As the horror stories continue about women getting into ride-hailing vehicles and facing everything from the uncomfortable to the fatal, Uber and Lyft are being called on to take more aggressive safety measures.

And they are. Today, Uber announced its campus initiative in partnership with the University of South Carolina to help students identify fake drivers. Earlier this week, Lyft doubled down on driver identification and background checks.

As the two ride-hailing companies barrel toward the public market amid the pressure to be better, smaller ride-hailing startups are finding room to step up and brand themselves around safety. These players are small potatoes in terms of capital and user base, but they’re targeting the users that Uber and Lyft are leaving behind.

David King, a professor who researches trends in ride-hailing at Arizona State University, told Crunchbase News that, in general, “market segmentation is undervalued in the ride-hailing world.”

“I’m skeptical of global domination but bullish on niche markets that provide new services,” he said. “Trying to be a monopoly from the start won’t work but developing a nice, mid-sized business will.”

King’s point is that while Lyft and Uber overwhelmingly cater to the average user, niche startups have an opportunity to target edge users. In this case, that category refers to those who identify as females. But whether these companies could be profitable is another story, he said. Still, some startups are convincing investors they have a future.

One Boston ride-hailing company, Safr, wants drivers and riders that identify as female to feel safer when entering a car. The company has 10,000 drivers on-boarded across the nation; however, it has not officially launched.

In an attempt to differentiate from Uber and Lyft, Safr interviews every driver that joins the platform. (Note: In Lyft’s early days, its co-founders also did this, according to its S-1.) Additionally, users can express gender preference when calling a ride.

Shebah, meanwhile, wants to bring an “all women rideshare” experience to Australia. Its focus is on bringing safety to the ride-sharing market for women and children. Its potential users are willing to bet on it: the company just raised $3 million in equity crowdfunding.

According to Shebah, 1,000 drivers are on-boarded, and there are 800 more in the pipeline. Their driver recruitment process includes government and police checks, a clean driving record, and appropriate vehicles.

Yet even these niche ride-hailing companies aiming to address safety gaps left by Uber and Lyft are not immune to criticism and intrigue.

Safr CEO Syed Gilani was arrested in June 2017 for embezzlement in a matter separate from Safr, reported the Boston Globe. Gilani said this fact did not impact investor interest in his company.

Additionally, Safr was criticized about its branding as a female ride-hailing startup, which some legal experts said was discriminatory to men. Gilani specified the company is female-focused, not female-specific. That said, once you join, you get an email that says “Welcome to the Safr Sisterhood — You’re a Superwoman.”

Meanwhile, Shebah marketing director Carol O’Hanlon told Crunchbase News that the company only welcomes female drivers on the application. King, a ride-sharing researcher, questions whether it is legal to exclude men. Shebah has also said it struggled to convince male investors, so it’s sticking to crowdfunding at this current stage.

Market Still Needs Convincing

It’s clear that across the industry, ride-hailing companies are thinking and talking about safety.

Lilly Kenyon, the head of operations at RideGuru, has observed that many players are trying to capitalize on various niches within the ride-share marketplace—but that doesn’t mean it’s working.

“While there is a place for these niche companies, Uber and Lyft are still dominating the market,” she said. According to a recent survey by RideGuru, 57 percent of respondents stated they use Uber the most, followed by 29 percent for Lyft. The remaining 14 percent were split among other niche startups like Juno, Via, or Arro.

King echoed the sentiment.

“I doubt women will be interested in paying a premium for what seems like comparable services to Uber and Lyft. If they don’t feel safe, they’ll probably just drive or not go out at all,” he said.

This year, Uber will release a transparency report providing the public with “data related to reports of sexual assaults and other safety incidents claimed to have occurred on our platform in the United States,” according to its latest S-1 filing.

Uber did not immediately respond to questions regarding when it will release the report, or what it is doing to address international incident claims (because it happens internationally, too, of course).

Lyft’s Kaelan Richards, a senior manager on policy and safety communications, told Crunchbase News that there is “no place in the Lyft community for discrimination or violence of any kind.” Richards said they do “professionally administered criminal background checks.”

To critics, Safr highlights proven investor interest and user demand as data points in favor of its success, despite being up against enormous, and enormously wealthy rivals Uber and Lyft. On the first point, Safr will announce new fundraising in the coming weeks; more when we know it.

There was a time when it was presumed that only one company would control the entire U.S. ride-hailing market. Lyft’s IPO undercuts that argument, and new safety-focused contenders may demonstrate room for more than two. In time the conversation around ride-hailing might just become less about complete market control, and more about serving different slices of demand.

Natasha Mascarenhas
April 18, 2019

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