Why Lyft is here to stay
And why the company’s unique culture could be its best defense against Uber
“Are you an Uber person or a Lyft person?” It’s a question I hear more and more these days as the two ridesharing companies battle for supremacy in the race to disrupt the U.S. taxi market in cities across the country. And nowhere is the battle fiercer than San Francisco, where a recent Fortune article reported that taxi rides declined a full 33% in 2013 versus the previous year as a result of ridesharing companies stealing market share. While the war between Uber and Lyft is now playing out in more than a dozen cities across the country, the front lines remain here in the Bay Area where the war began, and both companies recognize what’s at stake. If you need further convincing, just look at what Uber has done to its UberX rates recently, or ask any Lyft driver how many times they’ve had a “passenger” pitch them on switching over to Uber.
Since Uber and Lyft are local marketplaces, which often trend toward winner-take-all in any given city, one might suppose the smart money is on Uber to run its smaller, more mustachioed competitor out of town. After all, while Lyft raised a sizeable $60M round led by Andreessen Horowitz last spring, Uber’s war chest is more than five times as large after its most recent $361M round led by Google Ventures. And if Uber can’t simply crush Lyft by outspending it, then it seems determined to cut it off at the knees by cornering the supply of qualified drivers, a strategy it has pursued with some success in the last six months. Sidecar, another once legitimate contender for ridesharing supremacy, seems to have already lost its battle against the mighty Uber. So is there really any reason to believe that Lyft won’t eventually suffer the same fate?
Yes. And here’s why.
The key to Lyft’s salvation lies in that now familiar question: “Are you an Uber person or a Lyft person?” The fact that there are “Uber people” and “Lyft people” shows just how different these companies are. And the fact that they are so different is remarkable. After all, what could be more basic than getting a passenger from point A to point B? Yet while Uber and Lyft ostensibly provide the same service, offering consumers a long overdue alternative to taxis, they offer this service in materially different ways.
Uber is efficient, boasting a sophisticated dispatch algorithm, a best-in-class data science team, and an elegant surge pricing model that dynamically matches supply and demand (all while netting the company extra profits on weekends and holidays). Lyft is irreverent, making every ride an experience with its pink mustaches and “lyftsagrams.” Uber is professional, preferred by those who require space to get work done or who want to ride around in dignified silence. Lyft is playful, promising riders a smile and a lively conversation spurred on by whatever zany piece of “flair” a driver has decked out her car with. Uber is consistent, with its flagship black car service and UberX fleet made up predominantly of neutral colored sedans like the Toyota Prius or the Honda Civic. Call for a Lyft and you don’t know what the hell you’re going to get, but you can bet it’ll have a story attached to it.
All of these characteristics can be traced to one fundamental difference between the two companies: Uber puts technology first while Lyft puts people first.
Think about it. What is Uber most famous for? It’s stunningly simple app, seamless user experience, and elegant algorithms. If you close your eyes when stepping into an Uber, you might not even notice there is a human behind the wheel at all (and if Google delivers on autonomous vehicles then soon there might not be). Meanwhile, what is the first thing that happens to you when you step into a Lyft? You get a fist bump from your friendly neighborhood Lyft driver. You can’t avoid the human connection even if you want to, which is why most who don’t want to use Uber.
None of this is to say that one company is better than the other. Although it’s probably clear that I’m a big fan of Lyft, that doesn’t mean I don’t think Uber is a great service. Any company that would surprise members by offering to deliver Christmas trees in December is OK in my book. I’m not even saying that Lyft will ultimately see greater success. If I had to guess, Uber will end up being the larger company, in part because its utility-based value proposition is easier to scale than Lyft’s experience-based service. It’s also important to acknowledge that just being different will not be sufficient to ensure Lyft’s long-term survival — given Uber’s scale and efficiency, if it can drive prices down far enough then even the most enthusiastic Lyft supporters might be tempted to switch. But if Lyft can continue leveraging its unique culture and demonstrated core competency for encouraging human interaction in fun new ways, I believe it can carve out its own defensible position in the ridesharing economy.
And let’s be honest. Whether you’re an Uber person or a Lyft person, both services are a hell of a lot better than taking a taxi.
