Uber Vs Lyft: A Modern Parable

A ruthless culture is powerful but unsustainable


When Uber hit the scene in 2009, it quickly became a paragon of corporate disruption. The taxicab industry has been around for over a century, but Uber offered its users solutions to problems they didn’t even know they had. Removing the need for cash and utilizing improvements to location services were Uber’s masterstrokes, but it’s ruthless expansion and business nouse is what truly sets it apart as a game-changing startup.

Uber’s main US competitor, Lyft, has taken a slightly less brutal approach in targeting market share, and has successfully positioned itself as an alternative to its enormous rival’s competitiveness. Lyft has, with a few exceptions, maintained its superiority over Uber in terms of customer satisfaction for the last five years, something that has undoubtedly played a large role in Lyft’s market share gains, along with the multiple damning indictments of Uber’s corporate culture that have rocked the ride-hailing giant this year.

The issues facing Uber have come thick and fast in the first half of 2017. Once an immensely popular example of the tech industry’s ability to innovate, Uber has been under the spotlight since it exploded in popularity and some ugly allegations have surfaced. In just the space of a few months, the company faced multiple allegations of sexual harassment, a focus on its ruthlessly competitive ‘bro culture’ (which directly or indirectly sidelines women), major legal challenges around its use of autonomous driving technology, and ‘revelations that Apple CEO Tim Cook threatened to kick Uber out of the Apple app ecosystem because of Uber programming designed to fool Apple’s own engineers’ (according to CNBC). More recently, the Department of Justice opened a criminal investigation into the company over its alleged use of ‘greyballing’ - ‘using software to elude government officials trying to stop the service in cities where it has not yet been approved.’

And the figures are reflective of Uber’s diminishing popularity. Before the #DeleteUber campaign in January - a response to CEO Travis Kalanick’s position on Donald Trump’s economic advisory council - Uber held 83.5% of the ride-hailing market in the US, with Lyft sitting some distance behind at 16.5%. After both the campaign and former engineer Susan Fowler’s damning February blog post blowing the whistle on alleged sexism throughout the company, Lyft had increased its share to 21.3%.

This isn’t to say that Uber isn’t dominant - Kalanick’s giant has a valuation of $68 billion. A recent $600 million raise has Lyft up to a huge $7.5 billion, but bridging the gap between the two figures will be difficult. This March funding round came at a critical time, though, with Lyft looking to capitalize on Uber’s recent form. While the current incumbent fights lawsuits and accusations of severe cultural issues, it’s competition has been pursuing aggressive US expansion, with over 100 new markets added already in 2017. Lyft saw new user registration up 60% week-over-week in the immediate aftermath of the #DeleteUber campaign, with rides jumping 34% in comparison to the final quarter of 2016.

Lyft has also partnered with the likes of Waymo, Jaguar Land Rover, and nuTonomy to look ahead at the possibility of including self-driving cars in its fleet, which is an area in which it may genuinely be able to challenge Uber. Lyft has a relatively small number of patents, according to CNBC, but they are superior. ‘Lyft’s patents are more focused, specifically on the development of an improved rider experience. Uber’s portfolio is more vast but less likely to bring the company a specific advantage, covering everything from search and mapping to autonomous driving.’

It remains to be seen just how much Lyft can capitalize on Uber’s growing unpopularity and whether that unpopularity will actually translate into a significant loss of users. Lyft is popular with drivers, too. According to a survey from The Rideshare Guy, 75.8% of Lyft drivers are satisfied with their experience with the company, compared to just 49.4% with Uber. So Lyft has a healthier public image, patents that could prove valuable down the line, and the support of its drivers. CNBC even reported in January that Lyft could reach profitability before Uber does. The current leader is sitting on a mountain of cash and has the scale to survive despite its negative press, but it will be interesting to see just how unsustainable its aggressive expansion and cutthroat culture may prove. 


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