BUSINESS MODEL CANVAS

Lyft is an on-demand transportation service platform that lets people hire a cab with the help of a tap on their smartphone. Being valued at $5.5
Billion and having a presence in 200 cities of the USA, Lyft is giving a tough competition to Uber and aims to make it BIG in the on-demand taxi
industry.

Founded in year 2012 (i.e. 3 years after Uber came into existence), Lyft has been one of the fastest growing companies in the USA. Lyft has already
captured 40% of the total market in US cities like Austin and San Francisco.

Lyft Founders, Funding & Facts

Founders: John Zimmer, Matt Van Horn, Logan Green & Marcus Cohn.

Company Headquarters: San Francisco, California, USA.

Founded: As Zimride in 2007 and became Lyft in year 2012.

Lyft Valuation: $15.1 Billion as of 2018

Lyft Funding: $2.01 Billion (Till April 2016).

Lyft Revenue: Lyft is currently operating at $3.615 billion revenue run rate, based on October 2019 financials.

Number of Rides = 1 Billion in August 2019.

Number of employees = 5683 (As of May 2020).

Number of drivers = 2 Million in Aug, 2019

Logo / Mark: Pink Coloured Moustache on front grill of car.

Source for financial numbers: Bloomberg; https://expandedramblings.com/index.php/lyft-statistics/

Features of Lyft

• Lyft matches customers who want a ride with nearest available drivers.
• They use the tag line – Find a new friend everyday.
• All Lyft cars have a big pink coloured moustache on their front.
• Customer gets to know the driver details and ETA when he requests a ride.
• Live tracking tells driver the exact location of the customer from where ride has been requested.
• Payment procedure is handled by Lyft itself from within the app.
• Lyft charges a commission of 20% from each ride and the rest 80% goes to the driver.
• Lyft business model has a rating system in place for drivers as well as customers where they can rate each other.

Lyft just has 2 car options – Lyft and Lyft Plus and a ride-sharing option called Lyft Line

Lyft also has surge pricing model called as heat maps.

4 step model about how Lyft works

Step 1 (Request a ride): The initial step in the business model of Lyft is about requesting a ride. Anyone having a smartphone with the Lyft app
installed can simply request a ride almost instantly with the help of few taps. User has the option to choose from Lyft, Lyft Plus and Lyft Line.

Step 2 (Matching): As soon as a request is made, a notification is sent to nearby drivers in that area. Driver has the option to accept or decline a
request.

Step 3 (Ride): Map based interface allows the customer to track the car while it arrives and also gives the ETA. On the other side, the driver can also
track the customer’s location from where the request was made. Live tracking is also available during the ride. Unlike Uber, Lyft works on a model
where passenger almost always sits in the front seat along with the driver. This is due to Lyft’s tagline – Your friend with a car.

Step 4 (Payment & Rating): Customers can rate the driver once the ride gets over. Rating system is an important part of Lyft’s business model.
Lyft Business Model Canvas

Value Propositions

Lyft offers excellent value propositions for both its front-end stakeholders – drivers & customers.

For Customers:

• No need to wait for a taxi. Lyft app enables matching you with nearby available car.
• Lyft offers free rides on certain occasions and users can also avail discounted rides from time to time.
• Lyft makes customers feel as if they are riding with a friend instead of traditional cab.
• Prices are often lesser than the normal taxi fares.
• Lyft’s tagline says – Your friend with a car. It lets customers befriend drivers.

For Drivers:

• It adds up to an additional income source.

• Flexible working schedules. Drivers Can work anytime and for as long as they wish.
• Easy payments. Lyft pays 20% of the total ride cost to its drivers.
• Those who love to drive can make new friends and can earn money while pursuing their hobby.

Lyft’s Revenue Generation Model

Lyft is basically a cab aggregator that matches people who want a ride with drivers who have a car. Each transaction happening on Lyft’s
technology-based model is divided between the driver and the company. Lyft takes a 20% cut from the total amount paid by a passenger and the
rest 80% cut goes to the driver.

The main revenue models of Lyft include:

Lyft Car Ride

Lyft charges a 20% cut from every transaction that happens on the platform. Normal 5-seater cars come under the normal “Lyft” car category.
Drivers get the remaining 80% of the price that is being paid by the passenger.
Heat maps (Surge Pricing)

Lyft have heat maps that define an area where the demand is more. In case of high demand in a area, more price is charged by the cab company.
This adds up to the revenue model of Lyft. The heat maps are location specific as well as time specific.

