Silicon Valley-based venture capital firm Andreessen Horowitzjust announced that it lead $60 million investment round in a startup called Lyft.
Lyft is a car-sharing/semi-pro taxi service.
How it works: You open an app on your smartphone to summon a driver to take you somewhere. A car with a big, fuzzy pink mustache affixed to its front arrives to pick you up. The person who picks you up is not a professional driver, but another Lyft user.
Lyft, which is only a year old, plans to use the $60 million to expand beyond its current markets.
The funding enters Lyft into more serious competition with Uber and GroundLink, another two startups with apps people can use to summon taxi rides. Uber has raised the most capital of the three, and has the lead in terms of adoption.
Andreessen Horowitz partner Scott Weiss, who is leading the deal for his firm, wrote a blog post about it.
It's a worthwhile read, as it gets into the interesting story of how Lyft's cofounders came up with the idea…
It’s Time for Lyft off!
When I first met Logan Green and John Zimmer nearly a year ago, I was struck by the authenticity of Lyft’s founding. Originally called Zimride, everyone assumed the company was named after John but it’s actually a much better story: When Logan was traveling in Africa — Zimbabwe, to be exact — he noticed that despite the lack of infrastructure, people were able to get around efficiently thanks to a vibrant ridesharing movement. Every car, van and bus was full and people would literally stand on the side of the road waving money instead of sticking out their thumbs.
At nearly the same time, John was sitting in a college course exploring the history of transportation: canals, trains, and then roads and planes. He wondered to himself, what would be the next big innovation in transportation? He thought, “I’ll bet it’s about using information to fill seats — especially all those empty seats in cars.”
I’m acutely aware of John and Logan’s observations when I’m sitting alone in my 7-passenger minivan on the 101 inching along while others are zooming past me in the High Occupancy Vehicle (HOV) lane. These are times when I really wish I had a few extra people in the car! But it’s just not that simple — I don’t want to go way out of my way and I want to feel comfortable picking up someone new.
With this unique vision in mind, John and Logan went about launching Zimride and Lyft. The information technology problem was essentially solved with the proliferation of GPS-enabled smartphones. If they could get a critical mass of people on the same network with information about when and where people wanted to go, it would be relatively easy to pair up drivers and riders that were headed in the same direction. But how to get it started? And what about safety?
The first incarnation, Zimride, launched in 2007, tackling these issues by targeting college students headed home on holiday. Logan and John’s big insight was that by using Facebook profile information via Facebook Connect, both the drivers and the riders could find out about each other to develop enough trust to get into a car together. As a driver, you’d post the where and when details of your trip and then passengers would apply for a ride with a predetermined chip-in. Over the years they have showed steady and solid growth and built a real community of people making friends and sharing rides.
Last June, they launched Lyft in San Francisco, a made-for-mobile, ridesharing app that was geared towards ridesharing within a city as opposed to between cities. Since its launch, Lyft has absolutely exploded and is now doing over 30,000 rides per week! Now active in four major cities and expanding at a blazing pace to meet demand, the key for Lyft has been the community. Lyft has a very different offering and experience than anything else in this space. To be specific:
- Lyft is all about taking cars off the road via ridesharing. This is NOT merely a cool new use of technology to efficiently onboard and route more cars, cabs, towncars and limos. Lyft wants to use technology to get everyone who currently owns a car to join a trusted information network to share rides.
- As such, the Lyft drivers are regular folks with underutilized cars. They are college students, engineers, entrepreneurs and retirees. As the founders like to say, a Lyft driver is “your friend with a car.”
- As demonstrated by Airbnb, the person-to-person sharing economy is all about earning trust and establishing a good reputation. If I am going to rent my spare bedroom or get into the car with someone I don’t know, I have to find a way break the trust barrier. Lyft requires all drivers and riders to connect through Facebook. They have intentionally limited the potential market to people who have established social network identities as a way to improve trust and safety. The drivers and passengers also rate each other after each ride to further build their reputations.
- Lyft screens their drivers with interviews and full background and DMV checks. They are looking for real people with great driving records and a knack for hospitality.
- You also get to ride up front in a Lyft. As the car pulls up with its unique pink mustache on the front (as John says, “it always brings a smile!”), you jump in the front seat and do a ceremonial fistbump with the driver. You are offered a phone charger and the chance to play DJ for the ride. Many of the drivers I’ve ridden with even offer something unique and fun like Capri Suns or snacks for the road.
Lyft is a real community – with both the drivers and riders being inherently social – making real friendships and saving money.
I am pleased to announce Andreessen Horowitz’s partnership with Logan and John. We will be leading Lyft’s Series C financing round of $60 million to propel the Lyft movement globally. I am honored to be joining the board of directors and excited to help the founders realize their dream of filling all of those empty seats!
Here's a post from Lyft, announcing the news to its users:
Celebrating One Year Together
What does the pink mustache stand for? It’s a question we get asked frequently. People are curious when they see it for the first time, but once you’re a part of the community, a bigger meaning comes through. The pink mustache is a smile. It’s the goal of finishing your ride a little happier than you were before. It’s the belief that people are inherently good. It’s the idea that a great conversation on a trip across town can result in a new friend, a job offer, or even a hug after a tough breakup. Longtime Lyft driver, Danielle, put it best when she said “Lyfting restored my faith in humanity.”
Since you’ve helped define this larger meaning, we wanted the Lyft community to be the first to hear about some good news. Today, just one year after we first launched in San Francisco, we’re excited to announce that we’ve received additional investment from the amazing team at Andreessen Horowitz to bring Lyft to cities all over the world. This funding, along with an investment from Founders Fund earlier this year, will support our global expansion, giving us resources to strengthen existing Lyft communities and build new ones. From the beginning, the Lyft community has set itself apart inspiring us with passion, and we’re thrilled to be on this journey together.
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