The taxi hailing service Lyft is not giving up on their attempts to catch up with Uber. Despite a significant difference in valuation and market share, the company believes the game is far from over.
Currently, Lyft is working on 'growth and scale' within their business, by making tactical hires and launching new initiatives. Last month, the company welcomed its first ever Chief Strategy Officer, Raj Kapoor from Mayfield Fund, and Melissa Waters, Pandora's former vice president of brand and product marketing, who is now Lyft's head of marketing. By reshuffling the team, Lyft hopes to find strategic solutions to their slow growth speed and ways of capturing more market share. However, it may be too late, as according to Business Insider, Uber has announced it has more than 80% of the US market share, plus Lyft has to take into consideration its rival's international success too.
One of the main reasons for Uber's success is its aggressive strategy orientated on rapid expansion and growth in revenue. Uber's journey hasn't been the easiest, though. The service used to be one of-a-kind, meaning there was no comparison, and Uber had to deal with all the problems associated with being a disruptor. When Uber created a new niche in the market, it needed to figure out ways of gaining and retaining customers' trust, as well as dealing with a huge amount of legal wranglings, such as its constant law suits with incumbent taxi companies and local authorities. Despite the challenges, Uber succeeded. Lyft, on the other hand, has chosen to be a 'good guy' with its strategy and focused on minimizing risk and maintenance of their good reputation. But this is not how disruptive innovation works.
When in 2014 both companies were on the verge of the taxi-hailing revolution - in Portland, Oregon, Uber made it clear that it was going to launch a controversial taxi service without the mayor's permission. Lyft chose to stick to the rules and patiently waited for relevant regulations to be put in place. And today, Uber is operating in 77 countries and 527 cities, with Lyft enjoying only around 200 cities in the US, and 6 other countries. It doesn't, however, mean that Lyft's strategy was a bad one.
The company positioned itself as a caring alternative to Uber which appreciates and listens to their drivers and respects the views of authorities regarding new policies and regulations - but all of these earned Lyft almost nothing, and Uber's 'poorly treated' drivers are not rushing to leave the company.
Over the summer period, Lyft was looking for potential buyers to pick up the business, which was not an act of desperation but rather an attempt to see how others value the company. Options for the second biggest taxi hailing service in the US were limited. Lyft unsuccessfully attempted to sell itself to companies including Google, GM, Apple, and Amazon, according to the New York Times. The closest to a deal was GM, who is also among Lyft's biggest investors. The most recent private valuation of the company was at $5.5 billion, and considering that the deal never happened, it’s possible that they wanted much more than that. After failed negotiations, Lyft made an announcement stating 'the company is not for sale,' - at the same time, Uber had reached a valuation of $66 billion, becoming the biggest venture-backed company in the world.
During an interview with Forbes, Lyft's newly appointed CSO said his role at Lyft will be less about reacting to the competition and more about expanding the business, which seems sensible. The company currently has $1.4 billion of operating resources and is still showing growth. With this in mind, the initiatives should be focused on securing the success, and expansion should happen outside Uber's already captured sectors. With the impressive technology capabilities society has today, alongside the right business vision, Lyft has every chance to find a good and spacious place in the market. However, it can only happen once the company stops chasing its rival and truly focusses on their own goals