Wait For Perfect or Charge Forward? Lessons From Lyft's Controversial NYC Launch.
The San Francisco-based peer-to-peer ridesharing app has suffered a few setbacks in its launch into the New York City market. Here's what other entrepreneurs can learn from Lyft's Big Apple rollout.
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Knowing exactly when to make your move is sometimes more difficult than knowing what your move should be.
That San Francisco-based peer-to-peer ridesharing app Lyft would move into New York City is hardly a question. The Big Apple is the largest city in the United States where a huge swath of the population lives without owning a car.
Whether Lyft entered New York City at the right time, however? That's debatable.
Lyft made a big announcement that it would bring its service to New York City on July 11, complete with Brooklyn launch party. Just hours before takeoff, Lyft did a U-turn and said its plans were on hold as the New York State Supreme Court had declared the company in violation of taxi regulations and filed a temporary restraining order against it. Two weeks later, Lyft announced that it had reached a temporary agreement with city regulators, agreeing to utilize only drivers licensed by the NYC Taxi and Limousine Commission.
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In celebration of its soft launch, Lyft offered its "Pioneers" -- the ridesharing company's name for its first users -- two weeks of free rides on its service. "Hundreds" of drivers completed "thousands" of rides over the first weekend, according to Lyft. Exact numbers were not disclosed.
But there were not enough drivers to meet demand. People took to the Twitterverse in spades to voice their complaints about not being able to get a ride with Lyft or to complain about their poor experience with the service. Users waited for a long time or couldn't get a ride when they needed one.
The facts: The Lyft launch was late, an amended version of what it initially had promised, and left would-be riders unable to get a ride when they wanted one.
Should the West Coast car-sharing app have waited a bit longer before launching in New York? Perhaps with more time, Lyft could have had the regulations already worked out and had more drivers ready to go. Or is a bumpy launch part of the game when you are bringing a new, innovative technology to a huge market with existing stakeholders firmly wedded to the status quo?
The answer to both of those questions, depending, of course on who you ask, is yes.
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"What you are dealing with is the art side of management versus the science," said Dean M. Schroeder, a business consultant and co-author of The Idea-Driven Organization: Unlocking The Power In Bottom Up Ideas. "An awful lot of management decisions when they go into new areas are mistakes. That's just a given."
The key, though, is being able to move quickly and adjust to unforeseen circumstances when they come up. Schroeder says that while Lyft may very well have been prepared to enter its largest potential market yet, it still underestimated the complexities of working in New York City. The political infrastructure of New York, the regulators, the existing taxi services are all very entrenched in the Big Apple. What works in Chicago won't necessarily just scale to work in New York, Schroeder says.
It's easy to fault Lyft for being unprepared. But it's also true that if Lyft waited for New York City regulators and drivers to welcome them with open arms, the San Francisco company may have never entered New York City.
Entrepreneurs whose business success depends on regulators embracing new rules and individuals adopting new social norms (your mom did tell you growing up to never get into a car with a stranger, right?) can't always wait for perfect. Airbnb, the peer-to-peer apartment-rental site that is no stranger to legal battles and skeptics, would never have launched had its founders waited for everything to fall into place, co-founder Nathan Blecharczyk has said. He believes that with any new technology comes resistance, and the only way to force change is to jump in the deep end.
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One way Lyft could have minimized some of the frustrations it has caused in New York City is to have launched more slowly, says Schroeder. Inviting a small number of people to initially use the service could have given Lyft the opportunity to quietly stress-test the technology and then roll it out over a month or longer. Launching "shotgun"-style in a massive, complex market like New York City may not have been the best plan, he says.
What really matters now is what Lyft does going forward. With competitor Uber already positioned to capitalize on Lyft's fumble in New York City, Lyft's best play may well be a mea culpa. The company could even put a positive spin on its shortage of drivers, saying its service was more popular than expected. "The market is forgiving of this type of faux pas -- if you recover properly and correct your problems quickly enough."
Launching early and then backstepping, admitting to your customers that you may have been trigger happy is a classic Mark Zuckerberg move, notes Tony Marino, a business expansion strategist. The reason Zuckerberg gets away with boldly charging ahead is that Facebook is transparent and apologetic when it does get ahead of itself. "I think the company can make lemonade out of lemons," he says. "People love to hear 'I am sorry.'"
Lyft is taking steps to make amends with customers. It has assured its Pioneer riders who haven't been able to get a rides in New York City that it will re-issue their two weeks of free rides, and says it is working to get more drivers as fast as possible.
According to Lyft, the hurdles it has faced in New York City so far are not exceptionally out of the ordinary, nor are they deal breakers. "We have encountered challenges before and we have always been able to find a path forward through conversations with regulators," said Erin Simpson, the company's director of communications. "We are confident that we will have a path forward."
That may be so, but time is of the essence for Lyft to get back in New Yorkers' good graces. "This is a chess match -- a high-speed chess match," says Schroeder.