How Uber and Lyft are Revolutionizing the Industry
By: Good2GoPublished: June 15, 2015
The Sharing Economy
The relatively recent rise in mobile technology and applications has allowed for some truly innovative new products and services to reach the public. One sector that has been created out of the mobile revolution is known as the “sharing” economy.
The sharing economy refers to using technology to give an individual widespread access to the independently-operated services of another individual. Some of the major industries undergoing change due to the rise of the sharing economy include the hospitality industry with AirBnB and the car service industry with Uber and Lyft.
The way these services work is through a mobile application that can be downloaded on a smartphone for free. Let’s take Uber as an example – a new user will download the app and link it with their credit card information in order to pay their drivers. These drivers are driving their own vehicles and often have day jobs! No cash is ever exchanged. Once the account has been completely set up, the user can then pinpoint their exact location on a map using the app and request a ride (various car types can be requested and vary by price). Once the ride comes and brings them to their destination, the user is billed the appropriate fare and can choose to add a tip to that amount as well as give the driver a rating.
Uber and its rivals have been called taxi services that own no taxis, since all the cars are owned by individual people or companies that sign on with the respective app, which is the marvel of this revolution. Being a peer-to-peer business, Uber as a company saves a significant amount of money since it does not purchase any of the cars that operate under its app.
Uber was founded in March of 2009 by entrepreneurs Travis Kalanick and Garrett Camp. They founded the company after noticing how difficult it was to flag a cab in San Francisco. Lyft was also founded by two entrepreneurs, Logan Green and John Zimmer in San Francisco in 2012. What separates Lyft from an Uber car or a traditional taxi is that every car registered with the Lyft app wears a large, bright pink mustache in its grill. I guess facial hair really is in!
Compare and Contrast
Uber was founded three years before Lyft, which is an impactful amount of time in the startup world. Uber has been dominating the ridesharing playing field and is currently valued at $41.2 billion dollars and, in its latest round of funding, was able to raise $1.2 billion from investors including Amazon.com’s CEO, Jeff Bezos. Lyft, which is Uber’s closest competitor by any metric, is trailing in every category including in its valuation, which according to recent analysis was estimated at $2.5 billion. Lyft may be smaller than Uber, but that doesn’t mean it can’t have its own power brokers behind it. Investing titan Carl Icahn dropped $100 million on the startup in its latest funding round.
Both companies were founded and are currently headquartered in San Francisco, CA, but their reach is already seeing rapid expansion and acceptance in the market. Uber has drivers in 250 cities across 58 countries and is still looking to extend its Asian-Pacific influence. While Lyft has yet to gain any international exposure, it is expanding more rapidly than ever within the United States. On April 24 of 2014, Lyft launched a campaign that would put it in 24 new American cities within 24 hours. The campaign was a success and increased Lyft’s territory greatly to what now includes 65 cities across 29 states.
Uber also beats Lyft in an arena that is not being fought over for recognition – corporate culture controversies. Uber and its co-founder/CEO, Travis Kalanick, have been the targets of claims that they instilled a culture of sexism and misogyny in the company, as well as a cutthroat atmosphere that encourages intimidating and mercilessly crushing competitors.
As young as peer-to-peer ridesharing is, there is a surprising number of players in the industry. India has seen an influx in ridesharing startup activity. India’s burgeoning ridesharing services have caused the country to favor its own startups and take a more protectionist stance towards the industry in order to thwart the American competition in the nation.
Uber, Lyft, and other such services have garnered a following of devout users who love the convenience the company has brought to their busy, typically urban lives. But the love towards ride-sharing services has yet to be unanimously felt.
Both Lyft and Uber have been slapped with countless penalties regarding their lack of compliance with certain license/permit regulations. In some cities like Miami, undercover police officers will flag a cab through that service’s respective app, get in the vehicle, notice a certain license violation, and fine the driver.
Among other places, Uber’s legality has been questioned in Washington D.C., the state of Virginia, and the countries of South Korea and India. Uber still operates in those locations, but they company faces harsher regulations and harsher penalties should there be an incident. Even the jurisdictions that have welcomed Uber without penalties or criminal charges have done so with noticeable caution, since most cities are unaccustomed to mobile technology seep into mass transportation.
Ridesharing is not going anywhere anytime soon. It is here to stay and the only question that’s left is how long it will take for local, state, and national governments to fully accept the reality and impact of this new technology.
Even with the rapid increase in the popularity and usage of peer-to-peer ridesharing services such as Uber and Lyft, there are still more cars on the road than ever before. In such an automotive-oriented world, it is important to protect yourself from the many risks that come with owning and driving a car. Good2Go Auto Insurance helps its clients get back on the road for the least amount of money. We take pride in providing affordable and reliable coverage to those who understand the importance of insuring their car. Why wait, when you can get a free quote right now by clicking here.