Difference between revisions of "Lyft"

Revision as of 14:34, 17 April 2018

Lyft

Lyft Application text Type Ridesharing Application Launch Date 2012 Status Active Product Line Service Platform iOS, Android Website Lyft Official Website

History

Logan Green, CEO, and John Zimmer, President of Lyft. ^[1]

John Zimmer attended Cornell University and has a background in hospitality; he was particularly inspired by a class he took on the evolution of creating greener cities. This led to the idea of streamlining transportation with more effective models. When learning about cars and the road system, Zimmer was intrigued by the low rate of occupancy of public transportation. He realized that if you could increase the occupancy by a mere ten percent, it would create a more efficient society. Logan Green's background was specifically in transportation hacking, as he built the first car-share program even before Zipcar, at the University of California at Santa Barbara. He was constantly frustrated with the public transportation system and how it was funded. He wanted to build a transportation system that was operated and financed in a better way. ^[2]

John Zimmer and Logan Green founded Lyft on May 22, 2012. They originally created a company called Zimride in 2007, which was very similar to Lyft but was geared towards long distance rides connecting people through Facebook. ^[3] However, there was a strong market for short distance journeys, which was missing from Zimride. Thus, Lyft was created to better address this need, and the company has experienced growth since its inception. Initially created in San Francisco, Lyft offers services across the U.S. and parts of Canada. It is currently pursuing international expansion opportunities ^[4] Lyft has been a primary competitor of Uber, with both companies offering low-priced private drivers that are accessible with the click of a button. Lyft complemented Zimride, as these companies were accessible to ridesharers for both short and long distances. However, Zimride was sold to Enterprise on the 10th of July 2013, as Lyft was a more profitable venture for Zimmer and Green. ^[5]

Passenger Application Features

How to Start Using the Application

Homepage of Lyft on mobile application interface.

In order to be a customer of the service, users must create an account linked to their phone number and credit card, Google Wallet, or PayPal account. When using the phone app, Lyft uses GPS tracking to determine the location of the user and the availability of cars around them. In order to request a ride, a user must confirm the pickup location and select the type of car they would prefer. The user can then add their destination and view a price estimate, which includes additional charges that typically occur during times of day in which rides are in high demand or traffic is heavier than usual. The user then taps the “Requests Lyft” button and they are connected to the closest driver in the area.

Once the driver within their vicinity has been connected to the user, the application provides the driver’s estimated arrival time based on the distance and current traffic conditions. As the Lyft approaches, the rider is provided with the driver’s name, rating, car make and model, and the license plate number. Users can track the location of their car in relation to the pickup location on the application’s map, and can also view the estimated time until the car arrives, can contact the driver, split the fee for the ride with friends, send the estimated time of arrival to others, and cancel the ride from this screen. Users will receive a text notification from their driver once their ride and also have the ability to call their driver. ^[6]

In March 2015, Lyft made it possible for users to add personal profiles including where they are from, and their favorite music to encourage more personal connections between the passengers and their drivers. ^[7]

Lyft Tiers

Pricing Equation

Pricing

The calculation of ride payments is based on five different factors: cost per mile, cost per minute, base charge, service fee, and prime time. The distance is the cost per each mile and the time is the cost per minute during the trip. The base charge is the flat charge assessed at the beginning of the trip and the service fee is the Lyft platform charge for each ride. Primetime is an additional surcharge added during the busy times. ^[12]

The following table shows the cost of a Lyft in Los Angeles at a given time. ^[13]

Lyft Prime Time

Primetime encourages drivers to be on the roads during the busy times of the day where demand is high. Primetime varies each second depending on how many people are requesting Lyft. If there is a Prime Time surge happening in the location, the user will receive a notification pop up with the added percentage requiring confirmation of their ride. For example, if a ride costs $10 (before other fees) and there is a 150% Prime Time, the ride will cost $25 (+ other fees). ^[14]

Two-Way Ratings

At the end of the ride, the driver and the passenger have the chance to rate each other on a scale of one to five stars, with a rating of one being the lowest. If either the passenger or the driver rates under three stars, they will never be paired as a driver-passenger match again. If a driver is consistently getting low ratings, Lyft may deactivate the driver from the platform or investigate the cause of the lower ratings. Each driver receives a weekly summary of their ratings with comments left by passengers. ^[15]

