Last week, in our SharesPost Expert Series webinar, renowned ride-sharing expert Harry Campbell, founder of the popular blog, The RideShareGuy (RSG), did a deep dive into the ongoing tug of war between drivers and ride-sharing companies. Affable and irreverent, Harry has a unique perspective on the ride-sharing industry, particularly from a driver’s point of view. He has personally interviewed and conducted surveys of thousands of drivers over the past several years.
In a wide-ranging conversation with Harry, we covered a number of topics we discuss regularly with institutional investors about the long-term prospects of Uber and Lyft. For those who missed the webinar, we wanted to recap some of the highlights. The entire webinar replay is available online to SharesPost members. Click here to sign in or register.
Over 1 million drivers on Uber and Lyft in the U.S. Harry estimates roughly 750,000 to 1 million drivers currently drive for Uber in the U.S. More than 200,000 drivers are on the Lyft network. According to the surveys conducted by RSG, about 2 out of 3 rideshare drivers actively use more than one rideshare service. Harry mentioned that it is not uncommon for drivers to sometimes run multiple rideshare service apps at the same time to maximize earnings. However, roughly 75% of the drivers surveyed by RSG primarily work for Uber and about 20% primarily work for Lyft.
Hourly earnings have declined, but gross earnings remain strong. Harry noted that over half of all drivers earn between $10 - $20 per hour. Uber drivers report earning on average $15.68 per hour before expenses, while Lyft drivers report $17.50 per hour before expenses. These figures are largely consistent with our UberX driver experience, as highlighted in our deep-dive report, “Uber & Ride-Sharing: $650 billion question”. However, Harry said that hourly earnings vary significantly in large metro areas such as San Francisco or Los Angeles, where a seasoned driver can earn an incremental $10-20 per hour. He illustrated this point with an interesting graphic showing that driver pay has seen a continual decline over the past few years. At the same time, drivers are also racking more miles to earn comparable earnings. However, a full-time driver in a city like San Francisco can earn up to $2,000 per week (before expenses), indicating a fairly robust consumer demand environment for ridesharing services.
Subsidies & incentives offset price cuts & carpool products: While hourly earnings have declined over the past couple of years, company subsidies and incentives haven’t declined, and they continue to help with driver earnings. Lyft provides additional income opportunities, such as in-app tipping option and Power Driver Bonus. Uber offers weekly trip incentives through Earnings Boosts, which increase take-home pay for drivers who work in certain places and during certain times. Harry estimates up to 50% of drivers churn from the networks after their initial 6-12 month “honeymoon period.”
Expect Uber and Lyft’s battle for drivers to continue: According to surveys conducted by RSG, 75% of Lyft drivers are either “very satisfied” or “somewhat satisfied.” However, only 50% of Uber drivers indicated comparable levels of satisfaction. In addition, current or past Uber drivers continue to pose as an attractive pool of potential drivers for Lyft. Mr. Campbell noted that both Uber and Lyft continue to be fairly aggressive in acquiring and retaining drivers as overall consumer offerings continue to converge. All in, Harry argued that satisfied and productive drivers are an important factor contributing toward the long-term economic success of ridesharing companies. After several years of experimentation, Uber and Lyft seem to have realized this too!
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