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Lyft is a privately-held, San Francisco based company whose mobile-phone application facilitates peer-to-peer ridesharing by enabling passengers who need a ride to request one from drivers who have a car. Unlike traditional taxis, Lyft drivers do not charge “fares” but receive “donations” from their passengers. Lyft’s tagline is “your friend with a car,” and since its inception, the company has been conscious of creating a social and fun experience for drivers and passengers that helps develop a sense of community among its users. According to the company, Lyft generally costs about 30 percent less than the price of a similar length cab ride. Lyft currently operates in San Francisco, Los Angeles, San Diego, Seattle, Chicago and Boston with plans to expand both domestically and internationally.

As of June 2013, Lyft has raised $83 million from Andreesen-Horowitz, Founders Fund, Mayfield Fund, K9 Ventures, and Floodgate.

History
Lyft was launched in the summer of 2012 by Logan Green and John Zimmer, as a spinout of Zimride, a ridesharing company which the two founded in 2007. Zimride focused on ridesharing for longer trips, often between cities. By using Facebook Connect to facilitate rides, the company helped build trust among drivers and passengers, increasing ridesharing’s popularity and ultimately propelling Zimride to become the largest rideshare program in the United States. In doing so, Zimride was able to accomplish Green and Zimmer’s stated goals of enabling travelers to save money, reducing harmful CO2 emissions and helping to bring communities together, as Zimride users often developed lasting friendships.

Lyft was created by Green and Zimmer to bring the benefits of ridesharing to drivers and passengers traveling locally within cities. From their experience with Zimride, Green and Zimmer understood the magnitude of the opportunity presented by the fact that 80 percent of seats in cars are empty. They further realized that by empowering people to fill more of those seats, it would not only help reduce traffic and benefit the environment, but offer the chance to introduce a more social and fun way for people to travel.

Similar to Zimride, Lyft requires all drivers and passengers to sign-up with the service through their Facebook account. In addition, all riders and passengers rate each other after each ride which serves to establish their reputations within the network. Lyft has further worked to build a sense of community through making the service feel fun. Affixed to the front of Lyft cars is a fuzzy pink mustache, which the company says represents a smile. Passengers are invited to sit in the front seat, and to give the driver a fist bump, which is designed to emulate the experience of riding with a friend, or at least a fellow Lyft user, as opposed to a professional driver.

Since its launch, Lyft has exploded in popularity, growing to over 100,000 registered users and facilitating more than 30,000 rides per week within its first 12 months. The service has more than 300 drivers in San Francisco alone, who report earning as much as $30 to $35 an hour.

In June of 2013, Lyft completed a $60 million Series C venture financing round led by Andreessen Horowitz, bringing its total amount raised to $83 million. In May of 2013, Green and Zimmer officially changed the name of the company from Zimride to Lyft. In July of 2013, Lyft sold Zimride to Enterprise Holdings, the parent company of Enterprise-Rent-a-Car, for the primary reason of enabling the company to focus exclusively on the growth of Lyft.

Safety
Since not getting into a stranger’s car is one of the first safety lessons most children are taught, a key to Lyft’s success has been establishing trust among its users. Lyft claims that its safety precautions are more stringent than those performed by taxi and limousine companies, and that it only accepts 6 percent of its driver applicants. Beyond requiring every driver to join Lyft through their personal Facebook account and subjecting drivers to a 5-star rating assessment from passengers following each ride, the company carefully vets potential Lyft drivers through performing the following additional screening functions:


 * DMV and criminal background checks
 * In-person interviews by Lyft employees
 * Vehicle inspections and a two-hour training and safety session
 * Drivers must be 23 years or older and have a driver’s license for more than 3 years;
 * Zero tolerance drug and alcohol policy

Although Lyft drivers are classified as independent contractors, Lyft also insures each driver with a $1 million per-occurrence liability policy. Finally, any driver averaging less than a 4.5 star rating by users is dropped from the service. The company believes that these safeguards, as well as its community focus, account for the fact that the service has not only earned the trust of its users, but also explains why the majority of their riders are females aged 18 to 35.

How it Works
In order to request a Lyft car, riders need to download the Lyft app to their iPhone or Android-based phone, sign-in through Facebook Connect, and enter a valid phone number and credit card details. When a passenger wants a ride, he or she opens the app and sees a map displaying the locations of the nearest Lyft cars. After tapping to request a ride, the app shows the driver’s name, his or her rating by past passengers (out of five stars), and photos of the driver and their car. Minutes later, a car sporting a fuzzy pink mustache will pull up and the driver will likely greet the passenger with a friendly first bump. After the ride is completed, payment is made through the app in the form of a suggested donation based on the time and distance of the trip. The passenger can increase or decrease the dollar amount by tapping a virtual pencil. As the amount is increased, a graphical balloon swells in size until eventually animated fireworks explode on the background of the screen. The company takes a 20 percent cut of the fare. Finally, a passenger must rate the driver before he or she can request another Lyft.

Regulatory Opposition
Like many peer-to-peer startups, Lyft faces an uncertain legal and regulatory landscape, and has been criticized by the entrenched commercial enterprises that they threaten to disrupt, which in Lyft’s case, are traditional taxis services. Lyft, Uber and SideCar were each fined $20,000 in the fall of 2012 by the California Public Utilities Commission, although through an interim agreement, this fine was later eliminated, as was a cease and desist letter originally issued by the agency. In June of 2013, Lyft, Uber and Sidecar were served with cease and desist letters by the Los Angeles Transportation Department. Despite this, all three companies continue to operate and offer their services in Los Angeles.

Results and Reception
As of the summer of 2013, Lyft had raised more venture funding than any other peer-to-peer ridesharing or app-based car service, including Uber. But beyond impressive fundraising and user adoption numbers, Lyft has received widespread acclaim for creating a community that makes getting from point A to B a more uplifting and fun experience. Scott Weiss of Andreessen Horowitz said his fund met with teams at Sidecar and Uber but ultimately decided to invest in Lyft because of their strong community and transparency. He wrote in his blog that “Lyft is a real community — with both the drivers and riders being inherently social — making real friendships and saving money.”  Techcrunch has written “You feel like you’re in the car with a friend, and that’s no mistake.”  Adding further, “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.”  And the LA Times writes that it’s clear “that Lyft's marketing strategy, which is geared toward the young and technologically savvy, draws a relaxed and friendly demographic.”

Lyft faces competition from Uberx, SideCar and other ridesharing startups.