Lyft Wants Investors to Know It’s the ‘Better Boyfriend’
(Bloomberg) -- Two years ago, Uber Technologies Inc. was facing the chaos of sexual harassment allegations from employees and politically fueled outrage from customers. Lyft Inc., the second-largest ride-hailing operator, took the opportunity to remind the public of its longtime marketing angle: It’s a kinder and more empathetic company.
“We’re woke,” co-founder John Zimmer declared in a widely mocked interview with Time magazine in 2017. “We’re a better boyfriend.”
Now that it’s preparing for an initial public offering, Lyft is trying to sell new investors on a similar narrative. Its prospectus, filed Friday, doesn’t include the phrases “woke” or “better boyfriend,” but it explains how cultivating an image of being attuned to social issues—or at least, more so than Uber—is a business advantage. “We believe many users are loyal to Lyft because of our values, brand and commitment to social responsibility,” Lyft wrote in the filing.
Lyft’s attempt to stand out next to its much larger competitor has always involved branding and marketing. In its early days, Lyft cars sported large, fuzzy, hot-pink mustaches on the front grill, and the company encouraged riders to sit up front with the driver and exchange fist bumps. The “carstaches” and cheesy greetings didn’t last long, but the company has held on to its pink and friendly image.
In early 2017, Uber was practically drowning in bad news: employee misconduct, privacy controversies, the #DeleteUber campaign and investor lawsuits, all of which led to the resignation of its chief executive officer, Travis Kalanick.
For many Americans, that meant spending more of their money with Lyft. In the first half of 2017, Lyft’s revenue per active rider grew 36 percent to $25. The company’s explanation for that boost points a not-so-subtle finger at Uber’s near-meltdown. “The growth rate in revenue per active rider increased significantly in the first and second quarters of 2017 as our brand and values continued to resonate with riders and they increased their usage of Lyft instead of competing offerings,” according to the filing. The document also said Lyft’s share of the U.S. ride-hailing market grew to 39 percent, from 22 percent, in the last two years.
Lyft used the IPO stage as a moment to emphasize its many woke offerings: According to the filing, Lyft allows customers to round up their fares to the nearest dollar and donate the difference to charity, an effort it said has raised $10 million so far. Lyft also purchases carbon offsets to make all its rides carbon neutral. Lyft said its brand has an advantage because it’s “authentic” and would be a “key driver” for attracting and retaining customers going forward.
As Lyft positions itself as Uber’s near-equal, customers will inevitably be forced to reckon with whether the two companies are really all that different. Uber and Lyft have been subject to similar attacks on their business model, which classifies drivers as contractors and not employees. Lyft has even challenged rules that would ensure a $17 hourly minimum for drivers. The two companies are often locked in a price battle for riders and drivers who don’t care about a company’s brand but want the cheapest and quickest ride.
If you buy Lyft’s pitch, these business risks don’t matter as much to an ascending generation of consumers it’s going after. The word “millennial” shows up eight times in the filing, often not far from some variation of the phrase “social responsibility,” which appears two dozen times. “Consumers, especially millennials, are gravitating towards brands that value community engagement and embrace social and environmental responsibility,” the company wrote. “We believe that our brand represents freedom at your fingertips.”
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