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Taking the High Road

Lyft parlayed a disastrous year at Uber into big gains and a good-guy reputation. But are the two San Francisco companies reshaping transportation nationwide really so different?

Jordan DeWitt was in his Manhattan apartment one night last winter when he decided to delete an app on his phone. The act barely qualifies as an inconvenience, but the implications felt like they resonated far beyond the boundaries of his iPhone.

“There was something triumphant about it,” the 24-year-old actor says. “It makes me want to roll my eyes to say, ‘It’s a small act of resistance.’ But I don’t know, it kind of made me feel good for a minute.”

DeWitt canceled his Uber account on January 28, 2017, when the #deleteUber hashtag began to trend, kicking off one of the worst years of corporate mishaps in Silicon Valley history. On that day, Uber stood accused of disrupting a one-hour boycott of John F. Kennedy International Airport by taxi drivers who were protesting President Donald Trump’s travel ban of people from seven majority-Muslim countries. Uber’s transgression—eliminating surge pricing at JFK—had actually occurred after the taxi protest, but the sudden anger at the company really stemmed from years of devious practices. The same ruthlessness that had propelled Uber to a $70 billion valuation also allowed customers to assume the worst about the company’s intentions in a moment of confusion. But unlike previous Uber controversies, this one came with consequences. Hundreds of thousands of customers absconded for the nearly identical ride-hailing app Lyft. “It does the same job pretty well,” DeWitt says, “and it doesn’t make me feel like I’m supporting supervillains.”

The backlash came as a surprise to Lyft president John Zimmer, who had watched from Uber’s shadow as the ride-hailing giant engaged in ethically questionable tactics for years (often against Lyft itself) and was rewarded with more users and venture capital. “For the first three and a half years before [#deleteUber], we believed values mattered, we believed taking care of the people in our business mattered, and we were hoping it would show up in consumer sentiment and in the behavior of consumers,” Zimmer tells me at Lyft’s San Francisco headquarters. “But we didn’t know if and when that would happen.”

The 33-year-old Zimmer seemed eager to talk to me, and for good reason. Thanks to the internet’s outrage at Uber and a well-timed Lyft donation of $1 million to help the ACLU fight Trump’s travel ban, Lyft surpassed Uber in app downloads for the first time that weekend. (Zimmer says that #deleteUber did not influence the donation decision.) The achievement was just the start of a banner year for the company, which included expanding its coverage area to 95 percent of the United States, more than doubling its number of rides year-over-year to 375.5 million, and gaining more than $2 billion in fresh venture funding.

Lyft is still far from unseating the company whose name has become the go-to verb for ride-hailing. Uber is a global business, while Lyft operates only in the United States and Toronto. As of early 2018, Lyft still has only around 27 percent market share in the U.S., according to credit card analytics firm Second Measure—but that’s way up from the 15 percent share the company commanded before #deleteUber happened (Lyft says it has reached one-third market share). In major cities where Lyft has operated for years, like San Francisco and Los Angeles, the margin is much closer. What once appeared to be a rout is slowly evolving into a legitimate rivalry.

Zimmer, though, insists that his company’s true competition isn’t the Uber app on your phone, but rather the car in your driveway that sits unused 95 percent of the time. For more than a decade he and Lyft cofounder Logan Green have been devising ways to use the internet to cram more people into fewer cars. They dream of a world where carpooling in driverless Lyfts is the norm, personal car ownership is obsolete, and cities have been radically redesigned to best accommodate human beings rather than automobiles. “The implications of this business will have the largest impact on our built environment that we will witness in our lifetime,” he says. “The stakes are really high.”

But technology has a habit of yielding unintended consequences—the plain old human-driven car brought us suburban sprawl, global warming, and the leading cause of death among teengaers, after all. Already there are pitfalls in Lyft’s idealistic vision, with recent research showing that ride-hailing apps are reducing public transit use in some cities and clogging congested roads with even more cars. Lyft’s brand is built on an image of friendly, well-cared-for drivers, but like Uber drivers, they remain under the heel of the gig economy as independent contractors. And big questions remain about what will happen to these workers if and when the driverless future ever does arrive.