Competitors

Lyft is considered a ridesharing company, which is an arrangement where passengers travel in a private vehicle driven by its owner for a fee. Lyft's biggest rival is Uber who has dominated the ridesharing industry since 2009. Uber has a similar setup to Lyft as both companies require a ride-hailing application. Uber is worth $68 billion and dominates the industry in more than 60 countries. ^[16] In order to compete with Uber, Lyft merged with a Chinese ridesharing application called Didi Kuaidi. Didi Kuaidi controls approximately 80 percent of the ridesharing market in China. This partnership will allow Didi Kuaidi to function in the United States and Lyft to operate in China. Lyft users will be able to use the Lyft application in China to find Didi Kuaidi drivers rather than re-downloading a new service. ^[17]

In the early months of 2017, Uber was the subject of a lot of negative press. During that time, they were accused of cheating both riders and drivers by using manipulative navigation data; there were also many claims of sexual harassment surfacing that were directed at senior management employees, and the company was also accused of using a secret tool to deceive authorities^[18]. In response to the immigration ban enacted by the presidential administration earlier in the year, yellow-cab drivers led an hour-long work stoppage in opposition. In response, Uber replied that they were still available for business and many people viewed this as the company attempting to capitalize on the situation and claimed that it was done in poor taste. The board is working diligently on repairing the company's tarnished reputation, company culture, and leadership. However, this influx of bad publicity for their competitor created an opportunity for Lyft to get a major boost in this market. They've seen large increases in ride requests and have secured $500 million in a new round of funding, as of April 2017^[19]. On January 29th, Lyft surpassed Uber for downloads for the first time in the company's history.

In the News

Lyft is donating $1 million over the next four years to the American Civil Liberties Union (ACLU). This pledge is in response to the executive order that places limits on travel to the U.S. from certain countries signed by President Donald Trump to temporarily assess the risk of terrorists infiltrating the immigration system into the U.S. ^[20]

Recently, Lyft has also agreed to pay $27 million to settle a lawsuit against the company. Lyft considers their drivers as contractors rather than employees. Under the new deal that was just signed, Lyft drivers will continue to be considered independent contractors and pay for their own gas and expenses while not being covered under minimum-wage laws. 100,000 drivers could be eligible to receive part of the $27 million depending on how many hours they have driven for Lyft. ^[21]

Lyft and Uber representatives in Oregon are promoting a bill that would allow the state of Oregon to regulate the companies instead of individual cities. This type of regulation would set uniform rules for the companies throughout the state. ^[22] These regulations would allow Lyft to treat drivers as independent contractors. Meaning that the companies would not have to pay payroll taxes on these employees, or provide them with benefits or workers compensation insurance. ^[23]

Ethics

Lyft claims they are dedicated to maintaining an inclusive and accommodating ride-sharing service. Their anti-discrimination policies prohibit discrimination against passengers on the basis of race, national origin, religion, gender, gender identity, physical or mental disability, mental condition, marital status, age, or sexual orientation. ^[24].

Safety

Lyft sets out to ensure the safety of all passengers using their service. The Trust and Safety Team is a critical response line that is available 24/7 in the case of emergencies. Passengers are instructed to first dial 911 and contact local non-emergency authorities before using their call tool to reach the Critical Response Line. To maintain a level of standards amongst drivers and safety for its customers, all drivers must meet the following requirements during the screening process:

• DMV or third-party background checks (criminal background checks include both national and county-level databases and records stretching back to 7 years in states like California, and even longer in others).
• Minimum age requirement of 21, along with the possession of a license for at least a year.
• Zero-tolerance policy for drugs and alcohol.
• In-person interview with current Lyft driver.

Drivers that meet all requirements are covered by the Lyft Insurance Protection Plan that utilizes Lyft's $1 million liability insurance. The liability serves as primary to the driver's personal automobile insurance policy as soon as they switch into driver mode up until each moment they drop off their passenger.^[25].

