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Transportation network company
Industry Transportation networking
Founded June 2012; 4 years ago (2012-06)
Founders Logan Green, CEO
John Zimmer, President
Headquarters San Francisco, California, United States
Services Taxicab, Vehicle for hire
Revenue Increase $700 million[1]
Decrease -$600 million[1]

Lyft is a transportation network company based in San Francisco, California with operations in 300[2] cities in the United States. It develops, markets, and operates the Lyft software application, which allows consumers to request car transportation via the Lyft mobile app. It also allows drivers to earn income from delivering food or transporting passengers. Lyft drivers use their own personal cars, although drivers can rent a car to drive with Lyft.[3][4][5]

How it works[edit]

Riders must download the Lyft mobile app to their iOS or Android-based phone, sign up, enter a valid phone number, and enter a valid form of payment (either a credit card, or link to a Google Wallet or PayPal account).[6] Passengers can then request a ride from a nearby driver. Once confirmed, the app shows the driver's name, ratings by past passengers, and photos of the driver and car.[7] Drivers and passengers can add personal information to their profiles about their hometown, music preferences, and other details to encourage drivers and passengers to converse during the ride.[8] After the ride is over, the rider is given the opportunity to provide a gratuity to the driver, which is also billed to the rider's payment method.[9]

Lyft offers four types of rides within the app:

  • Lyft Line, which is not available in all cities, is the cheapest option and will match passengers with other riders if they are going in the same direction.[10]
  • Lyft is the basic offering that matches passengers with nearby drivers.
  • Lyft Plus matches passengers with a six-seater car.[11]
  • Lyft Premier matches passengers with a luxury car.[12]


One tenet of Lyft’s platform is establishing trust among its users.[13] All drivers undergo the following screening processes:

  • Department of Motor Vehicle, sex offender registries in the United States, and personnel-type criminal background checks. The criminal background check goes back seven years and includes national and county-level databases, as well as national sex offender registries.[14]
  • In-person interviews with current Lyft drivers.[15]
  • Drivers must be 21 years or older and have had a driver's license for more than 1 year.[14]
  • Zero-tolerance drug and alcohol policy.[14]


After a ride is completed, drivers and passengers are given the opportunity to rate each other.[16] Any driver averaging a low rating by users is dropped from the service.[14]


Although Lyft drivers are classified as independent contractors, Lyft also insures each driver with a $1 million commercial liability policy that is primary to a driver’s personal policy. Additional coverage includes:[17]

  • Contingent comprehensive and collision coverage up to $50,000 with a $2,500 deductible. (Applies from the time a driver accepts a ride request until the time the ride is ended in the app.)
  • Contingent liability coverage up to $50,000 per person/$100,000 per accident/$25,000 property damage. (Applies from the time when a driver flips into driver mode until the driver accepts a ride request.)
  • Uninsured/underinsured motorist coverage up to $1 million. (Applies from the time a driver accepts a ride request in the app until the time the ride is ended in the app.)


Further information: Timeline of Lyft
A Lyft vehicle in Santa Monica, CA with the original grill-stache branding, since retired.


Lyft was launched in the summer of 2012 by Logan Green and John Zimmer as a service of Zimride, a ridesharing company the two founded in 2007.[18] Zimride focused on carpools for longer trips, often between cities,[19] and linked drivers and passengers through the Facebook Connect application.[20] Zimride eventually became the largest rideshare program in the United States (U.S.).[21][22]

Lyft launched as an on-demand ridesharing network for shorter trips within cities. Similar to Zimride, the app connects drivers with cars to passengers that need rides. Drivers and passengers rate each other on a five-star scale after each ride,[13] and the ratings establish the reputations of both drivers and passengers within the network.[13] To use Lyft, clients must set up an account that links directly to a funding source such as a debit card or PayPal account. Once the ride is completed, funds are debited from the funding source. Lyft then retains approximately 20-25% (20% from drivers who applied before January 2016 and 25% from those who applied starting January 2016) of this total as business revenue.

