Lyft (transportation service)
Logan Green and John Zimmer
ABOUT THE FOUNDERS/COMPANY:
Green and Zimmer conceived of Lyft as a spinoff of their 2007 startup, Zimride. Zimride was a long-distance ride-sharing program which matched people who wanted to travel to the same distant destinations for a fee. The more people sharing the same ride, the less each individual rider had to pay for the ride. Zimride originally focused its services and marketing on university campuses. Green came up with the idea when he was attending the University of California at Santa Barbara. He would often travel from Santa Barbara to Los Angeles to visit his girlfriend and liked to find ways to share the commute with fellow students or others traveling the same route in order to save money. He frequently used Craigslist ride boards to make these trips, even though he sometimes felt wary of traveling with strangers.
TRIP TO ZIMBABWE CREATED INSPIRATION
Green later made a trip to Zimbabwe where he noticed that locals would regularly share rides in minivan taxis. He related this to his own college experience of ridesharing, and came back from his trip with a determination to start something similar in the US.
He eventually met entrepreneur John Zimmer through Facebook and the two decided to take Green’s idea and together launch Zimride. (Zimride was named after “Zimbabwe,” not “Zimmer,” as many consumers presume.)
EXPANSION TO A NEW BRAND
Capitalizing on Zimride’s success, the two business partners expanded on the idea, changed Zimride’s name to Lyft and launched under the new brand in 2012. Lyft Line now targets users who needed to travel less lengthy distances than the typical Zimride user but, otherwise, the premise is similar. Lyft/Lyft Line is based out of San Francisco, California. Although the rideshare service is often referred to by consumers simply as “Lyft,” the actual service, administered by way of smartphone app, is called “Lyft Line.”
Lyft Line’s popularity with consumers is based on the idea that it is an economical way to travel, and usually cheaper than more traditional forms of travel, such as taxi or bus. Today, Lyft/Lyft Line operates in nearly every state in the US, as well as Washington, DC.
Lyft is a transportation network company that allows valid drivers licence holders over the age of 21 to apply to become drivers for Lyft’s rideshare service, “Lyft Line.” In addition to being of legal age, applicants must have a clean driving record, no history of driving while under the influence of drugs or alcohol and must pass a criminal records check. Once an applicant has been approved, he or she may begin providing rides for Lyft Line customers. Users pay a fee to Lyft, a percentage of which is paid to the Lyft driver. The driver may also keep one hundred percent of any tips he or she receives.
HOW IT WORKS:
The basic premise behind Lyft Line is providing economically-priced rides between destinations for users who need transportation. Lyft is similar to a taxi service in that a rider can purchase a ride from one place to another. However, it differs from a taxi in that once a passenger is picked up at a particular destination, it may also pick up other passengers who are traveling from the same point of origin, or others along the same route from the point of origin to the same final destination. The fee charged to the original rider at the point of origin is reduced if other passengers join the ride before it reaches its destination because the fee will ultimately be shared by every individual passenger. Riders must access Lyft Line through the Lyft app, which can be downloaded to any smartphone.
ANY LICENSED DRIVER OVER THE AGE OF 21 CAN APPLY TO BECOME A LYFT DRIVER
Of course, to be successful, Lyft Line must have a large cache of drivers who are willing, able and qualified to drive riders from their point of origin to their destination. Rather than hiring drivers in a traditional taxi sense, any licensed driver over the age of 21 can apply to become a Lyft driver. (See other qualifications as previously outlined in our “OVERVIEW” section.)
SCHEDULE OF A LYFT DRIVER
The schedule of a Lyft driver: Drivers are not “scheduled” to work at a particular time the way a taxi driver or chauffeur would be. This is one of the things that appeals to potential Lyft drivers. Drivers may choose to provide rides when and where they want to (within their approved area of operation/city) and work for a short time or for longer periods (several hours or more). Therefore, it can be a fun and relatively easy way to earn a side income, especially if you travel between the same points regularly (for instance, from your home in the suburbs to work in a city). Many Lyft drivers simply incorporate their driving work into their regular daily driving routine. Others make a habit of setting aside a few hours a week to making driving more like a traditional job.
