Launch a new mode of transportation for Lyft.

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Answers (6)

CQ: To better scope out this project, I’d like to ask a few clarifying questions.


  • How can we define transportation in this scenario. Is it strictly getting from point A to point B? YES
  • Are we sticking to ground transportation only? I’m asking this because all modes of transport currently supported by Lyft is ground. YES


  • Do we already know where we want to operate with this new mode of transportation? U.S.

Stage of product:

  • Im assuming that we are in the discovery stage of the product and haven’t had product market fit research done yet, or have we done some explorations of other modes of transport and the data isnt promising? Want to better understand our status quo

Mission: Lyft’s mission is to improve people’s lives with the world’s best transportation. So this new mode of transport should be aligned with this mission.

Strategy (Why): Lyft as a company overall has reached its mature stage and this means our user base under Riders, and more specificaly MAU, has really plataeued and Lyft is operating in a highly competitive market primarily driven by price competitiveness with Uber in the U.S. Providing a new mode of transpotation is a strategic initiative to expand our active user base, which is our main goal here.

User segment: Riders Drivers Renters

User Journey: Focus on renters because this is a relatively new user segment given that Lyft rental car is one of its new offerings.

  • Natalie doesnt own a car but frequently rents one to drive out of town on the weekend for hikes
  • Natalie has tried Lyft’s rental cars in partnership with Sixt but Sixt locations are limited and quite far from where she lives in Manhattan.
  • She wants a closer pickup location where she doesnt have to spend too much time and money to pick up her rental car.
  • Sixt sometimes have limited inventory supply as well and would not be able to offer a car that natalie is looking for, eco-friendly suv.

Problems: From the user journey 3 painpoints can be identified

  1. Time and additional cost to travel far to pickup location (P: high F: high I: high)
  2. long wait at sixt pick up location (P: high F: low I:Med)
  3. limited supply of cars to rent with Sixt (P:low F:low I:low)

I would prioritize each of these 3 problems using a matrix evaluating (Pain) (Frequency) (Impact) and measure as low, medium, high Pain: how painful is this specfic problem to our usersd? Frequency: how often do they actually experience this issue? Impact: Among users, how many cope with this issue?

Based on my evaluation criteria, I want to prioritize solving for problem number 1: time and additional travel cost to get to a Sixt pickup location.

Possible solutions:

  1. Provide airbnb of cars offering a platform similar to Turo and Getaround to allow users to find other lyft users with cars to rent.
  2. Allow drivers who are inactive to lend their cars out to renters. Drivers can earn additional money without needing to be on the road. Uber has started piloting this.
  3. Open up partnership with Turo and Getaround

Out of these 3 potential solutions I would want to evaluate each based on value, effort, and frequency. Value: how valuable is it to users to solve the problem?, Effort: operational effort? technical effort?, Frequency: How frequent would renters want to USE this solution, Risk

  1. Airbnb of cars V:high E:high Freq: high R:low
  2. Allow drivers to rent their cars: V:high E: med F:med Risk:med
  3. partnerhsip with Turo V:med E:med F: high Risk: low

I would prioritize airbnb for cars to compete. Lyft can leverage its current fleet of drivers and also riders who own vehicles. This will reduce time and cost if we can provide travelers with closer rentable vehicles to their home locations by providing a peer-to-peer car rental marketplace as a new mode of transportation. This will help boost Lyft’s active user base and be more competitive with Uber. Although there is a risk with competing with Turo who has already been in the airbnb of rental cars market for awhile now, I think lyft has a great advantage over Turo by leveraging riders and drivers to rent vehicles.

I would approach this in this way –

  1. Clarifying question –
    1. What is meant by a new mode of transportation? — Luxury cars.
    2. Is this located in. a specific place? considering Lyft is in the US. — USA only
    3. What do we wish to achieve? considering this is a new mode so we would love to get the market share. we already are aware Uber is out competition.
  2. Understanding of customer – Party goers, Office execs, Celebs. Who would make sense? Party goers – type of bachelors etc.
  3. How does a party goer behave? They’re often looking for a stellar experience on their way to the party and would love to have a luxury car, so the need exists.
  4. Launching cars in the app.
  5. Understanding the GTM- Would launch for a specific city based on supply, how to measure efficacy?
  6. Metrics-
    1. Total number of cars-
    2. Total people searching for luxury cars
    3. Total people booking the car
    4. The total number of unavailability. during car search.
    5. Net revenue
    6. Partnered drivers.