These are not just Lyft problems—they’re societal ones. But Zimmer believes his company is uniquely equipped to deal with the issues of labor, infrastructure, and transportation technology that will reshape cities this century. Lyft has the good-guy image that Silicon Valley needs in a moment of increasing tech cynicism, but it’s still an IPO-bound corporation that is structurally similar to one regularly described as “evil.” The question Zimmer will have to answer, as his company transitions from plucky underdog to legitimate ride-hailing rival, is whether he can build a business that’s actually a force for good, and not just the lesser of two evils.

Lyft’s rapidly expanding offices, in San Francisco’s Mission Bay business district, mix typical Silicon Valley quirk with the company’s well-curated progressive image. In the lobby, hundreds of translucent yo-yos hang from the ceiling in front of the company’s bubbly, lowercase logo. In various corners of the gray, industrial workspace, AstroTurf benches surrounded by living plants present a splash of green, symbolizing the dream of parks one day replacing parking lots in cities (an idea that came to Zimmer on a trip to New York’s High Line, a former railroad line reclaimed as green space). Propped up next to one employee’s computer sits a small picket sign that reads “#MLKEVERYDAY.” Uber’s headquarters, just 2 miles away, feels a universe apart, all sleek minimalism and actual black mirrors.

Lyft Driver Rally
John Zimmer. at a Lyft event in 2015
Photo by John Sciulli/Getty Images for Lyft

Lyft and Uber began as wildly different companies, a fact that Zimmer believes explains why such increasingly similar services can have such starkly different brands. “Logan and I started this company with a social purpose,” he says. “The other company was looking to create private drivers in limos for their best friends. That’s the origin stories.”

It really did take a while for Uber’s and Lyft’s stories to intertwine. Uber was started by serial entrepreneurs, Lyft by recent college graduates with passions for public transit (Green) and hospitality management (Zimmer). The initial version of Uber was an upscale black-car service to let Travis Kalanick (recently ousted as CEO) and his friends “roll around San Francisco like ballers.” Lyft began as a way to help college kids without vehicles carpool home for the holidays.

Back then, though, it wasn’t called Lyft. In 2006, Green launched Zimride, a carpooling platform that used Facebook to connect people planning rides along similar long-distance routes. Zimmer came on as a cofounder in 2007, and their service slowly gained popularity on college campuses (the company was named for Zimbabwe, where Green had observed the popularity of carpooling on a postgraduation trip, not for Zimmer). Zimride was a modestly successful business, but there were concerns in Silicon Valley that its founders lacked the killer instinct that defines nearly every tech giant’s origin story.

“When we were fundraising, I got questions from the VCs saying, ‘Are they too nice?’” recalls Ann Miura-Ko, an early investor in Zimride and current member of Lyft’s board. “And I used to say, ‘There’s a difference between being competitive and being nice.’ You don’t have to give up one to be the other.”

As the number of smartphones in the country surged, Zimmer and Green realized they needed to figure out a way to transfer Zimride’s business to mobile devices. At a hackathon in early 2012, their team came up with a concept that mixed Zimride’s carpooling idea with Uber’s ride-hailing model—an app that would let customers get a ride at a moment’s notice, driven by someone in their personal vehicle rather than a fancy black car. “We [needed] to take it from a product you use two times a year to two times a day,” Zimmer says. They considered calling the new service Zimride Instant but instead christened it Lyft.

Lyft launched in May 2012, catching the tail end of the gee-whiz optimism about technology’s ability to solve the world’s problems via human connection. Early marketing worked extra hard to sell Lyft as a feel-good company: Sit in the front seat! Give your driver a fist bump! Laugh at this goofy pink mustache! But beneath the branding there were features showing that Lyft really did care about more than its own bottom line, such as the ability to tip drivers and a mentor program that paired each new driver with an experienced one before they hit the road. Zimmer himself drives on Lyft every New Year’s Eve to better understand the driver experience, and his time behind the wheel is going up as the company expands, not down. “They’ve always had the driver-centric approach, and it wasn’t just marketing,” says Harry Campbell, owner of the popular blog The Rideshare Guy. “Nowadays, a lot of drivers feel like they’re the more driver-friendly company.”

