The most important question for any start-up
This question came to light listening to John Zimmer speak about starting Lyft – which as many may know, is the main competitor to Uber in America. Zimmer helped start Lyft after coming across a Facebook post by Logan Green who wanted to build a car sharing business. The company they initially looked nothing like Lyft or Uber today, and the reason it doesn’t is because they asked themselves, “if we were to start this business all over again, what would we do?” This led them to grow a business now valued at over $15 billion.
Their car sharing business was based on Logan’s experience in Zimbabwe. They would share rides out of necessity and he felt this was a more effective form of transportation compared to public transport which relies on public subsidies. So they set up Zimride in 2007 (named after Zimbabwe, rather than John Zimmer) that was to become the largest car sharing program in America. It was focused primarily on longer trips, often between cities, helping people such as students when travelling to and from college between terms. Their USP at the time was how they integrated Facebook into the ride share, so people could see what the person was like before agreeing to share a lift with them.
Then by 2012, there had been a proliferation of smartphones which allowed for more short-term planning of car sharing. Previously with Zimride, people would have to log onto their website and book a lift about a day in advance. They started to build and test the software to simulate much more what we experience with Uber nowadays and originally called it “Zimride Instant”. Then shortly after launching the new app, they could see a significant number of people were downloading it. They reassessed their entire business and decided to make the momentous decision of transferring all their time and resources into what they now call Lyft and sold off Zimride to Enterprise Rent-a-Car.
For Jo and I, this very much resonated with our own experience – in that, instead of setting up a multibillion dollar business, we decided to walk away from one which could have put us into further financial difficulties. We could see that while Lashbrook Lassis was popular, there were inherent logistical issues due to the short shelf life of our product. This had stemmed from the fact we had created a product within our kitchen and from the heart rather than with our head. If we could have started our business again, we would have created our drinks in the laboratory with the balance sheet to hand. They would have been much cheaper to make with a much longer shelf life. However, such research and development can cost between £30,000 to well over £100,000. Even then, we still may not have been able to make a success of our business. So once we’d reached the crossroads of either investing more of our depleted funds to create a more resilient product, or deciding to walk away from the business, we chose the latter.