Lyft got back to its roots today, announcing a feature called Lyft Line that allows two passengers with similar routes share a ride, and split the cost. It’s eerily similar to a feature announced yesterday by the company’s arch rival Uber, but more on the timing and implications of this fact later.
Long before the company adorned its vehicles with the now famous pink mustaches, and before the hundreds of millions in venture capital, Lyft was known as Zimride and was one of the earliest ride-sharing companies to hit the market. The difference, at that time, was that the driver wasn’t “working” as a psuedo-livery, but was simply inviting users within the community to tag along on trips they were already taking, so as to defer the cost and potentially add some camaraderie.
Nice idea, but it didn’t work, and what followed was an almost-too-late pivot to traditional ridesharing. And we mean “pivot” in the original Mike Maples sense of the word, not the now familiar euphemism for “we failed but we still have a little cash in the bank.”
Today’s Lyft drivers look at the service from a far more commercial perspective, heading out on the road for what are effectively “work shifts” and picking up and dropping off passengers at destinations of their choosing. But the piggyback ride-sharing idea is one that is closely related to the early Zimrides model.
Both Lyft and Uber have set out on near-identical missions to reduce the cost and friction of local transportation and to change the economic calculus of car ownership. To this end, allowing users to share rides – and thus reducing the cost of said rides by as much as 50 percent – will further help the companies further undercut the cost of traditional taxis, while making the burden of car payments, gas, insurance, and parking seem less and less enticing.
Now back to this curious case of timing. Uber announced its “UberPool” feature yesterday, which like “Line” allows passengers – ok, let’s be real, strangers – to hop in a car together and split the cost of traveling from point A to point B (with the possibility of a Point C if two riders’ destinations don’t exactly match). Lyft obviously followed this announcement within 24 hours.
The initial reaction of many in the blogosphere and on twitter was “monkey see, monkey do,” suggesting that Lyft is somehow following in Uber’s footsteps. Please. Multi-billion dollar companies don’t code up and roll out features to their users in a matter of hours. Lyft, like Uber, has obviously been working on this for a long time– particularly since the move is more central to Lyft’s core DNA. What I think is more interesting, is the notion that Uber might have caught wind of Lyft’s pending announcement and decided to preempt their rival.
The closest thing to evidence we have in this regard is that Lyft Line is live in the app store today and available to all users – in other words, this was obviously a carefully planned launch. Uber Pool, on the other hand was merely announced yesterday, but remains in “coming soon” status. The coincidence and disparity in availability was enough to lead Lyft Community Relations Head Emily Castor to tweet:
@jowyang Line is available in the app store today – was planned for months. I think we inspired quick action by our friends in black. :)
— Emily Castor (@emilycastor) August 6, 2014
Others around the web, including in the Product Hunt discussion of the new Lyft feature, have reached a similar conclusion. Given the heated nature of the battle for on-demand transportation supremacy, it would in no way be surprising for Uber to take an opportunity to steal a bit of Lyft’s thunder. Anyone who looks closely at the two announcements is unlikely to fall for the trick, but Uber did manage to earn itself a full 24 hour’s worth of exclusive news headlines, while Lyft today must share them – and any ensuing discussion – with its competitor.
The winner at the end of the day, however is the consumer. We’ve discussed at length the notion that many on-demand startups are artificially subsidizing the prices of their service with cheap and readily available venture capital. In cases where scale doesn’t solve these issues of operating margins, the music will eventually stop.
But as Uber and Lyft both demonstrated this week, there are product and business model innovations that make it possible to reduce the per-user cost of using an on-demand service, without impacting the dollars that reach the company’s bottom line. It’s short term thinking to suggest that by combining two rides into one, Uber and Lyft generate only 50 percent the revenue. The more likely outcome is that by making the service cheaper and more efficient, the companies will dramatically grow usage, well beyond levels they would have otherwise seen with a single-rider model.
Uber and Lyft are two very different companies from a cultural perspective, but as we’ve seen today, they are both ruthlessly focused on the same goal. For my money, this has become one of the most fascinating rivalries in the tech sector in recent memory. There are big dollars and big societal impacts on the line. Here’s hoping the innovation doesn’t stop any time soon.