Earlier today I took my first ride on Lyft Line, Lyft’s brand new twist on ridesharing. The concept is simple – you as the rider get a discount on your fare in exchange for being willing to share your trip with another person heading in the same direction. My early experiences with Lyft Line have been good. I waited about a minute or so longer for the system to find a match when I first initiated my ride request (the face carousel was a nice way to pass the time) as they were looking to match me with another rider. And I like the idea that I won’t be delayed in transit as the goal is to only pick up passengers who are ready to go in a minute or less. There are certainly circumstances where I’m willing to trade some time and solitude for a reduced fare. I had moved a lot of my ride activity toward Uber in the past few months and I think Lyft Line will get me back in the habit of using Lyft more often.
Urban transportation continues to be one of my favorite themes. It’s worth noting that Lyft is not the only company experimenting with this service. One of their main competitors, Uber, is planning to launch something similar. And there are startups like Hitch whose whole service is based on this premise. I wanted to share some of my thoughts on ridepooling and what I think it will mean for transportation in cities.
I take a pretty varied set of services to get around town here in San Francisco. I own a car, but I try to avoid driving it as parking is expensive and parking tickets are even more expensive. Most days I take some combination of walking, ridesharing, BART, MUNI, and a bicycle to get around. In most cases, I tend to choose my mode of transportation based on some rough tradeoff between price and speed. Walking or taking a bike is obviously very cheap and taking an Uber or Lyft is more expensive than public transportation. I mix and match based on my schedule and need for speed.
Price Competition in Ridesharing
While ridesharing here in the US is still a young industry, we’ve already seen a lot of innovation around access and price. Aside from a simple, relentless focus on reducing the price of an individual ride, Uber and Lyft have both done interesting things in terms of pricing and segmentation. Uber, in particular, has done a very nice job of segmenting its service into different tiers (Uber, UberX, UberSUV, etc) that offer different experiences for different prices. I think it’s a very good real-world example of price discrimination in action. Regardless of how consumers have received the concept of demand-based surge pricing, that too has had an impact on how consumers use these services. I suspect that ridepooling will also impact the market by creating yet another product with a different price and experience combination and will grow the overall ridesharing pie.
I think the way in which Lyft Line is marketed to consumers is very smart. The service promise to me, as a consumer, is that I get a lower fare by being willing to pick up another passenger along the way. If we pick up someone else along the way it will be quick. In the best case (and I experienced this already), you get the benefit of the Lyft Line fare and don’t end up picking up another passenger – you get the benefit of a lower fare without the interruption of an additional stop. I suspect this will change if and when ridepooling becomes more common, but for now it’s a nice perk. And it means that I, as the rider, don’t bear the financial risk of a higher fare because the service couldn’t find a matched rider. And from a marketplace design and development standpoint, it’s a great way to convince consumers like me to “gamble” on Lyft Line and try it out with the possibility that I get the benefit of the lower fare without an extra stop. For the service to work in the long term, there needs to be enough route matching to provide benefits to Lyft and the drivers who drive for them. Time will tell if there’s enough demand to make that happen.
Lyft Line and Ride Length
Overall, I think that I’ll end up using Lyft Line in two ways that I don’t currently use Lyft or Uber today. With the fare differential and focus on making the process of picking up additional passengers efficient, I think I’d actually start to think about taking a Lyft or Uber to work every day. It typically costs me about $8 each way to take an Uber or Lyft by myself to the office, which is significantly more than BART or MUNI. But if I can get a meaningful discount on that fare by being willing to pick up another passenger, I think Lyft rides will displace some of the trips where I would otherwise use MUNI or BART to get to my office.
The other thing that I think Lyft Line unlocks for me are longer cross-town rides. I don’t particularly like taking an Uber or Lyft across town by myself. Honestly, it feels extravagant and expensive. But the idea of shaving some money off of my fare by agreeing to pick up another passenger on what is already a relatively long (by SF standards) ride seems like a small inconvenience. And I would imagine that a longer ride would open up more opportunities for route matching along the way.
Differences between Uber and Lyft Brands
The last thing that Lyft Line has made me think about is how Uber and Lyft will compete in this market. As a consumer, I think the two services have marketed themselves in really different ways and have cultivated really different brand images. And I have friends and people in my network who use one service exclusively and have no interest in the other. I’m very curious to see how each service develops a ridepooling service that’s consistent with its own brand.
I think it’s interesting to see that Uber is going to pilot with Google. The one really interesting thing about working with a company (Google in this case) is that I think ridepooling where everyone is going to the same place is an interesting and unique value proposition. I think that’s decidedly different from just heading in the same direction.
At any rate, I’m glad to see more innovation here and I’ll be curious to see how this plays out. As always, the comments field is open and you can also share your thoughts with me on Twitter @chudson.