Lyft

Lyft, Inc. develops, markets, and operates a mobile app, offering vehicles for hire, motorized scooters, a bicycle-sharing system, and food delivery. The company is based in San Francisco, California and operates in 644 cities in the United States and 12 cities in Canada.[2]

Lyft, Inc.
Public
Traded asNASDAQ: LYFT (Class A)
ISINUS55087P1049 
IndustryVehicle for hire
FoundedJune 9, 2012 (2012-06-09) (as Zimride)
FoundersLogan Green
John Zimmer
Headquarters
San Francisco, California
,
U.S.
Area served
United States, Canada
Key people
Logan Green, CEO
John Zimmer, President
Brian Roberts, CFO
Revenue US$3.616 billion (2019)
US$−2.702 billion (2019)
US$−2.602 billion (2019)
Total assets US$5.691 billion (2019)
Total equity US$2.854 billion (2019)
OwnerRakuten (11%)
Number of employees
5,683 (2020)
SubsidiariesMotivate
Websitelyft.com
Footnotes / references
[1]
Lyft's distinctive pink mustache was the first branding the company used until 2015 when it switched to a smaller, glowing magenta mustache that sits on a driver's dashboard.

With a 30% market share, Lyft is the second-largest ridesharing company in the United States after Uber.[3]

The legality of ridesharing companies by jurisdiction varies; in some areas they have been banned and are considered to be illegal taxicab operations.[4]

Product overview

Service is generally accessed via mobile app. Users set up a personal profile with a name, phone number, other information, and payment preference, which could be a credit card, e-commerce payment system or, in some cases, cash. After the service is complete, the customer may be given the option to provide a gratuity to the driver, which is also billed to the customer's payment method.

The status of drivers as independent contractors is an unresolved issue. Drivers provide a vehicle, which could be owned, rented, or leased. Drivers must meet requirements for age, health, car age and type, have a driver's license and a smartphone or tablet, and may be required to pass a background check. In many cities, vehicles must pass annual safety inspections and/or must have an emblem posted in the passenger window. Some cities also require drivers to have a business license.[5] There may be accommodations for hearing-impaired drivers.[6] Drivers may be notified before accepting a trip if it will be longer than 45 minutes. After each transaction, drivers and customers may rate each other and users with low ratings may be deactivated.[7] Lyft provides basic vehicle insurance.[8]

Riders must download the Lyft mobile app to their smartphone, sign up, enter a valid phone number, and enter a valid form of payment (either a credit card, Lyft Gift card, or link to an Apple Pay, Google Wallet, or PayPal account).[9][10] Once the trip is completed, funds are debited from the funding source.[11]

Car rides

Once their account is set up, passengers can request a ride from a nearby driver. Once confirmed, the app shows the driver's name, ratings by past passengers, and photos of the driver and car.[12] Drivers and passengers can add personal information to their profiles about their hometown, music preferences, and other details to encourage drivers and passengers to converse during the ride.[13] After the ride is over, the rider is given the opportunity to provide a tip to the driver, which is also billed to the rider's payment method.[14]

Depending on the location, Lyft offers various service levels including shared rides with other passengers traveling in the same general direction (suspended during the COVID-19 pandemic), private rides, or larger or luxury vehicles.[15][16][17][18][19][19][19]

Scooters
Lyft scooter

Lyft scooters cost US$1 to unlock and 15 cents per minute to ride.[20]

Driver requirements

Ratings

After a ride is completed, drivers and passengers are given the opportunity to rate each other on a scale of one to five stars.[22] Any driver averaging a low rating by a passenger will not be matched with that passenger again.[21] Lyft does not allow passengers to know their rating.[23] The ratings establish the reputations of both drivers and passengers within the network.[24]

Sexual assault lawsuits

More than 34 women sued Lyft in the United States alleging that they were raped or assaulted by Lyft drivers, and that the company did not do enough to keep them safe[25] and that Lyft attracts drivers that plan to prey on vulnerable women.[26] Many women claim that, even after they reported their assault to Lyft, the company ignored their report and continued to allow the assailants to drive with Lyft.[27]

History

A Lyft vehicle in Santa Monica, California, with the original grill-stache branding, since retired

Lyft was launched in the summer of 2012 by computer programmers Logan Green and John Zimmer as a service of Zimride, a long-distance intercity carpooling company they founded in 2007.[28][29]

