Rival ride-hailing firms Lyft and Uber are revving up for IPOs, which are expected to kick off a blockbuster year for tech IPOs beyond the ride-hailing industry.
There is a David and Goliath story playing out here. Lyft is dwarfed by Uber, but has made a strong showing as the number-two ride-hailing service in the U.S. and Canada. It was last privately valued at around $15 billion, compared with Uber’s $100 billion. In December, both firms filed papers for public listings. Whichever goes public first will be the first-ever ride-hailing firm to do so. The race is on, and the implications of these two IPOs go beyond Lyft and Uber. They are expected to open the floodgates for tech IPOs this year, with highly valued start-ups such as Slack, Airbnb and Pinterest waiting in the wings.
The impending IPO has cast a spotlight on Logan Green, Lyft’s Chief Executive and founder. Over the past 12 years the firm’s President, John Zimmer, has been the company’s public face. Green has preferred to stay behind the scenes.
Several things led Green to conceive of Lyft, which pre-dates Uber. The first was concern for the environment. After graduating from the University of California, he worked as the university’s sustainability coordinator, and was keenly interested in alternatives to the one-car mobility model. On a trip to Zimbabwe, he took note of the local practice of creating informal services to fill car pools. This inspired Zimride, which Green started in 2007 to arrange car pools for college students. Early on, Zimmer went to work with Green to build Zimride.
Zimride raised $6 million in 2011, according to the New York Times, but the web-based service miscalculated the rapid rise of smartphones and mobile apps. The following year Green decided to spin a mobile peer-to-peer ride-hailing service out of Zimride – and Lyft was born. This expanded it beyond the student demographic, pairing drivers with riders on public streets in real time.
Green’s entrepreneurial instincts were spot-on, but in the nascent ride-hailing industry, using unlicensed drivers was not legal. This, says Ann Miura-Ko, a Lyft board member and partner at venture capital firm Floodgate, made some board members uneasy about the pivot. Not Green. “Someone asked, ‘Will this really work?’ And he wasn’t just sure, he was positive,” she said.
What Green didn’t see coming was Uber, which Travis Kalanick started in 2009. Initially Uber was positioned as a luxury service, using only licensed drivers. The two firms became rivals when Kalanick re-cast Uber in Lyft’s mold. Competition between the two has been fraught ever since. Green gained the upper hand in 2017. When scandal-ridden Kalanick was ousted from Uber, Green promoted Lyft’s different tenor as the “kinder, gentler” firm. Ridership surged, and Lyft took a share of up to 35% in some U.S. cities.
Lyft has since started moving into other areas, such as self-driving cars. In 2018 it acquired Motivate, the largest bike-share operator in the U.S. and parent company of Citi Bike. This has given it a leading position in an emerging transportation market. Green is not out of ideas. “As an entrepreneur, you always kind of want what you’re pitching to sound somewhat off the wall,” he said in a 2017 interview. “You’re trying to pitch the future that doesn’t exist, and you want it to be – it needs to be – a little bit of a stretch.”