(Note: Some regions have regulations that mandate how long a driver can be on the road. Sometimes these regulations apply to only traditional taxi service drivers and don’t include Lyft drivers while in other areas Lyft drivers are under the same regulations as taxi drivers. Be sure that you know what these regulations are for your area (if there are any) and if they apply to Lyft drivers.)
LYFT DRIVER APP
Drivers find riders by using the Lyft Driver app provided to them by Lyft. A driver simply needs to open up the app, where a map will pinpoint the location of the driver via satellite. It will then show ride requests on the map that are within the area along with a time estimate of how long it will take for the driver to reach the location of the Lyft user making the pickup request. It will also show what it will cost the driver for their ride (thus letting the driver calculate approximately how much his or her commission will be).
To accept the ride request, the driver simply taps the screen. If other passengers on the same route are looking for a ride, this will also appear on the map.
Once the driver arrives at the location, he or she must click the “Tap to arrive” button. There is also an option for the driver to text the rider, but Lyft also sends a notification to the rider when the driver arrives. Upon picking up the rider, the driver taps “Pick up [Passenger’s Name].” Next, the driver taps “Navigate,” which gives the most direct driving route and also tracks the trip for Lyft’s records. When the driver reaches the passenger’s destination, he must tap “Tap to drop off,” and when the passenger exits the vehicle, the driver finally must tap the “Confirm drop off” button and then rate the passenger.
The driver pays for his or her ride directly through the Lyft app. This way the driver does not have to worry about processing the transaction and the paperwork involved. However, if the passenger chooses to do so, he or she may tip the driver in cash. Drivers are allowed to keep all cash tips they receive.
HOW MUCH CAN A LYFT DRIVER MAKE?
What will I make as a Lyft driver? How much you can make is a difficult question to answer, largely because the fees that Lyft charges rider vary from city to city, and even within different areas of the same city. It also varies depending on the time of day and day of the week.
There are some factors that are the same, though, no matter what city or area you are operating in. First, there is always a minimum fee and a maximum fee, which Lyft provides to the rider through the app when the rider requests a ride. The minimum, or “base” fee is charged to the rider regardless of whether the trip is two blocks or two miles. The maximum fee is the most that Lyft will ever charge a ride for a given trip.
The maximum fee covers approximately two hours of driving time, with minimal or no stopping for traffic, lights, etc. The driver can choose to drive a passenger longer or further, but will not benefit from an increase in fees for doing so. Lyft advises drivers who have riders that want to go beyond what the maximum fee will adequately cover to suggest that the rider find an alternative method of transportation at the end of the route.
As already noted, all fees are accepted directly by Lyft through the rider’s app. Lyft’s take from each fare is 20 percent. Taxes are also taken from the fare, and may differ from region to region, but average out to be around 9 percent. Depending on region, there may also be a fee deducted for Black Cabs. Whatever is left over after all deductions are made goes to the driver. Again, it’s impossible to pinpoint what this amount will be, but the average payout for Lyft drivers is about 70 to 72 percent of each fee. Your earnings are deposited into the bank account of your choice on a weekly basis.
OTHER THINGS TO KNOW ABOUT BEING A LYFT DRIVER
A few more things to know about being a Lyft driver that may help you increase your business: Riders fill out profiles which are kept on record by Lyft. Along with basic information (name, etc.), users are also asked questions about things like their preferred music style, likes and dislikes, etc. This information is made available to drivers so that the driver can, if he or she wishes, cater the ride to the passenger’s taste. By catering to some of these personal preferences, the driver may increase his or her chance of getting a cash tip, as well as increase the chance that the rider will give the driver a high rating on the Lyft app. More and higher ratings will, in turn, lead future riders to be more likely to choose that driver’s services.
Drivers also fill out profiles about themselves, which are made available to riders. This is another opportunity for drivers to attract passengers to their services. Take full advantage of this opportunity and fill out the entire profile. Be honest, but do be creative when answering questions so that passengers will want to ride with you.
DRIVERS MUST KEEP RATINGS HIGH
Also important to note is that drivers whose average rating is less than three stars may not be allowed to continue working for Lyft. Therefore, it is important to be professional and focus on providing an excellent rider experience.
