Lyft vs. Uber

Battle of David vs. Goliath

In April this year, Lyft received its series D funding of $250M. Meanwhile, Google Ventures put $258M into Uber, its largest deal ever. Google integrates Uber with Google maps(a nice Haymaker at Lyft) and rumors are that in the near future, Google will introduce Uber self-driving cars to the world(if true, this will definitely be a huge uppercut to the chin). But will that be the knock out punch? Only the future will tell.

Though this blog is titled Lyft vs. Uber, I will be focusing more on Lyft’s product. I will explain what I think is Lyft’s competitive advantage, some challenges, and my thought process on how I’d go about solving them. The notes on the right hand side supplement my arguments.

Product Design

Lyft is an easy, affordable, and friendly transportation option that is comprised of two products:

1. The Drivers
2. The Mobile App

The Drivers

I define The Drivers as:

• The Pink Mustache
• The car (the state of the car — clean, dirty?)
• The person driving the car

While you may believe that Lyft’s mobile app is the core of their product — and their software IS important — the crux of their service is the drivers, and they play a crucial role in Lyft’s success. Why? Aside from the fact that Uber has more money and drivers, let me paint a brief picture how fierce the competition is:

• Users have 4 different options: uberX, uberXL, Black Car, SUV.
• Uber is in 36+ cities worldwide.
• Google maps sees approx. 1 billion MAUs(desktop + mobile).
• I’ll let your imagination do the rest of the work ☺.

Tradeoffs

Culture is very important to Lyft. Friendly, the third pillar of Lyft’s description, is it’s biggest competitive advantage. It’s what differentiates Lyft from others. When a ride arrives to the pickup location:

1. First, a customer notices the Pink Mustache, which is cool, unique and refreshing.
2. When the customer hops into the front seat, the driver welcomes her with a friendly fist bump. (vs. Uber where she hops in the back seat)

Pros: I have a great experience every time I use Lyft. The drivers are friendly and genuinely seem to be interested in you. The training is impeccable. Now, why is that important to a customer? The goal of a driver is not only to get you safely to your destination, but also to sell you an experience. One of Lyft’s community managers says:

What makes a Lyft more than just a ride? Magic moments, human connections, and random acts of kindness!

I believe this quote above is Lyft’s greatest asset. Some people find it therapeutic to speak with a friendly driver — remember Taxicab confessions? Furthermore, sitting next to the driver makes the experience even more natural.

Cons: The Pink Mustache sign

Let me be clear, I love the Lyft brand and the sign. My concern is that there’s no consistency within the car fleet. Let me explain:

1. Within 5 blocks anywhere in San Francisco, you’ve probably seen a fleet of cars with the Mustache placed in front of the hood, on top of the car, or on the windshield. I’ve even seen it on the rear windshield.
2. The Bay Area has always been know to be culturally different and liberal and as such a large Pink Mustache in front of a car will likely be appealing. But are other cities in the world as open minded? Will the sign be as appealing to customers and drivers from these cities?

Small Lyft sign

Solution

To follow consistency and uniformity while ensuring a mainstream appeal, I’d have the small sign on the windshield of every car. Unlike the bulky one that is usually seen in front of the hood, it’s easier to remove and carry around with you. And you can easily hide it without the fear of taxi drivers menacing to push you off the road while driving customers. It’s a jungle out there!

Recruiting

Challenge: During a busy hour, a user picks up her smartphone to request a Lyft ride. She looks at her screen and 4 cars are available. She requests a ride and bang! A popover says that drivers are currently unavailable. Suddenly, all cars on the map disappear. Insanity kicks in, the user repeats the process again a least 5 times hoping for a different outcome. Frustrated with getting the same results, she closes the app and calls for an Uber. Yikes!

This is a serious problem because:

1. The user has a bad experience. Lyft was unable to convert her to a customer and risk not getting her back on the app.
2. In urban cities, words go around fast. A frustrated user is bad for business as she’s likely to share her experiences and recommends Uber to her friends instead.
3. Consequently, the drivers now have fewer customers and may decide to work for Uber where they can potentially earn more.

Solution: A few months ago, I had a chance to sit-down with a VC whose firm is actually a Lyft investor. He asked me how I would go about recruiting drivers for Lyft. Here are my answers:

1. Data points: Lyft already knows a driver’s age, gender, and race — I’d go further. I’d be curious to know her profession outside of Lyft? Is she a student? Is Lyft a supplemental income? Why is that important? If I know the background of drivers that my brand attracts, then I know what, who, how and where to market it effectively to activate more drivers.
2. Target Market: Vibrant cities are built around universities. So, a demographic that also resonates with Lyft’s culture are young, dynamic college students who have cars and looking to make some money. Lyft is very flexible, students can work at any time of the day.
3. Driver Incentive Program: Lyft provides insurance to cover liabilities, contingent collision, and injuries — I’d go further. Wouldn’t it be great if a driver was rewarded for her safe driving by reducing her car insurance premium? Lyft and insurance carriers could reward drivers who drive hundreds of miles without any accidents — a program for driver retention.

Why not just pay the drivers more than Uber? I’m not sure that Lyft has the cash flow to do that.

The Mobile App

“A great product is a product that is user/customer centered.”

The Engineer and Design teams have done an incredible job with the app. With the stance that I may be wrong, can I make a few suggestions that we can test out? — As of now, the app is sending mixed messages to users. Its sole responsibility should be to convert a user to a customer by calling a friendly ride. To illustrate my point, below is a step-by-step of 2 use case:

Case A -Step 1

A user opens the app.

A user touches the button on the upper-right corner.

step 2

A user sees a driver sign up flow.

Case B -step 1

A user touches the button on the upper-left corner.

A user sees a vertical navigation with a “Driver mode” switch.

Every time users are looking to request a ride, they may not want to be constantly reminded that they are being recruited — that could be a turnoff. So my hypothesis is: Removing the recruiting form from the mobile app won’t adversely impact recruiting and will improve the user experience.

Implementation: There will be several challenges including 1) building a separate mobile app specifically designed for recruiting and 2) the cost of time and money from Engineering and Design standpoint relatively to other priorities. However, a separate recruiting app would give the Engineering and Design team the flexibility to build social tools for the purpose of virality amongst drivers. Current drivers will be able to invite their friends to become drivers through the Lyft platform. Drivers will be able to notify other drivers of traffic jams, road blocks, and alternatives routes to take.

Risks: Current drivers have grown accustomed to jumping on the consumer app and switching to driver mode. So, the new design may create unexpected friction for current drivers. And potential new drivers may not be aware of the new recruiting app.

Product validation: A/B tests will test out my hypothesis on a small user group. Reviews collected from customers and drivers, user conversion and retention data will be compared between the experiment and control groups. The end results will prove or disprove my hypothesis.

Time series analysis will determine at what rate we are recruiting new drivers compared to the previous process.

Conclusion

Lyft has a faithful growing customer base as long as they keep improving their response time by recruiting more drivers. There are other business models that Lyft can explore. In fact, I’m tinkering with an idea, but I need data to validate its credibility.

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