With Uber in chaos, is this Lyft’s time to shine?
Uber has for years dominated the ride-hailing market, its brand nearly synonymous with an industry that has reshaped how many people get around. Coming in at a distant second — marked by a pink logo and billing itself as a better option for drivers — has been Lyft.
Today . . . well, today Lyft is still a distant second. But the gap has narrowed as Uber Technologies Inc. has been mired in a months-long corporate crisis highlighted by claims of sexual harassment at corporate offices and a series of leadership gaffes that led chief executive Travis Kalanick to take a leave of absence this week.
In Boston and across the country, Lyft has enjoyed a significant uptick in rides since early this year, when the maelstrom of bad news began at Uber.
In late January, Lyft accounted for about 17.3 percent of US rides booked by the two companies, and 14 percent in Boston, according to TXN Solutions, a San Francisco company that tracks credit card purchases. But a week later, after a #DeleteUber social media campaign went viral, Lyft’s share jumped by more than 4 percentage points both in Boston and across the country. Since then, it has risen to more than 24 percent locally and nationally.
Jake Walker of Roslindale was an early Uber user, but he deleted the app and installed Lyft in February, after a former Uber employee published a blog post detailing rampant sexual harassment and sexism in the office. With Lyft providing essentially the same service, he doesn’t see himself returning to Uber.
“When there’s something available that’s just as convenient and that I feel better using, it’s hard to imagine a scenario where I’d go back,” Walker said.
Lyft was already growing before Uber’s trouble began. According to the company, its driver roster more than doubled in 2016 to 700,000, and its rider numbers grew from 7 million to 12 million. Lyft this year has expanded to 150 new cities, bringing its total to 350, a geographic expansion that accounts for some of the growth.
Lyft spokesman Adrian Durbin said the company is “focused on our mission of improving lives through the world’s best transportation.”
“Now that Lyft has reached its current scale and can compete aggressively on price point and pickup times, it comes down to brand — what that brand stands for — and the experience,” he said.
Uber declined to comment, except to say it experienced “phenomenal growth” in the first quarter of 2017, with revenue of $3.4 billion and losses of $708 million, compared with a loss of nearly $1 billion the previous quarter.
The two companies are both based in San Francisco, and their apps and business models are similar. But Lyft has long sought to distinguish itself from Uber. It allows riders to tip drivers in the app, a marked difference from Uber that drivers enjoy. While Uber once marketed itself as “everyone’s private driver,” Lyft’s slogan was “your friend with a car.” And a recent Lyft ad campaign has read: “Happier drivers. Happier riders.”
None of that explicitly points to the issues that have simmered at Uber headquarters. Branding experts say Lyft is right to avoid the topic.
“The thing they need to be concerned about is not turning it into negative and pointing out the problems of the other guys, but to take it as an unsaid opportunity,” said LuAnn Reeb, a marketing professor at Emerson College. “They have to make it as good an experience as possible for the people who are converting.”
Taxi and limo industry groups, by contrast, have been quick to attack Uber during the crisis. Justin Joseph, a communications professor at Boston University, said those companies likely want to draw a distinction between their services and the ride-hailing firms that have decimated their businesses, in an effort to win back customers.
But head-to-head competitors like Uber and Lyft are usually more reluctant to criticize one another, because it could lower the overall perception of their industry, Joseph said. “Once you start throwing mud at your competitor, you could be throwing mud at yourself, too,” he said.
Some passengers may already have developed a negative perception of ride-hailing companies in light of Uber’s issues. Audrey Michael, a 23-year-old Cambridge resident who replaced Uber with Lyft over the winter, considers Lyft only marginally better because both companies consider their drivers independent contractors.
“In some ways, Lyft is exactly the same, but I also feel like if I’m going to use ride-sharing, I needed to use a different company” than Uber, she said.
Drivers, meanwhile, do not appear to be abandoning Uber in droves. One Massachusetts driver, Zahir Bacaliu, said he was largely unfamiliar with the company’s corporate controversies. “I know there’s something going on about the CEO, but that’s it,” he said.
But some drivers who take both Uber and Lyft passengers say they are getting more activity on Lyft in recent months. Michael Sullivan, a New Hampshire resident who drives for Uber and Lyft in Boston, said about 20 percent of the passengers he picks up say they have deleted Uber because of its corporate issues.
“I would never use Uber as a passenger,” Sullivan said. But he remains an Uber driver because “someone else would otherwise.”
Smaller Uber competitors also seem to sense an opportunity. Vlad Christoff, cofounder of Boston-based Fasten, which operates in Massachusetts and Texas, said ridership has increased in recent weeks even though college students have left the city. Uber’s problems have “opened the eyes of riders” to his service and its driver-friendly policies, he said. Unlike Uber and Lyft — which take a percentage of what drivers make — Fasten collects only $1 per ride.
Safr, another Boston startup geared toward female passengers and drivers, said in an e-mail that “troubling news about ridesharing services is prompting them to look for safer, socially responsible alternatives.”
Joseph, the BU professor, noted that Uber’s massive market share lead will help it weather these difficult times. Even as Lyft and other companies grow, they have a “tough hill to climb” if they are to supplant Uber, he said.
According to TXN’s research, the percentage of passengers who shifted spending from Uber to Lyft since February is still small, topping out at about 3 percent of riders in San Francisco. (Boston’s 2 percent swing was the fourth largest.)
But TXN also found that riders who did not completely abandon Uber also began spending 25 percent more on Lyft rides after the scandals began.
“It seems that the media attention around Uber’s woes has increased awareness of Lyft as an alternative, even amongst those most loyal to Uber,” TXN wrote in a blog post on its data.