← Decoder with Nilay Patel
Decoder with Nilay Patel
Lyft CEO David Risher on paying drivers more and the shift to robotaxis
01:18:02
Risher sees Lyft as a service company above all, but AI makes everything weird.
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- [00:01]
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- [01:48]
Nilay Patel
Hello and welcome to Decoder. I'm Neelai Patel, editor and chief of the Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with David Rischer, the CEO of Lyft, and I'll just say it from the jump, you're gonna like this one. David is refreshingly direct and doesn't pull a lot of punches. He'd been on the board of Lyft for years, but only stepped in as CEO just a couple years ago to help turn it around. He's done well with that so far, but he's pretty straightforward that the company was not doing well and he had to make real changes to fix it. That also means he has a clear thesis about what kind of company Lyft really is, a service company that operates in the real physical world that's opposed to a tech platform, which is very much how its big competitor Uber sees itself. Uber comes up a lot in this conversation. Actually, the competition between Uber and Lyft is just as fierce as ever, and you'll hear David make a lot of references to the other guys throughout this episode. But it's not just competition for riders and drivers that Lyft has to deal with. It's the future of transportation itself and new AI tools that might take apps like Lyft out of the equation entirely. David and I talked a lot about autonomous vehicles and how they'll impact riders and especially drivers. I always ask my rideshare drivers what I should ask the CEOs when I do these interviews, and the only thing they ever ask is simple, when are you going to pay us more? So I asked David straight up, can Lyft pay drivers more money? Especially when the promise of autonomy is to replace the drivers entirely. You'll hear David point out that it's going to be a long time before Lyft or anyone else gets to the point where self driving cars are the default. So for now, Lyft is still a service company with humans doing the work. But the transition to a world of robo taxis is going to upend that system over time, and David has a lot of ideas about how that might all play out. Then there's the other problem with AI, what I've been calling the doordash problem. In a world of AI agents going out and booking cars and ordering sandwiches for you, apps like Lyft and DoorDash might just turn into commodities and not companies that anyone interacts with directly. Lyft in particular is the exact kind of service that seems really susceptible to this problem, given how many people will just choose between Uber and Lyft based on which service is cheaper on any given day. So I really wanted to dig into this with David to see what he thought a service platform like Lyft could do to retain loyal customers, customers that they can sell subscriptions and other services to when users might not be opening apps at all in the future. There's a lot going on in this one, but I have to point out David is one of the only Amazon or ex Amazon people to give an original answer to the standard decoder question about decision making. Like I said, he's pretty direct. Okay, Lyft CEO David Rischer, here we go. David Risher, you are the CEO of Lyft. Welcome to Decoder.
- [04:47]
David Risher
It's great to be here.
- [04:48]
Nilay Patel
I am very excited to talk to you. It feels like I'm having a lot of conversations with various service providers, I would say, across the industry about how AI might be changing how they get customers, how the platforms themselves are changing, the nature of the people who work on the platforms and provide the services. And Lyft has been there since the start. It's one of the very first, you know, app economy apps. Right. It's the progenitor of the gig economy. Started, I think, with Uber and Lyft. You have been turning the company around. You've got some new ideas. There's quite a lot to discuss. So I want to start. At the start, you're the. You're a newish CEO, I would say.
- [05:27]
David Risher
Yeah.
- [05:27]
Nilay Patel
A couple years into it, I think most people are familiar with Lyft in the popular conception of Uber and Lyft. I think I have a sense of what Lyft is. I use it quite a lot because I have a credit card that gives me rewards when I use Lyft. I'm just curious, what is your conception of Lyft today? Right, There's Lyft in the popular culture, there's the lift many people have experienced, and there's what you, the CEO, think it is and what you might want it to be. What do you think Lyft is today?
- [05:51]
David Risher
You know what? I actually must start with what I want it to be. What I want it to be is a way to serve and connect you better than you've ever been served before and better and connect you and connect you to the real world. And so let me say a little bit about this. Like, in a world where the, you know, the virtual technical world is, you know, bigger and more powerful every single day and, you know, sort of seductive, I want to be the one that gets you out and makes you part of the real world and maybe connects you to the best Lyft ride you've ever had, because you have an incredible conversation with your driver or maybe you meet your future spouse, you know, in the bar you're going to, that's really what I want. I really want us to be sort of the physical glue that holds our society together and do it in a way that is, you know, you know, blows your mind. From a service perspective.
- [06:36]
Nilay Patel
When you say physical glue, do you mean transportation? Do you mean other services? There's a lot of ways to interpret that.
- [06:43]
David Risher
Yeah, for sure. Yeah. No, transportation is. That's our. That's our bread and butter. That's what we do. You know, we do it mostly in cars 800 million times a year. If you live in New York City, we do it on Citi Bike. If you live in San Francisco, we do it on bay wheels. If you live in Chicago, we do it on Divi. Increasingly, we're doing it overseas as well through Free now. So, yeah, it'll be through transportation. But transportation is a big deal. You know, if you're older, it's how you stay connected to your grandkids. You know, if you're younger, as they say, it's how you get to work every single day. It's part of your daily life. And I don't see that going away anytime soon.
