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Startups pay more per ride for Lyft, but Uber still reigns

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It’s been a few months since Lyft and Uber made their debut as publicly traded companies, and there’s still no sign of the battle for ridership among startups is slowing down.

Lyft is now worth around $17.5 billion, while Uber is valued at $69.6 billion as we head into the back half of the year. Ridesharing usage is an area of intense interest as a question of whether companies like Lyft and Uber represent a new kind of way the Internet connects with the physical world. Both have quite different brands, and it’s important to see the traction each is getting.

When we last looked a few months ago, we saw that Uber had a commanding lead when it came to the set of companies that spend exclusively on Uber. Since then, we’ve seen both companies fare, well, so-so in the public markets. So we decided to check back in on how things are going with both companies.

We dug into Brex data to see how each is faring among spend share in the startup community. Brex customers are mostly early- to mid-stage startups, though we have a growing cohort of Life Sciences and ecommerce companies. We decided to also dig into per-ride spending data to get an idea of how much companies are paying on a per-ride basis for Lyft and Uber.

And it is, indeed, an ongoing duel between the two companies to control spending amongst Brex customers — and a small change in the tide in July.

Lyft gains a little momentum

Throughout the first and second quarter, the overall spending between Lyft and Uber remained relatively consistent — around 25% went to Lyft, while about 75% went to Uber, with some minor changes in between. Some of the more exciting dynamics happen when it comes to customers “loyal” to Lyft or Uber — which are companies that spend exclusively on either company without using the other.

The majority of spend lies in that middle ground of companies using both products. In July this year, however, we saw a small increase in loyalty usage on both ends. But in total, Lyft gained a small amount of the total share of spend, increasing to an overall share of 27%. Lyft loyalists also captured a slight increase in spending.

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We can see Uber still holds a commanding share of spend between the two, but as spending for ridesharing products continues to grow, these single-digit shifts could start to have a more significant impact on the success of both companies.

Uber is still the top option for startups

It’s still important to remember that nearly a third of all spend by Brex customers on ridesharing products goes exclusively to Uber. That level of loyalty spending also shows no change — and grew slightly last month. 

There may also be a good reason why. When we look at the median ride cost per customer among Brex customers, we can find that Uber’s median ride price is lower than Lyft’s. This does take into account cancellation fees, but they represent a small fraction of the overall spend.

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There are a few ways you could look at what’s happening, from a hypothetical standpoint. Both Lyft and Uber have cheaper carpool options, but it could be that Brex customers tend toward Uber carpooling. Or it could be that people prefer Lyft for longer trips to places like the airport, but Ubers for shorter trips within cities. Or because of the sheer volume of trips on Uber, there is just more driver supply, making the overall product cheaper for customers.

And indeed, if you look at the total number of rides, it’s not even worth putting a chart here: it’s pretty much a 25/75 split every month for Lyft and Uber.

The duel carries on

In the end, a consistent duking-out between Lyft and Uber is likely good for the consumer. Each company, to capture market share, is incentivized to offer the best deal for riders and also find a way to retain the most (and highest-rated) drivers. Each has to ensure that customers and drivers have a pleasant experience with the product and feel good about using it.

Loyalty, too, might be even more important to Uber and Lyft. These smaller startups are the kinds of companies that Uber and Lyft would hope to grow with as they scale up over time to the level of an Uber or a Lyft. Giving an early-stage startup a great experience may pay dividends down the line in the form of loyalty as they grow.

It will be exciting to see how this story continues to play out — and how, in the end, startups benefit from the ongoing competition between the two.

About Brex

Brex is transforming B2B payments by creating corporate cards, rewards, and travel programs that are tailored to specific industries, like startups, ecommerce, and life sciences. In 2018 Brex launched the first corporate card and rewards program specifically designed for startups. By rebuilding the credit card tech stack from the ground up, Brex is able to reimagine every aspect of corporate cards, including underwriting, transparency, and approvals, to create a radically better experience for customers. Brex is backed by Y Combinator Continuity, Peter Thiel, Max Levchin, and more, and has raised $315M in equity and $100M in debt capital. The company’s headquarters are in San Francisco.

We’re still early, and we welcome as much feedback as we can get. Also, we are hiring like crazy. Check out our openings!

Methodology

Brex examined customer spend and usage of Uber and Lyft to get a better sense of the dynamics between the two companies among startups. Share of spend is defined as the total dollar amount spent in a period of time for either Lyft or Uber over the total volume of both. Median ride price is defined as the median transaction amount across all transactions for that specific merchant. Median ride price was calculated using rides that cost between $2 and $250. Ride volume is defined as the total number of transactions for either Lyft or Uber over the sum of the two.

As part of its underwriting process, Brex maintains visibility into the spending of companies that use its products. Companies who asked that their data not to be shared were not used, and any company that does not wish to share its data for future aggregated analysis may request to exclude it from being shared in the aggregate.

Photo credit:

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Victor Xok on Unsplash

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