Lyft Co-founder on the Future of Rideshare | How I Built This with Guy Raz | NPR

TL;DR

Lyft's rideshare volume fell about 75% at the pandemic's peak but recovered to roughly half down, helped by mask-confirmation prompts for drivers and riders. With nearly $3 billion in the bank plus newly raised debt, Lyft is diversifying into bike share and local delivery rather than a food-delivery consumer app.

Transcript

hello everyone and welcome to how i built this resilience edition from npr i am guy roz and i am excuse me a little choked up back in my studio um out of the broom closet in las vegas so it's great to be back um this of course is where we talk about how entrepreneurs are building resilience during this incredibly challenging time hopefully this is ... Read More

Key Insights

• Lyft's rideshare rides were down about 75% at the peak of the pandemic and have since recovered to a little under half down, which president John Zimmer views as strong progress given far fewer people commuting to offices.
• Lyft entered the crisis in a strong cash position, having gone public with nearly three billion dollars in the bank, and raised its first debt as a 'no regrets' move to add a cushion for worst-case scenarios.
• Scenario planning drove Lyft's decisions: the team modeled being 75% down for two quarters versus four quarters, running worst, medium, and best cases before choosing to preserve cash and raise debt.
• The roughly one thousand layoffs in May were extremely difficult but, in hindsight, were healthy for the business because they forced hard decisions about expenses and teams that needed tightening.
• Rider hesitancy stems from a mix of changed transportation behavior, such as no longer commuting, and health-safety concerns, with the Bay Area recovering slower than other regions of the country.
• Lyft asks both driver and rider to confirm they are wearing masks, confirm they have not been in contact with anyone with COVID, and to keep areas clean and open windows when possible.
• Bike share is recovering faster and falling less than rideshare; Lyft owns Citi Bike in New York, Bay Wheels in the Bay, and Divvy in Chicago, and Citi Bike hit a record of over 100,000 rides in one day.
• Lyft's delivery push targets small local businesses paying 20 to 30 percent of revenue to existing platforms, aiming to give them their own capabilities and more driver jobs rather than building another consumer food-delivery app.

Questions & Answers

Q: How much did Lyft's rideshare business decline during the pandemic?

According to John Zimmer, Lyft's rideshare rides were down about 75 percent at the peak of the pandemic. Since that bottom, the business saw strong recovery and returned to a little under half down. Zimmer described this as good progress, and said he was actually quite happy with it in a strange way, because many people stopped commuting to offices, so the fact that one out of two rides is still present shows real flexibility in the model.

Q: How did Lyft manage its cash and finances during the crisis?

Lyft was in a strong position because it went public with nearly three billion dollars in the bank. The leadership ran different cash scenarios, modeling being 75 percent down for two quarters versus four quarters, covering worst, medium, and best cases. They raised the company's first debt as a no-regrets move to add cushion, preserved existing cash, cut office expenses that were more of a luxury, and tightened certain teams, including closing some operation centers in some markets.

Q: Why did Lyft lay off employees, and how did leadership feel about it?

Lyft had to make roughly a thousand layoffs in May 2020 as part of short-term decisions needed to preserve the company's long-term mission. Zimmer said these were very difficult decisions, especially because the job market was tough for those affected. However, in hindsight he believed some of these hard decisions were actually very healthy for the business, forcing choices about expenses and team structure that strengthened the company.

Q: What safety measures is Lyft using to reassure riders during COVID-19?

When users open the Lyft app, both the driver and rider are asked to confirm they are wearing a mask. They also confirm they have not been in contact with anyone who has COVID, and everyone is asked to keep their areas clean and open windows if possible. Zimmer said these measures have gone a long way. Guy Raz described his own recent Lyft ride as normal, with both he and the driver masked and a window open.

Q: Why are some riders not using Lyft as much anymore?

Zimmer said it is a mix of two factors. Primarily, people have changed their actual transportation behavior, such as no longer commuting into the office, which represents a huge change in transportation. Secondarily, there are questions around health and safety. He also noted regional differences, with the Bay Area recovering slower than other regions of the country, while essential workers used Lyft more because they were concerned about other options like public transportation.

Q: How is Lyft diversifying beyond rideshare?

Lyft is expanding into bike share and delivery. It owns bike systems including Citi Bike in New York, Bay Wheels in the Bay Area, and Divvy in Chicago, all accessible through the Lyft app. Bikes recovered faster and fell less than rideshare. Lyft is also experimenting with delivery, focusing on helping small and local businesses rather than building another consumer food-delivery app, and has worked with partners to deliver millions of meals for people in need.

Q: What record did Citi Bike set during the pandemic?

Zimmer said that for Citi Bike in New York, which Lyft owns, the system hit a record of over one hundred thousand rides in one day, which he believed happened the previous weekend. He noted that bikes have become a bright spot, hitting records and showing faster recovery with not as deep a downside compared with rideshare. This trend has been really helpful for Lyft as it navigates the pandemic's impact on core rideshare volume.

Q: What is Lyft's approach to entering the delivery market?

Lyft has no intention of becoming another food-delivery consumer app and explicitly will not do that. Instead, it sees an opportunity to help small and local businesses that currently pay 20 to 30 percent of their revenue to existing delivery platforms. Lyft wants to give these businesses their own capabilities and provide more jobs for drivers. It started this with essential deliveries and worked with partners to deliver millions of meals for people in need during the pandemic.

