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SXSW

How Lyft's CEO Plans to Overtake Uber in the Ride-Sharing Race

Logan Green's triumphant return to SXSW

Logan Green is the co-founder of Lyft.

Hey, look. There's that Zimride dude, Logan Green, in the South by Southwest program. Remember him? How did he get there?

For those of you who happened to meet Green during the SXSW festival in Austin, Texas, in 2011, it's a fair question. When the Lyft co-founder and CEO, now a king of the ride-hailing space, attended his first SXSW that year, he drifted through town without so much as a hotel room or a pass to the conference. He was forced to hustle making contacts in the tech and investment world outside the convention hall.

"I just ended up crashing with friends," the 31-year-old recalls. "And honestly, that's the best way to do stuff. I think the best way to go is without a badge. Everybody you meet, you know, it's a really unique experience."

At the time, he was pitching that original moonshot Zimride, a faltering startup that was similar in concept to Lyft but had the misfortune of launching before the world became so mobile-obsessed. Fast-forward and this guy who couch-surfed four years ago is now a keynote speaker at this year's SXSW Interactive. Here's why:

Green would go on to co-found Lyft, a ride-hailing service that competes primarily against Uber. It was at first seen as a spinoff of Zimride, which he and partner John Zimmer launched in 2007 from their Cornell University dorm as a carpooling and road-tripping service for college students. Zimride was born prior to the first iPhone hitting the market and never drew the spotlight.

"When you are talking about transportation, people aren't making their plans while in front of a computer," Green explains. 

Lyft has seen business explode in San Francisco. | Photo: Winni Wintermeyer

San Francisco-based Lyft became Green's focus after selling Zimride to rental car giant Enterprise Holdings in the summer of 2013. The wisdom of the move now appears beyond question. Some $320 million in funding has since flowed to Lyft from such tech-investor giants as Andreessen Horowitz and executives from Alibaba—a virtual stamp of approval from the Chinese e-commerce site's CEO genius Jack Ma. Their financial interest in one of the sharing economy's rising stars seems apropos if you search SXSW's online events program where you'll find dozens of panels addressing the topic.

"The sharing economy changes the way we look at our cars, our property, our goods and our public space," says Gadi Ben-Yehuda, an innovation fellow at the IBM Center for the Business of Government, and a SXSW speaker.

Last summer, PricewaterhouseCoopers estimated that the sharing economy would balloon to $325 billion in the next decade. Green's company won't disclose financials but claims its January 2015 revenue was five times greater than a year prior (it has expanded from 20 markets to 65 in that same time). Lyft has competitors in addition to Uber (Hailo, RelayRides, Flywheel), as the larger sharing marketplace includes lodging sites Airbnb and HomeAway and food delivery service Instacart, to name just a few.

One should expect an evolution of just what the sharing economy means. Launched in recent weeks, Roadie is a neighbor-to-neighbor delivery service that has its eye on grabbing share from the likes of FedEx and Craigslist. Roadie has already partnered with the Waffle House chain for the drop-off and pickup of goods. The startup will show up at SXSW to beat the drum in a similar bootstrapping approach to Green's first visit to Austin.

"The South by Southwest crowd is something we need to be around," says Valerie Metzker, head of field marketing at Roadie. "Like our drivers, the people at the festival are not the types to sit still—they are on the move."

That is in part why Lyft is readying for a major presence this year at SXSW—that, and to celebrate the service having set up shop in Austin last May. Lyft is, in fact, the official ride-hailing partner of SXSW this year. It will offer Lyft Line, which lets multiple parties share the same car during the 10-day run of the SXSW tech, film and music exhibitions. Also in Austin, Lyft will unveil a SXSW-dedicated promotion called Magic Mode. Using the Lyft app, the feature lets conference goers ride in style, ordering up hot wheels like a 1963 Bentley, a '60s-era Mini Cooper, a Tesla Model S and a Range Rover.

But Magic Mode is not just about living the high life. The feature also addresses a common practical issue—and pain point—for SXSW attendees: finding a cab to and from one's hotel, especially in the wee hours.

"And it's in the general spirit of South by Southwest, where you are connecting with other people, learning, engaging and networking," says Kira Wampler, Lyft's CMO. "So it's not just about getting from point A to point B; it's about bringing something more to that transportation experience."

The tech brand's advocates like to hammer at the "experience" talking point—and the term does, in fact, relate to Green's journey of bringing Lyft to life, which started decades ago in his hometown of Los Angeles and included time he spent in Africa. 