- [07:13]
Nilay Patel
When you say transportation again, most people today think of honestly, when you use these apps, a Toyota Camry shows up like what we have developed with all this technology, billions of dollars of investment in fiber optics and wireless and 5G is. You can push a button on your phone and to a high degree of certainty a Toyota Camry will show up, which is pretty amazing. That was not, that was not true before all this investment. That's one version of it. There's another version where a robo taxi shows up or you get a bike or you, a shared service shows up of some, one kind or another. Are you thinking that broadly and are you thinking about the transition from there's a driver in a car to maybe it's a robot? Maybe we're telling you to take a train. There's a lot of ways to think about that. How are you framing that in your mind?
- [07:59]
David Risher
I actually think most people, when they pull an app like this, they kind of know how they're going to get from A to B. They kind of know that already. So I'm not super focused on maybe it's a train, you know, maybe it's a vertical takeoff, you know, aircraft. I'm pretty focused on a car. Or maybe a bike is going to be what you're going to use now. It's going to change, right? So let's use bikes, which is not the place that most people start. But E bikes today are going bananas. Absolutely bananas, you know, and you can feel it. You can feel it in a New York or San Francisco where a couple of years ago biking was of a niche thing, and now it's, it's a, it's a huge, huge mode of transportation. And E bikes are the reason for that. On the car side. AVs autonomous vehicles are going to be a game changer, right? A game changer. You can sit in the back seat, you can sort of snooze, you can go into, into party mode. You know, maybe there's a car tender in front who's making a drink While you're driving, like, all kinds of crazy stuff. So. But I'm pretty focused on people, you know, jumping in a car. You know, today it's a Camry. Maybe tomorrow it's something else. We can talk about that. Today it's driven by a driver. Probably tomorrow it'll be driven by driver, but also driven by a robot. I'm sort of a, let's say, an advocate of focus in the technology, but where I'm expansive in my thinking is all the different cool things that you should be able to do by getting out of your house and not just sitting on the couch and watching Netflix and getting a food delivery.
- [09:16]
Nilay Patel
A version of that that I've heard several times, most notably, I think, from Brian Cheske from Airbnb, who is on the show, was, we should also start selling the experiences, right? We want to get you out of your house. We want to get you doing things. Airbnb launched an entire platform that was bigger than just house rentals. All experiences. You can have a private chef that's a big expansion of the platform. Brian is very convincing when he talks about it. Is your head there? You should open Lyft and we should send you to a concert, maybe.
- [09:46]
David Risher
Yeah. I mean, we're earlier, I think, in that journey than he is, but I think that the destination is pretty similar, like, literally. I actually went to a Dua Lipa concert a couple nights ago, and it was so fun. It was great, right? And I can listen to Dua lipa on my AirPods, right. I can do it when I'm walking down the street. Like, she can be with me all the time, but it's 10,000% better if we get you there and we put you in the right seat and we make sure we pick you up at the end and we encourage you to do it. And maybe if you're a Lyft member, you know, you get a. You get a. Some sort of special service. You go to a restaurant, you get a special dessert that's not on the menu, or maybe you get a special access to a lounge at the airport. Yeah, I think you'll find us doing more and more of that. I don't want to over rotate. Look, just getting you reliably, hundreds of millions of times a year to where you want to go. Picking you up instantaneously, rather than having you wait five minutes, not having the driver cancel on you, all of these things. Making sure you get your points, making sure you can spend your points if you want to. All of those basics really, really matter. But I think over time we need to be an advocate for the physical world because the digital world is fighting pretty hard for your attention. And I don't think that's a great place if that's where we end up.
- [10:47]
Nilay Patel
I'll pre apologize for the obvious comparisons to Uber that come up over and over again, but there's one here. Dara was just on the show, I saw him again. They had a big announcement. They're becoming like a work platform. What they, I think abstractly see Uber as is, there's supply, there's demand. We are really good at matching supply and demand. We can do that for cars, we can do that for Waymo, we can do that for food. What if we just did it for everything? And I think the first thing they're going to do is AI training, which is a wild first thing to do. But they're like, yeah, we got a bunch of drivers who are looking for work to do, opening an app every day, and maybe we can just put other kinds of work in front of them, not just driving cars. That's very different than we're going to send you the Dua Lipa concert. Right? It's a very different point of view. Did you evaluate a similar idea? Did you say we don't want to just be a work platform, we want to be an experiences platform? Because that feels like a very big decision.
- [11:41]
David Risher
I agree. You know, look, I won't comment on those guys, but what I will say is one of the. I've been in the job for two and a half years now, and one of the things that I said from day one is we're going to be customer obsessed. And I know you think a lot about Jeff Bezos. I worked for Jeff for a long time, so I don't have to tell you all the reasons why I think that's a good idea. There are two passengers, excuse me, two customers in every car, a rider and driver. And I want to do everything we can to get to know our riders as well as possible and our drivers as well as possible and understand what it is they want. And so I'm super excited about looking at the world through that eye and say, okay, from a driver's perspective, I want to make more money, I want to all sorts of different things. But I, I may be a little less enthusiastic about the concept of becoming, you know, quote, a technology platform for everything, because I think what that tends to do, at least in my experience, is make you less focused on the customers and what it is they really care about. And More about let's build this cool tech to do a whole bunch of different things.
