Dear Uber and Lyft – Get Your Shit Together

Let’s start out by saying that I’m a big fan of both Uber and Lyft. I’m indirectly an investor in both companies as I’m an investor in three VC funds that are investors Uber and one VC fund that is an investor in Lyft. I have no idea how much actual equity I have in either company, but based on current valuations the dollar value of my indirect ownership is non-trivial. And Foundry Group came close to investing in Zimride (the predecessor to Lyft) but we ended up withdrawing from what we thought was an inappropriately high priced round, which, in hindsight, was clearly a miss on our part.

Regardless of my support and enthusiasm for these two companies, I’m bummed at the mud they are slinging at each other. I get that this is an intensely competitive market. I get that the stakes are huge. I get that all the reporting I’m reading is second hand and might be fiction. But the ad hominem attacks are escalating rapidly and the behavior they are surfacing isn’t pretty.

Techcrunch summarized this pretty well yesterday, after multiple articles from a variety of places including the NY Times and WSJ. The headline sets the tone: Uber Strikes Back, Claiming Lyft Drivers And Employees Canceled Nearly 13,000 Rides. The NYT article is Accusations Fly Between Uber and Lyft and the WSJ article is Uber and Lyft Rivalry Turns Nasty in War of Words.

I have no idea what, if any of what is being said is true. The tactic being asserted that is most disturbing is this one:

Accused Lyft behavior: “Lyft employees, drivers and one of its founders ordered 12,900 trips on Uber’s app and then canceled them with the goal of slowing down drivers who would otherwise be picking up actual, paying passengers.”

Accused Uber behavior: “177 Uber employees have requested and quickly canceled more than 5,000 rides from Lyft drivers over the past 10 months, Lyft said, in an effort to frustrate Lyft’s customers and drivers.”

As a customer, this sucks. If I was a driver for either service, this sucks. I think this ultimately backfires against each company equally.

Guys – both of you are trying to disrupt a massive market dominated by incumbents and government regulation. I’m sure these incumbents are now laughing their asses off at y’all are acting like petulant children, as they wait patiently for you to chew up capital, value, partners, customers, while generating additional scrutiny from the government forces in the incumbents’ pockets trying to slow you down.

I get that you believe price is a weapon – how you use it for you and your investors to decide. But by messing with each other’s service, especially in a way that negatively impacts your two key constituents, consumers and drivers, you are opening yourself up to a ridiculous amount of scrutiny and quickly playing a no-win, zero-sum game. There is no need at all for this given the massive size of the market opportunity before you.

One, or both of you, should rise above the fray. Keep on competing aggressively. But recognize that you are radically disrupting a market desperately in need of disruption and doing it beautifully. Don’t shit all over it, and yourself in the process.

  • http://is.linkedin.com/in/balakamallakharan Bala

    I always wonder what gives rise to the first thought which leads to actions like these… Do you have to destroy your competitor to win in the market? Why cannot we focus on service, value and the pure joy of solving a problem that delights a customer. I would be interested to use both Uber and Lyft, but if leadership is lacking and no-one is able to really show maturity in this, I would treat them like they are children who don’t know better. Guess what when that happens we need babysitting and that always leads to more rules, regulations and big brother to watch over the service. Shame

  • http://www.pointsandfigures.com/ pointsnfigures

    I was surprised at the allegation that each ordered rides and cancelled. Intense competition will do that. Doesn’t seem to ethical. Would force them to start charging in advance like Airlines, and that would be no fun.

  • jody s

    They should act more like a CPG company – you don’t buy the competitor’s product and throw it in the trash, or knock over the display in the store. Instead you send every employee, friend and family member to buy your product so the retailers see the product flying off the shelf.
    Imagine if they focused their efforts on getting more rides for their respective service (even if it was “all in the family”) instead of making the whole category look bad…

  • https://twitter.com/johnmccarthy johnmccarthy

    Well said.

  • http://www.startupmanagement.org/ William Mougayar

    For sure, slinging mud at each other hurts both, and doesn’t reflect well on the segment either.
    IMO, Hailo looks good, amidst all of this.

    • Rick

      Do you think this stuff is a sign they can’t compete with the other players in the segment?

      • http://www.startupmanagement.org/ William Mougayar

        I’m not sure it is that type of sign, as I’m not privy to that type of information, but one thing I know is it’s proving a lack of management maturity on either side. You don’t compete by resorting to these types of tactics. These are dirty tricks.

        • Rick

          “…a lack of management maturity…”
          .
          That or desperation could explain it. Does your comment mean you think these new companies, run by youngsters, are lacking the maturity of well experienced leadership?

          • http://www.startupmanagement.org/ William Mougayar

            I’m not implying that directly. But it appears that way.

