Lyft is latest ride-sharing app to offer service in Boston
Car-sharing service Lyft Inc. launches in Boston on Saturday as the latest start-up to bring its smartphone technology here to connect riders and drivers outside the bounds of the traditional taxicab system.
Boston is the first East Coast city for Lyft, and the service arrives as a growing number of companies such as Uber, SideCar, and Hailo are already offering technologies for consumers to find rides from fellow commuters and professional drivers such as cabbies and livery services.
Their arrival has roiled the local cab industry and left regulators here and across the country unsure of exactly how to treat these emerging transportation companies.
Mayor Thomas M. Menino’s office would not comment on whether Lyft is an acceptable transportation service, but SideCar, which runs a similar operation, does not appear to have run afoul of local regulators or cab operators yet.
That hasn’t been the case for Uber, which lets users summon professional drivers — cabs and livery services — using smartphones. Earlier this year, two of the Boston’s biggest cab companies sued Uber saying it operates an unlicensed cab company and flouts local taxi regulations. The city of Cambridge is also challenging in court a state decision from last summer that cleared the way for Uber to operate in Massachusetts.
While all of these new services are similarly tied to the fast rise in mobile technologies, each has a slightly different approach to the transportation business.
Lyft, for example, has an app for riders to connect with drivers who have been checked out and insured by the company.
“You can be on your way to work, and you can be picking people up,” said John Zimmer, cofounder of the company, which this month closed a $60 million funding round led by the venture capital firm Andreessen Horowitz, the Silicon Valley firm that backed Facebook Inc. and Twitter Inc.
Lyft has run into some trouble with regulators in California, which issued a cease and desist order for running an unlicensed cab company last year and fined it $20,000.
But Zimmer said Lyft has an interim operating agreement with California that allows it to operate in Los Angeles and San Francisco, and it is working with the state on a new set of regulations that would apply to ride-sharing services that don’t directly employ drivers or own a fleet of vehicles. California has also fined SideCar and Uber on the same grounds.
California regulators were concerned about the safety of the operation, said Zimmer. And he has stressed that is a key priority for the start-up. It runs criminal background checks on drivers, and makes sure they have insurance, a car that passes inspection, and a clean driving record. Lyft also maintains a $1 million insurance policy for each of its drivers.
So far, Lyft has more than 100,000 users and several hundred drivers nationwide; between 25 and 50 people have signed up to be Lyft drivers in Boston. The service is distinguished by fuzzy pink mustaches mounted on the front grilles of its cars.
Lyft doesn’t charge riders a specific fare, but instead calculates a “suggested donation” based on the time and distance of a given trip. Riders can opt to pay the full donation or less. Most of the time, Zimmer said, riders will pay more than what Lyft suggests.
The average donation for a ride in San Francisco is $15. The company takes a 20 percent cut from the cost of the ride.
In general, Zimmer said, the service costs about 80 percent of a similar cab trip. The service often attracts college students, part-time artists and musicians, and occasionally retired people looking to supplement their income.
Critics suggest that private car services such as Lyft and SideCar may also face legal challenges. The lawyer representing Boston Cab Dispatch Inc. and EJT Management in their lawsuit against Uber, Sam Perkins, said Lyft and SideCar should be regulated just like cabs. And using techniques such as “suggested donations” doesn’t mask their underlying business as a taxi-like service.
“None of these service would exist, or could survive, if they didn’t have just as reliable an income stream from a donation as taxis get from compulsory fares,” he said.