Uber quickly launched its own version of Lyft’s more casual ride-hailing service, called UberX, and easily gained supremacy in the market. Uber had more money and less shame, bending cities to its will and trying to break its enemies outright. It became the most valuable startup in the world and set its sights on besting Google in the realm of driverless cars and Amazon in the world of product delivery. Lyft emerged as the most viable alternative to Uber out of a scrum of similar startups (RIP, Sidecar) but couldn’t escape also-ran status. In 2016, Lyft was reportedly in acquisition talks with a variety of larger companies but couldn’t earn a high enough bid (a spokesperson says Lyft was “never for sale”).

Waymo-Uber Technology Theft Trial Continues In San Francisco Photo by Justin Sullivan/Getty Images

Even as Uber took off, Lyft retained one advantage: It had a much better public reputation. An early 2017 survey of more than 1,000 drivers by Campbell found that less than half of them were satisfied with their experience driving for Uber. About three-fourths of drivers said they were satisfied driving for Lyft. These drivers, as they sang Lyft’s praises or griped about Uber’s poor treatment during rides, helped frame the way passengers viewed the two companies. Their biggest complaint about Lyft was often simply that there weren’t enough passengers to make driving exclusively on the platform lucrative. More passengers could attract more drivers, who would in turn lower wait times and attract more passengers. To enter this virtuous cycle of network effects, though, Lyft needed a spark.

Enter #deleteUber. By the time of that calamitous weekend last January, Uber and Lyft had become interchangeable experiences for passengers. That made it easy for people to judge the two companies through a moral lens rather than comparing price or service quality. “It’s especially [true] when there’s similarity on those dimensions—price and quality—that reputation matters even more,” says Brayden King, a professor of management and organizations at the Kellogg School of Management at Northwestern University. “I think people are extremely politically sensitive right now and therefore consumers seem to be more mobilized around lifestyle choices that resonate with their own personal politics.”

Gwen Baer, a 26-year-old social media manager, deleted her Uber account in response to the JFK Airport incident, along with six of her friends, who now all use Lyft. She saw it as part of the broader protest movement erupting around the country at the time. “It was just another thing that we were doing, standing up and letting people know we do care about people of color, we do care about immigrants,” she says. “Modern-day America is more than just Trump’s America and capitalism and consumerism. We also care about people for being actual human beings.”

Lyft has leaned aggressively into its anti-Uber positioning, though Zimmer still refers to his rival as “the other company” most of the time. He has an earnestness that seems extremely well rehearsed. Given his background, his salesmanship makes sense—he attended Cornell University to study hospitality management and likes to compare personally owned cars to wildly underutilized hotel rooms. Unlike Kalanick, who checks off a long list of insufferable Silicon Valley stereotypes, Zimmer wants to be seen as a humble guy driven by passion over profits. At a keynote dinner at CES in January, he affably explained Lyft’s ambitious road map, making looming problems (driverless cars displacing human workers) seem like opportunities (more Lyft rides increasing the need for human drivers as driverless cars are gradually implemented). The presentation earned rapturous applause—more than is typical, I was told by one longtime CES attendee—and both people seated next to me said they wanted to start using Lyft over Uber after hearing Zimmer speak.

Sometimes, though, he sells too hard. In a strange interview with Time last March, Zimmer repeatedly described Lyft as “woke” and called his company a “better boyfriend” than Uber. By the time I talked to him in January, he’d recalibrated his PR messaging: “I think [woke] is not the right word for me to be using. … What I want to articulate with that in how we operate is that we are going to be a responsible company that takes care of everyone that’s involved.”

Lyft’s progressive acts have certainly extended past the ACLU donation. In May, the company introduced a feature that lets passengers round up their fare to the nearest dollar and donate the change to charity. The feature has raised more than $4 million. After the white supremacist rally and fatal attack in Charlottesville in August, the company organized a staffwide meeting to let employees vent and decompress, an act of compassion that tech companies often botch. Out of that meeting emerged a plan to include the Southern Poverty Law Center in the round-up donation program and to implement company-wide unconscious bias training. “I got to take my diversity inclusion hat off for a moment and sit in the room as a black man, and see my cofounder across from me talk about the fact that he cares about these issues,” says Tariq Meyers, Lyft’s head of inclusion and diversity. “There were some real conversations that we had, but we had outcomes. … [Zimmer is] very action-oriented as a leader.”

