Logan Green hates traffic. Can’t stand it. He hates it so much that, after graduating from high school in Los Angeles, he left his car at home in protest. As a student at the University of California, Santa Barbara, Green joined the board of directors for the Santa Barbara Metropolitan Transit District, where he was “the youngest member by about 40 years," he says.
Between weekend trips home on the Greyhound to see his then-girlfriend (“Some trips took eight hours and I would show up at midnight in downtown L.A.; she really loved that,” he says), Green fought to raise bus fees to help improve the city’s public transit system but hit some major roadblocks along the way. “It was politically infeasible," he says. "Any small tax increase on the ballot would get shut down right away."
In 2005 and while still in college, Green went on vacation to Zimbabwe and was deeply impressed by the country’s transit system. In the absence of reliable public transportation, residents had created a crowdsourced network where entrepreneurs would use minibuses to drive people where they needed to go on a donation system. The experience planted a seed in Green’s brain.
“There was no way public transit [in Santa Barbara] was going to scale the way it was currently built," Green says. "I became enthralled with the idea that there was an opportunity to create an scalable network by crowdsourcing it."
Green came back to the States and launched a car-sharing program in Santa Barbara similar to Zipcar or City CarShare, two companies that at the time wouldn't come to that market because of its small size. (Both now have a presence in the city and have taken the place of Green’s program.) Simultaneously, he threw around the idea of launching an online matching network for people in need of carpool rides, naming the project Zimride after Zimbabwe.
In 2007, Green posted a Facebook status update about Zimride and was soon introduced to John Zimmer, a banker at Lehman Brothers in New York who hated his job and, coincidentally, was considering starting a company with the same premise.
“Three weeks after we met on Facebook, I was flying out to New York to meet John,” Green says. “We spent an entire weekend hashing out ideas together and talking more about Zimride.”
The pair wasn’t ready to give up their jobs just yet (Green was working for his alma mater’s Green Investment Fund), so they stayed in touch and perfected their idea via email and phone. They were able to put those plans in action in early 2008, when they received $30,000 in funding from an angel investor. The pair moved to San Francisco to launch the company for real. The next few years included a team build-out and fundraising, but when an early 2012 internal hackathon produced an altogether new business idea, the pair decided to pivot.
The new idea: Lyft, an on-demand ride-sharing platform accessible via mobile. Instead of employing limo or taxi drivers, Lyft would empower pre-screened drivers (without special permits) to use their own vehicles to pick up passengers and take them where they wanted to go.
Green and Zimmer launched the company in summer 2012 and it took off immediately. They transitioned their team of 25 employees over to Lyft from Zimride and sold off Zimride’s assets to Enterprise in July 2013 for an undisclosed amount. To date, Lyft has reportedly raised more than $80 million, the company now has 140 employees in its San Francisco office and the service is available in more than 15 cities nationwide.
Take me back to early 2008 when you received your first round of funding for Zimride. How excited were you?
We were excited, but we also had no idea what to do with the money. It seemed like too much money because we didn’t think the business would ever require anyone to go full time.
What was your first purchase?
[Laughing] You really want to know? John went out and bought two ridiculous costumes: a happy beaver and a frog prince. The first thing he did was go to Cornell, his alma mater, with a couple friends and just stand around. People would come up to him to ask what he was doing and he would tell them that he was promoting Zimride. It was genius. John was also the one who came up with the idea for the pink mustache. [All Lyft drivers are required to affix a large pink mustache to the grilles of their vehicles when picking up passengers.]
Is it true that Lyft was almost shut down right after you launched?
Well, sort of. We launched in June 2012 and in August, the California Public Utilities Commission issued us a cease and desist letter. We could have been scared, but we took it as the start to a conversation.
What was their beef?
They didn’t know what to make of us. We weren’t licensed like a limo company, but we were doing some things like a limo company. They didn’t like the fact that we weren’t fitting into an existing transportation category, so they wanted us to stop.
How did you fight it?
We told them that even though Lyft doesn’t fit into a specific category, we have higher safety standards and stricter screening methods and insurance policies than required by law for limo drivers. We do criminal background checks on our all applicants and in-person interviews. Limo drivers aren’t required to pass background checks. By January this year, everything was ironed out. Our promise to spell out our screening practices sealed the deal. We also have a $1 million insurance policy on every driver, which helped our cause.
The ride-sharing market is blowing up right now. How do you compete with the likes of Uber, Sidecar and others?
We are really trying to create a distinct experience with Lyft. It’s all about the peer-to-peer community. Your driver pulls up and you get in the front seat, like a friend. Drivers will offer cell phone chargers and sometimes do karaoke in the car with their passengers.
Are Lyft drivers really making money on the road? Are they ever stiffed because your model is donation only?
People are rarely stiffed. In fact, our passengers often pay more than the suggested donation. I’d say the majority of our drivers drive occasionally; maybe a few hours before work in the morning or a half-day on the weekends. A lot of our drivers are artists and musicians and photographers who need some income on the side.
What lessons have you learned through this experience that you’d impart to other budding entrepreneurs?
I would tell them that it is important to develop an internal culture that encourages experimentation. We did that and that’s how we came up with Lyft. I’d also tell them to be open to pivoting. Remember that the company you start off with isn’t always the company you end up with. And know that is okay.
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Photo: Courtesy Lyft