          • Rick

            I just learned something of major importance by visiting your website! I went to post and found out I couldn’t because you don’t let people post as a guest. It’s really funny this happened just now because I’m working on a new process I call “Objective Based Web Usage.” This really helped me implement it today.
            .
            With objective based web usage a person must first define their objective before using the web. For me, when visiting your site today, I was there to learn more about the start up world. So it quickly dawned on me. If I’m there to learn why am I wanting to post? I should be there to read NOT POST!!!
            .
            Thanks!

          • http://www.startupmanagement.org/ William Mougayar

            Hmm. I’ll check on this. It wasn’t intentional- maybe it was a default setting. thanks.

          • http://www.EyeOnJewels.com/ Darius Vasefi

            Agreed, and there are lots of startups run by young founder which do not behave like this. this seems a unique situation applicable to these companies. Would be good to get the full story and have them get back to business serving their customers.

          • http://www.startupmanagement.org/ William Mougayar

            One thing is for sure- Uber and Lyft are very aggressive competitors.

  • Rich

    Hmm… Is this behavior another example of where competing on price takes a company?
    .
    I see people act like this toward others often. Is that kind of childish behavior a good marketing ploy to get free media attention?

  • markmacauley

    Fucking with those who make your business a business is NEVER a good model. Drivers will go back to what they know if it’s better and less painful than what either Uber or Lyft are offering. Losing drivers means losing access to revenue (customers), and if this happens because you can’t operate above the maturity level of a 7th grader, then you will either grow up or implode. I like what you did, not what you’re doing. Grow the fuck up.

  • http://batman-news.com Jeremy Shure

    +1

  • http://www.museumplanet.com David Brown

    Exactly right Brad. The Yellow Cab franchises are notoriously corrupt. A taxi medallion in NYC is now over $1,000,000. (you read it right). The medallions are mostly owned by one bank corp. Such a joke. Did I say that some years ago a taxi driver did NOT know where Carnegie Hall was. Stupid me thought he was joking. There is enough business for both companies. Bust the cab franchises sirs, not each other.

    • Rick

      So then the *new way* companies like Uber and Lyft are working around getting a medallion with their systems? If so that’s a great example of disrupting an industry!

      • http://www.museumplanet.com David Brown

        The problem will be the crooked politicos who take contributions from the medallion owners.

    • http://www.twitter.com/dbkahn Dan Kahn

      So what you’re saying is that the cab driver didn’t know how to get to Carnegie Hall?

      • https://twitter.com/johnmccarthy johnmccarthy

        Nice set up…..

      • http://www.museumplanet.com David Brown

        Yea. Only the newest immigrants drive cabs in NYC now because the artificially limited number of medallions (11,000?) are so expensive. The system there is a total corrupt joke.

        • http://www.twitter.com/dbkahn Dan Kahn

          So how do you get to Carnegie Hall?

          • https://twitter.com/johnmccarthy johnmccarthy

            Practice………

          • http://www.museumplanet.com David Brown

            Used to be that..now ya just pay pay pay

  • jon

    They should be doing everything in their power to show that outside regulation is not needed in the industry, not repeating the type of behavior that brought taxi regulation in the first place.

    • Rick

      I think they should be focused on bringing a quality service to market. In other words focusing on the customer needs and wants. I would guess that means making getting transportation easier and quicker. Ensuring a pleasant ride. Making sure the people who provide the service, the drivers, make more money.

  • kevrmoore

    I totally agree that this could really backfire. Positive consumer sentiment is going to be an increasing differentiator in this space, and could have regulatory ramifactions, as well. They need to be upstanding corporate citizens. Well said, Brad!

  • Drew V

    Both are very similar services, fighting the same fight, granted there are a few distinctions (i.e Uber’s different level of services). I’m really waiting for one to start dominating the market, preferably through a better (read – more mature) business strategy than the other. This is not the type of stuff that I would expect.
    Anybody foresee a merger/acquisition?

  • Niv Dror

    Well said.

  • Niv Dror

    Tweet from @tristanwalker says it all: https://twitter.com/tristanwalker/status/499614389213745152
    /Users/NivDror/Desktop/Screen Shot 2014-08-13 at 11.13.03 AM.png

  • http://simplifilm.com/ Chris Johnson

    Brad, it’s not even a zero sum game. It’s a no-win negative sum game.

  • http://www.betterpointment.com/ Rich Weisberger

    We may look back at this event as the changing of the Guard in startup tech, which up to this point has not practiced this type of behavior. The issue is how far up the corporate chain this went.

  • Chris J Snook

    If I was a taxi cab company I would have seeded this war and its great that you call attention to coolwr heads and aligned self interests because they are shooting themselves in the foot. Just like Elon opened up Teslas patents because he is not competing with other Electric Vehicle companies Iber and Lyft need to put the guns they point at each other down and aim em elsewhere. We all want this service to continue.

  • http://vectorpress.blogspot.com/ tpkroger

    In New York City, services like Alexis and Citivan were “disrupting” the existing for-profit transportation systems long before Uber or Lyft came on the scene. And they’re still doing it with better prices: a dollar anytime, anywhere along routes that aren’t covered by MTA busses or the subway.

