Competition Brings Lyft, Sidecar and Uber Closer to Cloning Each Other
Sometimes competition forces players to distinguish themselves. Other times, it brings them closer together. That seems to be ever more the case among mobile ride-hailing companies, the principals being Lyft, Uber and Sidecar.
Yesterday, Lyft launched “Prime Time Tips” in Los Angeles, instituting a mandatory higher tip — up to 25 percent — during times of high demand. The point is to incentivize and reward drivers to increase supply. Riders will be warned about the dynamic price increase before the booking. It sounds an awful lot, though not exactly, like Uber’s Surge Pricing scheme, which applies a multiplier to fares during peak times.
Meanwhile, also yesterday, Sidecar told California users that it would be switching from “donations” to “payments,” following regulatory approval in September that established that it was okay for people to drive their own cars for pay. Lyft told the Los Angeles Times that it’s planning to do the same thing. You know who else takes payments? Uber.
And you know who else? The taxicabs these companies are trying to upstage.
It won’t take long to recap the short history of ride-hailing, told with a bias toward San Francisco, where the three companies are based.
In May 2012, we wrote about the brand-new beta launch of a peer-to-peer ride-sharing service in San Francisco, called Lyft. In June 2012, we wrote about the launch of Sidecar, a seemingly nearly identical service in the same city, where users hailed pre-screened strangers to drive them places via a smartphone app, and approved a suggested donation when they reached their destination. (The euphemism of a “donation” rather than a “payment” was meant to indicate this was a community service rather than full-on competition with cabs.)
Then, another month later, in July 2012, the black-car smartphone service Uber launched its own lower-cost competitor, UberX. Uber doesn’t harp on the “community” angle as much, but UberX is basically the same service: It includes non-commercially licensed drivers, and has fares that compare well with taxis. (Uber continues to provide its premium services — sedans, SUVs, etc. — with professional drivers, for a higher price.)
And so, over the course of just a few months, San Franciscans went from a crappy cab system — with limited supply, many cars in bad repair, and a significant portion that required cash payments — to multiple low-cost alternatives. And these companies and their competitors expanded to other cities around the country.
Since then, the apps have grown to look more and more alike. A key feature from Uber — overlaying the live location of nearby drivers onto a map, and showing the progress of your hailed driver as he or she approaches your location — quickly became part of Lyft and Sidecar, too. Lyft added enormous fuzzy pink mustaches early on to make its cars stand out, and Sidecar later followed with more subdued “mirror socks.” (And Uber launched a “shave the stache” driver recruitment campaign.)
The differences that persist are ones that are hardly perceptible to many people: For instance, Sidecar asks would-be riders to name their destination in advance. Lyft drivers greet their riders with fist bumps.
Sidecar, Uber and Lyft aren’t the only three companies in the space, but they are quite well-capitalized — especially the latter two. Uber raised $258 million this summer. Lyft added $60 million to its war chest this spring.
At the same time, the companies behind the apps have faced similar challenges from incumbents and regulators, who didn’t much like the competition or its deviations from traditional licensing, insurance and medallion systems.
Then, in September 2013, regulators voted to legalize ride-sharing, by designating a new transportation class that includes people who accept payment for offering rides in their personal vehicles. Sidecar and Lyft were overjoyed, but Uber wasn’t quite as happy, because it was worried that the same regulators would come for its black-car business. The decision is what’s allowing Sidecar and Lyft to dispense with the “donations” ruse.
Meanwhile, the lumbering taxicab industry has been getting with the times. There are now apps like Flywheel and Hailo that help people hail and pay for regular cabs from their phones, just as they would for Ubers, Sidecars or Lyfts.
If cabs had made these changes just a couple of years ago, it’s doubtful the ride-sharing companies would have had such an impact.
The difference, the startups would say, is the communities they’ve built, and their place in the new “sharing economy.” But, really, they’re increasingly acting just like a more modern version of cabs.