|Transportation network company|
|Founders||Logan Green, CEO
John Zimmer, President
|Headquarters||San Francisco, California, United States|
|Derek Kan, General Manager|
|Services||Taxicab, Vehicle for hire|
|Revenue||$700 million (2016)|
|−$600 million (2016)|
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 18.7 million rides a month. The company was valued at $7.5 billion as of April 2017 and has raised a total of $2.61 billion in funding.
- 1 How it works
- 2 History
- 3 Competition
- 4 Reception
- 5 Political involvement
- 6 See also
- 7 References
- 8 External links
How it works
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 luxury car. 
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.
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.
Although Lyft drivers are classified as independent contractors, Lyft also insures each driver with a $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.)
Lyft was launched in the summer of 2012 by Logan Green and John Zimmer as a service of Zimride, a long-distance ridesharing company the two founded in 2007. Zimride focused on ridesharing for longer trips, often between cities, and linked drivers and passengers through the Facebook Connect application. Zimride eventually became the largest rideshare program in the United States (U.S.).
Green had the inspiration for Zimride after sharing rides from the University of California, Santa Barbara campus to visit his girlfriend in Los Angeles. He had used Craigslist’s ride boards but wanted to eliminate the anxiety of not knowing the passenger or driver. When Facebook opened its API to third-party developers, Green said he thought "Here’s the missing ingredient." Green was introduced to John Zimmer through a mutual friend and the pair initially met on Facebook. The company name comes from the country Zimbabwe, where, during a trip in 2005, Green observed locals sharing minivan taxis. He said, "I came back to the US inspired to create that same form of transportation here." Green had coding experience and was able to develop the site in four months.Zimride launched the first version of the rideshare program at Cornell University, where, after six months, the service had signed up 20% of the campus. By using Facebook profile information, student drivers and passengers could learn about each other.
In May 2013, the company officially changed its name from Zimride to Lyft. The change from Zimride to Lyft was the result of a hackathon that sought a means of daily engagement with its users, instead of once or twice a year.
Transition to Lyft
Whereas Zimride was focused on college campuses, Lyft launched as an on-demand ridesharing network for shorter trips within cities. Similar to Zimride, the app connects drivers with cars to passengers that need rides. Drivers and passengers rate each other on a five-star scale after each ride, and the ratings establish the reputations of both drivers and passengers within the network. In order to take advantage of the Lyft system, clients must set up an account that links directly to a funding source such as a debit card or PayPal account. Once the ride is completed, funds are debited from the funding source. Lyft then retains 20% from drivers who applied before January 2016 and 25% from those who applied starting January 2016 of this total as a commission.
As a brand, Lyft became known for the large pink furry mustaches drivers attached to the front of their cars. Riders were also encouraged to sit in the front seat and fist bump with drivers upon meeting. 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 December 2016, Lyft introduced a new color-changing dashboard indicator called "Amp."
In April 2014, Lyft launched in 24 new U.S. cities in 24 hours, bringing its total to 60 U.S. cities. In August 2014, the company introduced Lyft Line, allowing passengers to split fare on shared rides.
Due to regulatory hurdles in New York City, the company decided to significantly alter its business model to establish Lyft on the East Coast. Lyft’s launch in New York City 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.
In May 2016, Lyft began offering a service to let clients schedule rides up to 24-hours in advance. Also in the summer of 2016, Lyft started to offer riders the ability to make multiple stops during a trip.
In January 2017, Lyft announced it would add 100 U.S. cities, bringing its total to 300 U.S. cities served.
The company announced it grew ride numbers and revenue by fivefold in 2014.
The company said revenue grew 250% to $700 million in 2016, on a loss of $600 million.
Lyft is valued at $7.5 billion. As of January 2016, Lyft had raised more than $2 billion from investors General Motors ($500M), Alibaba, Andreessen Horowitz, Coatue Management, Didi Kuaidi, fbFund, Floodgate, Fontinalis Group, Fortress, Founders Fund, GSV Capital, Icahn Enterprises, Janus Capital Management, K9 Ventures, Mayfield Fund, Prince Alwaleed's Kingdom Holdings Company, Rakuten, Tencent, and Third Point Ventures.
In April 2014, Lyft completed a $250 million Series D financing round led by Coatue Management, Alibaba Group, and Andreessen Horowitz, bringing its total amount raised to $332.5 million. In March 2015, the company received a $530 million investment from a group led by Japanese online retailer Rakuten Inc. In May 2015, Lyft received an additional $150 million in investment, including a $100 million investment from Carl Icahn based on a valuation of $2.5 billion, which brought the total raised to over $1 billion.
On January 4, 2016, Lyft announced a partnership with U.S. automaker General Motors, which invested $500 million as part of a $1 billion fundraising effort. The partnership is designed to help both companies accelerate in the ride-sharing market, as well as the autonomous car arena. In conjunction with GM's investment, Prince al-Waleed bin Talal of Saudi Arabia also made an investment in Lyft which included the purchase of $148 million worth of existing stock from Andreessen Horowitz and Founders Fund.
Regulatory opposition and momentum
Like many peer-to-peer startups, Lyft faces legal and regulatory hurdles and has been criticized by established 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 Uber and Sidecar) and fined each $20,000. However, in 2013 an interim agreement was reached that reversed those actions. In June 2013, Lyft, Uber and Sidecar were served with cease and desist letters by the Los Angeles Department of Transportation. In September 2013, the California Public Utilities Commission unanimously voted to make the agreement permanent, and created a new category of service called Transportation Network Companies, making California the first state to recognize and regulate such services.
The Seattle City Council passed an ordinance in March 2014 that capped Lyft drivers on the road at any given time to 150. As that failed to function with Lyft's model, the company supported a coalition that submitted a referendum containing 36,000 signatures from residents that called for the ordinance to be appealed. Following the signatures, Seattle Mayor Ed Murray worked with Lyft to reach a deal in July 2014 that legalized ridesharing in Seattle.
In the spring of 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.
In June 2014, Colorado became the first state to pass rules for TNCs through the legislative process, when S 125 was signed into law.
In July 2014, the Minneapolis City Council voted almost unanimously to legalize Lyft and other Transportation Network Companies.
In September 2015, Lyft announced a relocation of their customer service operations to Nashville and mentioned that a full relocation would be possible in the future from San Francisco.
In December 2015, Lyft became the first ride-hailing service allowed to pick up passengers at Los Angeles International Airport.
On May 18th after passing of HB 100 by the Texas House and Senate, Lyft announced their planned return to Austin and began communicating with former riders in anticipation
Lyft, like other ride-sharing services, has been criticized by government officials for operating what they consider to be unlicensed taxi services. For example, upon expansion into Virginia in April 2014, the Virginia Department of Transportation levied a $9,000 civil penalty against Lyft for failure to register as a transportation broker. Virginia DoT had previously communicated with the company and informed it that it had to register in order to provide services inside the Commonwealth. In August, state officials reversed their ruling and allowed Lyft to operate in Virginia.
In 2016, Lyft offered promotions to attract public transit customers affected by transit service disruptions. During Washington Metropolitan Area Transit Authority's SafeTrack construction Lyft offered deep discounts in the areas impacted, and after Massachusetts Bay Transportation Authority ended late night service Lyft discounted trips during the overnight times impacted.
Self-driving car research
On May 5, 2016, Lyft and General Motors announced, as part of their partnership, that they planned to begin testing self-driving cars within the next year. They were considering using a self-driving Chevrolet Bolt for this purpose.
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.
- Collaborative consumption
- Online platforms for collaborative consumption
- Sharing economy (commercial peer-to-peer mutualization systems)
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