On Friday, Lyft Inc. filed to go public, in an offering that could value the business at $20 billion to $25 billion. The prospectus fits a classic Silicon Valley-company-in-growth-mode archetype: skyrocketing revenue (doubling annually to $2.2 billion last year), mounting losses ($911 million last year) and an aspirational motto that ties it all together: “Improve people’s lives with the world’s best transportation.” Lyft also fits the mold in another way: Its original business was a dud. Lyft was founded in 2007 as a company called Zimride. The founders’ goal was to let people find carpools for long road trips. Zimride co-creator Logan Green was frustrated by his experiences on the Santa Barbara Metropolitan Transit District board in college, when he tried unsuccessfully to improve the quality of local bus service and bring the car-sharing service Zipcar to campus. He was also inspired by the packed minivan taxis he saw on a trip abroad one summer to Victoria Falls, Zimbabwe. For five years, Zimride pretty much went nowhere. Green and John Zimmer, the equally idealistic business partner he met through a friend, worked in a tiny Palo Alto, California, apartment with a view of the raucous backyard parties hosted by then Google executive Marissa Mayer. The pair drove vans of customers to the Coachella music festival and were so desperate for business that they dressed up in frog and beaver costumes to pass out Zimride flyers at college campuses. But the Lyft story is a paean to the power of the pivot—that Silicon Valley-style flexibility to wholly change business models midstream. In 2012, after moving north to offices in San Francisco, the Lyft founders and their team met to grimly assess the future of their struggling startup. Inspired by a local, young upstart’s increasingly popular black car service (now called Uber Black), they decided to design a mobile app that let regular drivers—without a professional driver’s license—host carpools on their commutes and other trips within cities. It was these cars, with the pink, fuzzy mustaches attached to the front grille that popularized the idea of unlicensed ride-sharing. The service won customers, enraged local taxi unions and regulators, and fatefully, inspired Uber Technologies Inc. co-founder Travis Kalanick to duplicate and export the model worldwide with a service called UberX. If Silicon Valley is the fusion of two separate ideological strands—save-the-world idealism and free-market, wealth-concentrating capitalism—Uber and Lyft positioned themselves on different ends of the spectrum. Uber was hard-driving and ruthless; it started with a premium service for urban high-rollers who want to sip on Evian in the back seat. Lyft sought to contrast its rival’s predatory ambition with sincere idealism. It portrayed its service as personable and friendly, with riders sitting in the front seat and fist-bumping drivers. At maturity, the two companies aren’t quite as different as Lyft might have hoped. They each raised capital voraciously, flouted taxi regulations and endlessly copied each other’s features. Lyft riders inevitably migrated to the back seat. In the ongoing battles with New York City, Uber was the more prominent pugilist, but Lyft was every bit as stubborn. In an early skirmish, Zimmer begged his lawyers to violate a local injunction and allow him to be arrested. They eventually talked him out of it. As Lyft’s IPO filing shows, the companies remain similar in many ways. Both are losing money. Both are funneling cash into autonomous-driving technology that might one day displace their own drivers. Both will likely need to raise capital to keep operating. Lyft is different from Uber, but not because of its idealism. In the securities document, Lyft declares a focus on developed markets in North America and on transportation, while seemingly staying away from the crowded food-delivery business. The strategy sounds a lot like what Lyft has been doing for a while. Yet, it remains much smaller than Uber, with about 19 percent of its rival’s annual revenue. To thrive as a public company, Lyft may need to reinvent itself once again.


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