- [12:38]
Nilay Patel
Let's talk about that, that two year journey. You joined the company 2023.
- [12:42]
David Risher
Yeah.
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Nilay Patel
You made a lot of changes right at the beginning, I would say Lyft was not doing well immediately. You laid off more than half of the company, which you said, there are quotes, you said that it was very hard. Why did you make that decision? Why'd you have to slim down right away?
- [12:55]
David Risher
To be able to pay drivers what we needed to pay them and to be able to charge riders what they wanted, what they could afford. So again, if you start with customer obsession is what's going to drive our profitable growth. And that was the thesis. The thesis, I can tell you the whole conversation about how I got selected for this job and how I said no to it, but eventually we said yes and the really came to. Look, if you board of directors believe that customer obsession is what's going to drive our profitable growth, then you know, maybe, maybe I'm the guy. And, and, and if you believe it, there are a whole bunch of implications that come from that. And the first thing is our cost structure does not afford the. It does not allow us to do what it is that we need to do, which is to, you know, pick people up highly reliably. Yes. But also at a price that they can afford and so on and so forth. So that was that. That was that. Full stop.
- [13:48]
Nilay Patel
Take me in that room. No. Vanishingly few people ever get to go interview with a board of directors to be the CEO of a big public company and say no and get called back in. Walk us through that. What was that actually like?
- [13:59]
David Risher
Here it is and I'll sort of go step by step. So I had been on the lift board for a couple of years. John and Logan, the co founders of the company, had sort of invited me to be part of the board mostly because I think they had a very interesting observation, which is boards don't tend to think a lot about customers. They think a lot about strategy, they think a lot about finance, but they're pretty far removed from customers. And I had come up, you know, as you know, I worked at Microsoft, you know, in the early days and then for Jeff, for a long time even World Reader, the nonprofit that I founded, all of these were, you know, customer obsession was right at the center of it. So they're like, look, David, how about you join the board? So this was in 2021, 2023. At the end of the year, John and Logan decided to Step back. They had been doing this for a long time. They were about to turn 40 years old. Only thing they'd ever done time to turn it over to somebody else. And so the board did what they do, which is found it just formed, looked at a bunch of candidates. I wasn't part of it. I was just sort of observing from afar. And then one day, it was actually Valentine's Day. I remember it very clearly. 2023, my phone rings and the board chair, Sean Agarwal is on the line and he says, david, we've got an offer we think you can't refuse. And I'm preparing myself for. We want you to be the chair of the audit committee. Some terrible thing that he's trying to butter me up for, whatever. And he's like, no, John, Logan and I have been thinking and as we've been looking at all these external candidates, we've been sort of evaluating the back of head. Maybe the right guy is sitting right here next to us in David and I, honest to God. And this is not, you know, I said, no, that's ridiculous. Like, I don't even know what you're suggesting, but I can tell you it's not. You know, I'm very focused on getting kids reading. I've been focused on that for many years with a World Reader. There's nonprofit. I'd focused, I'd started and you know, you need to hang up the phone immediately and sort of get back to work. Like do something which has a higher likelihood of success. But he said, Sean said this was, why don't you think about it? And so I did. I literally took a walk around for about an hour and I thought, and I kept hearing myself say, hmm, interesting. As I mentioned, it was Valentine's Day. So this became the topic of conversation between my wife and me that evening. And she said, david, I think you should give it a try or go for it. And so anyway, then John and Logan, a couple days later they came over and they sort of sold me on the idea a little bit. And then they did something which I don't think was clear. I don't think they were being clever. I think they were just being honest. They said, just to be clear, we're not offering you the job, we're offering you the chance to apply for the job. And I'm like, hold on, now I'm. Now I'm getting competitive. So anyway, so over the next, you know, it was about a six week process. I literally put together a sort of hundred day plan. I talked to Every individual board member, some of them thought it was an interesting idea that I was applying. Some thought it was a crazy idea like this guy. Like that doesn't make any sense. But anyway put together a hundred day plan. I still have it. It's actually kind of interesting. I was looking at it recently and the thesis of it was I want Lyft to lead. And the kicker at the end was and I want to lead Lyft and everything in between the two were all the things we needed to do including lay off a big part of the company, including change the composition of the team, including start to innovate again around customers and on and on and on. Anyway, that was one thing led to another. They offered me the job and I started on April 17, 2023 and having.
- [17:09]
Nilay Patel
The time of my life again. Vanishingly few people ever get to do this. So I have some just very weedsy questions. What software did you put your presentation together in?
- [17:20]
David Risher
That is a weedy question. Two Google Docs. So first it was literally a written document. So I wasn't at Amazon at the time when Jeff sort of did the whole like everything has to be a written document and don't use presentations. That was before. That'll happen. But I have always. I like to write and I express myself through writing. So anyway, so I wrote a document that literally was a page of text and then maybe two and a half pages of sort of outline, kind of bullet points type thing. That was phase one. And then that turned into a slideshow.