Green and a Lyft team member share a ride. | Photo: Winni Wintermeyer

"Growing up, I was scarred by the terrible traffic in L.A.," he explains. "When I was in college [at the University of California, Santa Barbara], I was appointed by the Santa Barbara City Council to the local public transit district. I spent three years on this board to improve public transportation—very unsuccessfully. I then wound up over a summer taking a trip to Zimbabwe where it's kind of like a crowdsourced transportation network. Entrepreneurs run these transit lines, using mini-buses, and they set their own market rates. I started Zimride eight years ago on this concept. Now, taking Lyft Line in San Francisco is cheaper than owning a car."

Lyft Line is a primary focus these days for Green and his colleagues. The service is similar to UberPool, the offering of the market leader that puts total strangers together for rides. The very notion does beg the question: Isn't that a little creepy?

No, insists Green. "In San Francisco, we've seen usage explode—it's more than 30 percent of all our rides," he says. "It's relatively new in L.A. and New York, but we've seen similar growth there."

A driver in New York who works for both Lyft and Uber—increasingly common for stoplight Jedis in big cities—was asked which brand gives him more business. "It's Uber," answers the driver, who asked to remain anonymous. "But Lyft just got here, what, eight months ago? Uber's already been here for a few years."

Indeed, Lyft is the brand playing catch-up in the space. While both companies are tight-lipped about user numbers, Lyft trailed Uber by about five times in credit-card transactions in the month of May 2014, according to FutureAdvisor research. The stakes are ultimately huge: IBISWorld estimates that the taxi and for-hire ride industry in the U.S. tops $11 billion per year.

On the public relations front, Lyft has watched as its rival has endured one media firestorm after another—from that executive who suggested it might not be a bad idea to dig up dirt on journalists who are unfriendly to Uber to the several assaults reported against female passengers, leading to calls for women to delete the app from their smartphones. Green's team is quick to point out that women make up 60 percent of its customer base.

Yet Lyft hasn't enjoyed universally positive press either. Last November, a Lyft passenger in California was killed in a highway accident during a rainstorm. Meanwhile, legal battles with taxi companies have been a headache for both Lyft and Uber, though the law has generally favored the services.

"The consumer wants fast response, dependability, a safe and easy experience—and both services provide this," says Julie Baccelli, a tech consultant at TurnKey. "What will differentiate the two companies is respectable social business, consistency and reliability."

Which ride-hailing brand establishes that kind of street cred and social media rep will likely determine pole position in the long haul. To that end, Lyft has taken its marketing game to a new level. In August, it poached Jesse McMillin from his role as creative director at Virgin America for the same, newly created position at the app. More recently, Lyft enlisted San Francisco shop Eleven, which also services Virgin America, as its agency.

In fact, Lyft's promoters point to Virgin founder Richard Branson as a model. "That ethos and the whimsical nature is what separates the brand [from Uber]," says Courtney Buechert, CEO of Eleven. "If my basic expectation is met by both [Lyft and Uber] as a consumer, then the ethos of each brand matters a lot."

Generally speaking, Lyft's marketing message is a departure from its earliest days when it resorted to the gimmick of slapping a big, pink mustache on the front of its cars. (The mustache now can be found inside the vehicles, in a much subtler execution.)

"There's a misconception that Lyft is just a better version of the taxi," says Green. "You know, I think that's just scratching the surface of what we're doing."

When asked whether Lyft can generate the same kind of buzz in Albuquerque, N.M., and Omaha, Neb., as it has in the Bay Area and Manhattan, the CEO hints about a peer-to-peer future that might grab the attention of the aforementioned Roadie.

"We have a lot of things planned that I think will work in suburban communities," he says. "We're not just into the idea of semiprofessional drivers. The idea we are [embracing] is that every car on the road can be a Lyft. You know, every mom in a minivan, every person commuting. Anytime they are on the road, they should be able to go into driver mode and give a ride to a neighbor. That's how we achieve scale."

What's interesting about both Lyft and Uber is the goal of each to become a media platform for other brands. Lyft has partnered with Budweiser, MasterCard and Chobani over the last year. Lyft and Chobani offered new customers cases of pumpkin spice yogurt in exchange for booking a car, resulting in 19,000 people joining up across just two hours. Last year, Uber ran a promotion with Casper that had its mattresses delivered to customers within 60 minutes, and last week it announced a quarterly magazine.

"Any opportunity we have as a brand to partner with a service that our guests use or want that we do not directly offer would seem to me to be a win for all parties involved," says Kevin Scholl, digital marketing manager at hotel chain Red Roof Inn.

How to connect brands to in-car consumers and yet not come off as intrusive remains a challenge.

But who knows? There could well be a kid catching some shut-eye on somebody's old futon in Austin this week who has figured it out already.

"The [sleeping-on-the-sofa] story is a pretty legit one for startups," notes Kelly Hoey, a venture capitalist based in New York. "The question is not how many start on sofas at SXSW but, rather, how many go big after?"

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