I usually take the most simple approach by doing a quick SWOT analysis to churn some thoughts and buy myself some time on strategy questions. My other approach is to ask the interviewer as well if there is a pain point that we are trying to solve or a goal the company has in mind to help with assumptions.

  • SWOT:
    • Strength: strong coverage across US, primary choice amongst users/customers
    • Weakness: no carpool options as compared to competitors
    • Opportunities: electric vehicles, autonomous vehicles, health care workers – ambulances (pandemic), delivery etc.
    • Threats: Uber, Via, Market Consolidation, Ab5 etc.


  • No pain points given.
  • Goal is to improve a metric: New Users/Adoption
  • Country: US only

To get new users on the platform and also create a differentiation, I would suggest Lyft provide a new new option for Electric Vehicles on their platform. EVs are the way of the future. EV have low environmental impact, and can also be an option to reduce cost of the ride. This might attract customers who care for the environment and otherwise, who want low cost ride options. This option is not yet offered on any of the competitive platforms and could be a solid choice to attract more user base.


  • Start with one state/city and then expand to understand nuances and legal considerations. This will also help better understand how EV impact Lyft’s core metrics.
  • Couple of approaches can be taken: partner with Tesla, Ford etc to have their vehicles on their platform to create partnership and marketing opportunities.

High level app design

  • Another dropdown option in the list, highlights reduced price and also pros on environmental impact

Trade offs: would be interesting to see how EV choice canabalizes the demand for other options.

Summarize the solution to the interviewer by wrapping up on how I will measure metrics to understand if this decision was a success or not. The metrics would be New users creating rides with EV vehicles/ total number of users (adoption rate)

Clarifying questions:

  • Is there a particular market that we want to target? like US? or global?
  • Are we trying to target our existing user base or acquire a new user base?
  • When we say “new mode”, is this referring to creating a brand new way of transportation? or just introducing a new mode of transportation in the context of the Lyft’s business


  • First I want to get some context on where Lyft is at now – especially around the competitive market, market trend, and alternatives to Lyft / unmet needs
  • Then, ideate a few opportunities and then choosing one (providing why)


  • For my analysis, I will focus on the US market since that’s where Lyft’s core business is focus in as well


  • Lyft’s current mission is to improves people’s lives through the world’s best transportation. It has been trying to achieve this mission by providing ridesharing to its customers
  • Although there aren’t that many ridesharing competitor, its competition with Uber is fierce and both drivers and riders have very low switching costs to use either Lyft or Uber. in fact, most riders will check both App for ride, and a lot of drivers will drive for both companies.
    • note: knowing this, one criteria that we can use to evaluate our opportunity is the “Switching Costs” potential.
  • Ridesharing’s alternatives are mainly public transportation (bus & train), walking/running, driving, biking, motorcycle, scooter. Additionally, these alternatives play a bigger role in metros areas (vs. suburber) where driving/ridesharing may be less efficient due to traffic/congestion, and in some cases, these alternatives also represent net-new user base as those users are currently not considering car (driving or ridesharing) a viable transportation (e.g. want to be green)
  • Lastly, the market trend is going away from car ownership, which means the supply will naturally decline. We should prioritize opportunities that align with future market trend around transportation


When identifying potential opportunities, I am specifically only looking at existing mode of transportation that already exists. I am not looking at new / undiscovered mode of transportation in this analysis as it won’t make an impact on our business if the transportation is still not yet widely tested, proven and adopted

Out of the various existing alternatives that I listed previously, I would want to look into the bike – specifically around bike sharing. The reasons are the following:

  • In area where car/ridesharing is inconvenient, bike is often a very good alternative to get from point A to point B
  • With bike sharing – it gives us potential flexibility in creating supply – either directly buying/owning our own fleet of bikes (bike is much cheaper than cars) or work with existing bike owners to share their bikes when they are not using it (there is already a supply of existing bike owner)
  • The future trend of transportation is toward more green transportation, and bike is part of this trend
  • Finally, this opportunity also aligns with Lyft’s mission – it fits well with Lyft’s desire to make a positive environmental impact. It helps bike owner economically and provider rider with another affordable transportation.

