Lyft versus Uber: San Francisco’s Design District Turf War

Lyft moves in next to Uber “Driver Office.” Marketing havok ensues.

There is a turf war occurring outside my house on the Western side of Potrero Hill in San Francisco. The players are ride-sharing service Uber, and second-to-market Lyft. Both companies are competing to serve the same market — connecting passengers with drivers. And from a marketing design perspective, their differing messages are fascinating.

For background, the current determining point between the two companies in the Bay Area is who has the most drivers. Passengers are abundant and are increasing month over month. The majority of San Francisco passengers are willing to switch carriers based on cost and convenience.

As part of Uber’s recently adopted insurance coverage, all cars in the Uber fleet have to undergo a thorough mechanical inspection. Uber leased a plot of land for this purpose under the freeways of the design district between SOMA, Mission and Potrero. They moved to this “driver’s office” just as they moved into their newly furbished offices on Market Street and received some negative press for being unreachable by drivers. I walk through this district on my way to lunch every day so imagine my surprise when instead of a fleet of black limos waiting for their turn to get inspected, I was greeted by sign-waivers advertising $500 for Lyft drivers, plus a free taco.

As I stood enjoying a taco courtesy of a Lyft representative I reflected on the message being conveyed by the two different companies. On the surface Uber is all about fast and no-nonsense service, whereas Lyft promotes community. And yet Lyft’s leasing of property less than a block from Uber’s unofficial headquarters is a not-so-subtle jab at the larger Uber. Billboard trucks circle the district with signs like “You are more than just a number to us.” According to the Lyft representative, they are getting a lot of sign-ups at that location.

Uber, which was first-to-market, has operations in 128 cities in 37 countries. Lyft currently operates in 60 cities around the US. Uber has recently been evaluated at $17 billion and raised $1.4 billion. That massive war chest, compared to Lyft’s recent fundraising of a not-insubstantial $250 million, puts into doubt that Lyft or other services will be able to outcompete financially. Still, the debate is fierce in San Francisco where both companies are based.

“Community”

The San Francisco Bay Area is a particularly unique market because there is such a demand for drivers. Especially among those who might as soon ride a bike or walk to their destination, using Lyft, where the driver is often personable, is a draw.

Lyft’s message of community is compelling. The company’s tagline is “Your friend with a car” and riders are encouraged to socialize with their passengers. Uber began with high-end black cars, and as suggested by the availability of their offices to drivers, continues to prioritize driving over community. There is likely enough space for both of these companies to continue to expand in San Francisco and other tech.-savvy, social cities (Portland, Boulder, and Austin come to mind). I question Lyft’s message, though, in the San Francisco Design District turf war. The signs and taco are a cute gesture, but offering Uber drivers $500 if they sign up with Lyft too, isn’t sustainable in the face of $1.4 billion in Uber’s coffers. Rather than targeting drivers through financial incentives, maintaining and promoting Lyft’s message is key.

Authenticity Rules

Lyft will have to tread carefully as it goes forward again the formidable Uber, in the Bay Area and elsewhere. With drivers and passengers likely to change companies depending on price and convenience, the question is who do the passengers and drivers trust. In the turf war, Lyft is dabbling with the edge of a distinctly anti-community message. The taco and $500 for new drivers can cut both ways. The underlying message is clear: leave Uber and work for Lyft. Of course, we don’t know how many of those drivers actually continue to drive for Uber but they’ll certainly remember that Lyft tried to bribe them to change carriers. What impacts will that have on drivers’ perception? Similarly, what is the most common association with someone on a street corner waving a sign? Mine is often a sketchy used car lot.

How Do You Translate Your Message

To take a deeper look at what differentiates Lyft and Uber I’ll draw from a different industry: Kaiser Permanente’s Thrive campaign. This campaign has been very well received in California, where the idea of the pursuit of wellbeing is commonplace. We consumers enjoy the idea that a healthcare provider is joining us on this quest. In the Midwest Thrive hasn’t played nearly so well. People don’t think healthcare = health = wellbeing. Kaiser has had to first teach the value of wellbeing, before potential customers can even interpret their message.
Lyft’s message of community will be lost in many parts of the world. A community-focus will work in cities where drivers and riders want community. They’ll have to refine that message if they are going to expand elsewhere. If Lyft is able to translate it’s community message into a language that these hubs can understand, and offer something that Uber or a traditional taxi service cannot, I think they have a very good chance to make it much, much bigger.

Where They Don’t Appear To Be Needed

I recently traveled for work in Buenos Aires, Argentina. Buenos Aires has no need of either Lyft or Uber. The reason being: there are more than ample taxis to go around. This hasn’t always been the case in San Francisco, where prior to Uber’s launch taxis were in very short supply. If either company is going to reach the substantial market of Buenos Aires residents their message will have to be changed to provide something that local taxis don’t. Uber has begun to dabble in such offerings by bringing UberFAMILY (cars with baby seats) and UberRUSH (bike messenger services) to New York City. Offering could also vary depending on the need of a specific region. Regardless, if either company is going to be successful globally it will need to provide tangible benefit well beyond what is currently available.

There’s Room For More Than One

The peer-to-peer ride sharing is industry is here to stay. It remains to be seen whether Uber and Lyft will continue down their cutthroat path or diverge in their offerings. Given the lack of fondness between the two companies, they almost certainly will not reach a mutually beneficial arrangement. It will be very interesting to see how the stories each company tells will result in varying degree of success.