The Takeoff Episode 03: Why Team and Culture Matter for Travel Startups Sponsored This content is created collaboratively with one of our sponsors.
Sidecar and Lyft don’t stand much of a chance against Uber unless they start thinking “What Would Travis Do?”
It’s easy to persuade consumers to use an app to book a ride. But having enough drivers on the road to pick up all those passengers has proven more difficult.
In a race to keep up with ballooning demand from riders in San Francisco, who now expect on-call cars within minutes at all times of day, companies like Uber, Lyft and Sidecar are putting their recruiting tactics in high gear.
Uber, which lets riders hail drivers using personal cars through its lower-cost UberX program, has pulled some “really ballsy” moves to lure drivers away from competitors while increasing their own pool, said a 50-year-old motorist who works for UberX and Lyft.
“I was driving for Lyft in November when I picked up two attractive women,” said the driver, who declined to give his name because he fears repercussions from the apps. “Like anybody, we started chatting, but they were sort of awkward. I knew something was up when they didn’t tell me clearly where they wanted to go.”
After a few minutes, the women dropped the pretense. They said they were from Uber and made a mouthwatering offer to switch to UberX: If he signed up for the service, Uber wouldn’t skim its usual 15 percent off fares for the rest of the year. Plus, he could land a $500 bonus for picking up 20 passengers, and for simply checking out the company’s headquarters he would receive a $50 gas card — and a free lunch.
“I got a big chuckle out of it,” said the driver, who missed out on the goodies because he had already signed up for UberX the previous week. “How smart is that — recruiting drivers in their very own car?”
Uber and similar app-based car services have in many ways uprooted the taxi industry, but as more San Franciscans pull out their phones to hitch a ride, questions of scalability dot the road ahead.
The companies face high turnover since they don’t require a commitment from drivers, some of whom take the wheel for only a few weeks before stopping. Lyft tries to woo and retain drivers by building a sense of community with lounges, parties and driver outings — all key perks, according to several drivers.
But the bottom line can be very persuasive.
“It’s basically a fire hose of money that Uber shoots at you trying to get you to come over and drive for them,” said Adrian Anzaldua, a former Lyft driver. “You can imagine — with that promotion, if I could make $550 in a day plus fares, that’s an absurd financial incentive.”
Uber, valued as high as $3.5 billion, has no problem shelling out to entice drivers and passengers. It cuts its UberX prices 20 percent this month, and lowered its commission from those rides from 15 to 5 percent. And UberX drivers say the price cuts pushed more passengers their way, without hurting their bottom line.
But the company’s competitive drive isn’t limited to dollars and cents.
This month, Uber employees repeatedly called and canceled rides with a New York City competitor, Gett, then texted the jilted drivers in hopes they would switch companies. Uber later apologized for being “too aggressive” in trying to poach drivers.
There’s also competition among drivers within their companies. Demand surges at busy times of day, so companies like Uber and Lyft charge higher fares in a policy they say increases the supply of cars. But at slow times, passengers are literally few and far between, so some companies limit the number of drivers on the road.
Lyft encourages drivers to sign up for certain time slots ahead of time, and blocks extra drivers from logging on or staying on call when demand is too low, Anzaldua said.
Keeping cars off the road might help its drivers come close to netting the $35 per hour boasted of in the company’s advertisements — but getting booted from the system the moment a shift ends irks some drivers.
“I can remember seeing complaints on the driver forum, saying I got a ton of pings before I got kicked off the system,” Anzaldua said. “Clearly there are people out there trying to drive but they can’t.”
Lyft could not confirm by press time whether it limits supply in slow hours.
Companies are so interested in getting new drivers that they’re even recruiting people who don’t yet own cars. In November, Uber began offering to its UberX drivers discounted leases and financing for Toyota or GM cars.
And a new company, Zephyr, says it leases cars for $50 per day — with an option to buy after a year — to motorists who plan to drive them for Uber, Lyft or Sidecar. Zephyr would not give further details about its business model, but it clearly hopes to fill a need for possible drivers who just don’t have cars.
Even cabbies are hearing the call. Taxi drivers who register with Uber get frequent e-mails asking them to come in and hear a pitch about UberX and the car-purchasing option, said Trevor Johnson, a director with the San Francisco Cab Drivers Association. And cab companies are seeing their once fully booked shifts become partially empty — sometimes short as much as 30 percent.
“They’re having trouble selling shifts,” Johnson said. “That means there are not enough drivers. And that means they’ve gotta be going somewhere else.”