- [17:54]
Nilay Patel
Google Slides. Yeah, Google Slides. The reason I asked this is I think people, it's, it's such an abstract thing but you sat down and opened Google Docs like anybody else would open Google Docs and thought of a bunch of ideas to turn on the lift. And then you presented them and there was some conversation. The board said, yeah, that's what you want to do. Where in that process did you think. Because you were on the board. Where in that process did you think, boy, this company has gotten too big and too unfocused and I need to make these two big changes, right? I need to cut a quarter of the company and turn over its leadership because somewhere, right, your open Google Docs. Was that the first thing you wrote down like that? Like that kind of mechanical writing and thinking process is just so fascinating to me.
- [18:32]
David Risher
So this is super interesting. I hadn't thought about it in any level of depth for a while, so I guess here's what I knew. There were two things that I absolutely knew that we had to Focus on customers. Again, it sounds cliche, but I can give you an example. Okay. This was something that I detected while I was on the board but didn't really understand until I was inside the company. We would look at service metrics, and an example of a service metric might be driver cancellations. Okay. And this wasn't something that typically the board would look at, but I would have a particular interest in. I would say, let's talk about driver cancellations, because I have this frustration. I open up the app some percentage of the time, I get matched with the driver, and then three minutes later, it says, you're going to rematch with the new driver, which I find irritating. And it also lengthens the process. I don't like it. And so I found out this was actually after I joined the company, but it still tells the story. So this is a company that said, we're customer obsessed. I'm like, okay, let's talk about what that really looks like. So I said, okay, let's look at. And they said, well, yeah, okay. So it's about 15% of the time that this happens. 15%. But the good news is 95% of the time, people end up rematching and taking the ride. So no big deal. Like, mostly people are still taking the ride. I'm like, okay, hold up. You've just glossed over, like, the most important thing, which is 100% of the time it happens. It's a pain in the ass, and the rider is frustrated by it. And so I will guarantee you without. You don't have to go and do a bunch of research on this. I already know people who have that experience are less likely to take rides in the future. So you can go ahead and decide if you want to look at that or not, but I don't know the answer. So I said, let's focus on this as an example. Early on, this is not my biggest decision, is one of the smallest. But again, maybe tells the story. So it was 15% of the time that this would happen. And I said, let's focus on it like a laser. Let's talk about what information the driver gets when they're making this decision. Let's talk about how big the font is. Let's talk about whether we're talking about it in dollars. Because remember, what's happening in the background is a driver is deciding whether or not to take the ride, and then for some reason, a couple minutes later, deciding differently. So maybe we're telling them too early, maybe we're telling them too late. Maybe we're not giving the right information. Maybe it's up on the screen, too little time. Maybe your font is too small. So we looked at every single one of those things. When I started it was 15%. A year later it was 10%. Three weeks ago it was 5%. As of this last Wednesday it was 4 and a half percent. So massive change. But that's the customer obsession side. So customer recession. That was the first thing I knew is we got to really get customer obsessed, not just blah blah, blah. And then number two is we don't have the right people on the scene. Senior management team and this is old school. Jim Collins Good to great. If you've ever read the book. If you don't have the right people to bust, it just doesn't matter. And so I asked our CFO to leave very shortly after joining. And that was its own thing. And then there was cost structure things and innovation things and so forth. But those were sort of the two basics that I started with when I opened up that Google Doc. Because I knew we had to make changes in personnel and I knew we had to reorient the company around customers. And then yes, I knew that in order to pay for some of what we had to do to reorient ourselves, we were doing too many things and we had to cut a lot of staff.
- [21:29]
Nilay Patel
This is a lead up right into the decoder questions. How is Lyft organized now? How have you structured the company now that you've been on the job for two and a half years?
- [21:36]
David Risher
Well, I can answer the question, but I'll give you a little bit of context. The question is we're organized by customer. Excuse me. The answer is we're organized by customer. So we have a rider group, we have a driver group, we have what's called Marketplace group, which is in charge of matching those riders and drivers in real time, 24 hours a day, seven days a week. So it's operationally but also computationally quite complex. We have a group that is focused on our ads business, which is a relatively newer business, relatively small business, but at $100 million run rate with high growth and high margins, it's kind of awesome. They also do some other things that are kind of newer product types of things. Of course, then we have a bunch of central functions like marketing and legal and so on and so forth. But that's really the primary. Oh, and we have a back end group that a lot of the infrastructure, but really I'd say the primary organizing sort of vector is by customer.
- [22:27]
Nilay Patel
So when you organize that way. Right. Some of those central functions can get pushed in different directions. Right. Engineering is a central function, but if you want to build the concert experience, you got to devote some resources to that versus bringing down writer mismatches. Right. How do you make those decisions? How do you balance that tension out?
- [22:46]
David Risher
Yeah, so we put a lot of our engineering in those customer groups. So those customer groups are full stack groups. They've got product management, they've got engineering, they've got tests, they've got design, all the rest. So we accept the fact that there will be some redundancy and some distribution of talent. So then you have to ask the question, how do you maintain, let's say, excellence across, like functional excellence? Right. How do you make sure your engineering is operating at top talent? And we've identified people or teams or whatever to drive that kind of horizontal excellence across the company. But the trade off is there's some redundancy. You know, we've got some stuff happening at. We have two apps, a driver app and a rider app. You can imagine a world where there's one group that develops both apps using the same frameworks and all. We don't have that. We have two different groups, they develop it using different frameworks. It's kind of a pain in the butt sometimes, but you know, you make it work. But it's better that way because that way you're close to your customers as opposed to close to your technology. Which sounds great until you realize you have lost track of what your customers care about.
