Uber and Lyft may seem interchangeable, but there are differences between the United States’ two biggest transportation network services that are significant. Below, we’ll explore factors including service area and type, payment, culture, driver and user experience and more.
Are Uber and Lyft Public Companies?
As of March 2019, both Lyft and Uber are privately held companies with plans to debut on the public market before 2020. Lyft may go public as soon as late March.
On Dec. 6, 2018, Lyft announced that the company had officially filed paperwork with the Securities Exchange Commission (SEC) to go public in early 2019. Uber’s smaller rival said in a filing that it expects to raise $2 billion in its IPO and will offer 30.8 million shares at $62-$68 per share. It is targeting a valuation of as much as $23 billion. Lyft was valued at $15 billion in 2018 when it raised $600 million in a Series I financing round led by Fidelity Management & Research Company.
Uber filed paperwork for its initial public offering on the same day as Lyft. The multinational ride-hailing company was valued at $120 billion by Wall Street banks and will reportedly go public soon after Lyft.
History and Leadership
Lyft was launched as a service in 2012. It was spawned from Zimride, a company founded by Logan Green and John Zimmer. Zimride, a peer-to-peer rideshare matchmaker for people looking to securely carpool long distances, was sold so that the duo could focus on Lyft. Green is currently chief executive and Zimmer is the company’s president.
Uber was founded in 2009 by Travis Kalanick and Garrett Camp as UberCab. After Kalanick’s resignation as CEO in 2017, Dara Khosrowshahi took his place. Ronald Sugar was named chairman in August 2018. Kalanick remains on the firm’s board of directors.
Both Lyft and Uber are based in San Francisco.
Service Area and Hours
Uber serves hundreds of cities in dozens of countries, while Lyft operates only in the United States and Canada, serving all 50 states and the District of Columbia. Uber’s considerably larger service area means it might be your only option for a taxi alternative, depending upon where you are. Uber and Lyft are both available 24/7, though you might have trouble getting a ride in the middle of the night in a small city if no drivers are operating. Both services are on-demand with a typical wait time of just a few minutes, and in some cities, you can book a ride well in advance.
For example, Lyft allows customers to reserve a ride up to 7 days in advance, and Uber lets customers schedule a ride up to 30 days in advance in most cities in which it operates.
For times when punctuality is especially important, like getting to the airport, a job interview or an important business meeting, reserving a ride is a great option. Otherwise, just open the app a few minutes early to see how far away the nearest driver is and what traffic is like, then time your ride request accordingly.
Uber drivers are a combination of professional drivers and non-professionals who have passed driving record checks and background checks. Uber offers several classes of service whose availability varies by city.
UberX is the basic sedan service for everyday rides for up to 4 people.
UberXL provides affordable SUV service for groups up to 6 people.
UberSUV provides luxury SUV service for groups up to 6 people.
UberPOOL allows customers with different starting and ending points who are traveling in the same direction to share rides in sedans and share the cost.
UberBLACK provides rides with professional drivers in black town cars for up to 4 people.
UberWAV provides rides in wheelchair- and scooter-accessible vehicles by drivers trained in assisting passengers.
UberSELECT provides stylish, high-end cars with top-rated drivers for up to 4 people for special occasions.
UberTAXI lets you hail a yellow cab from the Uber app.
Even if you choose UberX, the lowest-cost option, you won’t get picked up in a clunker. Uber has minimum vehicle requirements for drivers in each city. For example, in Los Angeles, you’ll be picked up in a vehicle that’s model year 2003 or newer, that is a 4-door car or minivan, that is in good condition with no cosmetic damage, that has working air conditioning, that is not commercially branded and that has passed a vehicle inspection.
Lyft, like Uber, has minimum vehicle requirements for even its basic level of service. Cars generally must be model year 2005 or newer and they must have four doors, no body damage and fully functional air conditioning, among other requirements. Lyft offers several service classes, too, which vary by city.
Original Lyft provides rides in regular vehicles for up to 4 passengers.
Lyft XL provides rides in regular vehicles for up to 6 passengers.
Lyft Premier provides rides in high-end vehicles for 4 passengers.
Lyft Lux provides premium black car service in luxury vehicles.
Lyft Black is a premium black car service including luxury vehicles.
Lyft Black XL provides rides in premium black SUV service for up to 6 people.
Lyft originally identified its vehicles with furry pink mustaches on the front (“carstashes”), but it now uses a more subtle system called the Amp on some vehicles in some cities (rollout began in December 2016). The Amp sits on the driver’s dashboard and lights up in a particular color. Waiting passengers see the color in the Lyft app on their phone so they know what to look for, which is especially helpful when getting a ride after dark, or when leaving a venue where everyone is using a rideshare app to get home. All Lyft vehicles have stickers displaying the Lyft logo in the front and rear windshields. Retiring its mustaches may have been a move toward adopting a more professional look to compete with Uber.
Uber uses a beacon similar to Lyft’s Amp to help passengers identify the cars they’re waiting for. Drivers also display placards with the Uber logo in their front and back windshields. The apps themselves help drivers and riders identify each other as well, providing license plate numbers and descriptions of the cars.
