Lyft: Offering Ridesharing facility!
What Is Lyft?
San Francisco-based Lyft is mobile phone application that offers on-demand ridesharing facility by connecting passengers who need a ride with drivers who have a car.
The Lyft cars can be recognized by its signature pink moustaches. They earlier were placed just above the number plate on the front, and now have evolved into a smaller pink moustache on their dashboards and are called ‘Glowstache.’
After every ride, drivers and passengers rate each other on a five-star scale. These ratings help to create the reputations of both drivers and passengers within the network.
Lyft offers three types of rides: -
- Lyft: – The original ride offered by the company. A personal ride that is available nationwide.
- Lyft Plus is a six-passenger ride
- Lyft Line is a cheaper ride for ridesharing as compared to the earlier two. It is presently available in San Francisco, Los Angeles, Austin, New York City, Boston and Chicago.
Its functioning is pretty simple. If you wish to use their service, all you need to do is: -
- Download the Lyft app,
- Sign-up with the necessary information like – personal details, valid phone number, and valid form of payment mode (credit card, link to Google Wallet or PayPal account).
- Add your hometown, music preferences and other details to your profile, which would help you to connect with the driver or passenger.
- Requests a ride using the app, from a nearby driver
- Once the ride is confirmed, the app will show the driver’s name, their ratings by past passengers, and photos of the driver and their car
- Lastly, after you reach your destination, pay for the ride and rate each other.
Talking about the drivers –
One of important principles of Lyft is to create and maintain trust among its users. And to do so they make sure to leave no table unturned. All their drivers have to undergo a range of screening processes which includes: -
- A driver must be 21 years or older and must also have a driver’s license for more than 1 year
- Their records are confirmed with the Department of Motor Vehicle, National sex offender registries, and thorough Criminal background checks are also performed.
- The records for the last seven years are checked from the national and county-level databases
- Face-to-face interviews with current Lyft drivers are also conducted
- Lyft also has a Zero-tolerance drug and alcohol policy
- And lastly, any driver averaging a low rating by users is dropped from the service.
And on the other end, even though Lyft drivers are classified as independent contractors, Lyft still makes sure that they are secured too. The company insures each driver with a $1 Mn commercial liability policy.
What Kind Of Strategies, Partnerships & Revenue Models Have They Adopted?
To begin with – as we already know obviously, their model is very similar to that of Uber, however, the main difference here is that Lyft has avoided the headaches and hang-ups of cabs and limousines themselves.
Instead, Lyft’s model acts as a medium to connect users who have cars or car-seats to share, with other users who are looking for a cheaper and more convenient modes of rides.
Lyft has very strategically yet evidently has narrowed down to the group of Millennials as their targeted market segment. According to the West Midland Family Center, a Millennial is the age group that falls within the birth range from 1977 to 1994.
This is the age group which believes in the culture and posses core values of being social, being a member of the global community and also are the ones that mainly use technology in their daily lives.
Lyft believes that this is the perfect age group for them, since they share various distinct parallels with the company. Not only would they be the right match for being an employee for this company, but would greatly help them as a consumer to generate profits.
To satisfy this target audience well, Lyft attempts to provide the best social experience through their service.
Lyft has maintained certain strategically formed ideologies that has helped them come this far. Some of these include their consistent pricing, nicer drivers which include a majority of women, etc….
On the pricing front, Lyft has created and maintained a fixed rate system that has an initial flat cost of service, post which, an additional cost per mile of ride is charged. This of course, varies in different areas of the United States depending on several factors.
In an attempt to strengthen themselves globally against the rising Uber, more recently, they have got into a strategic partnership with four of its regional rivals in a bid for more scale and service continuity, and to work together on technology and services. This includes Didi Kuaidi (China), Ola (India) and GrabTaxi (South East Asia).
Talking about their marketing strategies –
Lyft spends more than 60% of its revenue on marketing! Lyft uses a unique strategy wherein it has presented itself as a model which is about “creating new friendships in a car ride that lasts less than 20 minutes”!
Their strategy largely relies on word of mouth. Initial promotions aside, of course!
They promote the features of a standard Lyft car on Twitter, Facebook, Instagram and other social media platforms, which gives a feel-good-factor experience for the non-users to join Lyft. Later, depending on the customer’s satisfaction, they spread the word amongst their circle on social media or by word-of-mouth.
They create some very intelligent content, which is aimed right for the heart of a person. For example: their website has a page called ‘Lyft Stories’. It is a micro-blogging page which speaks about real-life user experiences. Their Facebook and Twitter pages are equally human-story-centric as the rest of their digital marketing channels.
Majorly, all their promotion is centralized around social media. Slick marketing, puns, eye-catching visual ads, clever slogans, etc., basically, story driven content! They also use a referral system offering credits and discounts, to divert traffic to their pages.
To sum it all – Lyft uses a 5 step marketing formula to get noticed: -
- Talk about your USP’s
- Understand the mind of your target audience and strategize accordingly.
- Give them a reason to remember you. A Memorable Experience!
- Be an opportunist. Capitalize on the trails that have already been blazed
- Build Communities
Who Leads The Brand?
The brand is currently led and cofounded by two people ‘Logan Green’ and ‘John Zimmer’. They currently lead a management team which includes – Boris Korsunsky (Engineering Manager), Paul Thompson (Sr. Driver Communication Manager), David Estrada (VP of Government Relations) and Amit Patel (Director of Enterprise Partnerships).