- [23:47]
Nilay Patel
Amazon famously organized this way. I can just issue some criticisms of Amazon broadly, like, I know what those trade offs are. We talk about the structures on the show all the time. If you look at how Amazon is, they have lots of sync, single threaded owners of just, you know, two pizza teams that make their own products. Those products rarely talk to each other. Right. As you're describing, you end up in a lot of different Google the same way, you end up in a lot of different directions. And suddenly you're like, we got to roll out AI across the company and you don't have a common shared framework to do such a thing. Have you run into this at Lyft? Are you, you're aware of this trade off? How are you managing that?
- [24:19]
David Risher
You know, so remember when you asked me about my vision for Lyft and I talked a lot about rideshare and a sort of focus on, you know, getting people around. And so we, I would say a strength that we have is we're really quite focused on our customers. And our use cases. And so while, yes, occasionally those issues crop up, it's kind of a small thing for us. And also, I would say. And this is. I don't know if this is a good or bad thing, but it just is a thing. I am very involved with product decisions. Very, very involved. Just thinking about the last 24 hours and how I've spent my time and, like, product decisions, you know, and it's again, like, there are parts of the team that, like that. There are parts of the team that find that a little frustrating. But I have no problem saying, like, we don't need to do these three different things. We're going to do this one thing here. We're going to do it super well. And that means that these other two teams that thought they were going to get to work on those things, we're just not going to have that happen. Instead, we're going to have them focus on something else. So I guess a little bit of, to a certain extent, we solve the problem by focus because we're focused on sort of one thing and not Amazon's focused on many things, but we're focused on one thing. And then second, I play a pretty big role there in kind of breaking ties.
- [25:27]
Nilay Patel
That does seem like the, the way to make this structure work, right? You need to have the leader who's just going to show up and break ties all day long. It also seems like scale is the other. That leader can't scale. At the same time, if you want to attract great people, you have to give them some autonomy. How do you balance this? What's the cadence of letting your folks do what they want to do and then showing up and telling them they have to do what you want to do?
- [25:49]
David Risher
I mean, such a classic issue, right? And so I, I actually wrote about this last year in my, in the shareholder letter, I wrote about two things. I wrote about insidification, why products tend to get worse, and how we're pushing things the other direction. And then this topic, which I called Falcon mode. So the, the sort of visual that I wanted people to think about is the falcon, which is flying at, you know, 2,000ft and hangs out up in the sky often because they need to see everything. Like they're looking for where's my next meal? And they're, they're pretty good at, even at 2,000ft, seeing where that next meal is. And then they gotta dive in deep and they gotta get the meal, otherwise they starve and follow the, Follow the sky. So this kind of coming down and going Back up and coming down and going back up. Like that's the world that the CEO lives in. I don't, you know, it's art. And part of it is expectation setting. Part of it is telling my team, like, I am going to do this, like I am going to talk in excruciating detail about this loyalty program that we're in the process of developing. And anyway, that's going to be where I kind of go falcon mode on you. But then I'm going to go way, way up and I'm going to say, now it's yours and you're going to tell me all the ways where I got it wrong or you're going to make it better or you're going to push back or whatever it is. I don't know, there's no easy answer here, but I think a lot of it is just maybe being judicious because if you do it, I'll say a little bit of an adjacent thing. Sorry for going on such a much detail of this. This is actually a comment that I heard Gavin Newsom of all people say, which I thought really is very interesting. He was saying you have two types of power as a leader. You have positional power and you kind of have moral authority. And the difference is with positional power, the more you use it, the less you have of it. So if you use too much of it, you squander it. Right. Because people eventually get tired of being told what to do. Moral authority is a little different. If you say, for example, in my case, we're going to be a customer obsessed organization and we're going to look at everything that lens and occasionally I'm going to come in and remind what that really looks like. But then I'm going to sort of back way off almost the more you use of it, the more it creates itself. You know, it reinforces and people go off and they have their own amazing ideas and stuff. So anyway, that's the, that's the mode I try to get to. You can ask people on my team whether I'm successful or not, but that's, but I try to be very, let's say, deliberate about the balance between the two.
- [28:07]
Nilay Patel
Yeah, I'm always curious when you end up in that divisional structure. There's an amount of just re coordinating that needs to occur and most tech companies have chosen against it. So it's fascinating that you've chosen this way and you are very clear that you actually need to do that specific task. Because I have so many conversations with, I mean, the number of CEOs who are like, I don't do anything. Which is very funny, is very high, you know.