Uber and Lyft have both gotten into the food delivery game as well. Uber launched Uber Eats in 2014 to compete with other services like GrubHub and Postmates. Uber gained a major partnership when McDonald’s announced in December of 2016 that it would venture into delivery with Uber Eats. In December of 2017, the company announced the service was profitable in 40 out of 165 cities in which it operated. As of February 2019, Uber Eats was available in close to 500 cities worldwide.
Lyft also has a food delivery service, although it’s a bit more colorful. Lyft had a major partner of their own: the fast-food chain Taco Bell. In July of 2017, the company tested out a new feature called “Taco Mode,” which allowed a user currently on a trip in a Lyft car to press a button on their app and direct the driver to the nearest Taco Bell. Interestingly, the service was only available between 9 p.m. and 2 a.m. We can’t imagine why. Taco Mode was expected to be rolled out to all devices in 2018, but many drivers and customers expressed disapproval, both because of issues like messiness in vehicles as well as a general concern about the company’s focus on driver satisfaction.
Uber is a much larger company than Lyft and has received negative press for everything from sexual harassment lawsuits to its cutthroat workplace culture to the low wages some workers earn. The company was also accused of trying to profit from a New York protest against Trump’s travel ban, which led to the #deleteuber social media campaign. Lyft has so far managed to avoid many of the controversies Uber has faced, perhaps in part because of its smaller size, though a New York labor group has accused Lyft of wage theft. In 2017, it was also reported that the FBI had opened a probe into Uber’s use of software to track Lyft’s drivers.
Cost and Payment
Uber’s fares consist of a base fare plus a time and distance rate, and fares vary by vehicle type and by city. Surge pricing during times of peak demand will increase the fare. The app allows customers to estimate their fares in advance. UberX is the least expensive option, while UberSUV is the most expensive. Each vehicle class has a minimum fare so that it’s worth a driver’s time to pick customers up even for very short rides. In some cities, Uber does not provide up-front fare estimates, but rather calculates the total charge at the conclusion of the ride.
The cost of a Lyft ride also varies by city and vehicle type and is based on total miles traveled, total minutes traveled, the base charge for each ride, the service fee that is added to each ride charge, and for rides during the busiest times, a prime time charge. The app gives riders an exact price for their ride in advance in certain cities and an estimated price in others.
With both services, changes to a ride once it is underway will affect the price. Customers pay through the company’s smartphone app. Lyft riders can tip their drivers through the app at the time of payment or up to 72 hours after the ride has completed, and drivers keep 100% of their tips. Lyft passengers can split the cost of a ride with fellow passengers through the app as long as they do so during the ride, not after. Uber did not solicit tips earlier, but as of 2017 lets customers add tips to their fare and allows drivers to accept cash tips. Uber lets riders split fares with friends through the app, too.
While both Uber and Lyft are gaining market share compared to traditional taxi services in many locations across the U.S. and abroad, it’s unclear exactly how the two companies fare when compared against one another. In May of 2018, Lyft revealed market share figures for the first time, suggesting that it had 35% of the U.S. ridesharing market and that it has a majority of the share in multiple markets across the country. That figure is estimated to be nearer to 40% as of February 2019. Lyft may have managed to gain market share from Uber as a result of the aforementioned controversies, several of which took place in the months leading up to the announcement. Uber may have also lost market share in the early months of the leadership of CEO Dara Khosrowshahi, who assumed the top spot at the company following the departure of co-founder and former CEO Travis Kalanick in June of 2017. Later, in August of 2018, Uber accounted for about 70% of U.S. rideshare spending, while Lyft appears to be strongest on the West Coast of the U.S.
With both companies reportedly preparing IPOs for early 2019, it’s likely that discussions of market share between Uber and Lyft will only continue to grow into the future.
In many respects, the experience for Uber and Lyft customers is quite simple. All hailing and reviewing of rides, payment, and account management functions take place within each company’s app. Both apps are designed to be user-friendly and functional, and both offer 24/7 support. More recently, each company has rolled out a smartwatch-compatible app for Android and Apple iOS users. As mentioned above, in some cases Uber is the only rideshare service available in a particular location. In terms of cost per ride, the companies offer similar services and charges, although there may be a discrepancy between estimates between Uber and Lyft for any given proposed ride.
For many customers, it is other factors besides functionality which influence their decision to one or the other company. The backlash to the perception that Uber was attempting to profit off of the Trump administration’s proposed travel ban in early 2017 led to the #deleteuber campaign and prompted some users to prefer Lyft. Others will prefer the sleek, streamlined look of the Uber app or the somewhat more colorful and playful appearance of the Lyft platform. Still others may open both apps to price out the difference between them when they wish to call a car, then select whichever of the two companies provides the cheaper service at that place and time.
There have also been multiple high-profile news stories about attacks by Uber drivers on passengers over the years. In response, Uber’s driver background check policy has been called into question. Both Uber and Lyft decided to end a policy in which customers who were victims of sexual assault were required to resolve cases through arbitration as opposed to the criminal justice system.