LOGAN GREEN – CEO
Logan Green is the Co-founder and CEO of Lyft, which he had founded along with John Zimmer in 2012.
Logan now lives with his wife in Menlo Park in California, but unlike the recent generation of cofounders – he didn’t hold any fancy degree when he had started off. Rather, he had only completed his education with B.A. in Business Economics from the UCSB (University of California, Santa Barbara) in 2006, before which, he had attended New Roads High School in Santa Monica, California.
While he was a student, Green had not only created ‘The Green Initiative Fund’, but had also served as a board member for the ‘Isla Vista Recreation and Park District’ and ‘Santa Barbara Metropolitan Transit District’ where he was also known to be the youngest director as well.
Post these stints, Logan had moved on to work with UCSB as a Sustainability Director from August 2007 to February 2008.
In 2007, alongside John Zimmer, Green founded Zimride: a ridesharing platform that coordinated carpools, especially across college campuses.
Now, he was someone who deeply believed in solving problems, and while he was in his growing up days in Los Angeles, he had seen traffic as a pain-point which had been pestering people since a long time. Hence in an attempt to solve the transportation flaws, Logan had started a car-sharing program that let users unlock cars with radio-frequency identification within the UCSB campus. The program had over 2,000 people on campus sharing four cars.
He along with his co-founder John Zimmer was also named as the finalists of America’s Best Young Entrepreneurs by Business Week in 2009.
JOHN ZIMMER – PRESIDENT
John Zimmer is the cofounder and President of Lyft Inc, which he had co-founded along with Logan in 2012.
He spent most of his childhood in Greenwich in Connecticut where he grew up. He has completed his graduation from the Cornell University in Hotel Administration in 2006 and very few people are aware that, while he was at it, he was also a member of the Quill and Dagger society and Sigma Pi Fraternity as well.
Post his graduation, John started his career with ‘ESPN’ as a Summer Analyst in 2004.
Although this stint did not long for more than a year, but it gave him enough experience to move on to working with ‘Lehman Brothers’ as an Analyst in real estate finance in New York City.
While he was at Lehman Brothers, John got the opportunity to create real estate models in Microsoft Excel. Interestingly, he had left Lehman Brothers just three months before it declared bankruptcy in 2008.
Post which he diverted all his focus on Zimride, which they had founded in 2007, and later went on to become Lyft.
How Has Their Growth Been So Far?
To begin with, let’s give you a short brief into the backstory of Lyft.
Lyft was launched in the summer of 2007 as a service of Zimride, which was a ridesharing company across college campuses.
The basic idea of Zimride was to offer ridesharing services for longer trips, often between cities, and used to act as a medium between the drivers and passengers through the ‘Facebook Connect application’.
Logan and John lived in different cities and were introduced by a mutual friend on Facebook. Logan had posted details about his new company called “Zimride,” which had got the interest of John who was longing to start something on similar lines.
Since this idea sounded like a perfect opportunity to both, Logan flew out to New York within a week’s time of being introduced and met John.
Having done that, Logan developed the site in a matter of four months with his basic coding experience and launched the first version of the rideshare program at Cornell University.
In just six month’s time, more than 20% of the campus had signed up for the service and by April of 2012 they also had reached to a point where they managed to raise their first round of funding worth $7.5 million.
By now they had facilitated over 26,000 carpools, had completed more than 100 million miles of travel, had saved $50 million+ in vehicle operating expenses, and had a staffing of about 29 employees.
Their service was now actively available at over 125 universities which included the Cornell, UCSB, University of Minnesota, UCLA, UCSF, Harvard, University of Michigan, and many more…
In 2012, they launched Lyft, which offered similar services like Zimride, but was made available to the masses other than college campuses in general.
The name Zimride was officially changed to Lyft in May 2013, post which, Zimride (the earlier version) was also sold to ‘Enterprise Holdings’ (St. Louis) in July 2013, for
undisclosed terms of the sale.
In a matter of a year, the ride numbers and revenue of the company grew by five times and by now they not only directly competed with companies like – Sidecar, Haxi, and other small car-service start-ups, but they were now in direct competition with the biggest and the generic name of the car-service industry – Uber.
By now, the number of people using their service had also grown from 9,000 / month in 2012, to 631,000 / month in 2014. Besides that, Lyft was also seeing a drastic growth in both ridership and drivers, and had also an increase from 400 drivers and 40,000 rides (Dec 2012), 7,000 drivers and 488,000 rides (Dec 2013), to a whooping 51,000 drivers and 2.2 million rides (Dec 2014).
Additionally, Lyft was now accounting for revenues worth $130 Mn (2014).
Talking about the present year, the company is expecting a dramatic jump from 2.5 Mn rides a month in the beginning of the year, to 13 Mn rides a month by the end. They are also projecting their revenues to be somewhere around $796 Mn in 2015, for a valuation of $2.5 Bn.
Over the period of time, Lyft has also acquired four companies to attain, sustain and maintain its growth. These include – Leo (June 2015), Hitch (September 2014), Rover (April 2014) and Cherry (March 2013).
Lastly, over the period of time, the company has also raised a total of $1.12 Billion in nine rounds of funding from roughly 27 investors including – Carl Icahn, Rakuten, Coatue Management, Alibaba, Andreessen Horowitz, Mayfield Fund, K9 Ventures, Floodgate, etc.