- [28:30]
David Risher
So let me say one little tiny thing about that. So Scott Cook, who I'm sure you know of the founder of Intuit and still very active on the board, he's just in the process. I just saw him a couple nights ago, and he's someone I've known for many years. He was on Amazon's board in the early days, and we've kind of reconnected over the last bit. Anyway, he is actually writing an article that I think comes out any day in the Harvard Business Review about a study of a couple of companies where he tries to. I think he makes the case. I haven't read the article because it's not it, but I think he makes the case that the best companies are the ones where the CEO focuses not just on the what, but actually on the how. Like, actually gets involved in the how. Like this whole, like, I don't do anything. That's bullshit. Like, if you're running a company, you're doing a lot. And a lot of it is not just the big ideas, it's how are we actually going to organize? How are we actually going to get thing done? So I don't know. I'd be a little skeptical. I don't know. I think the CEOs are saying that either. I don't know what that. What that's all about, but anyway, that's not who I am. I'll just say it that way.
- [29:23]
Nilay Patel
I feel like our producers and I could do an entire episode of Decoder just on why we think some people say some of the things they say.
- [29:30]
David Risher
Interesting.
- [29:30]
Nilay Patel
Speaking of which, we have a little side bet going on how you're going to answer the other decoder question. How do you make decisions? What's your framework?
- [29:42]
David Risher
Okay. I mean, the obvious thing, and it really is true, is I start from the customer and work backwards. I don't know whether that's what you were betting I would say, but that is actually true. I'll say maybe a different thing, though, that I haven't talked too much about publicly. So I guess, okay, I am sort of blessed in the following way. I don't find making decisions super hard. And what I mean by that is I think there's a way of. In a sense, all you're doing as a CEO or any leader is making decisions in a sense, like, yes, no, hire the right people, fire the wrong people, say yes to the good ideas, say no to the bad Ideas, that's the job. Okay? And there's a lot of decisions there. Is it the right person or the wrong person? Do I fire them or I keep them? I love them like a brother, but maybe they're not the right person. All these things. And then is this a good idea that's going to scale and customers are going to love or is it a bad idea that was just dumb in the first place? Okay, so that's kind of a framework, I guess, but not really. It's just sort of an observation about the job. And then I get down one level and say, well, I don't personally mind making decisions a lot. I don't. But I am aware that every decision takes a certain amount of effort. It does. And so what I try desperately to do is I try to make the biggest decision I can possibly have so that everything else just becomes almost a checklist. Let me give you a personal example. Years ago my wife and I sat down, this was back in the early 2000s and said, we met at Microsoft and we said it's interesting at work we have these sort of multi year plans. But here we have a family, we have two daughters at the time, they're very young. And we said, what's our multi year plan for our family? And we came basically to the conclusion we want to live outside the United States at some point we want to give ourselves and our kids that experience. That was the big decision. Okay, then there are a bunch of questions where, when, what schools, how do you get insurance, all these things. But we already made the big decision and so everything else was just like a sort of checklist. And we ended up doing it. A couple years later we moved outside the United States. It turned out to be a very, very long and very important thing for our family to do. But I say that very long story to kind of say like I try to hold myself to what are the biggest decisions that I can possibly make. Where once that decision is made, everything else becomes just kind of a checklist. And then frankly I don't worry a lot about when, if things are then on track, I don't have to worry too much about it and I can go on and make the next decision.
- [32:07]
Nilay Patel
Okay, we all lost the bet. You are. Congratulations. I think we should send you an award. You are the first ex Amazon person to ever say something other than there are type one and type two decisions.
- [32:19]
David Risher
Oh God. Yeah. Oh, oh, yeah, yeah, yeah.
- [32:24]
Nilay Patel
I mean, yes, we literally in the pre production he's gonna say there's two one way doors and two way doors. And we were all like, all right, we'll just get through it.
- [32:33]
David Risher
I see.
- [32:34]
Nilay Patel
First one ever. First person who's ever come within 100 miles of Amazon headquarters who did not immediately say one way doors and two way doors.
- [32:43]
David Risher
I, I feel proud. I have my own ideas. Look at that.
- [32:46]
Nilay Patel
Very good. We have to pause here for a quick break. We'll be right back.
- [33:00]
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- [34:00]
Nilay Patel
Support.
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Nilay Patel
Your phone or computer.
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- [35:21]
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- [37:35]
Nilay Patel
Welcome back. I'm talking with Lyft CEO David Rischer. Before the break, he managed to be the first ever former Amazon executive to not give me the two way door answer to a decision question which was delightful. But then I had to ask another question that seems to be Coming up in every episode lately. What are we going to do about AI? Let me ask you about some stuff that is changing that. I think you're going to have to make some decisions about that. And honestly, we'll stress some of your structure. Okay. AI is here. It's happening in a lot of ways. Every CEO of a service company, whether that's TaskRabbit or Uber or whoever has come on the show, I've asked, asked this question. I've been calling it the doordash problem. I should probably get the people from DoorDash on the show to actually ask them directly about this thing that I've been calling the DoorDash problem for six months. But, you know, just a couple days ago, OpenAI had Dev Day. They showed a bunch of integrations where you could ask ChatGPT to go do stuff for you, including Book and Uber. We've seen other agentic products. Amazon announced Alexa. We'll be able to go book a flight for you. We'll traverse websites. It's built into Chrome now. We're going to traverse websites on your behalf and do stuff for you. You the back end of that. Whether it's you or we, Zoc Dock or whoever else is. Well, we have a database of information. We, we know where all the drivers are. If you want to buy a sandwich, we know where all the sandwiches are. And so your agent's going to come and order a sandwich on our website and we won't get the customer right. We will just become a service provider to some chatbot interface and we won't be able to do upsells. We won't say, hey, there's do Olympa tickets or whatever we're going to say. And that's going to shrink our margins and we'll just become commodity service providers. This is feels like a very big problem. I've been asking everybody about it. Does that feel like a big problem to you?