    But this doesn’t draw anywhere near the amount of attention because they’re in the business of transportation, not smartphone doodads. Also, the drivers and customers are predominantly black, reflecting the actual demographics of the city, and none of these techie blogs care about black entrepreneurs.

  • http://www.justanentrepreneur.com PhilipSugar

    There is a good saying: “never wrestle with a pig because you both will end up dirty and the pig will like it.”

    I don’t know what happened to “win with honor”.

    A good competition is that, it can make you both better.

    But the win at all costs has become more pronounced. You can see it in politics and business much more these days.

    I don’t know where it comes from. The easy one’s to blame are lawyers and investment bankers, that’s not really fair, but both have a belief that even if you are on the wrong side you do whatever it takes to win for your client.

    • Rick

      In the thread “Capital Is Cheap And Labor Is Expensive” you asked for a debate. I tried to provide it but you bailed on me. Why?

      • Rick

        Also comments on your blog for the post http://www.justanentrepreneur.com/?p=119 are closed and I would like to have discussed technical debt with you. I think you’re leaving out length of service with regard to technical debt.

        • http://www.justanentrepreneur.com PhilipSugar

          Length of service meaning turnover is a technical debt you have to pay off?? Agree completely. Arguing philosophy? Not really productive. I am not going to change mind and expect the same of you.

          • Rick

            No I mean length of service of the code. It’s a software development thing.

  • http://www.stevenkuyan.com Steven Kuyan

    Love both services but this is absurd.

    You never get into any kind of war, especially a price war, with someone in your industry and vertical, it never ends well. I know that drivers of both companies like to drive for them, I always ask when I use them.

    Brad and Chris J Snook made a very good point, the TLC is the only one that will benefit from this as both companies burn through funding. With little funding the TLC will dictate the rules and regulations through legal battles. I really hope that they figure things out and learn to work as complementary services.

  • http://vayknows.com/ Vivek Reddy

    Brad, while I completely agree that the mudslinging is unfortunate and will hurt both companies, the media has given Uber way too much of a free pass here.

    Just look to a week ago, when Uber “announced” UberPool and Lyft launched Lyft Line the next day. Lyft launched a live product while Uber merely put up a blog post that they’d start a Beta test in a few weeks.

    Why did no one in the media catch on that Uber was tipped off to the Lyft Line announcement and tried to steal the PR for themselves? How was this not painfully obvious, especially given the tactics Uber took against Gett in New York and how they handle PR in general? This is a complete failure of the tech media to call out a company, even if they’re as successful and powerful as Uber, when said company comes out with BS.

    I’m sure this isn’t the first time Uber has done this against Lyft, and I wouldn’t be surprised if Lyft started this recent bout of mudslinging purely because of the tactics Uber takes. Some might think what Uber was a smart move, but it’s only smart if the media is complicit in letting them get away with it.

    Was Lyft wrong to put out that recent release? Probably. If they’re going to battle Uber using Uber’s tactics, they’ll almost assuredly lose the war, but this false equivalency of “wrongs” is absolute nonsense and reminds me way too much of the he-said-she-said crap we see in politics these days.

    When will someone properly call out Uber in the press? They’re worth 5-10x what Lyft is worth- why can’t they win in a clean way as opposed to employing such juvenile tactics?

  • Simone Brunozzi

    The winner will be the first of these two companies to issue a modest refund to drivers that have been damaged.

  • Andy Josuweit

    Ummm, how is there no limit to cancellations? If a user(s) cancel X rides, in Y time range = BAN user.

  • Oscar Levant

    If you invested in Uber, I got bad news for you. The rates are now so low that drivers are saying it’s no longer worth it. I know, I’m a driver. The rate is now what Yellow Cab was charging 25 years ago, when gas was $1.25 a gallon.
    All the drivers I know are deeply unhappy with Uber. We used to love our company, and now we hate it. Uber thinks everything is Ok because it sends out surveys, but drivers lie so they won’t get “deactivated”. If Uber wants the truth, it will allow for anonymous feedback. Moreover, there is no telephone contact with Uber, I don’t know who my boss is, I don’t know anyone in the office, we can only text or email, and they are answered days later. My grievances are responded with cut and pasted emails back. UBer does not care about drivers. Customers are feeling it, and this will have detrimental effect. UBer is destined to fail if it thinks these new low rates are the best policy. Customers were happy with the previous rate becasue it was lower than cabs, now it is so low that drivers are being hurt. Someone ought to slap the CEO and get him to wake up to what is happening. I love the Uber platfrom, but it is wearing out my car and I’m only profiting maybe $10 an hour after all expenses. UBer says we make “$900 per week”, but they are not factoring in gas, maintenance, and depreciation. Subtract all that, and there’s no where near that amount left.