Green had the inspiration for Zimride after sharing rides from the University of California, Santa Barbara campus to visit his girlfriend in Los Angeles. He had used Craigslist’s ride boards but wanted to eliminate the anxiety of not knowing the passenger or driver. When Facebook opened its API to third-party developers, Green said he thought "Here’s the missing ingredient."[30] Zimride linked drivers and passengers through the Facebook Connect application.[31] By using Facebook profile information, student drivers and passengers could learn about each other.[32] Zimride eventually became the largest carpool company in the United States.[33][34] Green was introduced to John Zimmer through a mutual friend and the pair initially met on Facebook. The company name came from the country Zimbabwe, where, during a trip in 2005, Green observed locals sharing minivan taxis.[35][36][37] Zimride launched at Cornell University, where, after six months, the service had signed up 20% of the campus.[38][39]

In May 2013, the company officially changed its name from Zimride to Lyft.[40] The change from Zimride to Lyft was the result of a hackathon that sought a means of daily engagement with its users, instead of once or twice a year.[41]

In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, to enable the company to focus exclusively on the growth of Lyft.[42]

Whereas Zimride was focused on college campuses, Lyft launched as a ridesharing company for shorter trips within cities.[32]

Lyft became known for the large pink furry mustaches drivers attached to the front of their cars. Riders were also encouraged to sit in the front seat and fist bump with drivers upon meeting.[43] In November 2014, the company distanced itself from the fist bump.[44][45]

In January 2015, Lyft introduced a small, glowing plastic dashboard mustache it called a "glowstache" as an alternative to the large fuzzy mustaches on the front of cars. The transition was to help overcome the resistance of some riders to arrive at destinations, such as business meetings, in a car with a giant mustache.[46]

In December 2016, Lyft introduced a color-changing dashboard indicator called "Amp."[47][48]

In 2013, San Francisco Mayor Ed Lee proclaimed July 13 as Lyft Day.[49]

In April 2014, Lyft launched in 24 new U.S. cities in 24 hours, bringing its total to 60 U.S. cities.[50]

In April 2014, Lyft hired two lobbying firms, TwinLogic Strategies, and Jochum Shore & Trossevin, to address the regulatory barriers and opposition it had received since its launch.[51]

Due to regulatory hurdles in New York City, the company altered its business model when establishing Lyft on the East Coast of the United States. Lyft’s launch in New York City occurred on the evening of July 25, 2014, and, in accordance with the Taxi and Limousine Commission (TLC) and the approval of the Manhattan Supreme Court, only drivers registered with the TLC were permitted to drive Lyft-branded vehicles in New York City.[52]

In August 2014, the company introduced a shared ride concept, which provides cheaper fares.[53]

In September 2015, Lyft announced a relocation of its customer service operations to Nashville and mentioned that a full relocation would be possible in the future from San Francisco.[54]

In December 2015, Lyft became the first ridesharing company allowed to pick up passengers at Los Angeles International Airport.[55]

In May 2016, Lyft began offering a service to let clients schedule rides up to 24-hours in advance.[56]

In November 2016, Lyft began offering riders the ability to make multiple stops during a trip.[57][58]

In January 2017, the company announced its 160 millionth ride.[59]

In January 2017, Lyft announced it would add 100 U.S. cities, bringing its total to 300 U.S. cities served.[60]

In December 2017, Lyft expanded into Canada, with operations in the Greater Toronto Area, Hamilton, Ontario and Ottawa.[61]

In July 2017, the company announced that the Walt Disney World Resort "Minnie Van" service will be powered by Lyft. Users staying at select Walt Disney World Resort hotels are given the option to hail a "Minnie Van" via the Lyft app. A Minnie Van, a Chevrolet Traverse with Minnie Mouse inspired exterior theming, driven by a Walt Disney World Cast Member can take guests to and from any destination within the Walt Disney World Resort for a flat fee of $20 per ride. Lyft Founder John Zimmer said of the partnership "Playing a part in a family’s experience at the most magical place on earth is a dream come true."[62]

In March 2018, Lyft partnered with Allscripts to create a platform allowing healthcare providers to arrange rides for patients who lack transportation to appointments. The service would be available to 2,500 hospitals, 180,000 physicians, and approximately 7 million patients.[63][64]

On September 6, 2018, Lyft launched a fleet of electric scooters in Denver.[65][66]

In November 2018, Lyft acquired Motivate, a bicycle-sharing system and the operator of Capital Bikeshare and Citi Bike.[67][68] The company also announced plans to add 28,000 Citi Bikes and expand its service.[69]

In December 2018, Lyft launched additional scooter fleets in Arlington County, Virginia, Atlanta, Austin, Texas, Los Angeles, Nashville, Tennessee, San Diego, Santa Monica, California and Washington, D.C..

