Uber vs Lyft: The App Transportation War Gets Bloody
Over the last few years, mobile apps have become the main driver (get it?) in changing the way we solicit rides to get around town. Two of the primary companies offering alternative modes of transportation are Uber and Lyft. While there are certainly other rideshare companies, these are easy to compare because they have a few things in common:
Most used transportation apps.
Both founded in San Francisco.
Both fighting aggressively and publicly for business.
Uber was the first of the 2, starting in 2009 and paving the way for similar companies. In 2012, Lyft joined the game and scooped up much of the riders - and drivers - Uber used to have all to itself. Today, both are faced with fighting each other for a better reputation, more riders, and more drivers.
As such, the fight is starting to get dirty.
War for Drivers
The rideshare apps are seemingly struggling to maintain a reliable fleet of drivers. The remedy? Stealing drivers from each other. Since 2014, both companies have aggressively been poaching drivers from each other, with offers targeted at drivers of the opposing companies and offering sign up bonuses.
As 2015 was just getting its start, the fight became stronger. Uber launched a full assault specifically targeting Lyft drivers to make the switch. The promotion offers that if you can verify that you are a Lyft driver, Uber will give a $500 bonus to make the switch to driving for Uber. The Lyft driver only has to have been driving for Lyft for a matter of weeks to qualify for this promotion.
GET $500 AFTER YOUR FIRST TRIP
Already a rideshare driver? Great! We're giving experienced rideshare drivers like you $500 after you sign up to drive with Uber and complete your first trip. To qualify, you must prove you have driven BEFORE 1/8/15 on another ridesharing platform.
Ostensibly in response, Lyft put together a promotion for Lyft drivers to stay aboard while at the same time beefing up the Lyft driver base. This particular promotion was developed for Lyft drivers to invite their friends to get started driving. Lyft offered that the current Lyft driver and the new driver would get to split $2,000 upon the new Lyft driver’s first ride. Yep, $1,000 a person.
“Refer a Friend. Split $2,000. Friends don't let friends miss out on Lyft promotions. Refer a new driver in San Diego starting today, and you'll both get $1,000 if they give their first ride before March 5.”
As such, Uber’s offer suddenly increased to $1,000...
GET $1000 AFTER YOUR FIRST TRIP
Already a rideshare driver in San Diego? Get $1000 after you sign up to drive with Uber and complete your first trip. To qualify, you must prove you have driven BEFORE 1/8/15 on another ridesharing platform. Don't live in San Diego? No problem, you can still sign up to drive here.
All seemed too good to be true, especially for current and new Lyft drivers able to both earn a grand over one ride.
In Over Their Heads
Too good to be true it was as the plan backfired, leaving scores of angry Lyft drivers and newbie Lyft drivers furious with the company. The promotion launched February 26, 2015 required that the new driver must pass background checks by the end of the very short deadline - March 5, 2015 - to receive the funds. Apparently, Lyft became overwhelmed, per an email sent to applicants the night before the deadline:
“Last week's invitation - apply to be a driver, give 1 ride by March 5, and make $1,000 - brought the biggest wave of applicants in Lyft history.
As we're processing the applications, it's important that we continue to fulfill our safety obligations. Some of these steps, including DMV and background checks, are outside our control and can vary in length for different applicants.
It is possible that you won't qualify for the promotion if all steps aren't completed by the March 5 deadline, along with the ride requirement. In the meantime, you can check the status of your application at lyft.com/drivers.
We'll be in touch again via email with another update on Friday. Thank you for your patience.”
The day of the deadline, Lyft really seemed to be reeling on their heels:
“Lyft learned a lesson this week, and we're sorry for the frustration it caused you. We vastly underestimated the volume of applications we would receive for our $1,000 sign-on promotion, which was created to help us keep up with record-breaking passenger demand.
We owe it to the driver community and our passengers to make sure our approval process is rigorous and complete. All elements of our safety process are imperative and can take time - that means some applications haven't been approved yet even though the applicant's DMV and background checks are in. We know this can be frustrating.
Based on ideas from our community, here are the actions we're taking:
Extension of deadline to March 12 for those who applied for this promotion and pass their DMV and background check by March 5. We're still completing our internal review of many applications, but if your DMV and background checks pass by end of day today (March 5), we're providing an extension until March 12 to meet your ride requirement.
We, at Lyft, will not benefit from an application if an applicant does not qualify for the promotion and does not want to continue through the application process. By default, we won't use any information from the applications of drivers who don't qualify for the promotion, unless they would like us to continue with the application.
You'll receive an email from us tomorrow evening with your eligibility for the extension outlined above. If you are not eligible, you will have the choice of whether or not to continue with your application.”
Uber must be enjoying the seeming implosion of the referral program gone wrong.
Race to the Bottom?