Some incidents have arisen some concerns over passenger and driver safety. In 2014, a driver was punched in the face by a passenger after the driver asked the passenger to stop smoking. ^[26] In a response from Lyft, they noted that the passenger's Lyft account was deactivated and that he was blocked from making any new Lyft accounts. ^[27]

Passenger Discrimination

Recently, Lyft and other ride-sharing applications including Uber have been accused of failing to comply with the Americans with Disabilities Act (ADA). Allegedly, Lyft drivers have discriminated against people in wheelchairs or with service animals, either refusing to transport them or charging excessive prices to do so. Outlined on Lyft's website are policies that explicitly state that drivers are responsible for transporting all passengers in wheelchairs, so long as the wheelchair can safely and securely fit in the car. If a wheelchair cannot be accommodated for some reason, the driver must cancel the ride and contact the Critical Response Line for further help. ^[28] Policies also state that drivers cannot deny service to passengers with service animals, even if that driver is allergic to the animal, afraid of such animals, or has cultural objection toward them. According to Lyft, discrimination can result in deactivation from the platform.^[29]

Within the application, there is a feature called "Access Mode," which enables passengers with accessibility needs to complete ridesharing transactions through the app. Once a passenger enables, they can request permission to be able to request rides with locally accessible vehicles. "Access Mode" dispatches a wheelchair accessible vehicle instead of a standard Lyft vehicle when a passenger in need of accommodations requests a ride. However, "Access Mode" is not available in all markets, and these accessible vehicles are not always available 24/7 like standard Lyft cars. The registration process aforementioned may take several weeks to complete and accessible vehicles often have to be requested at least 24 hours in advance. Passengers with accessibility needs may not always be guaranteed fast and easy transportation when needed, defeating the purpose of the application. ^[30]

Local Regulations

Lyft operates all over the United States; however, some local governments require extra steps from those who are looking to become a Lyft driver. Most Lyft driver applicants meet with a representative from Lyft to have their car inspected and to take a practice ride in order to ensure that their driving is safe enough to generally avoid accidents. A few cities require applicants to go to an inspection facility or meet with a mechanic in order to be approved as a Lyft driver. Approved applicants are not required to display a Lyft emblem in their windshield, however, they are strongly encouraged to do so. If a Lyft driver chooses not to display the Lyft emblem in their car and is caught, the only potential consequence could be receiving a citation. ^[31]

Airport Policies

Some airports have strict policies regarding where passengers are allowed to be picked up and dropped off, and some even prohibit Lyft drivers from transporting passengers to and from the airport altogether. Because airports are one of greatest sources of profit for taxi and limousine companies, airports will generally take extra steps to ensure that taxi and limo drivers will still have a market for rides. Because taxi and limousine drivers are required to have city licenses or permits in addition to paying fees for each airport pickup or drop off, cornering the ride market to and from airports allows them to profit more from those traveling to and from airports. Ride-sharing services such as Lyft and Uber can be cheaper and easier to request than taxis, especially for longer trips, which has led many airport travelers and Lyft drivers to attempt to find ways of getting around these restrictions. For example, some people take shuttle buses to rental car lots and call Lyft rides from there; in many of these cases, Lyft drivers will often remove the Lyft emblem from their cars in addition to asking passengers to sit in the front seat so that it appears less like a Lyft ride.^[32]

Lyft has partnered with airports across to country to make the pick-up and drop-off processes easier for both Lyft passengers and drivers. On Lyft's website, there is a list of airports that allow passengers to be picked up and dropped off by Lyft drivers, with a set of detailed instructions for each airport for drivers to follow when doing so. ^[33] Also on the website is a guide for passengers to use when determining which airports allow Lyft pickups and drop-offs, the coverage area for the corresponding cities, and pricing details for the ride itself.^[34] Regardless, travelers are motivated to disobey airport policies to save money and Lyft drivers are motivated to disobey airport policies to make money.

Pricing

Lyft, similar to Uber, informs passengers of the total cost of their ride, including cost, fees, taxes, tolls, and Prime Time, before the ride is requested; however, if the passenger changes their destination in the middle of their ride or the ride takes more or less time than expected, the price of the ride is subjected to change. Since pricing is unfixed, passengers may end up paying more than originally expected. ^[35]

Aforementioned, Lyft's Prime Time happens at times when demand is higher than normal. Passengers typically pay an additional percentage on top of the original ride's price when they request a ride during Prime Time. ^[36] Passengers of Lyft often find Prime Time pricing unfair since they most likely are in need of Lyft's services during these peak hours. Taxi companies, unlike Lyft and Uber, do not have surge pricing during peak hours, in part because they too question the ethical implications of such pricing. ^[37] However, Prime Time pricing is readily announced before the ride begins so Lyft is not hiding the reason for the higher cost. Prime Time usually occurs late at night when people are using Lyft to get home safely after a night of drinking. Raising the cost means some people will be more inclined to drive drunk or walk home alone putting themselves and others in harm's way.

See Also

External Links

References