Due to regulatory hurdles in New York City, the company eventually decided to significantly alter its business model to establish Lyft on the East Coast. Lyft’s launch in New York City occurred on the evening of July 25, 2014 and, in accordance with the Taxi and Limousine Commission (TLC) and the approval of the Manhattan Supreme Court, only drivers registered with the TLC were permitted to drive Lyft-branded vehicles in New York City. Instead of Lyft's signature pink mustaches, Lyft drivers in New York City sported a smaller pink mustache on their dashboards, which eventually evolved into the "glowstache."[23][24] In December 2016, Lyft introduced a new color-changing dashboard indicator called "Amp."[25]


Lyft is valued at $5.5 billion.[26] As of January 2016, Lyft had raised more than $2 billion from investors General Motors ($500M), Alibaba, Andreessen Horowitz, Coatue Management, Didi Kuaidi, fbFund, Floodgate, Fontinalis Group, Fortress, Founders Fund, GSV Capital, Icahn Enterprises, Janus Capital Management, K9 Ventures, Mayfield Fund, Prince Alwaleed's Kingdom Holdings Company, Rakuten, Tencent, and Third Point Ventures.[27][28][29]

Financing history[edit]

In May 2013, Lyft completed a US $60 million Series C venture financing round led by Andreessen Horowitz; the other investors were Founders Fund, Mayfield Fund, K9 Ventures, and Floodgate Fund.[19][30] In July 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise Rent-A-Car, to enable the company to focus exclusively on the growth of Lyft.[31]

In April 2014, Lyft completed a $250 million Series D financing round led by Coatue, Alibaba, and Andreessen Horowitz, bringing its total amount raised to $332.5 million.[27] A $530 million investment led by Japanese online retailer Rakuten Inc. in March 2015 and an additional $150 million led by a $100 million investment from Carl Ichan in May 2015 brought the total raised to over $1 billion and the valuation to $2.5 billion.[32][33]

On January 4, 2016, Lyft announced a partnership with U.S. automaker General Motors, which invested $500 million as part of a $1 billion fundraising effort. The partnership is designed to help both companies accelerate in the ride-sharing market, as well as the autonomous car arena.[34] In conjunction with GM's investment, Prince al-Waleed bin Talal of Saudi Arabia also made an investment in Lyft which included the purchase of $148 million worth of existing stock from Andreessen Horowitz and Founders Fund.[35]

Regulatory opposition and momentum[edit]

Lyft’s distinctive pink mustache was the first branding the company used until 2015 when it switched to a smaller, glowing magenta mustache that sits on a driver's dashboard.

Like many peer-to-peer startups, Lyft faces legal and regulatory hurdles and has been criticized by established commercial enterprises, including taxi services.

In the fall of 2012, the California Public Utilities Commission issued a cease and desist letter to Lyft (along with Uber and Sidecar) and fined each $20,000.[36] However, in 2013 an interim agreement was reached that reversed those actions. In June 2013, Lyft, Uber and Sidecar were served with cease and desist letters by the Los Angeles Department of Transportation.[37] In September 2013, the California Public Utilities Commission unanimously voted to make the agreement permanent, and created a new category of service called Transportation Network Companies, making California the first state to recognize and regulate such services.[38]

The Washington, D.C. City Council passed emergency legislation in September 2013 to allow ridesharing platforms like Lyft to operate.[39]

The Seattle City Council passed an ordinance in March 2014 that capped Lyft drivers on the road at any given time to 150. As that failed to function with Lyft's model, the company supported a coalition that submitted a referendum containing 36,000 signatures from residents that called for the ordinance to be appealed.[40] Following the signatures, Seattle Mayor Ed Murray worked with Lyft to reach a deal in July 2014 that legalized ridesharing in Seattle.