- [39:17]
David Risher
I mean, maybe, right. For the reasons you just said. But I wouldn't say it's one of the top five that I worry about. And a big part of it is you. First of all, remember what you're doing. You know, you are trusting something. Like you're trusting that this thing, this person is going to come and pick you up and they're going to be on time and it's going to be safe. And if I leave my iPhone there, I'm not going to get the thing stolen. All these different things. And it's physical, you know, it's, it's safety and it's real world stuff. And so it's, you know, so it's, this is not like, like the most extreme version of what you're saying is I go to ChatGPT and I say, please come pick me up and some rando comes pick me up and there's no guarantee, there's no service, there's no, you know what? Like, that would be bad. I don't think a lot of people would be super excited about just some rando coming, picking me up and sort of an unbranded service and whatever it is. So if it's not going to be sort of an unbranded, just rando picking me up, then it probably has to be, you know, one of the guys who joining existing rideshare and that's us. And then we've got all sorts of ways where I think we can compete, where we can compete. So we want to compete on relationships, by the way, not just on transactions. Right, and what does that look like that you already mentioned you choose us, among other reasons, because you get points on your credit card, unnamed credit card, when you do that. Well, that's still going to be the case in the future. And so you might have a preference for us that, you know, you push through ChatGPT if they try to disinimate you say, well, no, I actually have a preference here. And we're going to do a whole bunch of different things to make sure that you have a very, very strong preference for asking for us by name, not just saying, you know, I want to get to a place. And then second of all, remember that.
- [40:50]
Nilay Patel
Can you tell me what those things are? Because right now on my phone, you know, the apps are side by side and I open them both and I will, you know, if it's within $5, I'll pick the credit card points, but I will almost always pick the cheaper one.
- [41:03]
David Risher
Yep.
- [41:04]
Nilay Patel
And I, I feel like a bun, an agent going off onto the web and finding the cheapest one is actually the most direct threat to, to your margins, everyone's margins.
- [41:13]
David Risher
So I don't think it's a big margin threat because we already price. Let's talk about price specifically. And you're you. So you are not alone. Right. Quite a few people price shop, interestingly enough, from my perspective, I would wish everybody did. And you're saying, well, that's weird. Why? Because Remember, I have 30% share and the other guys have 70% share and we price almost at parity. In fact, our strategy is actually price a little less when we can, but it's really hard because we have costs and those are real costs of insurance, driver pay and all these different things. By the way, the other guys have pretty damn similar costs, which is why our prices are so, so, you know, like this. Now, we might have a slightly different strategy. Maybe we compete a little harder at airports, maybe they compete a little harder at something else, but it's marginal. So my point is, why do I say I want everyone to check both? Because if everyone checked both, I'd win probably 55% of the time as opposed to 30% of the time. So that's great for me. So let's just, first of all, let's just step one. I don't mind that because that is.
- [42:14]
Nilay Patel
The margin pressure, right? If the agent is. If ChatGPT is saying, here are the two rates and the strategy to win is to always have the lower rate rate, you will quickly become competing in a way that right now maybe you aren't competing all the time.
- [42:26]
David Risher
No, no, we are. That's the thing. We already are. That, that's the basic, I think the premise of the, of the, of the question. This is true in some industries where price makes less of a difference and therefore if you're. And nobody wants to be reduced to competing on price. But the truth is that's our life. Every single day, every single day we wake up and we look competitively, market by market, where we are, where are we low, how can we get lower and so forth. So I don't worry a lot about someone else. It would, it's. I literally don't know how someone, a third party, not us or the other big guys, could underprice us consistently. People try and they go out of business. That's the way that works because they realize that the costs that they have are no less than the cost that we have. They just tried to subsidize it through some other magical thing for a while and they ran out of cash. Then on the. And we have a big scale and all these reasons why it's hard to underprice us. And then between us and the other big guys again, there's just not that much left. You know what I mean? So it's like, I don't know how either one of us could underprice the other in a sustainable way. But then back to the fundamental thing, of course, which is if you then believe that the price is pretty much the same. And again, if most people believe that, then I probably have 50% sure, not 30% sure. But I digress. Then it becomes who can get you the points, who can allow you to pay with the points. For example, who can pick you up faster today? We pick you up about a minute and a half faster than we did a year and a half ago. And. And oftentimes, not always, but oftentimes it's actually faster than the other guys because we've got good algorithms. I'll just say that. And we have drivers who like us a lot. That's also a real source of strength. So, anyway, and then there's a service you can get in the car. What happens when you get in the car today? You might say it's, well, generic Toyota Camry, but I don't know, maybe there are things we can do with the drivers there to make you feel a little bit more special that might make you say, you know what? I actually do have a preference. Even if the price is. Is. Forget about. Even if the price is exactly the same, I'll still always ask for a lift over the other guys because I'm going to get a better experience from the driver. So I know that was a little bit of a roundabout point, but the reason I don't worry too much about it is I think it'd be very difficult for anyone to, quote, unquote, go direct to one and a half million drivers that we have. I think that's very, very hard to do. And then on price, I'm not super worried about being competed out of the game because I think I've got a pretty good cost position. I think it'd be hard for someone to underprice. And we already compete pretty directly. And so then I think it comes back to who can offer the better service. And I feel really good about our ability to offer a great, great service.