Ultimately, though, Lyft believes its biggest impact on the world won’t be through charity, but through its business model. And the company—whose marketing tagline is “It matters how you get there”—is working hard to convince customers that hailing Lyfts fits into the framework of progressivism that has become part political viewpoint, part personal aesthetic in the social media era. “What we’re finding in our communities is that folks want to be a part of something. They want to stand for something, or in our case, they want to sit for something,” Meyers says. “Just by touching a button I can be a part of something greater than myself.”

Boston is currently home to both the promise and peril of Lyft’s future. In December the company launched its first self-driving pilot and partnered with the autonomous car software company nuTonomy to let customers in the city’s Seaport District hop into driverless vehicles. Having ridden in a Lyft driverless car at a demo in Las Vegas, I can tell you that the trip is disarmingly smooth, and the exact opposite of the white-knuckle experience in an aggressive taxi driver’s car.

In 2016, Lyft said that more than half of its rides would be driverless by 2021, and the company is sticking by that timeline a year and a half later. With its boost in funding and surging user base, Lyft was able to ink several important deals for its driverless future last year. In addition to the nuTonomy tie-up, Lyft announced partnerships with Jaguar Land Rover and Ford (the company also signed earlier deals with General Motors and the Google spinoff Waymo). The company poached a key engineer from Google’s Maps division in February and announced in July that it would launch a driverless car research center, where it would develop its own software and hardware for fully autonomous vehicles. In Lyft’s vision, all these companies with competing interests will one day deploy their cars on Lyft’s transportation network, and customers will have access to any in their vicinity. “We assign an autonomous vehicle, you get a match, and then we give you the option to decide whether or not you want a self-driving vehicle or if you want a traditional Lyft,” says Taggart Matthiesen, Lyft’s director of product. “Those are competitors, but … I see them just as service providers.”

Lyft Lounge at Sundance Film Festival 2018 Photo by Isaac Brekken/Getty Images for Lyft

Whether or not this plan is really implemented by 2021, we don’t have to peer into the future to see how Lyft is changing cities like Boston. Earlier this month the city’s Metropolitan Area Planning Council issued a report on the transportation habits of ride-hailing customers. The survey found that 59 percent of the roughly 1,000 respondents were using apps like Uber and Lyft on trips when they otherwise would have walked, biked, or used public transit. Fifteen percent of the ride-hailing trips were adding congestion to roads during rush hour. And the average ride-hailing trip represented 35 cents in lost fare to Boston’s public transit system, even though the state charges only a 20-cent surcharge to recoup such losses. “The findings above indicate that ride-hailing trips are replacing more sustainable modes of transportation (transit, walking, and biking) at an alarming rate,” the study states. (Lyft says that 47 percent of its customers in Boston use their cars less because of ride-hailing and 24 percent use Lyft to access public transit.)

Other independent research has mirrored Boston’s findings. An October study [PDF] by the University of California, Davis that surveyed adults in seven major U.S. cities found that people who used ride-hailing apps used public transit 6 percent less. Overall between 49 percent and 61 percent of ride-hailing trips would have occurred by more sustainable means (walking, biking, or public transit) or not at all if Uber and Lyft were not available. And all of these trips include a period of “deadheading,” when a driver is alone en route to a new passenger, that would not occur if a person were driving themselves around. Estimates for the time drivers spend deadheading range from 20 to 50 percent, according to the study.

These newest data throw cold water on the idea that Lyft and Uber will inevitably improve traffic conditions as they grow. “Net for net, they’re taking more people off of transit than they’re putting on. … They’re definitely adding more cars to the road,” says Regina Clewlow, the lead author of the study. “If I’m swapping a trip I would have driven myself for a trip in an Uber, at the end of the day, that’s still basically the same, if not more, miles on the road.”

