Lyft's Zimmer on Uber battle: 'We'll ultimately win'

SAN FRANCISCO — John Zimmer isn't shy about making bold pronouncements when it comes to Uber, the ride-hailing industry's Goliath to Lyft's David.

"I think we'll ultimately win, yes," the Lyft co-founder tells USA TODAY. "Our focus on the U.S. has been helpful."

Lyft has indeed taken a narrower path to success by focusing on the domestic market. Founded in 2012, three years after Uber created the category, Lyft made itself known with the fuzzy pink mustaches that adorned its cars.

But Zimmer's confidence is mitigated by the fact that this battle is getting grizzly, thanks largely to Uber's mushrooming footprint. Reports surfaced this summer, which Lyft executives denied, that the company was shopping itself around to a range of suitors — including Uber.

By most standards, Lyft has done well with venture capitalists. The company has raised $2 billion, which includes a $500 million investment from General Motors in late 2015. Its private market valuation is estimated at $5.5 billion. It has 315,000 drivers and just hit 17 million rides a month, up from 7 million a year ago.

In contrast, Uber has raised $15 billion and is currently valued at $68 billion and operates in more than 60 countries. It has more than a million drivers, and has completed 2 billion rides.

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And while little is known about the exact unit economics of both companies, the widely held belief is that both are using their capital to keep prices low in order to grow market share. Uber recently shelved its plans to compete in China after an expensive incentives program that failed to dent rival Didi Chuxing.

Both Zimmer and Uber CEO Travis Kalanick have made plain their desire to provide a service that eliminates, for many people, the need to own a vehicle. Once that hook is set, ride-sharing companies could charge more, in theory.

Ride sharing is thought to be a $40 billion market, and given fairly low barrier to entry — namely compelling tech — there are likely to be more entrants into the space.

In the meantime, however, Zimmer and his team still need to make sure they're top of mind for consumers.

"We have enough drivers now so that customers can count on a Lyft arriving within three minutes," says Zimmer, 32. "Once you can compete on price and estimated time of arrival, then the winner is whoever has the best experience."

Lyft's new Amp, a cylindrical dash-mounted device aimed at making pick-ups trouble-free, is one move in the customer-experience direction. By matching colors between the Amp's screen and a rider's Lyft app, the company hopes to streamline the curbside process.

Lyft also differs from Uber in that it allows customers the option of tipping.

While Zimmer would not provide details on how many riders tip and how much, he says that Lyft drivers have "10% higher earnings" than rival drivers, and that since he and co-founder Logan Green launched the service in 2012, some $100 million in tips have been doled out by appreciative riders.

"I was in the hospitality business before, and what I learned there is the experience has to be right for the customer," he says. "So, you certainly don't have to tip. But tipping does help foster a service culture."

Ultimately, Zimmer says he and Green have a broader vision than simply providing consumers with rides. They want to help eliminate car ownership altogether.

"Every year in this country, $2.1 trillion is spent on car ownership, which is around $9,000 per vehicle per year, and that car is typically only used 4% of the time," he says. "When I went to hotel school, they taught us about how important occupancy was. Well, 4% occupancy isn't great."

Lyft's massive investment from GM is seen as a way for the automaker to buy its way into the burgeoning ride hailing game. GM, like many other automakers and some tech companies, has been working on self-driving and all-electric technology.

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Zimmer recently wrote in a Medium post titled "The Third Transportation Revolution: Lyft’s Vision for the Next Ten Years and Beyond," that consumers could expect a driverless Lyft ride within five years. He also predicted that private car ownership in major cities would be all but obsolete by 2025, and that cities will reclaim acres of public space now dedicated to parking lots.

But what will the seemingly inevitable age of self-driving cars mean for its drivers?

"We'll still need drivers for quite some time," he says. "For one, you'll have many routes (outside of urban cores) that won't be something self-driving cars can handle. And then you'll have a need for a human being for things like rides for the elderly or handicapped. So I don't see that going away fast."

One aspect of the autonomous car future that Zimmer isn't quite clear on is what direction federal regulations will take under a new administration.

Just recently, the Transportation Department offered more than 100 pages of guidelines for self-driving pioneers in an effort to start creating uniform regulations and avoid state-by-state rulings that could hinder the deployment of such tech. President-elect Donald Trump has yet to set out a technology agenda.

"A lot is simply unknown right now, whether that's what could happen with regulations to the funding climate (for tech companies)," he says. "But we've got $2 billion in the bank and don't need to raise money."

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For Zimmer, who remains convinced of his company's bright future, pushing for the elimination of car ownership is a far cry from the way he felt as a 16-year-old attending the New York Auto Show with his father.

"Back then, I wrote down a note to myself saying that I'd soon get my driver's license and a Ferrari," he says, likely echoing the sentiments of many a car-crazed teen.

"But I'm over that now," he says with a laugh. "I'm convinced that at some point, driving in a city will be illegal. In fact, driving will be like going to an amusement park. You'll take your car to a track, buy a ticket, drive around, then go home. And call a Lyft to go somewhere."

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