Lyft Plans to Expand to 100 More US Cities in 2017 [The Verge]

Harry here.  Lyft has been in the news a lot the past couple weeks, with big results from our survey, fare cuts/increases and now this latest expansion announcement.  I think more competition is a good thing though, and I hope to see Lyft continue to do well and expand.  Today, senior RSG contributor John Ince takes a look at Lyft’s expansion plans, a well-researched story on Uber and Lyft drivers who sleep in their cars and the controversial appointment of Travis Kalanick to serve as an advisor for the Trump administration.

In this round up, John Ince covers Lyft's expansion plans, drivers who live out of their cars, and Uber CEO's relationship to Pres Trump.

Lyft plans to expand to 100 more US cities in 2017 [The Verge]

Sum and Substance: Lyft will launch its service in 100 additional cities in the US in 2017, according to Business Insider. The major expansion, which was confirmed by a spokesperson, will bring the total number of US cities served by Lyft up to 300 by the end of the year The expansion will begin right away, with Lyft adding 40 cities to its map on Thursday. The remaining 60 cities will be announced later this year. Lyft says that it currently covers 55 percent of the US population, or 177 million people, and that by the end of the year, that coverage will increase to 72 percent of the population, or 231 million people. “We are building on the momentum of an awesome 2016 and will accelerate our launch pace over the next several months,” said Jaime Raczka, head of early stage markets and expansion, in a statement. “There is a lot of excitement from both passengers and drivers as Lyft expands into these new markets.”

… That said, Lyft has a long way to go to catch up with Uber, which is available in over 560 cities around the globe. So far, Lyft has remained within the US, but it seems likely the company will seek to expand into other countries soon enough. The company formed an anti-Uber alliance with a handful of Asian ride-hailing companies, though the status of that alliance is unclear since Uber sold its Chinese business to one of the members, Didi Chuxing.

Lyft’s domestic expansion comes as the ride-hailing startup put into effect a modest price cut in its city of origin, San Francisco. According to a “competitive strategy update” message obtained by The Verge, Lyft said it would be lowering prices by less than 2 percent thanks to “slower winter months” and “competition offering lower prices.” (The validity of the latter reason is a little unclear, as Uber has broken with tradition this year by abandoning its annual price cuts, according to Quartz.)

My Take:  Although some have written off Lyft as a serious Uber competitor, this latest expansion to 100 cities could be aimed at challenging their bigger rival.  Is this a desperate move or does Lyft have the resources to expand?  One can certainly see the logic.

Harry’s study on driver satisfaction clearly indicates Lyft has a stronger brand than Uber in the driver community.  Uber’s $69 billion valuation dwarfs Lyft’s market value largely because Uber is seen as more dominant in more places.  If ridesharing truly is an industry that shows network effects (which I question) then it makes sense for Lyft to expand its footprint.  But if neither company can demonstrate that its business model works, then expanding will just increase losses.

As I’ve said before on this blog: deep pockets will likely determine the winner in this space. If Lyft can parlay its expansion into another funding round (hopefully at a higher valuation), then this will have been a good move. If not, it could be Lyft’s last, desperate gasp for air.

When Their Shifts End, Uber Drivers Set Up Camp in Parking Lots Across the U.S. [Bloomberg]

Sum and Substance: In the 1970s, the Safeway grocery store in San Francisco’s gleaming Marina neighborhood, known as the Social Safeway, was a cornerstone of the pre-Tinder dating scene. Armistead Maupin made it famous in his 1978 book, Tales of the City, calling it “the hottest spot in town” to meet people. For years afterward, locals called it the “Singles Safeway” or the “Dateway.” 

Forty years later, German Tugas, a 42-year-old Uber driver, got to know it for another reason: Its parking lot was a safe spot to sleep in his car. Tugas drives over 70 hours a week in San Francisco, where the work is steadier and fares are higher than in his hometown, Sacramento. So every Monday morning, Tugas leaves at 4 a.m., says goodbye to his wife and four daughters, drives 90 miles to the city, and lugs around passengers until he earns $300 or gets too tired to keep going. (Most days he nets $230 after expenses like gas.) Then, he and at least a half dozen other Uber drivers gathered in the Social Safeway parking lot to sleep in their cars before another long day of driving.

“That’s the sacrifice,” he said in May, smoking a cigarette beside his Toyota Prius parked at the Safeway at 1 a.m., the boats in the bay bobbing gently in the background. “My goal is to get a house somewhere closer, so that I don’t have to do this every day.” 

The vast majority of Uber’s full-time drivers return home to their beds at the end of a day’s work. But all over the country, there are many who don’t. These drivers live near, but not in, expensive cities where they can tap higher fares, ferrying wealthier, white-collar workers to their jobs and out to dinner—but where they can’t make enough money to get by, even with longer hours. To maximize their time, drivers find supermarket parking lots, airports and hostels where they catch several hours of sleep after taking riders home from bars and before starting the morning commute….

My Take:  One might expect to see an article like this in a progressive blog or liberal website, but when you read this on Bloomberg, it means the plight of the Uber / Lyft driver has made it into the mainstream consciousness.

The article is well-researched and well-constructed.  The author gives a compassionate feel for the real world challenges of being a rideshare driver and discreetly draws a contrast between the situation of Uber execs/investors  who have seen their net worth soar to stratesophic levels, while some of the drivers who make it all possible are sleeping in their cars at night.