In the spring of 2014, Lyft hired two lobbying firms, TwinLogic Strategies and Jochum Shore & Trossevin, to address the regulatory barriers and opposition it had received since its launch.[41]

In May 2014, Lyft signed a temporary operating agreement with the city of Detroit that allows operation under a specific set of rules for two years or until new regulations are developed.[42]

In June 2014, Colorado became the first state to pass rules for TNCs through the legislative process, when S 125 was signed into law.[43]

In July 2014, the Minneapolis City Council voted almost unanimously to legalize Lyft and other Transportation Network Companies.[44]

In September 2015, Lyft announced a relocation of their customer service operations to Nashville, and mentioned that a full relocation would be possible in the future from San Francisco.[45]

In December 2015, Lyft became the first ride-hailing service allowed to pick up passengers at Los Angeles International Airport.[46]

Other cities and states such as Austin,[47] Nashville,[48] Tulsa[49] and Illinois[50] have passed laws to regulate or outlaw Lyft and other TNCs.

Lyft, like other ride-sharing services, has been criticized by government officials for operating what they consider to be unlicensed taxi services. For example, upon expansion into Virginia in April 2014, the Virginia Department of Transportation levied a $9,000 civil penalty against Lyft for failure to register as a transportation broker. Virginia DoT had previously communicated with the company and informed it that it had to register in order to provide services inside the Commonwealth. In August, state officials reversed their ruling and allowed Lyft to operate in Virginia.[51]

In 2016, Lyft offered promotions to attract public transit customers affected by transit service disruptions. During Washington Metropolitan Area Transit Authority's SafeTrack construction Lyft offered deep discounts in the areas impacted,[52] and after Massachusetts Bay Transportation Authority ended late night service Lyft discounted trips during the overnight times impacted.[53]

Self-driving car research[edit]

On May 5, 2016, Lyft and General Motors announced, as part of their partnership, that they planned to begin testing self-driving cars within the next year. They were considering using a self-driving Chevrolet Bolt for this purpose.[54]

Financial results[edit]

In 2014, the company said it had grown ride numbers and revenue five fold.[55] In January 2017 the company announced it facilitated 160 million rides combined in all cities where it operates.[56]


Lyft faces competition from Uber, Via, Haxi, Dryver, and other car-service startups. Lyft's global alliance includes China's Didi Chuxing, India's Ola Cabs and Southeast Asia's Grab.


In 2013, San Francisco Mayor Ed Lee proclaimed July 13 as Lyft Day.[57]

Beyond its fundraising and user adoption numbers, investors and commentators have praised Lyft's sense of "community". Scott Weiss of Andreessen Horowitz said the venture capital firm ultimately decided to invest in Lyft because of its strong community and transparency. He wrote in his blog, "Lyft is a real community—with both the drivers and riders being inherently social—making real friendships and saving money."[58]

Drew Olanoff of TechCrunch wrote, "You feel like you're in the car with a friend, and that's no mistake...Whether it's bringing someone a sandwich for the ride or letting them choose the music in the car, Lyft drivers have their own budding community growing."[59] Jessica Gelt wrote in the Los Angeles Times, "Lyft's marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic."[60] Others have protested the impact of Lyft and its competitors on the taxicab industry.[61]

Political involvement[edit]

In 2017, Lyft pledged to donate $1 million to the ACLU in response to the executive order signed by President Donald Trump.[62]

See also[edit]