Both companies have aggressively sought new funding for their services, which provides the backing for such expensive promotions. But can offering promotions like this offer a sustainable model for new drivers? Especially if the promotions are not followed through, the trust of the driving and riding community must be reaching new levels of skepticism. All this funding must be paid back...but if the drivers get fed up with empty promises, there could be trouble for the companies.
What are your thoughts? Do rideshare apps offer a sustainable model for business? Were these promotions doomed from the get-go? Let us know what you think in the comments below.
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Startups with the Best Launch Stories
Startup companies are an exciting sector of business, and watching them grow is as interesting as being a team member making it happen. For example, the hit HBO series Silicon Valley has viewers like us well entertained by the shenanigans these entrepreneurs get into. By observing humorously how important the group’s creative solutions move their business forward, other startups can learn from the clever ways these characters get around tricky situations.
Though Silicon Valley is a work of fiction, the scenarios these tech geeks face are quite common in startup culture, especially in technology. Forming a leadership team, honing the idea, getting funding, you name it; getting a startup off the ground and into a profit earning place is not a task for the faint hearted. As such, many startups get buried in the ever-growing startup graveyard, yet others become household names and keep the startup dream alive for everyone.
Here’s a few startups with stories that caught our attention. Some have launched into celebrity success, others are young and growing, but all share the similarity of an interesting idea.
AirBnB
In 2007, a couple of dudes in San Francisco couldn’t pay their rent. The dudes, Brian Chesky and Joe Gebbia, looked around their apartment and decided to rent out their air mattresses, which they did to three people for $80 each. Thinking they might be on to something, the dudes invited their engineer friend Nathan Blecharczyk to build a site, AirBnB, and launched the project at SXSW. Unfortunately, the idea gathered little attention and the team was back to square one trying to figure out how to pay rent.
The 2008 presidential election was around the corner, so they had an idea that could raise money for the fledgling business as well as make ends meet. They decided to make presidential themed cereals, Obama O’s and Cap’n McCains, which they sold at campaign parties at $40 a box. They ended up raising 30,000 from the clever cereal effort, and invested the cash back into the idea they were determined to work. Revamping their design and positioning, AirBnB finally did gain traction, and is now valued at over $10 billion dollars.
ReviewBuzz
Beginning from the closet of his home in Vista, CA, Mike Montano started and launched a successful home services company that grew to a multimillion dollar business. Yet around 2010, online reviews started to become a noticeable factor in the SEO game, and a big reason internet shoppers would choose one company over another. Montano knew customers weren’t just looking for any ole plumber to walk into their house, they were searching for a service professional they could actually trust. He realized online reviews were a way of proving his guys were worthy of trust, and started to encourage his team to ask for reviews. From there, he began to showcase those reviews as social proof for customers looking for help - and realized he was onto a solid idea.
With that idea Montano started ReviewBuzz in 2012, a tech company that helps service companies get more 5-star reviews organically. The core of the business is to make it easy for service professionals to request reviews, and for customers to write reviews online. Only 3-years old, ReviewBuzz has grown beyond home service businesses and has helped companies across a range of industries earn more than 150,000 5-star reviews on sites like Yelp, Google, Facebook and more. Organically!
Dropbox
The file sharing world in 2008 had certainly progressed beyond the floppy disk, yet was dependent on saving to flash-drives or emailing files. Two MIT computer science grads, Drew Houston and Arash Ferdowsi, left the giant MIT network of computers they were used to, and went out into the mainstream norm of how most users stored on computers. Already growing tired of this system, one day while on a public bus Houston realized that he forgot his USB-drive. That moment was the last straw, and he started creating what would later be a cloud-based file sharing system, Dropbox.
Steve Jobs of Apple learned about the product, which piqued his interest to such a degree he offered for Dropbox to join Apple. Houston denied the offer, determined to build the business on his own. And build the business he did, as the company is now estimated to be worth over ten billion dollars and employs over 700 people.
HandUp
One cold San Francisco night in the winter of 2012, Rose Broome was walking down the street and noticed a homeless woman. The woman was sleeping on the street, shivering in the dark. The image haunted Broome as she wondered why, given all of the advancement in technology, this woman was still in a position of living without a home. Broome wanted to find a new way to give to the homeless as a result.
Broome partnered with her friend Zac Witte and created HandUp, a startup company that utilizes crowdsourcing for the purposes of helping homeless people get off the streets and into a better position in life. The app allows people in need to team up with local nonprofits to post their story, photos and videos to request donations that will help them get to a place that will help them off the streets. HandUp has been able to raise money from people like Eric Reis, Salesforce.com founder Marc Benioff, and companies like Google, Twitter, and - tying it all together - Dropbox.
These stories are just a few, and proof that any range of creative ideas can result in startup success. Have a story you’d like to share? Post in the comments below.
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