Summary

In this video, Guy Roz interviews John Zimmer, the co-founder and president of rideshare company Lyft. They discuss the challenges and solutions faced by Lyft during the COVID-19 pandemic, as well as the controversial issue of classifying drivers as independent contractors or employees. Zimmer also discusses Lyft's plans for diversification and the future of transportation.

Questions & Answers

Q: How has Lyft been coping with the COVID-19 pandemic?

John Zimmer explains that Lyft initially saw a significant decrease in rideshare rides, dropping by 75% at the peak of the pandemic. However, there has been a strong recovery since then, with rides now down by less than half. Zimmer also notes the importance of adapting to change and appreciating the little things, such as clean air.

Q: What conversations did Lyft have with its leadership team during the pandemic?

Zimmer discusses the challenges faced by Lyft in taking care of different audiences, such as drivers, riders, employees, and black team members. They had to make decisions with both short-term and long-term goals in mind, considering the preservation of their mission and the financial stability of the company.

Q: What short-term decisions did Lyft make to keep the business running?

Zimmer explains that Lyft looked at various scenarios to assess the impact on their cash flow. They decided to raise debt to add cushion, cut down on expenses that were considered luxuries, and make adjustments in certain teams and operations. They also tightened up operations in some markets, closing some of their centers.

Q: What factors have affected Lyft's recovery in rideshare rides?

Zimmer states that the decrease in rides is primarily due to a change in transportation behavior, as people are traveling less. Additionally, there are concerns about health and safety. However, Lyft has implemented measures to ensure the safety of both drivers and riders, such as mandatory mask-wearing and keeping vehicles clean.

Q: Is Lyft considering diversifying beyond rideshare transportation?

Zimmer mentions that Lyft has already diversified into bike share programs and is experiencing faster recovery in that area. They are also exploring the potential of delivery services to support small and local businesses. While they may consider supporting food delivery services, they do not intend to compete in that market as consumer platforms are not profitable.

Q: Why is Lyft opposing the classification of drivers as employees in California?

Zimmer explains that Lyft supports providing benefits to drivers but wants them to scale according to the amount of work they do. They believe the specific types of benefits designed for full-time workers may not be feasible for part-time drivers and could lead to a significant loss of jobs. Lyft proposes a middle ground that offers benefits based on driver hours, as outlined in Proposition 22.

Q: Have Lyft's efforts to convince California legislators been successful?

Zimmer acknowledges that it has been challenging to convince legislators due to political considerations. Lyft has tried to make the drivers' voices heard and demonstrate the consequences of not passing Proposition 22. However, he recognizes the lack of trust in businesses and leaders and emphasizes the need to create new regulations together.

Q: What is Lyft doing to encourage riders to upload their photos for drivers to see?

Zimmer acknowledges the positive impact of rider photos on both safety and overall experience. While Lyft does not want to make photo upload mandatory to avoid affecting ride frequency, they are working on features to increase the percentage of riders posting their photos, such as encouraging selfies during rides.

Q: Is Lyft focusing more on autonomous vehicles?

Zimmer confirms that Lyft has been working on autonomous vehicles through their Level 5 program. They also have a partnership model called Open Network, collaborating with companies like Waymo to offer autonomous vehicles to Lyft riders. While safety and cost limitations still exist, they continue to make progress in developing this technology.

Q: If Zimmer were to start over today, what would he do differently?

Zimmer suggests that he might start with Lyft Pink, a subscription service that offers transportation benefits to members. He believes this could be a more affordable and enjoyable alternative to car ownership while providing access to bikes, cars, and car rentals. Starting with this concept and working backward might have been a different approach for Lyft.

Takeaways

In summary, Lyft has faced significant challenges during the COVID-19 pandemic but has seen a strong recovery in rideshare rides. They have made short-term decisions to preserve the company's financial stability and have diversified into bike share programs and delivery services. Lyft opposes classifying drivers as employees in California and proposes a middle ground that offers benefits based on driver hours. They continue to invest in autonomous vehicles, and Zimmer believes that the future of transportation will involve fewer cars and more alternative modes, especially in dense urban cores.

Summary & Key Takeaways

• John Zimmer, co-founder and president of Lyft, joined Guy Raz on How I Built This to discuss resilience. Rideshare was down about 75% at the pandemic's peak but recovered to under half down. Zimmer credits the company's long-term, challenger-brand mindset for staying focused through the hardest period in its leadership history.

• Lyft juggled many stakeholders including drivers, riders, in-person and remote employees, Black team members, and investors. It ran worst, medium, and best-case cash scenarios, raised its first debt as a no-regrets move atop nearly three billion dollars in the bank, cut luxury office expenses, closed some operation centers, and made roughly a thousand May layoffs.

• To rebuild trust, Lyft prompts drivers and riders to confirm masks, confirm no COVID contact, and open windows. Bikes are recovering fastest, with Citi Bike setting a 100,000-ride day record. Lyft is also experimenting with delivery for small local businesses, avoiding a consumer food app while helping merchants escape 20-30% platform fees.