Uber and Lyft are both becoming increasingly known as pillars of the “gig economy,” the growing trend in which workers combine multiple, ad hoc means of employment rather than a single, full-time job.
Both Uber and Lyft offer complex rewards and payment systems for drivers, with drivers potentially earning bonuses depending upon numbers of rides provided, frequency of rides, and other factors. In certain cases, Uber has claimed its drivers can make up to $25 per hour after commission and sales tax. However, with certain costs (including gas, insurance, cleaning, and so on) left up to the driver, the actual hourly rate is variable. By some reports, the net earnings may be closer to (or even below) minimum wage, depending upon the location and many other factors.
While there remains some mystery about the exact amount of money a driver working with Uber or Lyft can make per month, there are nonetheless other small aspects of the driver experience which differ between the companies. Uber, for instance, offers a “No thanks” button to allow drivers to decline bad requests if they so choose. On the other hand, some drivers have expressed a belief that, because Uber did not allow tipping early in its existence, some Uber users were conditioned not to tip drivers; Lyft has allowed tips from the beginning. There are differences between the companies’ surge maps and peak ride systems, as well as the promotional offers made to drivers.
Unsurprisingly, because of the differences between the two companies, it’s quite common for drivers to sign up to be a part of both systems.
When booking a ride, both the Uber and Lyft apps offer similar experiences. Each app is designed to rely on location-based data to identify where you are when you call for a ride. Both apps allow users to also input a particular address if the location-matching software is not working correctly or if they wish to call a ride to a different location. The apps work similarly when it comes to picking a destination; users can input a street address or a point of interest.
At the time of booking a ride, Lyft allows users to select a mid-route waypoint, in case someone needs to be dropped off or picked up on the way to a final destination. This remains a small but important difference between the two apps.
Ultimately, aside from minor differences like the one above, Uber and Lyft offer very similar app interfaces.
Both Uber and Lyft have systems in which riders and customers rate one another. As a rider, a customer will be able to view the average rating (out of five stars) of any drivers who picks up his or her request on each app. Drivers can similarly view ratings of riders as well. While the exact impact of the average rating is somewhat unclear for both Uber and Lyft, it is generally seen as an incentive system: for drivers, it incentivizes professionalism, cleanliness, punctuality, efficient and safe driving, and more. For riders, the system incentivizes politeness, punctuality, respectfulness of the driver’s vehicle, and more.
In 2015, Uber began to develop self-driving cars. The vehicles could be the future of the company and would dramatically lower its labor costs. However, Uber was involved in a lawsuit with Alphabet, Google’s parent company, over allegations that it did not develop its driverless car technology independently and stole trade secrets from Google’s self-driving car spin-off, Waymo. The lawsuit resulted in a payout of $245 million.
After a failed attempt in San Francisco that ended in a regulatory clash, Uber began offering rides in driverless cars in Tempe, Arizona, with two Uber engineers in the front seat to handle any vehicle control problems that arose. In March 2018, an experimental Uber vehicle, operating in autonomous mode, struck and killed a pedestrian. Uber then stopped testing driverless cars for several months. As of July of 2018, the company was once again testing driverless cars, but with human participants available to oversee the technology.
Uber also has ambitious plans for flying cars, opening an entire branch of the company (Uber Elevate) that focuses specifically on developing flying transit systems.
In May of 2017, Waymo joined forces with Lyft. The partnership will allow Lyft to use driverless cars in its fleet and remain competitive with Uber. In December of 2017 the company started deploying self-driving cars developed by Boston-based startup NuTonomy in the Boston Seaport District. These cars also have a driver ready to take the wheel should any surprises occur. Then, in May of 2018, the company unveiled a fleet of self-driving cars in Las Vegas. Both companies hope and expect they’ll have thousands of autonomous vehicles on the streets of major U.S. cities by 2020.
On July 2, 2018, Lyft shared a press release announcing that the company is set to purchase Motivate, the operator of Citi Bike in New York City and other bike-rental services in other U.S. cities. Lyft did not disclose details of the deal, though Bloomberg reported that the deal is said to be around $250 million.
In April of 2018, Uber acquired an electric-bike rental startup called Jump Bikes. Jump Bikes continues operating through the company’s own app as well as directly through the Uber app in select cities.
Both Uber and Lyft are rolling out new services all the time. Uber has launched Uber Business and Uber Freight as transportation solutions services for corporate clients, as well as Uber Health to facilitate rides for patients and caregivers. Lyft has recently unveiled its Lyft Scooters program, which provides on-demand scooter use in multiple US cities. As the two companies continue their competitive race for dominance in the ridesharing space, it’s likely that this list of services will continue to grow.
The Bottom Line
Uber and Lyft both offer innovative alternatives to taxis and long-established private transportation services, and both give passengers a convenient and innovative way to request and pay for rides through their smartphones. However, the companies have considerable differences in their service areas, offerings and culture. And because each company’s drivers are independent contractors with varying vehicle types and personalities, even if you consistently use the same service in the same city, each trip will be different.