Here's A Look Inside Lyft's Plan For Disrupting The Transportation Industry
How? By becoming the Airbnb for driving. When you want to catch a ride across town, you just open up the app and let Lyft know. Then a Lyft user — anybody registered in the app with a free seat in their car, as signaled by a pink mustache on the grill — will come pick you up.
As Green tells Business Insider, Lyft lets users leverage all of the "unused inventory" that they're carrying around in their cars, i.e., empty seats.
Since last year, Lyft has grown from two cities in the U.S. to 34. To date, Green says that tens of thousands of drivers have joined Lyft, who together have given millions of rides. At the end of each ride, the user is prompted to pay the driver, and 20% goes back to Lyft. Rates depend on the city and are usually less than cab rides. Here's a look at San Francisco and Boston.
With a recent $250-million-dollar investment from Andreessen Horowitz and other venture heavyweights — bringing the overall investment to a whopping $333 million — Lyft is ready to expand even more, including internationally.
As Green explains in the below conversation, the idea behind Lyft has been buzzing inside him since his Los Angeles youth, was crystallized on a trip to Zimbabwe, and realized after pivoting Zimride, the startup that Lyft sprang from.
This interview has been condensed and edited.
Business Insider: How did your early life lead to Lyft?
In March 2005, I was appointed to the board of the Santa Barbara metro transit district. I was incredibly optimistic about how public transportation can be the solution to help people live in the city and not need a car. I spent three years on the board, and realized the reality of every transit district in the country.
In Santa Barbara, we lost money on every trip. When people got on a bus in Santa Barbara and paid $1.25, that covered about 30% of the trip. Even if we had a full bus, we were losing money. We tried raising rates, tried sales tax, but public transit was stuck.
Fifty years from now, public transit is going to look the same if not worse. There's nothing built into the model to allow it to improve.
BI: And you took a trip to Africa?
LG: While I was on the board and I was witnessing this dynamic that made it hard for public transit to change, I took a trip to southern Africa with a friend, just for fun. We traveled around South Africa, Namibia, Botswana, and into Zimbabwe.
Zimbabwe was going through total economic chaos. Inflation was about 1,000%, day over day. Money was evaporating out of people's hands and bank accounts. Nobody could afford to drive. People were using fuel as currency.
Most people didn't have cars, but even if they did, nobody would use fuel to run a car. The streets were eerily quiet. The government didn't provide any sort of public transit. Out of that necessity, the country traveled by shared taxis, via a microbus that an entrepreneur would get their hands on and drive on popular routes. Soon as one filled up, someone else would get another bus.
I loved how this incredibly efficient transportation system came out of necessity. It was, in a way, a crowd-sourced, grass-roots public transit network.
When I came back and graduated, I had been thinking about these ideas a lot and thinking about how to adapt that idea to make sense in the U.S.
But in the U.S., the problem is that everyone has a car, with one person in every car. Then the question was, how do we open access to all these existing seats, all this existing inventory on the road?
BI: That led to founding Zimride, the service that allowed users to share rides between cities. What happened with Zimride?
LG: We built Zimride into a small business, with 150 university and corporate clients. We found a couple of use cases where it worked well: It worked really well for college students sharing rides on weekends and Thanksgiving and spring break. It worked well for a carpool-matching service for corporate campuses.
But the scale was not there, we were not replacing public transportation. We were not growing as fast as we wanted it to grow.
We had been building up Zimride for 5 1/2 years. During a hackathon, the mobile team came up with a couple concepts for something radically different from what Zimride had been. They were thinking about how the service worked and designing it for a mobile-first experience.
After spending a few weeks on it, we launched Lyft as an experiment in June 2012.
BI: What happened?
LG: It popped. We couldn't keep up with demand. All the graphs took off like we hadn't seen before: repeat rates, frequency of use, other metrics. With Zimride, every ride was hard fought; with Lyft the growth took off like nothing we had seen before.
A few months into it, we made the decision to pivot the whole company and go after the Lyft opportunity. It was a no-brainer decision, but surprising that five years after pushing Zimride that this other thing took off so much faster.
BI: What was different with Lyft?
LG: We refer to Lyft as a 'mullet app': simple up front, a lot going on in the back. Zimride was a much more complicated experience; people had to search for the ride that was best for them. The amount of friction and drop off was enormous.
With Lyft we run criminal background checks on every driver. We do a DMV check on every driver. We have a million-dollar insurance policy on every ride, and the five-star rating system. The Lyft system does the work of sending you the best match. Mobile forced us to rethink the user experience and do something people would be able to carry out in a couple of seconds on the mobile phone. By stripping out all the work the user had to do and putting that on the company, we were able to create a much better user experience.
We wanted to build a marketplace that people would use twice a day, that millions of people across the country — eventually across the world — would use every day. Zimride had a great following but didn't have the opportunity to do that.
Lyft had the possibility to do that at scale, to change the transportation infrastructure in our cities. That's what we've always wanted to do — and it's what Lyft is on track to be able to do.
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