Lyft has observed a sudden 5% increase in driver-initiated cancellations. The candidate, working alongside a data scientist, is tasked with investigating the root cause.

Clarifying the Scope:

The candidate confirms that:

• The focus is on driver-initiated cancellations.

• There have been no changes in how cancellations are logged or defined.

• The increase is recent and abrupt, primarily over the past few weeks.

Investigative Approach:

The candidate proposes exploring four key areas:

1. Market Dynamics

2. Technical Issues

3. Driver Behavior

4. External Competitive Pressures

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1. Market Dynamics:

• Could it be seasonal or regional?

→ Interviewer confirms it’s more pronounced domestically but not tied to any specific region or seasonal pattern.

2. Technical Glitches:

• Any recent app updates or systemic changes on the rider/driver side?

→ No relevant updates or experiments (e.g., app icon color change) align with the spike.

3. Driver Behavior Patterns:

• Are cancellations occurring more during the early ride phase (post-acceptance, pre-pickup)?

→ Yes, cancellations are clustering early in the process.

→ However, there are no increases in pickup distance or time that would explain this.

4. External Competitive Pressures:

• Has there been increased activity from competitors like Uber?

→ Yes, Uber and others have ramped up marketing campaigns targeting drivers, possibly influencing loyalty and behavior.

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Conclusion & Recommendations:

The candidate hypothesizes that competitive pressures are the most likely cause of the spike. To mitigate this, Lyft could:

• Enhance driver incentives to remain competitive.

• Reevaluate cancellation policies to maintain a balance between driver flexibility and platform reliability.

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This structured approach pinpoints competitive activity as the main driver behind the increase in cancellations and offers actionable steps for Lyft to consider.