Lyft Puts Drivers On A Pedestal

The No. 2 U.S. ride-hailing app bets on providing better service to those behind the wheel.

- Eric Newcomer

On Dec. 6, Uber Technologies Inc. filed paperwork confidentially with the U.S. Securities and Exchange Commission to go public. According to sources familiar with the filing, Uber’s likely investment bankers—Morgan Stanley and Goldman Sachs Group Inc.—believe the company could be valued at $120 billion. The news of the IPO was the latest achievement for Chief Executive Officer Dara Khosrowshahi after a series of scandals, lawsuits, and embarrassments involving the previous CEO, Travis Kalanick. The biggest threat to Khosrowshahi’s turnaround effort: Lyft Inc., Uber’s smaller, friendlier, annoyingly persistent ridehailing competitor.

At times, Lyft had seemed like a long shot just to survive. In 2014, Kalanick tried to buy the smaller company, proposing to give Lyft’s shareholders a little less than a 10 percent stake in Uber, according to two people familiar with the negotiation. When Lyft founders Logan Green and John Zimmer refused, Kalanick set out to crush them instead.

But Lyft hung around, raising additional capital, winning market share, and, mere hours before Uber filed to go public, stealing the spotlight with its own IPO filing. Lyft intends to go public in either April or May, according to people familiar with its plans. “Uber thought they’ll just kind of grow their business, and these guys will go away,” says Santosh Rao, head of research at Manhattan Venture Partners LLC. Now, “Lyft is in a strong competitive position.”