Lyft will need to do more than being nicer to beat Uber.

Being the Nice Alternative Isn’t Enough for Lyft to Beat Uber

Being the Nice Alternative Isn’t Enough for Lyft to Beat Uber

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July 31 2017 5:57 PM

It’s Not Enough for Lyft to Be Nicer

The company wants to be the better boyfriend of the ride-hailing industry. That won’t be enough to beat Uber, even now.

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A Lyft car drives along Montgomery Street on Jan. 21, 2014, in San Francisco.

Justin Sullivan/Getty Images

If there is a workplace in America more troubled than Uber is these days, it could only be the Trump White House. The ride-hailing startup, currently valued at around $70 billion, is now operating without a CEO or a chief financial officer, and it has faced scandals this year on a more-or-less monthly basis, including seriously disturbing charges of sexual harassment within the company and a case of trying to discredit a rape victim who was attacked in an Uber in 2014. There was the #DeleteUber campaign; there was the video of founder Travis Kalanick chewing out a driver. And more and more, there is Lyft, Uber’s nice-guy rival.

As Uber fitfully tries to reset its bad fortunes—see the recent intrigue in its search for a new CEO—Lyft is trying its hardest to catch up with its rival. Beyond positioning itself as the convenient ride-hailing company that isn’t afflicted by a toxic tech-bro culture and also keeps an eye out for its drivers (it’s allowed riders to tip drivers for years), Lyft wants to show that it can beat Uber at some of its other endeavors, including the most important one of all: innovating at the bleeding edge of transportation technology. While Uber has faced scandals, internal squabbles, and even a messy legal battle with Google’s parent Alphabet over whether it stole aspects of its self-driving cars technology, Lyft has launched ambitious partnerships in that field with General Motors and even with Alphabet.

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But the narrative that Lyft might ultimately win out by eschewing Uber’s most recognizable trait—that they are jerks—was always too simplistic, and it ignores two things: that even as it roiled by scandal, Uber retains massive advantages against all comers; and that Lyft has benefited immensely from Uber’s brash tactics, particularly Uber’s ask-for-permission-later approach to local regulations. Simply being nice, in other words, won’t cut it.

For its part, Uber can still function quite effectively even without a CEO. It still has legions of drivers. It still has riders who are mostly respondent to convenience and price—not brand reputation. It’s true that Uber may have trouble growing without a strong leader. But unless there’s truly a mass exodus among either riders or drivers, there’s no reason why its operations will face serious trouble.

While the #DeleteUber campaign in February marred Uber’s reputation, particularly among some left-leaning riders who were turned off by (admittedly overblown) accusations of union-busting and complicity with the nascent Trump administration, ultimately only about 200,000 people deleted the app. Uber typically adds around 200,000 new accounts in a single week in just a few of the cities where it operates, according to Recode.

Lyft’s market share isn’t even close to Uber’s. The Los Angeles Times reported that it rose to 24.7 percent from 21.2 percent from mid-February when allegations of the Uber’s sexist culture initially blew up in the press. That’s not nothing. But it’s also not quite an existential threat to Uber.

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That doesn’t mean that Lyft won’t continue to grow as Uber flounders. This time last year, for example, Uber was downloaded 165 percent more than Lyft was. Now, that difference is 70 percent, as Lyft gains popularity as a viable Uber alternative, according to data compiled by Recode. Lyft’s rating in the Apple App store is also significantly higher than Uber’s this year. Lyft has an average of 4.4 stars out of 5. Uber’s average rating this year is 1.8.

But if Lyft really hopes to come out on top, it’s going to do much more to prove it’s a better service than Uber, even though its function is fundamentally the same. That means bringing on more drivers, achieving shorter rider wait-times, improving the app, and offering cheaper fares and a significantly better customer experience.

Courting the drivers that aren’t already double-dipping with Lyft and wooing the riders who have stuck with Uber will take much more than making the case that its rival is an evil company. After all, it’s extremely unlikely that any meaningful percentage of Uber users are even slightly aware of the company’s recent sexist scandals or of the fact that Kalanick is no longer CEO. For that turmoil to truly impact the company’s bottom line, it will also likely have to negatively affect rider and driver experience, which it hasn’t yet. And because Lyft can’t realistically compete on price, its options are limited.

On top of all this, Lyft has also benefited greatly from Uber’s brashness. Until now, Uber has barreled its way through regulatory fights to operate in cities, ultimately opening markets for Lyft to do business, too. So Lyft will have to fight even harder to enter new markets, especially if Uber cools its own efforts, and not just step in when the coast is clear.

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If Lyft can’t surpass its rival on service or growth, what can it do? What it’s been doing: branding.

The company isn’t wrong to cement what its president, John Zimmer, has called its “better boyfriend” image—in comparison to the nickname “Boober” that Uber’s former CEO gave his company, a nod to how his success has helped him to pick up women. But if Lyft truly wants to make an ethical pitch, it can do more. The company released a diversity report earlier this year, and there's room for improvement.* Right now it counts 18 percent of its overall tech workforce that identify as female and only 2 percent of its tech employees are African American. Lyft has also yet to make any monumental announcements about the importance of fostering a healthy and equitable workplace culture in the wake of Uber’s sexist drama.

Neither Uber nor Lyft offer corporate health care to their national networks of drivers, though many put in longer days than most office workers. If Lyft was going to make a big move about improving driver welfare with the hopes that doing so would attract new customers and drivers, the time to do that would be soon.

Will any of this be enough for Lyft to conquer the taxi market that Uber disrupted? No. Uber, after all, has over $5 billion in cash on hand and no qualms about heavily subsidizing its service to price out the competition.

Lyft has never had a better shot at Uber’s crown. Simply being nicer won’t be enough to get it.

Correction, Aug. 1, 2017: This article originally misstated that Lyft has not released a diversity report. It released its first diversity report in June. (Return.)