Driverless cars may only exacerbate these problems. From a business standpoint, the main appeal of driverless cars is that they should allow Lyft and Uber to drive down both costs and prices by getting rid of a major expense, human drivers. But lower costs will also increase demand, which means even more cars on the road, and potentially less use of public transit. I explored the heaven-hell dichotomy of driverless cars in a feature about Seattle’s traffic problems in 2016—the more individual people place their own comfort and privacy over the communal benefits of carpooling or public transportation, the faster the dream of a driverless-car utopia turns into a nightmare.

“What happens in automated vehicles, as you drive the cost down—which is the entire goal—the incentive to share rides actually goes away,” says Mark Hallenbeck, director of the Washington State Transportation Center at the University of Washington. “I am extremely skeptical that ridesharing will actually improve dramatically because the behavioral side of it says probably not.”

Lyft says it is an ardent supporter of public transit—cofounder Green was the youngest member of the Santa Barbara County transit board when he was in college, and the company has many partnerships with local governments to ferry people to transit hubs or replace rarely used bus routes with subsidized Lyft rides. As for carpooling, Lyft certainly has more power to push people toward the habit than any public service announcement ever could. In 2017, about 40 percent of Lyft rides occurred in the carpooling service Lyft Line in cities where the feature was available, up from 30 percent the previous year. Zimmer says this number will continue to rise thanks to a mixture of price incentive and government policy—he supports a congestion pricing scheme that would charge people in cars with only one or two people. “Policy can find that price point to change your behavior,” he says.

A world of fully occupied Lines and Uber Pools would reduce taxi traffic by 75 percent in New York, according to an MIT study, paving the way for the smart city of the future. But recent history is littered with idealistic tech visions—Facebook’s global town square, YouTube’s democratized take on television, Airbnb’s “live like a local” ethos—undermined by human cruelty, self-interest, and greed. A company doesn’t need to be as villainous as Uber to upend some aspect of society.

The road congestion conundrum underscores an important point: For all the talk of differing values, Uber and Lyft are becoming more similar over time. Both companies are deep in the red, using venture capital to subsidize their transportation upheaval. Both companies oppose allowing their drivers to unionize or be hired as employees with work benefits. In 2016, when Austin, Texas, passed new background-check laws that they found onerous, both companies left the city on the same day.

Uber has a new CEO, a contrite attitude, and a bevy of driver-friendly features that should have been implemented long ago, like tipping. Lyft has shed some of its distinguishing attributes, like the pink mustaches and the driver mentor program, as its business has scaled. And even some of Uber’s controversies may not be unique—in January, a current or former Lyft employee anonymously claimed that workers at the company had improperly looked up passengers’ location data, similar to Uber’s notorious “God View” mode. The company has said such actions violate its policies and it is investigating the matter.

Is Lyft really just Uber with woke window dressing, a mirage of clever (and increasingly on-the-nose) marketing that’s almost too easy to feel good about using? Many of the company’s proponents who I interviewed struggled with the question. “I’m not going to sit here and say that Lyft is the end-all-be-all answer, but I think they do a better job of attempting to not just simply make profit and do a better job of considering the driver’s needs,” says Jason Evans, a 31-year-old resident of Austin who has mostly stopped using Uber since the travel ban. “I think people around my age feel like this is one action they can do and can have a difference.”

Lyft certainly seems to be making an effort to do good, as all responsible corporations should. When I asked Zimmer if there was a CEO he modeled his leadership after, he mentioned Howard Schultz, the former Starbucks chief who built a brand out of corporate benevolence by paying for his employees’ college tuition and vowing to hire 10,000 refugees. But Starbucks is also the company that was using ruthless scheduling software to wring every ounce of efficiency out of its workers, throwing their lives into chaos. Algorithms can guide human beings to behave like machines without the need to actually build a robot barista or a driverless car. And even well-meaning companies often find themselves using technology to advance their own ends rather than society’s. Lyft wants to be the company that manages the balancing act between those two aims. It may be better equipped than its larger ridesharing rival, but it’s still facing the same potential bumps in the road ahead.

”It’s not just about one ride or the next couple of years or building a business. It’s about what our cities can look like,” Zimmer says. “And so values really matter.”

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