forbes. Retrieved 23 Oct 2013. 
  33. ^ Ryan Lawler (4 April 2013). "SFO Serves Cease-And-Desist Letters To Keep Ride-Sharing Companies From Operating At The Airport". TechCrunch. AOL Inc. Retrieved 13 July 2014. 
  34. ^ Patrick Hoge (27 May 2014). "Uber, Lyft and Sidecar ask Mayor Lee to intervene in dispute with SFO". San Francisco Business Times. American City Business Journals. Retrieved 13 July 2014. 
  35. ^ Sarah Buhr (5 June 2014). "One Year Later, SFO Still Refuses To Meet With Uber, Lyft And Sidecar To Discuss Dispute". TechCrunch. AOL Inc. Retrieved 13 July 2014. 
  36. ^ Tuttle, Brad (27 Jun 2013). "Rideshare Battle Shifts to L.A.: City Tells Uber, Lyft, SideCar to Stop Picking Up Riders". Time. Retrieved 17 July 2013. 
  37. ^ Rodriguez, Salvador (2 Jul 2013). "Lyft expands to San Diego amid cease-and-desist order in Los Angeles". Los Angeles Times. Retrieved 17 July 2013. 
  38. ^ a b Isaac, Mike (2014-07-10). "Taxi Commission Blocks Lyft's Entry Into New York City". Bits Blog. Retrieved 2014-07-10. 
  39. ^ a b CHRISTINE LAGORIO-CHAFKIN (10 July 2014). "Prior to NYC Launch, Lyft Tries Negotiating With Regulators". TechCrunch. AOL Inc. Retrieved 13 July 2014. 
  40. ^ http://www.nydailynews.com/new-york/lyft-delaying-nyc-launch-car-hailing-service-article-1.1864010
  41. ^ Dave Forster (29 April 2014). "Hampton Roads gets a Lyft; defiant company gets fine". OnlinePilot.com. The Virginia Pilot. Retrieved 13 July 2014. 
  42. ^ Weiss, Scott (23 May 2013). "It's Time for Lyft off!". A16Z (The Scott Weiss Blog). Retrieved 17 July 2013. 
  43. ^ Olanoff, Drew (17 Sep 2012). "Lyft's Focus On Community And The Story Behind The Pink Mustache/". TechCrunch. Retrieved 17 July 2013. 
  44. ^ Gelt, Jessica (17 May 2013). "The Enabler: Getting a Lyft without a cab". Los Angeles Times. Retrieved 17 July 2013. 
  45. ^ Wilkie, Christina (16 April 2014). "Lyft Prepares To Fight Ride Share Regulation By Hiring GOP-Linked Lobbyists". The Huffington Post. Retrieved 20 April 2014. 

See also[edit]

External links[edit]