  1. ^ a b Newcomer, Eric (12 January 2016). "Lyft Loses $600 Million in 2016 as Revenue Surges". Bloomberg L.P. 
  2. ^ "Lyft launches in 10 more markets to meet 2017 goal of 100 in just 3 months". VentureBeat. Retrieved 2017-03-11. 
  3. ^ Patrick Hoge (18 November 2013). "Lyft and Sidecar replace voluntary donations with set prices". San Francisco Business Times. American City Business Journals. Retrieved 13 July 2014. 
  4. ^ Alsever, Jennifer (3 Oct 2012). "The mega trend that swallowed Silicon Valley". CNN Money. Retrieved 17 July 2013. 
  5. ^ Lawler, Ryan (31 May 2013). "Lyft Hits The East Coast With A Launch In Boston, Its First Big Post-Funding Expansion City". TechCrunch. 
  6. ^ Lane, Patrick (27 October 2012). "A Sense of Place". The Economist. 
  7. ^ Payments and Tips
  8. ^ Meet Lyft Profiles
  9. ^ How to Tip Your Driver
  10. ^ Make your everyday 365x easier
  11. ^ Lyft Plus
  12. ^ Arrive in Style with Lyft Premier
  13. ^ a b c Gustin, Sam (23 May 2013). "Lyft-Off: Car-Sharing Start-Up Raises $60 Million Led by Andreessen Horowitz". Time Magazine. Retrieved 17 July 2013. 
  14. ^ a b c d We Go the Extra Mile For Safety
  15. ^ A ride whenever you need one
  16. ^ Driver and Passenger Ratings
  17. ^ Lyft's Insurance Policy
  18. ^ Farr, Christina (23 May 2013). "Lyft team gets $60M more; now it must prove ride-sharing can go global". VentureBeat. 
  19. ^ a b Green, Tomio (23 May 2013). "Lyft Raises $60 Million As Ride Sharing Competition Heats Up". Forbes Magazine. 
  20. ^ Kincaid, Jason (25 Mar 2009). "Zimride: A Carpooling Startup That Actually Makes Money". TechCrunch. Retrieved 17 July 2013. 
  21. ^ Boyd Myers, Courtney (16 Jun 2012). "2012: The Summer of Ridesharing with Zimride, Ridejoy, Carpooling and more". The Next Web. 
  22. ^ Lyon, Cody (3 Aug 2012). "Zimride expands its ride-share business". Upstart Business Journal. 
  23. ^ CHRISTINE LAGORIO-CHAFKIN (25 July 2014). "Lyft in New York City: Let's Try This One More Time". Inc. Monsueto Ventures. Retrieved 27 July 2014. 
  24. ^ Associated Press (27 January 2015). "Lyft drops pink furry mustache, debuts 'glowstache'". New York Post. Retrieved 2 June 2015. 
  25. ^ Trop, Jaclyn. "You'll Never Get Into The Wrong Lyft Again". Forbes. Retrieved 2017-01-11. 
  26. ^ "Lyft Raises $1 Billion, Adds GM as Investor and Partner For Driverless Cars". 4 January 2016. Retrieved 2 June 2016. 
  27. ^ a b "Lyft Raises $250 Million From Coatue, Alibaba, And Third Point To Expand Internationally". TechCrunch. AOL. 2 April 2014. 
  28. ^ Lawler, Ryan (11 March 2015). "Lyft Has Raised $530 Million In Series E Funding Led By Rakuten, Is Now Valued At $2.5 Billion". TechCrunch. 
  29. ^ Kia Kokalitcheva (January 4, 2016). "Lyft Raises $1 Billion, Adds GM as Investor and Partner For Driverless Cars". Fortune Magazine. 
  30. ^ Lagorio, Christine and Markowitz, Eric (23 May 2013). "Lyft's New $60M: How the Deal Went Down". Inc. 
  31. ^ Gannes, Liz (12 Jul 2013). "Lyft Sells Zimride Carpool Service to Rental-Car Giant Enterprise". All Things D. 
  32. ^ Jason Redmond (12 March 2015). "Latest Rakuten-led funding values Lyft at $2.5 billion". Reuters. 
  33. ^ Etherington, Darrell (15 May 2015). "Lyft Raises An Additional $150M, Including $100M From Carl Icahn". TechCrunch. Retrieved 2 June 2015. 
