Skift Take

The taxi industry is going to have to get used to it. There is more competition now in the form of Lyft, Uber, and services such as Zipcar. Although individual startups may come and go, the ride-sharing concept is here to stay.

They hit Sacramento’s streets; cars adorned with large pink mustaches on the bumper, piloted by drivers who will give you a welcome fist-bump and — for a “donation” — take you where you want to go.

The mustachioed vehicles are affiliated with Lyft, a company that likens its service to getting a ride from a buddy. Lyft launched in Sacramento Friday, becoming the second ride service to enter the local market in the past year.

Both Lyft and its rival, Uber, allow customers to use a smartphone app to connect with drivers offering rides in their private cars. In a sign of competition to come, Uber announced this week that it will offer free rides on some vehicles today through the weekend.

Lyft, Uber and similar app-based ride services have popped up in dozens of cities nationally over the last year, often appealing to younger urban dwellers who like to do business by smartphone and are less inclined to own cars or take their cars on short trips.

It’s all part of what’s becoming known as the growing “sharing economy,” where people link up to share their homes, cars or other items for mutual benefit. Lyft and Uber are both based in San Francisco, which also gave birth to such firms as Airbnb, which allows people to rent out their houses, spare rooms or even couches to paying guests.

“This technology-enabled sharing is just taking off,” said Stuart Cohen, head of TransForm, a Northern California alternative transportation advocacy group that has been monitoring Uber and Lyft. “It is kind of shocking us.”

Traditional taxi companies, facing new competition from the upstarts, have called them rogues, elitists and potential safety hazards.

Scrambling to catch up, the California Public Utilities Commission last month began regulating Lyft, Uber and similar companies, creating a new category for them — transportation network companies. It imposed safety standards, including vehicle inspections, insurance requirements and driver background checks.

The PUC’s action hasn’t mollified taxi companies, however. They view the services as taxis in disguise — competitors that are trying to steal their customers without having to deal with as many costly regulatory requirements.

Taxis in Sacramento are regulated by the city. The new companies are not regulated by the city, and may not get adequate inspections from the PUC, said Fred Pleines, president of Yellow Cab Co. of Sacramento.

“The PUC sees this as a new type of industry. It is not new. It is folks operating pirate taxi cabs,” Pleines said. “It is a threat to every taxi driver and cab company operating by a completely different set of guidelines.”

Pleines also complained that the new companies will only focus on wealthier users. “If you are not in the financial position to have a credit card or smartphone, they don’t provide service to you.”

Both Uber and Lyft allow customers to use phone apps to request a ride by tapping on their phone screen. Customers also pay via smartphone instead of cash. The app shows customers which car is nearest, what type of car it is, and displays a photo of the driver. It also allows the customer to monitor the vehicle’s approach on a map, and alerts the customer via text when the car arrives.

Despite their similarities, the companies market themselves as distinctly different experiences.

Lyft cars have a comical pink mustache on the front bumper to make the vehicle identifiable. The driver’s welcome fist-bump serves as an icebreaker, company officials said. The rider sits in the front seat. At the end of the ride, the rider chooses a “donation” amount on the app.

Lyft spokeswoman Erin Simpson said users can expect to pay a bit less than a regular taxi ride, and can adjust the suggested “donation” amount up or down some depending on the ride experience.

Uber presents a more sophisticated image. Its website shows drivers in suits holding car doors open for stylish young riders. The company philosophy, spokesman Andrew Noyes said, is that “everyone should have a personal driver, not just the wealthy.”

The company’s more expensive UberBlack service includes Mercedes-Benz S Class vehicles. The UberSUV choice includes a Cadillac Escalade. The UberX service, introduced in Sacramento six weeks ago, offers smaller cars such as a Honda Civic or Hyundai Sonata.

One thing Lyft and Uber agree on: They don’t want to be called taxis.

“Lyft is an on-demand, peer-to-peer transportation system” or ride-sharing program, Simpson said this week. The person who picks you up isn’t a cabbie, it’s “your friend with a car. You are riding with your equal.”

In Sacramento, she said, the drivers signed up with Lyft include teachers, students, a musician, an art dealer, a CHP dispatcher and a nurse. “Some have a full-time job, some are involved in more creative pursuits, and this is extra money while they follow their passion,” Simpson said.

Uber representatives say they aren’t technically even a transportation service. “Uber is a technology platform that connects riders with cars,” Noyes said. “We don’t own the cars or employ the drivers.”

Uber, which operates in more than 50 cities, advertises its lower-end service, UberX, as less expensive than regular taxis. But the company has instituted what it calls “surge pricing,” higher rates, sometimes double, when demand outstrips supply.

Noyes said that might happen briefly on a rainy Friday night when a lot of people are trying to get to a concert. “It encourages more drivers to come on the system and pick up passengers,” he said.

Lyft’s Simpson said her company is expanding to Sacramento — its 18th city nationally — because it sees it as a market, much like Los Angeles, where many people do not have close access to public transportation and where services like Lyft can allow more people to keep their cars at home, or avoid the expense of owning a car altogether.

Both Lyft and Uber check the driving records of those who apply to accept passengers using the firms’ services. Neither Lyft nor Uber would say how many drivers they have in Sacramento.

Uber officials, though, said this week that they’re pleased with their results in Sacramento so far. Uber drivers pay the app company a percentage of their fares.

Lyft drivers receive 80 percent of donation amounts. Both companies have raised sizable sums of venture capital to fund their operations.

Downtown Sacramento resident Shrujal Joseph, 25, a frequent Uber user, said he appreciates the fact that he doesn’t have to have cash on hand to get a ride. If he rides with friends, the Uber app lets them split the fare on their smartphones.

“For my generation, being dialed into technology, we are on our phones so much, it’s easy to just pull up an app and request a car at the click of a button,” he said.

He wasn’t sure if he would try Lyft. “A giant pink mustache on the car, it seems a little hokey to me,” he said. “There is a style factor. I don’t want to be dropped off somewhere with a pink mustache on the car.”

—— ___

Uncover the next wave of innovation in travel.
June 4 in New York City
See Who's Coming

Have a confidential tip for Skift? Get in touch

Tags: airbnb, car-sharing, uber

Photo credit: Lyft debuted in Sacramento, and there is opposition from the taxi industry. Pictured is San Francisco taxi driver Joel Sanchez, who showed his opposition to Lyft on July 30, 2013. Beck Diefenbach / Reuters

Up Next

Loading next stories