Clarifying questions:

  • Assuming the goal behind launching a new mode of transportation is increasing revenue?
  • Is there a specific market in mind for this? – Can start with USA as the first market

I’d like to first explore what are the different types of transportation that exist today. Next I will prioritize them based on market size and something that Lyft can get into with its existing assets (i.e. a more natural expansion). After we pick a new mode of transportation, I will talk about how Lyft should launch it.

Is there anything else you would like me to explore? – No, this sounds good.

Great. Let’s look into the current transportation landscape in USA

  1. Personal cars
  2. Taxis
  3. Public buses
  4. Company shuttles
  5. Personal and shared bikes
  6. Walking
  7. Boats
  8. Airplanes
  9. Space travel is picking up as an idea too but for now we can easily leave it out.

The above list majorly covers people related transportation modes. I would even like to look into company related modes.

There are trucks for moving goods and large ships for moving containers full of goods.

A good way to frame all the options would be is to look at the distance between Point A and Point B.

For a given user, if the distance between Point A and Point B is

  • Short – they can walk or bike there
  • Short to medium – they can bike or drive or take a taxi or a public bus
  • Medium to long – they can either drive or take a plane

For a trucking or a shipping company, the options are either trucks, ships or planes.

I’m more biased to launch a new mode in the trucking industry rather than people transportation because the trucking industry is quite big, has many unmet needs and it hasn’t been disrupted. I agree that it is a completely new area for Lyft and hence more risky, but at the same time the reward is much higher. The overall guidance is, if Lyft is able to crack the trucking industry by using the same advanced routing and pricing technologies, the revenue will be MUCH higher than adding another mode of transport for people.

Let’s explore the trucking industry today

  • One of the most important metrics for trucks is their capacity utilization. The goal for any trucking company is to have the truck transporting good at all times with the trucks filled to their maximum capacity.
  • It’s a known issue that sometimes
    • Trucks travel full across country one way but then they don’t have loads to transport back to the place of origin, hence the cost to transport is higher to the shipper.
    • Small to medium sized shippers have to contract with shipping companies who consolidate a full load before loading a truck – this leads to long wait times and also unpredictable pricing
    • With the demand and supply changing so rapidly nowadays, it is difficult to plan routes and optimize costs.

The above needs can be met with Lyft’s existing technologies.

  • Lyft can easily track where is a truck at any given time. We can add a feature to report on what is the current load on the truck and how much more it can take.
  • Lyft can modify it’s matching algorithm to match shippers with trucks based on
    • What route the truck is on
    • What is the destination for the goods to be shipped
    • How soon does it need to get to the destination
    • How would route changes affect the overall transportation time

The idea is basically giving the shipper a platform where they can get an instant quote for shipping their goods. Once Lyft collects enough data, it could even recommend the shipper a more cost or time optimized option, depending on what the shipper wants.

There are certain risks here which I would like to call out

  • Lyft has no experience in the trucking industry
  • The recommendations and quotations could be wrong or worse than existing options
  • Different types of goods might require different loading/unloading times which might be difficult to capture in the algorithm
  • Large logistics companies (such as DHL, FedEx and UPS) and Amazon have enough volume to experiment with their own in-house solutions