Lyft Plus (More seater vehicles)

To give its customers another option apart from the normal 5-seater cabs, Lyft has got “Lyft Plus” which are basically 7-seater vehicles. The charges
for Lyft Plus are higher as compared to normal Lyft. Over here again, Lyft earns net 20% of each ride.

Lyft Line (Discounted Rides)

Lyft was born out of Zimride which was initially a ride sharing platform. Promoting car share among people and to give an option to those who do
not wish to hire an independent cab, Lyft initiated “Lyft Line”. As the name suggests, it enables a user to ride along with others on a pre-specified
route. It can be thought of as an alternative to public transport but with the service of Lyft.

Lyft – Your Friend with a Car.

• Passengers almost always sit on the front seat.

• All Lyft cars have a pink moustache on their front grill, so that a user can easily spot the car.
• Lyft tells users that car drivers are your friends.
• You can tip your Lyft driver after the ride.

Customer Segments

Users

• Users who don’t have a vehicle to travel

• Users are people who do not want to drive themselves and prefer to use a cab/taxi
• People who like to make a new friend while travelling
• Those who want a cost-efficient ride from their doorstep.
 Drivers

• People who own a car and want to earn money

• People who love to drive
• Those who like to make new friends and not be treated as cab drivers.

Customer Relationships

• Social Media - Using social media to reach out to potential users.

• Customer support – providing exceptional customer support
• Reviews, ratings and using feedbacks for ride experience.

Channels

• Website – lyft.com
• Android mobile App
• iOS mobile App
• SMS – discount codes, coupons – Regular users often get discount/coupon codes for their next ride

Key Activities

• Product development and management – One of the key activities is to constantly develop the product and the app experience for the users.
• Connecting riders with drivers – This allows the riders to make a booking via the app and connect with the drivers
• Marketing & customer acquisition
• Hiring drivers and backgrounds checks – Background checks are made on the drivers as customer needs to feel safe while going on a ride.
• Managing driver payouts
• Customer support

Key Resources

• Technology Platform
• Skilled drivers
 Cost Structure

• Technological infrastructure
• Salaries for permanent employees
• Payouts to drivers – 20% is commissioned to Lyft, rest 80% is for the drivers.
• Insurance costs
• Marketing expenses

Revenue Streams

• Car rides based on per km/basis

• Different car options – Lyft, Lyft Plus, Lyft Line
• Heat Maps
• Improve rider experience by adding personal items to improve comfort level of the customer. E.g. Water, snacks, charging cables and hand
sanitizer

Key Partners

• Drivers with their cars

• Payment processors
• Map API Providers such as Google Maps, Apple Maps
• Insurance companies’
• Investors
 Value Proposition Canvas

Amongst the top reasons for using rideshare apps, people cited:

• Avoid drinking and driving

• Avoid having to find and pay for parking
• To get to the airport
• Commuting
• Preferred to public transport

By adding in the feature of pre-booking a shared ride, Lyft can alleviate a lot of the anxiety that comes with booking a shared ride, when the user
needs to be somewhere at a certain time. This could be relevant to people getting to work, catching a flight, or any situation where the user has a
fixed time in advance.

The feature of pre-booking a shared ride also addresses the following pains and gains:

• No concern about surge at commuting hours (fixed price at booking)

• Expectations of arrival time are better managed — no one will be able to join the ride after the 24-hour booking window journey becomes a
lot more predictable — uncertainty massively reduce
• Able to relax in the car — more time to be productive before work if needed becomes a lot easier to plan around the ride
• Potentially reduces the number of cars on the road (less traffic/ pollution)
• The feature to enable passengers to rate co-riders help alleviate stress and frustrations. The idea being, that if a passenger knows another
rider can rate them, and that there are repercussions for repeated negative reviews, they ensure they are being considerate for the duration
of the ride. This would make for a more pleasant experience for all users.
In Summary,

• Save time while booking

• Want to be more productive
• Don’t want to deal with disrespectful people
• Can’t afford to get private cabs all the time
• No way to rate fellow passengers (only make a complaint)

There are essentially four phases of using Lyft. They are Before, Using the App, During the Ride, and After the Ride.

