Benevolent Disruption: Lyft’s Pink Mustache Crusade in Flip Flops

Over the past year, San Francisco-based Lyft has grown out of being a scrappy alternative to Uber and into a formidable, personality-driven transportation powerhouse.  After receiving a $500 million investment from GM and expanding its partnership with Starbucks to incentivize drivers while rewarding passengers, Lyft has maintained its quirky corporate personality seemingly against all odds.

By and large, it seems to come from the ambiguous and nebulous factor that every company seeks to optimize but can never define: culture. 

At the top, Lyft boasts a collection of tech crusaders and dreamers.  Its cofounders, John Zimmer and Logan Green, have remained at its helm as guiding spirits since Lyft’s humble beginnings as Zimride - a network for Santa Barbara college students who wanted to share rides home to Los Angeles or San Francisco. 

Emily Castor drives Lyft’s transportation policy initiatives with a warm personality and sharp intellect that have come to exemplify Lyft’s friendly crusaders-in-Birkenstocks image in Washington.  Joseph Okpaku, Vice President of Government Relations, displays an acute intellect and articulate adherence to the company’s mission, even when challenged by a panel of Senators on the safety of autonomous vehicles and transportation network companies (TNCs) like Lyft.

(Source: Lyft)

At its base, Lyft’s hundreds of thousands of drivers are drawn to an economic opportunity that presents itself as more of a community than a substitute taxi service like its competitors.  When Lyft’s drivers are onboarded in Washington, DC they’re encouraged by fellow “driver-mentors” to join a Facebook page and GroupMe chat where drivers share tips, organize spontaneous meetups, and update each other on earnings.

From personal experience, this makes drivers much happier – communicating with other drivers establishes the sense of a shared experience despite a constant spatial separation.  The platform also allows drivers to receive tips in their app and provides guaranteed hourly fares to drivers during commuting hours.  With Uber in DC, the same accommodations are rarely found. 

John Zimmer, Co-founder of Lyft on the best advice he’s ever received: “Stay true to your values, continue to put people first, and business success will follow,” from Howard Schultz at Starbucks. (CNN Money)

 

Benevolent Disruption

With Silicon Valley’s explosive growth and the emergence of startup culture, the term disruption changed from the negative thing that happens when coworkers walk into meetings late and into a term for anything that changes something else that has long remained the same.  From Google to Airbnb to Uber, this word has been used with almost untarnished reverence in Silicon Valley and tech circles around the world.

And yet, simply making change without a recognition of the consequences should not be enough.  When something is disrupted, it should be done both with purpose and with a purpose. 

That is to say, firms that are disrupting their field should strive to be benevolent actors in the market, or at the very least, minimize the negative impacts of their activity.  Economic activity is about more than dollars and goods/services changing hands – it’s also about how people make those dollars, goods, and services. 

The purpose of Lyft is to fill up the 85% of empty car seats on the road, and it does so with the purpose of reducing greenhouse gas emissions from single-occupant vehicles, increasing mobility for the entire cross-section of urban dwellers, and – this is a bit more of a tangential benefit – giving people the opportunity to interact positively in an increasingly distant society.

It’s obvious when speaking with Lyft’s government relations team that they don’t just have a mission – they believe in it. 

One of the most evident qualities sought after by the startup is intellectual curiosity and a willingness to dig deep into why, philosophically, Lyft can and should exist.  It isn’t taken for granted that their employees are contractors – when asked, it’s clear that arguments for and against their business model have been painstakingly discussed, weighed, and picked apart to create a sincere, nuanced perspective. 

 Their objective, in short, is this: make transportation more affordable, environmentally sustainable, and friendly for everyone – it doesn’t matter who you are, where you’re going, or where you came from, it matters that you’re able to get there. 

 

Chasing Windmills

To accomplish its lofty goals, Lyft will face tremendous challenges in the coming years, requiring even more gumption and bravado to do so. 

In less than a decade, Uber and Lyft upended the taxi industry and brought much-needed disruption to urban transportation.  Yet the crown goes to the conquerors: a territory must be ruled after it is won, even with barbarians at the gates.

In this sense, Lyft’s strength today is its Achilles heel tomorrow.  In the short run, rendering services through private contractors – 70% of whom also have full-time jobs – is a clever option that has offered economic opportunity and flexibility to drivers while allowing it to operate with minimal overhead and a fluid, ever-expanding workforce.

But in the long run, this may not be enough.  Some people may choose to drive for Lyft full time and use it as a sole source of income, like I once did

They may not have access to affordable health insurance, may not receive an adequate wage if Lyft were to lower fares significantly, and could see their cars sink into disrepair. 

As Lyft and Uber continue to expand, they’ll have to take on more and more drivers who might not be adequately prepared to operate as independent contractors who don’t know that they have to set aside portions of their checks for taxes, who aren’t aware of their own liability in accidents, or who face sudden and complete unemployment every time their car breaks down. 