On March 29, 2019, Lyft became the first ride-sharing company to IPO raising $2.34 billion at a valuation of $24.3 billion.[70] The company set aside some shares to be given to long-time drivers.[71]

In July 2019, the company's Lyft Entertainment division received an Emmy nomination for its co-production of Billy on the Street.[72]

On July 19, 2019, Lyft added real-time public transport and subway information for New York City, amidst battles with the city.[73]

On December 2019, Lyft launched in Vancouver.[74]

In April 2020, Lyft laid off 982 employees and furloughed an additional 288 in an effort to reduce operating expenses and adjust cash flows due to the COVID-19 pandemic in the United States.[75] The company continued to offer scooters for rent in San Francisco, while Miami government asked Lyft to halt operations.[76]

Unwanted text messages

In November 2018, Lyft settled a class action suit filed in 2014 alleging that the company had sent large numbers of unwanted commercial text messages.[77] In addition to $4 million in payments to consumers, the plaintiffs sought $1 million in legal fees.[78]

Self-driving car research

In 2012, Green wanted to pitch investors on self-driving cars as part of Lyft's future offering. Green envisioned a few big networks of self-driving cars, similar to AT&T and Verizon.[79]

In January 2016, Lyft announced an autonomous car partnership with General Motors.[80] On May 5, 2016, Lyft and General Motors announced, as part of their partnership, that it planned to begin testing self-driving cars within the next year.[81]

On June 6, 2017, Lyft announced a new partnership with Boston-based autonomous self-driving car start-up NuTonomy to eventually put autonomous, on-demand vehicles on the road.[82]

In September 2017, Lyft partnered with Ford Motor Company to develop and test autonomous vehicles.[83][84]

In March 2018, Lyft partnered with GoMentum Station to test its self-driving technology.[85]

On March 14, 2018, Lyft partnered with Magna International to co-fund, develop, and manufacture autonomous vehicle systems to produce self driving technology that will be available to all car manufacturers.[86]

In October 2018, Lyft acquired Blue Vision Labs, a London-based augmented reality startup, for $72 million. This expertise is expected to help autonomous cars to extract useful information from street-level images.[87][88]

Criticism
See also: Sharing economy § Criticism, and Temporary work § Legal issues

Classification of drivers as independent contractors

Unless otherwise required by law, drivers are generally independent contractors and not employees. This designation affects taxation, work hours, and overtime benefits. Lawsuits have been filed by drivers alleging that they are entitled to the rights and remedies of being considered "employees" under employment law.[89] However, drivers do receive certain flexibilities that are not common among employees.[90]

In O'Connor v. Uber Technologies, a lawsuit filed in the United States District Court for the Northern District of California on August 16, 2013, Uber drivers pleaded that according to the California Labor Code they should be classified as employees and receive reimbursement of business expenses such as gas and vehicle maintenance costs. In March 2019, Uber agreed to pay $20 million to settle the case.[91]

On October 28, 2016, in the case of Aslam v Uber BV, the Central London Employment tribunal ruled that Uber drivers are "workers", not self-employed, and are entitled to the minimum wage under the National Minimum Wage Act 1998, paid holiday, and other entitlements.[92] Two Uber drivers had brought the test case to the employment tribunal with the assistance of the GMB Union, on behalf of a group of drivers in London.[93] Uber appealed to the Supreme Court of the United Kingdom; a hearing took place on 21 July 2020.[94]

In March 2018, the Federal Department of Economic Affairs, Education and Research of Switzerland ruled that drivers should be classified as employees.[95]

