Coming to New York as an idealistic, wide-eyed upstart can be dangerous. Just ask Lyft, which announced it was launching its ride-sharing service in the city earlier this month, only to be greeted by a regulatory roadblock. San Francisco–based Lyft hoped to bring its pink-mustachioed cars and quirky driver rituals (passengers often sit shotgun; driver fist-bumps are a common greeting) to the land of Ubers and yellow cabs. But TLC rules require drivers to obey licensing rules, which clashed with Lyft’s peer-to-peer model. After weeks of hand-wringing and courtroom drama — including threats of fining Lyft drivers up to $2,000 and confiscating their cars — Lyft finally hammered out an agreement with regulators, agreeing to stop giving rides (for now) in Buffalo and Rochester while following the TLC’s licensing rules in the city. We spoke to Lyft co-founder and president John Zimmer about the clash, and what comes next.
Did you expect so much backlash?
We knew that this would be challenging. The Department of Financial Services reached out a few weeks ago. We met with them, and we thought the meeting went very well. But then, when we tried to reach back out, we weren’t hearing anything. We were informed that we were under investigation by the Attorney General a few weeks prior [to the scheduled launch date].
How was your launch party in Brooklyn? You’d just been ordered not to operate a few days earlier. I imagine the mood was somewhat … muted.
I used to live in New York, and I have all these friends here. I wanted to hang out with them, but I was extremely tired. I came for an hour and a half. It’s been like five or six hours [of sleep] a night; I’m usually an eight-hour guy. I’ve been in a hotel room near Gramercy Park and haven’t really left. I ran out of clothes. I’ve never done laundry at a hotel before.
Lyft has branded itself as the kinder, gentler Uber. So I assume you don’t share Uber’s CEO’s view that the taxi industry is, as he put it, an “asshole”?
I’m not looking for a fight. I’m not trying to be antagonistic in any way. We think of the thing we’re fighting against as car ownership and single-car occupancy. Currently, the TLC wants us to use their existing base and license structure. What that requires is $5,000 in up-front fees per driver. Which is fine if you’re a full-time driver. But 80-plus percent of our drivers are people who work at fire stations, teachers, single parents that are doing this supplementally. There’s no real process or structure that works for that type of driver.
The knock against all of these “sharing economy” start-ups — Uber, Lyft, Airbnb — is that they essentially launch without permission, then act shocked and offended when regulators crack down. Has dealing with the TLC made you more skeptical of the need for regulation?
We’re not anti-regulation. We think that regulations make sense. They can hold us and others accountable. But I do think the pace at which we’re moving to create something new and the pace at which rules are created are at odds.
You just reached a deal with the TLC to follow their existing licensing rules, like Uber does. So you’ll be allowed to operate in the city. But that’s clearly not the outcome you wanted.
The ultimate vision is still to bring the same peer-to-peer model to New York. The current model is too expensive for the majority of drivers. But it was important to get out there very quickly, while pushing for the ultimate solution.
But you’re optimistic that you’ll get the rules changed eventually?
Absolutely. All parties have said they want to work on that with us. But there are hurdles to doing something different. This is the right first step to build relationships with everyone involved.
Correction: an earlier version of this article incorrectly stated that John Zimmer was Lyft’s CEO. He is its president.
*This article appears in the July 28, 2014 issue of New York Magazine.