Editor’s note: Inc. magazine will announce its pick for Company of the Year on Monday, December 11. Here, we spotlight a contender for the title in 2017.
It’s been a pivotal year in the ride-hailing industry.
While Uber’s woes continue to sink the company into a seemingly ever-growing tangle of legal affairs and inner power struggles, Lyft has managed to steer enough momentum to narrow the gap with its rival and land a prime time spot in the race to bring autonomous vehicles to the public.
After collecting a whopping $1.6 billion cash injection from two separate funding rounds in 2017, the five-year-old startup, co-founded by Logan Green and John Zimmer, now has car service available to 95 percent of the U.S. population, up from 54 percent in January. It also closed five high-profile partnerships to work on self-driving technology, including one with Alphabet’s Waymo, which incidentally is currently fighting Uber in court over claims of trade secrets theft.
“Lyft has always had this ability to focus on what is right for them,” says Ann Miura-Ko, board member and early investor. “They aren’t focused on the competition, and I think that is the reason they’ve succeeded.” She adds, “I believe that they are central to the transportation revolution.”
As U.S. lawmakers pave the way for an autonomous vehicle future, Lyft has shifted gears to accelerate its contributions to the space. In addition to Waymo, the San Francisco company partnered this year with Drive.ai and nuTonomy, two startups building software for self-driving cars. It also inked similar deals with Ford and Jaguar Land Rover, which invested $25 million, to bring their vehicles and technology to its ride-hailing platform. These new partners fuel the work that began last year, when General Motors acquired a 9 percent stake in the company.
The goal is to assemble these collaborations on what Lyft dubs its “open platform.” All the players — each in different stages of developing its own robocar technology, but with vastly more experience than the hot pink ridesharing startup — will be able to leverage Lyft’s network to offer autonomous rides to willing passengers.
CREDIT: Courtesy Lyft
“It’s going to take [our partners] time to actually get to a point where these cars can navigate in any situation or any scenario,” says Taggart Matthiesen, director of product for Lyft’s self-driving division. But Lyft can help by pulling and analyzing large sets of data to assess the viability of an autonomous ride. “We already know the start and end of a ride before a ride happens. We can calculate that route,” Matthiesen says. “The value here is that [partners] all get access to our network in a way that allows them to enter their vehicles in very safe and known situations.”
While Lyft will not have a direct input on the vehicles themselves, it will have a say in what happens from the moment users request a ride and until they reach their destination. Matthiesen says his team is working on curating a “Lyft experience” to unify the fleet of self-driving cars.
It’s worth noting that presently there are no plans to train current Lyft drivers to operate the autonomous vehicles. It’s up to the partners to provide the safety drivers to monitor the ride. The company, however, is quick to reassure that it plans to maintain a hybrid model, slowly incorporating the autonomous rides to its platform. Even if there’s a turning point to a driverless service, Matthiesen says, it will still need people to provide car maintenance or concierge-like services to get people in and out of vehicles.
How soon any of this will happen remains to be seen. For all its prominent alliances, Lyft still has not publicly deployed a single pilot. Matthiesen says it aims to launch in one city by the end of this year.
In comparison, Uber has already set up various pilots in San Francisco, Pittsburgh, and Tempe, Arizona; nuTonomy has been testing its technology in Singapore since early 2016, and last August GM’s Cruise (a service similar to Uber and Lyft) began giving autonomous rides to employees in San Francisco.
Still, “I do think Lyft is well-positioned,” says Mark Muro, senior fellow at the Brookings Institution. “They have essentially an almost identical offering, but they have managed to play the optics better, and I think that’s actually going to be important.”
The caveat, Muro adds, however, is that “we’re beyond the amazement of the better mousetrap and we’re realizing all kinds of actors can hack this together.” As an example, there are currently more than 40 companies registered with California’s DMV to operate self-driving vehicles.
While Lyft is still playing catch up, celebrating half a billion rides in October compared with Uber’s five billion, it has spent most of 2017 racking up milestones. Its valuation soared 46 percent to $11 billion in six months, and it gave 100 million rides in three months, when its first 100 million took four years. It’s also finally venturing out of the U.S., setting its sights on Toronto as its first international market. With all that groundwork laid, 2018 could be the year that Lyft emerges as a leader in the self-driving sector — and captures the ridesharing throne.
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