In April 2018, the Supreme Court of California ruled in Dynamex Operations West, Inc. v. Superior Court that Dynamex, a delivery company, misclassified its delivery drivers as independent contractors rather than employees.[96] This ultimately led to California passing Assembly Bill 5 (AB5) on September 11, 2019, with a test to determine if a tasker must be classified as an employee and receive minimum wage protections and unemployment benefits. A referendum to provide exemptions is scheduled for a vote in November 2020.[97] In December 2019, Uber and Postmates sued California, claiming AB5 is unconstitutional.[98]

In November 2019, the New Jersey Department of Labor and Workforce Development determined that drivers should be classified as employees and fined Uber $650 million for overdue unemployment and disability insurance taxes.[99]

Compliance with minimum wage laws

In some jurisdictions, drivers are guaranteed a minimum wage, such as in New York City, where drivers must earn $26.51/hour before expenses or $17.22/hour after expenses. Analyses have shown that absent such laws, many drivers earn less than the stated minimum wage.[100] A May 2018 report by the Economic Policy Institute found the average hourly wage for drivers to be $9.21.[101] Reports of poor wages have been published in Profil,[102] Trend,[103] and The Guardian.[104] A 2017 report claimed that only 4% of all Uber drivers were still working as such one year after starting, primarily due to low pay.[105]

However, a 2019 study found that "drivers earn more than twice the surplus they would in less-flexible arrangements."[106]

Dynamic pricing and price fixing allegations

Due to dynamic pricing models, prices for the same route may vary based on the supply and demand for rides at the time the ride is requested.[107] When rides are in high demand in a certain area and there are not enough drivers in such area, fares increase to get more drivers to that area.[108][109] In some cases, this resulted in extreme surcharges during emergencies such as Hurricane Sandy,[110] the 2014 Sydney hostage crisis,[111] and the 2017 London Bridge attack.[112]

In the United States, drivers do not have any control over the fares they charge; lawsuits allege that this is an illegal restraint on trade in violation of the Sherman Antitrust Act of 1890.[113][114]

Safety concerns

It is unclear if rideshare vehicles are less or more safe than taxicabs. Major cities in the United States don't have much data on taxi-related incidents. However, in London, taxi drivers were responsible for 5 times the number of incidents of sexual assault as compared to Uber drivers.[115] Crimes have been committed by rideshare drivers[116] as well as by individuals posing as rideshare drivers who lure unsuspecting passengers to their vehicles by placing an emblem on their car or by claiming to be a passenger's expected driver.[117] The latter led to the Murder of Samantha Josephson and the introduction of Sami’s Law. Lawsuits claim that rideshare companies did not take necessary measures to prevent sexual assault.[118][119]

Rideshare companies have been fined by government agencies for violations in their background check processes.[120][121][122]

In November 2019, Transport for London did not renew Uber's license to operate due in part to the ability of people to fake identities and use other drivers' accounts, circumventing the background check process.[123][124][125]

Increased traffic congestion, carbon emissions, and reduced usage of public transport

Studies have shown that traffic congestion has increased in New York City and San Francisco, where extensive public transport networks are in place.[126][127][128][129] Many people who use these services would otherwise be using public transport.[130] Taxicabs were noted to have lower rider waiting time and vehicle empty driving time, and thus contribute less to congestion and pollution in downtown areas.[131] However, another report noted that these companies serve as complements to public transit.[132]

In 2020, the Union of Concerned Scientists found that due to dead mileage, "ride-hailing trips produce 47 percent more carbon emissions than a similar trip taken in your own private car."[133]

Insufficient wheelchair accessible vans

In some areas, vehicle for hire companies are required by law to have a certain amount of wheelchair accessible vans (WAVs) in use. However, most drivers do not own a WAV, making it hard to comply with the laws.[134]

Driver refusals to transport service animals

While companies have strict requirements to transport service animals, drivers have been criticized for refusal to transport service animals, which, in the United States, is in violation of the Americans with Disabilities Act. In one case, this resulted in a lawsuit, which was referred to arbitration.[135][136]

Use of phones while driving

To accept a fare, drivers must tap their phone screen, usually within 15 seconds after receiving a notification, which is illegal in some jurisdictions since it could result in distracted driving.[137]

Decline in value of taxi medallions

Values of taxi medallions, transferable permits or licenses authorizing the holder to pick up passengers for hire, have declined in value significantly. A couple of credit unions that lent money secured by medallions suffered from bank failure.[138]

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