Business Column

New York state could be the turning point for Lyft’s battle against Uber

Casey Russell | Head Illustrator

Lyft may only have 1/10th of Uber's $70 billion valuation, but investors might reconsider this value amid Uber's recent PR crises.

From sexual harassment allegations to being sued by Google for allegedly stealing self-driving tech secrets, one thing is very clear: Uber has some big problems.

Uber is facing these controversies without a CMO, CFO, COO and — with Travis Kalanick’s departure — CEO, which only adds to the company’s systemic operational, cultural and management issues. And amid Uber’s most difficult and revealing months ever, the company is trying to penetrate a brand new market: upstate New York.

Ride-hailing services finally became legal in the entirety of New York state at the end of June, right as Uber plunged into its sudden downfall. These stormy conditions are perfect for Uber’s biggest competitor, Lyft, to penetrate major markets within New York state and have a shot at legitimately competing with its massive rival.

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Andy Mendes | Digital Design Editor

Kalanick, former Uber CEO, was responsible for the bulldozer strategy that propelled the company to success following its launch in 2011. Uber raised billions in investments, disrupted the taxi industry and had the potential to grow even more. But this strategy came with an aggressive and unhealthy culture that accepted mistreatment of both corporate employees and drivers.

Now, with Kalanick and other key managers out of the picture, Uber’s industry-dominating strategies are lost, and the ride-hailing service company is still stuck with a bad reputation.

Lyft, on the other hand, has been building its brand on Uber’s weaknesses. Lyft’s service centers around a warm, friendly experience for both drivers and customers. Uber provides the exact opposite experience, and consumers are starting to drift toward Lyft’s positive culture as reflected by the companies’ respective market shares.

Uber’s market share has decreased 15 percent over the last two years, USA Today reported via TXN Solutions, a consumer spending analytics company. It’s dropped 3.5 percent since February, when the company’s problems starting coming to light after former employee Susan Fowler published an incriminating blog post about her “very, very strange” time working there.

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Andy Mendes | Digital Design Editor

The market has been quite different for Lyft since February. The company’s market share rose by 3.5 percent — from 21.2 percent to 24.7 percent — during the time Uber’s decreased by the same value. And with a brand new market in upstate New York up for grabs, Lyft has a chance to push those numbers even higher.

Longtime holdout New York state presented a huge market for ride-hailing companies, and they spent nearly $1 million lobbying lawmakers to operate there. While ride-hailing was already available to the roughly 8.5 million people living in New York City, there was still an untapped population of more than 11 million people in the rest of the state who couldn’t use ride-hailing services.

But ride-hailing isn’t new to these forgotten New Yorkers, considering many have likely used Lyft or Uber when travelling in other big cities. So even though they weren’t previously able to use it at home, they were familiar with the product and seemed eager to adopt it.

The atmosphere of central and upstate New York, which is filled with small to midsized cities including Syracuse, Rochester and Buffalo — all of which have vibrant bar scenes — makes a perfect playground for ride-hailing companies. And many of these cities, and small towns, are accompanied by college campuses. Students without cars will likely hop on their smartphones to request a ride to the airport instead of calling a cab.

With the promise of city bar scenes and campuses galore, it’s clear that upstate New York will be a battleground state for Lyft, and the timing couldn’t be more perfect. Uber is vulnerable and plagued by scandals, while Lyft presents a fresh and friendly option.

Ride-hailing’s long-awaited arrival is already getting rapid use from New Yorkers, so Lyft must market quickly and strategically to beat Uber. If it does, it will prove that Uber’s reign can be overthrown.

Daniel Strauss is a junior entrepreneurship and finance double major. His column appears weekly. He can be reached at dstrauss@syr.edu and followed on Twitter @_thestrausss_.

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