Customer Profile

Customer Jobs
• Travel with privacy
• Not worry about driving under influence
• Reduce anxiety and see where driver is
• Pickup friends
• Not to worry about parking

Customer Gains
• Reliable
• Good alternative when weather is bad
• Easy to get around unfamiliar places
• Time to be productive
• More privacy than public transport

Customer Pains
• Difficult to change pick up point once en-route
• Driver unable to find pickup point
• Surge pricing
• GPS taking a slower route than usual
• Arrival time may be different to the time on the app
Value Proposition

Gain Creators
• Reducing traffic on the road.
• More pleasant sharing ride experience
• Can be more productive
• Save money

Pain Relievers
• Reduce frustration with other riders
• Fixed cost at time of booking, no surge pricing
• Save money while being efficient
• Takes away stress of booking a ride
• Takes away uncertainty

Products and Services

• Book shared ride up to 24h in advance.
The idea for this feature is that users would book 24-hours in advance and receive driver and route confirmation 12-hours before their
departure time. Lyft would have time to plan the most efficient route whilst adding multiple stops, and the app would not allow any other
users to join the ride after the 24-hour cut-off. A user would be able to cancel their booking, but they would be charged a cancelation fee

• Rate experience with other riders

Passengers could then rate co-riders, and give feedback on things such as being late for pick-up, being inconsiderate in the car, with the
premise being that if a person receives 5 sad face reviews over a 2-week period, they would be temporarily banned from
booking shared services through Lyft (they could still book private rides).
 • Guarantee to get you to destination on time (unless unforeseen circumstances)

Essentially, a user of Lyft is trying to get from point A to point B, but that is not the only job they are trying to complete when they use Lyft. There are
many jobs that can be completed, including social and emotional ones. On a functional level, a person may be dropping something off or picking
something up, trying to travel with privacy, not worry about parking, avoiding drink driving. On an emotional level, they may feel confident they are
not being price gouged (the price you see is the price you pay before confirming your ride) and relaxed that they themselves don’t need to sit in
traffic or deal with other drivers.

Key Partners
List the partners that you
can’t do business without
(not suppliers)
• Drivers with their cars
• Payment processors
• Map API Providers such
as Google Maps, Apple
Maps
• Insurance companies’
• Investors
BUSINESS MODEL CANVAS
Key Activities
What do you do every day to
run your business model?
• Product development and
management
• Connecting riders with
drivers
• Marketing & customer
acquisition
• Hiring drivers and
backgrounds checks
• Managing driver payouts
• Customer support
Value Propositions
What are your products and
services?
What is the job you get
done for your customer?
Customers
• Minimum waiting time
• Cash/Card payment ride
• Price less than normal taxi
and other cab
aggregators
• Can see the Expected
Time of Arrival (ETA) and
Customer Relationships
How does this show up and
how do you maintain the
relationship?
• Social Media
• Customer support
• Reviews, ratings and using
feedbacks for ride
experience.
Channels
Customer Segments
List the top three segments.
Look for the segments that
provide the most revenue.
Users
• Those who do not own a
car
• Those who do not want to
drive themselves
• People who like to make a
new friend while traveling
• Those who want cost
efficient rides from their
doorstep.

Key Resources track cab on maps.

Drivers
The people, knowledge,
means, and money you
need to run your business.
• Technology Platform
• Skilled drivers
• Additional source of
income
Flexible working hours
• value proposition?
• Easy payments
• They are not treated as
cab drivers
Drivers:
How do you communicate
• People who own a car
with your customer?
and want to earn money
How do you deliver the • People who love to drive
• Those who like to make
new friends and not be
• Website treated as cab drivers.
• Android mobile App
• iOS mobile App
• SMS – discount codes,
coupons

Cost Structure Revenue Streams

• Technological infrastructure • Car rides based on per km/basis
• Salaries for permanent employees • Different car options – Lyft, Lyft Plus, Lyft Line
• Payouts to drivers • Heat Maps
• Insurance costs • Improve rider experience by adding personal items to improve comfort level of the
• Marketing expenses customer. E.g. Water, snacks, charging cables and hand sanitizer
 Value Proposition Canvas

Value Proposition Customer Profile

Gain Creators Customer Gains

1. Reducing traffic on the 1. Reliable
road. 2. Good alternative when weather is bad
2. More pleasant sharing 3. Easy to get around unfamiliar places
ride experience 4. Time to be productive
Products & Services
3. Can be more productive 5. More privacy than public
1. Book shared ride upto 4. Save money transport
24h in advance.
2. Rate experience with
other riders Customer Jobs
3. Guarantee to get you
to destination on time 1. Travel with privacy
(unless unforeseen 2. Not worry about driving
circumstances under influence
Customer Pains
3. Reduce anxiety and see
1. Difficult to change pick up point once where driver is
en-route 4. Pickup friends
Pain Relievers 2. Driver unable to find pickup point 5. Not to worry about parking
3. Surge pricing
1. Reduce frustration with other riders
4. GPS taking a slower route than usual
2. Fixed cost at time of booking, no surge pricing
5. Arrival time may be different to the
3. Save money while being efficient
time on the app
4. Takes away stress of booking a ride
5. Takes away uncertainty