  34. ^ "General Motors Invests $500 Million in Lyft, Sees A Self-Driving Future". Yahoo News. Retrieved 2 June 2016. 
  35. ^ MacMillan, Douglas; Winkler, Rolfe (11 February 2016). "Andreessen Horowitz Sells Some Lyft Shares to Prince Al-Waleed". Wall Street Journal. Retrieved 2 June 2016. 
  36. ^ Benny Evangelista (November 14, 2012). "PUC fines 3 app-hailing taxi startups". San Francisco Chronicle. 
  37. ^ Dara Kerr (June 25, 2013). "Uber, Lyft, Sidecar get cease-and-desist letters from LA". CNET. 
  38. ^ Tomio Geron (September 19, 2013). "California Becomes First State To Regulate Ridesharing Services Lyft, Sidecar, UberX". Forbes Magazine. 
  39. ^ Colleen Murphy (September 17, 2013). "Cheh, Evans pass legislation to protect Uber from city regulations". GW Hatchet. 
  40. ^ "Seattle Deals A Blow To Uber And Lyft By Limiting The Number Of Ride-Sharing Drivers On The Road". TechCrunch. AOL. 
  41. ^ Christina Wilkie (16 April 2014). "Lyft Prepares To Fight Ride Share Regulation By Hiring GOP-Linked Lobbyists". The Huffington Post. 
  42. ^ "Uber and Lyft are deemed legal in Detroit but not in Ann Arbor". Detroit Free Press. 2 May 2014. 
  43. ^ "Colorado first to authorize Lyft and Uber's ridesharing services". Denver Post. 5 June 2014. 
  44. ^ "Minneapolis joins other cities regulating Lyft, UberX". Star Tribune. 18 July 2014. 
  45. ^ "Lyft to Open Customer Experience Operations in Nashville". Insurance Journal. 7 October 2015. 
  46. ^ "Lyft beats Uber in race to offer rides from LAX". Engadget. 23 December 2015. 
  47. ^ Theis, Michael (17 October 2014). "Legalized: Uber and Lyft in Austin". Austin Business Journal. Austin Business Journal. 
  48. ^ Garrison, Joey (16 December 2014). "Uber, Lyft regulations approved in Nashville". The Tennessean. 
  49. ^ Evatt, Robert (25 April 2014). "Ride sharing service and Uber rival 'Lyft' arrives in Tulsa". Tulsa World. 
  50. ^ Dalike, Jim (4 December 2014). "Regulations on Uber and Lyft Get Ironed Out As Illinois Lawmakers Approve Ridesharing Bill". ChicagoInno. 
  51. ^ "Uber and Lyft win temporary state approval". Richmond Times-Dispatch. 6 August 2014. 
  52. ^ Lyft will offer steep discounts to attract commuters during Metro’s SafeTrack - The Washington Post
  53. ^ Lyft, Uber Offer Discounts as MBTA Late Night Service Ends
  54. ^ Kia Kokalitcheva (5 May 2016). "GM and Lyft Will Test Self-Driving Taxis Within the Next Year". Fortune (magazine). 
  55. ^ Nagy, Evie. "Increased Shares: Lyft's Rides and Revenue Grew Five-Fold in 2014". Fast Company (11 November 2014). 
  56. ^ Biz Carson (January 5, 2017). "Lyft tripled its rides in 2016". Business Insider. 
  57. ^ J.B. Wogan (October 2013). "How Will the Sharing Economy Change the Way Cities Function?". Governing (magazine). 
  58. ^ "Lyft, A Year-Old Startup That Helps Strangers Share Car Rides, Just Raised $60 Million From Andreessen Horowitz And Others". Business Insider. 23 May 2013. 
  59. ^ "Lyft's Focus On Community And The Story Behind The Pink Mustache". TechCrunch. 17 September 2012. 
  60. ^ "The Enabler: Getting a Lyft without a cab". Los Angeles Times. 17 May 2013. 
  61. ^ Darwin Bond-Graham (October 22, 2013). "Uber and Lyft get a lot of hype-- but ridesharing is a parasitic business model". Alternet. 
  62. ^ Zimmerman, Neetzan. "Lyft will donate $1M to ACLU after Trump immigration ban". The Hill. Retrieved 29 January 2017. 

External links[edit]