Central planning tends not to work well, as Lyft appears to be learning in its competition with Uber. The latest issue of Bloomberg Businessweek offers details.
Compared with Uber, Lyft looks scrappy, friendly, and a bit hapless. Uber is valued at $51 billion, Lyft $2.5 billion. Uber operates in more than 300 cities around the world, Lyft in 65, and only in the U.S. In June, term sheets for an Uber fundraising round put its annualized revenue at $415 million. Earlier this year, a Lyft fundraising presentation put its 2014 revenue at about $130 million.
In terms of management, one of the biggest differences is delegation. Uber has hundreds of local managers operating as mini-CEOs in each city where it operates. Lyft’s co-founders, Zimmer and Chief Executive Officer Logan Green, resisted Uber’s decentralized model for years, choosing to directly oversee the vast majority of its driver networks from the company’s San Francisco headquarters. Lyft has 10 city managers—one each for the nine biggest markets, such as New York and Chicago, and one who covers 40 smaller cities. The strategy saved money but meant the service often didn’t know enough about the cities it was working in, says Tibbens.
Soon after starting at Lyft, Tibbens, a plain-spoken, Mountain Dew-drinking Kentuckian, organized a weeklong field trip for executives to meet with drivers and passengers in five cities. He, Green, and two other executives spent the trip debating Lyft’s local strategy. Tibbens started to win the argument for more local managers as they met with a series of drivers and passengers who complained about Lyft’s mapping tools and raised questions about hang-ups that Lyft’s San Francisco-based executives hadn’t predicted because they applied to individual cities. “I think the realization is that we are local and we have this bias to our own market,” says Zimmer. Tibbens says he’ll hire 10 more city managers this year, focusing on cities where Lyft hasn’t yet set up shop.