Because drivers aren’t considered employees, Lyft and Uber have to interact with their drivers extremely carefully.  They cannot provide tax advice, benefits, or a host of other worker protections that are found in traditional employment. 

Even with Uber’s most recent agreement to allow drivers to form an association that is sanctioned by the Machinists Union in New York City, drivers only have an established forum to speak with Uber’s representatives and provide feedback – unionization and collective bargaining are expressly forbidden.

Suddenly, drivers may seem less like empowered entrepreneurs and more like vulnerable freelancers who are vulnerable to the whims of the market, misfortune, and misrepresentation.  In turn, passengers may begin to hear about drivers’ hardships and challenges as contractors.  

Such an unmitigated shift in the welfare of drivers and public perception might mean the difference between benevolent disruption and a failed experiment crushed by the weight of populist opposition. 

Nonetheless, it appears that many drivers prefer to be independent contractors for now.  One poll suggests that 73% of Uber driver-partners would rather keep their flexible hours than take on a steady 9-to-5 with a set salary.

Anecdotally, this holds true across each conversation with drivers ranging from Washington to Nashville and San Francisco to New York City. 

Lyft drivers represent an entire cross-section of American society – suburban moms, college students, young professionals, people making career transitions during a mid-life crisis, and even grandparents who just want to get out of the house.  They love that they can drive for Lyft any time they want to make money and interact with people, without needing to build their life around a new job.

And sure, they have complaints.  Sometimes passengers are a little rowdy on the weekends, their cars always feel dirty, they find bizarre items in their car after driving, and often they get poor ratings from passengers without knowing the reason.

Yet every occupation has its ups and downs.  Even in a dream job we still have to wake up early, or work late, or rush to prepare for a big conference and annual review. 

For Lyft drivers, this may not even be a problem much longer.

 

The Next Disruption

The company’s new partnership with General Motors will eventually replace its army of rideshare drivers with a fleet of self-driving cars.  By offering on-demand rides without their greatest operating expense – paying drivers – Lyft will once again have the ability to disrupt the transportation industry with a service that is cheaper, faster, and potentially safer than its current model.

Automated rides mean more than just “taking the other dude out of the car,” as Uber CEO Travis Kalanick has infamously said.  By mapping out cities and optimizing routes based upon traffic and other passenger requests, Lyft will match passengers heading in the same direction and direct vehicles to use the fastest routes possible.

Gradually, these friendly, quirky drivers in their pink-mustachioed cars will find themselves out of their job as a driver.  It’s likely that other opportunities will emerge for these drivers – whether it’s cleaning the cars, monitoring them from a local Lyft office to ensure safety, or taking advantage of the job training programs that Lyft may offer to appease outgoing drivers.

It should not come as a surprise that Lyft will eventually automate its workforce – practically every sector of the economy has and will continue to automate in order to decrease operating costs and increase efficiency.  And in the coming years, about 50% of jobs have the potential of being automated, with some more at risk than others (see your chance of being replaced here).

The social benefits are clear: even without the expected increase in transit efficiency, eliminating the human element of driving could have potentially saved some of the 38,300 American lives lost in traffic accidents in 2015, considering 94% of car accidents are caused by human error (NHTSA). 

Lyft’s success in transitioning to fully autonomous fleets depends on two factors:

a)     Whether it can convince consumers that self-driving cars are safer, faster, and/or more convenient; and

b)     If it will be able to maintain its carefully-crafted image as the “friendlier” version of Uber even in the face of driver strikes, legislative and regulatory obstacles at the federal level, and failing to distinguish itself from Uber when facing homegrown resistance in cities like Austin, Texas

Compared to Uber, Lyft has a lot more to lose – not in dollars and cents, but in the currency of public perception. 

Consumers may dislike Uber for its CEO’s abrasive comments, scorched-earth expansion into new markets, and labor disputes (although Lyft also has its fair share).  But in spite of this, Uber is a verb and it will likely continue to keep a base of customers simply because it is ubiquitous, convenient, and often cheaper than other options. 

Being the nice guy in rideshare isn’t enough: Lyft will have to continue reinventing itself to rise from being simply an alternative to Uber and brand itself as an entirely different lifestyle choice by integrating itself in the urban transit ecosystem and emphasizing the need for equity and social justice in transportation services.  This can be done through:

·         first-mile/last-mile and carpool partnerships with local transit agencies;

·         ensuring equitable access to safe rides regardless of income, location, race, gender, etc.;

·         employing a fleet of low-emission, self-driving vehicles;

·         adopting specialized pick-up/drop-off locations to reduce congestion and allow for quick drop-offs; and

·         helping to bridge the gaps in paratransit services, if and when appropriate.

Already, Lyft is on its way to fulfilling many of these needs.  And, as always, the boldly charismatic upstart is leading the quixotic charge with a smile.