What’s wrong with this picture? Publicly, Uber has gone into overdrive to stem the tide of driver opinion against them.  They’ve declared 2017 “The Year of the Driver” and hired a high powered exec to make the company seem more driver-friendly. Perhaps Uber finally understands the importance of drivers to their business model, but until they move beyond cosmetic gestures, don’t bet on on any substantive moves to improve driver’s plight.

Ride-Hailing Drivers Are Slaves to the Surge [The New York Times]

Sum and Substance: Uziel Santos driving in Manhattan. He signs on to three ride-hailing apps to determine the highest-paying fares that day. Credit Nicole Craine for The New York Times. Every weekday at 5:30 a.m., Uziel Santos, 48, leaves for work. Like most drivers for ride-hailing apps in New York, he is drawn by early-morning surge prices, and those closest to his home in Astoria, Queens, are on the Upper East Side of Manhattan, where children and parents book short, lucrative rides to school and work.

He simultaneously signs on to Uber, Lyft and Juno, three of the most prominent ride-hailing apps currently operating in the city, to determine the highest-paying fares in town that day. Having already memorized the promotions that various apps announce at the beginning of each week, Mr. Santos quickly scans for daily or even hourly surges and determines which app has the most profitable deal.Uber would bring him nearly twice the fare that a yellow cab would charge on a recent morning. 

“It’s like a weather forecast,” Mr. Santos said. “You learn to predict when people need rides, and where.” Ride-hailing apps established surge prices to lure drivers to areas with more requests than available cars. Capitalizing on New York’s hypersensitive surge market, drivers use two or three phones per app, or even supplementary apps like Driver Bar and Uber Partner that are designed to help them find the best rates offered among the various apps and to log off apps when accepting rides on others.

My Take:  This article gives a good feel for the way really experienced drivers operate.  There’s much more to this gig than just turning on the app and passively accepting ride requests as they come in.  The driver who is the subject of this story gives some of his trade secrets about how to screen requests to maximize income.  It should be required reading for all new drivers.

Watch Aziz Ansari take the weirdest Uber ever on SNL [Geekwire]

Sum and Substance: The awkward Uber trip has become so universally relatable, it’s joining the Saturday Night Live canon, along with the uncomfortable elevator ride, and the crowded subway car. In a skit with host Aziz Ansari, SNL spoofed the kind of ride we’ve all experienced — where one or both parties is trying way too hard.

Both Ansari and SNL’s Bobby Moynihan play characters trying to improve their Uber ratings and boy do they pull out all the stops. The skit parodies everything you might see in an Uber gone wrong, from vaguely racist assumptions about each other’s musical tastes to gnarly car mints to a very ill-conceived mutual massage. But it does have a happy ending … sort of. Watch the full SNL skit below:

My Take:  This is an entertaining sketch, but it’s based on a false premise.  If the driver had a 3.9 rating he would have been long gone.  Nevertheless, SNL has captured one of the strange aspects of this gig – the lengths some drivers will go to get a five star rating.

I’ve long considered the rating system to be one of the most unpleasant aspects of this job.  It automatically gives the passenger power over the driver, whether that power is justified or not.  Is it fair that a drunk or distraught passenger gives you a low rating when you did everything within your power to earn five stars? No, absolutely not, and yet that’s the way it is when you’re a rideshare driver.

‘I do not accept him as my leader’ — Uber CTO’s explosive anti-Trump email reveals growing internal tensions [Business Insider]

Sum and Substance: Shortly after Donald Trump won the 2016 presidential election, the chief technology officer of Uber rattled off an explosive email meant for a small group of employees that quickly spread like wildfire within the company, Business Insider has learned. 

In the message, CTO Thuan Pham blasted Trump as a “deplorable person” and called his election a huge step backward — even comparing it to the rise of ruthless dictators such as Mao Zedong in China and the Khmer Rouge in Cambodia after the Vietnam War. The email was being circulated internally among employees again in the past week, as Uber has come under fire for its link to the Trump administration.

Uber CEO Travis Kalanick was recently named as one of 19 executives who will advise President Trump on economic issues, joining Tesla CEO Elon Musk and Disney CEO Bob Iger. The visceral reaction by a top executive at one of the world’s most valuable private companies reflects Silicon Valley’s ongoing struggle to come to terms with a president who is deeply unpopular within the industry.

Even Uber, whose outspoken CEO and aggressive business tactics have long courted controversy, appears to be divided by a crisis of conscience within the ranks as some employees weigh the costs of being perceived as a pro-Trump shop. Uber’s ties to the Trump administration made headlines on Friday after protesters barricaded the doors of its San Francisco headquarters to denounce Uber’s “collaboration” with Trump. 

My Take:  Travis Kalanick is trying to walk a PR tightrope in his relations with our incoming president.  No CEO should take an invitation from the president to serve as an advisor lightly.  It’s potentially a valuable connection in a world where connections count.

But Kalanick’s acceptance of that invitation has tarnished the Uber brand both with employees and with the public at large – especially activists.  The dilemma is not unique to Uber and Kalanick.  All CEO’s are now adapting to a new reality. Acquiescence to a new power structure can be seen as a sign of weakness if you’re adamantly opposed to Trump, or seen as a sign of pragmatic leadership of you inclined to support him.  What do you think?  Should Kalanick serve as an advisor to Trump?

Readers, what do you think of this week’s round up?

-John @ RSG