To mitigate the above risks, Lyft should take the MVP approach

  • Lyft should look to launch this with the following constraints
    • Only deal with goods that are not time sensitive
    • Partner with a medium to large e-commerce company that has stores across at least in a few key cities within the US. Target comes to mind. Target is currently also looking to improve their supply chain as they saw the biggest cost advantages in that area recently. With Amazon leading the way in logistics, I’m confident Lyft can find at least one e-commerce company to partner with them.
    • Lease a few trucks for the experiment
  • Taking the example of Target, they can model which goods will be required in which store such that
    • The goods reach just in time at Target stores
    • The trucks are running at capacity
    • Takes into account manual logistics requests from Target stores

We can track the success of this by comparing

  • The cost to ship a particular item via traditional method and via Lyft
  • Truck’s overall utilization
  • # of manual requests from Target stores (This metric will reflect platform adoption but at the same time it could also mean the modeling isn’t accurate. We can gain a better idea by looking at the type of manual requests and decide if this metric gives us a good picture or not)
  • # of manual requests fulfilled

As Lyft collects more data and acquires more partners, this platform will be capable of optimizing quite efficiently, just like Lyft did in the case of developing from Lyft rides to Lyft shared to Lyft shared saver.

I would ask what are the currently supported modes of transport. Assuming cars, luxury cars, transit. Bike and scooter is off limits.

Also assuming Lyft is available only in the US currently.

Then I would start off with the Goal.

Why does Lyft want to launch a new mode of transport.

Assuming possible reasons in order of priority:

  1. To gain market share
  2. To gain new users (riders/drivers)
  3. Improve experience of users (riders/drivers)

Do we have restrictions on country that we can launch in? Assuming no.

Are there any other constraints to keep in mind? Assuming no

Company: Lyft’s vision is to improve people’s lives with the world’s best transportation. So launching a new mode of transport directly aligns with their vision.

Industry leaders: Uber, taxis, Ola, Grab, Lime, Byrd (depending on the country)

Users: Riders, Drivers

Market conditions: Looking at US market, Uber is there and between Uber and Lyft most existing modes of transport at covered like cars, luxury cars, no bikes/scooters. Some possible modes of transport left are: Shuttle buses, Vans, charter planes, boats

Looking at other markets in the world, there are modes of transport which are public and very commonly used. Eg. In India, auto rickshaw is a very commonly used mode of transport. Uber is in India but doesn’t support auto rickshaws yet in all cities.

Considering markets world wide based on population:

China, India, USA, Indonesia

China is a difficult market. Usually hard to get into due to lots of rules and regulations. Main mode of transport is rails.

India is next most populous with different modes of transport like : taxi, auto rickshaw, buses, etc.

USA is next but most modes of transport are covered already or are off limits. So only new ones that I can think of here are shuttle buses or airplanes.

I would make sense to market size some options at this point. Going by sheer population numbers and since our goal is to gain market share and get more number of users here are a few options

  1. Lyft auto in India

    Impact : Population is 1.4 billion. Assuming 70% use auto rickshaw = 98 million. Keeping to major cities: 60 billion Other factors: Entry into new market. Collaborators, market specialist, marketing, partnerships

  2. Lyft shuttle buses in US

    Impact : Population is 300 million. Shuttle buses used in major cities. Assuming 70% live in cities: 210 million. People who would use shuttle 2% = 45million Other factors: No other major costs since existing market, Collaborators, market specialist, marketing, partnerships

  3. Lyft airplane in US

    Impact : Population is 300 million. Shuttle buses used in major cities. Assuming 70% live in cities: 210 million. People who would use airplanes 0.5% = ~10millionOther factors: finding pilots is harder. People with planes to spare is hard. If Lyft needs to source the plans then it will be too expensive. Flying is not usually considering on demand mode of transport. It is much more planned.

So I think it makes sense for Lyft to try to launch Lyft auto rickshaw in India.


  1. Maximum number of users (riders and drivers) that can be added
  2. Competition to Uber and possible gain market share in major cities where Uber auto isn’t there
  3. New market entry and establish brand presence in India which is one of the biggest economies.

Here is Launch Plan:

  1. Marketing details
  2. Government relations
  3. Establish Channels of outreach
  4. Get partnerships with auto drivers
  5. Have a fall back plan for error scenarios