John Zimmer steps onto a New York City sidewalk and beelines straight for the fenced-in corner parking lot. "This is what we're trying change," he says, motioning to the rows of cars stacked atop hydraulic lifts. "Eighty percent of [car] seats are empty at all times, and it leads to an incredible loss of productivity due to traffic—$80 billion here in the U.S."
Zimmer thinks Lyft, the ride-sharing start-up he co-founded, can address that lofty goal. Like its larger competitor Uber, Lyft enables customers to "e-hail" a ride using an app and provides an on-demand, cash-free alternative to traditional taxis and black car services. Since kicking off two years ago, the San Francisco-based company has expanded to 67 markets, and this spring it raised $250 million in funding from likes of Andreessen Horowitz and Alibaba.
But for all the attention it's drummed up from investors, government regulators in New York are far from impressed. Friday night was supposed to kick off Lyft's debut in the Big Apple, one of the world's largest taxi markets. The company planned to offer two free weeks of rides to attract customers in Brooklyn and Queens. As of Thursday evening, it had recruited 500 drivers—10 times the amount a launch typically attracts—and 75,000 New Yorkers had already tried to download the app.
Now it's not happening. Lyft's launch is on hold indefinitely, and until Monday at the very least.
"We agreed in New York State Supreme Court to put off the launch of Lyft's peer-to-peer model in New York City, and we will not proceed with this model unless it complies with New York City Taxi and Limousine regulations," the company now says. "We will meet with the TLC beginning Monday to work on a new version of Lyft that is fully-licensed by the TLC, and we will launch immediately upon the TLC's approval."
The brakes come on the heels of New York state's request for a temporary restraining order, filed in State Supreme Court Friday. According to the New York state attorney general's office, a judge granted an injunction.
"We pursued this action only after repeatedly offering to work with Lyft in order to ensure that its business practices complied with the law," said state Attorney General Eric Schneiderman and Superintendent of Financial Services Benjamin Lawsky, in a joint statement. "Instead of collaborating with the state to help square innovation with statute and protect the public, as other technology companies have done as recently as this week, Lyft decided to move ahead and simply ignore state and local laws. Lyft's arguments are a disingenuous attempt to disguise old-fashioned law-breaking that jeopardizes public safety."