WHAT USERS ARE SAYING ABOUT LYFT THAT LEAVE A LYFT REVIEW:
As part of our Lyft review process, we checked out what other Lyft drivers are saying about their experiences with the company. Here are a few quotes that we pulled from Indeed.com where users left a Lyft review:
“I’ve only been with Lyft Left for a month. I love It! I get to work when I want with no commitment.” -Lyft review by driver who rated their experience 5 out of 5 stars.
“If you need extra money and have a car it’s not a bad gig. I personally got sick of doing it. It really takes any form of a social life that you have.” -Lyft review by driver who rated their experience 3 out of 5 stars.
“I live about 30 miles outside of downtown. I usually have to drive about 20 miles before I have a chance being pinged for a passenger. You never know who you’re picking up or where you’ll be going until you arrive at the pick-up location.” -Lyft review by driver who rated their experience 4 out of 5 stars.
Lyft drivers on Glassdoor.com had this to say about their experiences:
“Easy/fast money, work whenever you wish.” -Lyft review by driver who rated their experience 3 out of 5 stars.
“You can choose your own hours and work whenever you want. You can just get up and drive, or go online when you have free time. The profits are good, especially if you only need a little to go out later or if you need those extra $20 for something.You have to maintain a clean car every day, which eats up both time and money. Gas is also a bummer, especially when you want to drive non-stop but you glance over and see you’re almost close to empty… it sucks to ask a passenger if you can stop by for gas.” -Lyft review by driver who rated their experience 4 out of 5 stars.
OUR VERDICT ON THIS BUSINESS OPPORTUNITY:
The most frequent complaint that we heard from both current and former Lyft drivers who provided a Lyft review is that the payoff was not as high as they initially expected or were lead to believe, or that the pay was not adequate to cover added gas, vehicle maintenance and insurance requirements.
The second most common complaint from drivers who provided a Lyft review had to do with the rating that riders are required to give after each ride. Many Lyft drivers felt that the rating system, in which a rider must provide a rating out of five stars, was unfair. Drivers frequently commented that drunk passengers, a frequent occurrence on weekends and late nights, weren’t in a position to provide an authentic or honest rating and would sometimes give a low rating for no apparent reason. Other passengers would provide low ratings for reasons that were completely out of the control of the driver, like heavy traffic or the perceived unreasonable cost of the fare.
It seemed that there was a pretty equal balance of negative and positive comments from Lyft drivers who left a Lyft review. However, most drivers rated their experience with Lyft with three or more stars out of five. Two and one star ratings were rare from user who left a Lyft review. While our research was unscientific, we believe that our findings paint a reliable overall picture of what working for Lyft is like.
What we think about working for Lyft: Working for Lyft seems to offer a better payoff to drivers who:
1) Live in busy cities.
2) Commute daily from suburbs to big cities for work (as long as the commute isn’t longer than about an hour each way) and don’t mind picking up passengers.
3) Are willing to work during prime times (weekends, especially late nights).
4) Own cars that are newer and, therefore, more reliable and less prone to breakdowns or needing frequent repairs.
5) Own cars that are gas-efficient.
6) Just want a little bit of pocket money, not a liveable income or career.
Lyft driving didn’t seem to work out as well for people:
1) Who live in rural areas or not in close proximity to large cities.
2) Who don’t routinely drive more than short distances for work or pleasure.
3) Who own high maintenance or gas-guzzling vehicles.
4) Who have unreasonable expectations of the money they will make as a driver for Lyft.
Working for Lyft will not pay your mortgage or rent. However, if you are between jobs, only work part time at your regular job, just want to make a bit of pocket money, or drive a lot for pleasure or personal reasons and want to capitalize on that frequent travel, Lyft is probably a good opportunity for you to consider. If you live in or very close to a busy city, your experience will probably be even better. Otherwise, you might find that the pay-off is not worth the time, gas and wear and tear on your vehicle.
YELLOW THUMBS UP
RECOMMENDED BUT WITH CAUTION
CAN MAKE SOME DECENT PART TIME INCOME
PAYOFF WAS NOT AS HIGH AS INITIALLY EXPECTED
(Learn more about our rating guidelines.)