- [44:49]
Nilay Patel
So that your customer relationship will traverse whatever interface people are using. Right? People will say, I still have a relationship with Lyft.
- [44:57]
David Risher
And remember, most people don't change what they're doing unless something else is like 10 times better. You know, like, I don't. It's. It is. It's checking prices on airlines tickets is hard. Hard. Like that's. It's dynamic pricing, hugely big swings, you're planning ahead, vacationable, lifetime, all the things. But our stuff is like, I'd say very few people ever send me notes saying, I had a hard time, you know, with your app or getting a car or anything like that. So, in other words, I actually think that already we do a very, very good job. So I'm not sure the additional value add. Again, if there was someone else who can come in and give it a much lower price. I might be worried, but I the.
- [45:37]
Nilay Patel
Other challenge there is that you might have the brand relationship but they're not actually opening your app which is where you might show them upsells to other products or straightforward advertising or explain and reinforce why your brand is more valuable than the other one because it's all happening in someone else's app.
- [45:56]
David Risher
And so that would be a drag. Yeah, that'd be a drag. But I would say at least what I've seen so far, just using ChatGPT as the example example, they seem to be let's say more accommodating around that than you might expect. In other words, they don't and again it's not that they can't change strategies or that there's no reason for them to, but at least the kind of apps that I've seen tend to be a little bit more give more control over the to the app developer than sort of just a generic thing. So because I think they also recognize like brands matter, you know, to a lot of people.
- [46:27]
Nilay Patel
My theory on that is that the agenda take products that they are promising don't work as well as they should so they are forced to put app views in the chat bots.
- [46:35]
David Risher
Fair too.
- [46:36]
Nilay Patel
That's that I have this very pessimistic take but that is my, my belief today. But when you hear them all talk about across the board, not just open ad but across the board when you hear them talk about their agentic products, there's not a view that you're going to get dumped into an app. There's a view that the agent will actually do it and once the agent starts doing it, your customer relationship starts to diminish and that that's like the heart of what I have been calling the doordash problem. Right you're now, now it doesn't matter where the car comes from.
- [47:02]
David Risher
Yeah, yeah, I, as I say I really do get the. I mean of course it's something we think a lot about so I don't want to diminish it at all. But if you have this problem becomes a much bigger problem if A, you're not used to competing on price already or B, you don't have kind of a, you know, a big supply that will be hard to get to directly and it's really hard to get to 1.5 million drivers and know where they are and all the different things about them in any direct way. Hard to kind of go around. But yeah, who owns the customer and all that that is going to be played out. And part of my job, of course, is to make the Lyft brand so interesting and compelling that regardless of how you get here, you still feel. Remember, here's the last thing I'll say. People's interaction with the app, and this is different from us versus some primarily tech companies, is relatively brief compared to the time they're spending in the car. And so I would say, you know, part of my job is to figure out how to make that in car experience even more interesting and frankly, have a bigger place in your brain than just how you happen to get there.
- [48:09]
Nilay Patel
Let's talk about that for a second. You do have the other customer, the driver. Every time I get into a rideshare car, I ask the driver, what would you have me ask the CEOs of these companies? Companies? It is always the same answer. I'm sure you can guess what it is. They all want the rates to go up. Yeah, I don't think I've ever even heard another answer. They all just want the rates to go up. The idea that maybe the rates you charge to customers might change in the world of AI, or the margins might change if you're not doing as many upsells in the app because of AI interfaces, is in direct conflict with boy. The drivers want their rates to go up.
- [48:43]
David Risher
Right?
- [48:43]
Nilay Patel
They would like your cost to be high. 1. Can you pay drivers more? This is the number one question I get. So I'll just ask you directly, can you pay drivers more? Do you see a pathway to doing that?
- [48:53]
David Risher
The short answer is we pay drivers as much as we possibly can. Our interests are much more aligned with drivers than I think the popular imagination and drivers would. Would sort of think. And the reason I say that is because we both have the same goal, which is to get as many rides going through the platform as as possible and to increase the total volume that is now, of course, an individual driver level. They might say, well, gosh, I wish there were fewer drivers on the platform so I don't have to compete with as many other drivers. There are things like that and riders would say the opposite. I wish there were more drivers so that someone could pick me up faster. But broadly speaking. So let me back up for just a second because it's such a big deal. Okay, first of all, all, let's start with the super basics. How much do drivers make? Let's actually talk about this for a second. Okay? We've studied this a lot. There's a great white paper on our website that actually is super, super well researched and databased, not just opinions. Okay. Broadly speaking, when a driver is driving on our platform, which means they're either coming to pick you up or they got you in the car and they're dropping you off. Not they're not waiting. So that's. We're going to come back to that in a second. When they're driving, they're making about gross nationwide, $30 an hour, 33 0. Now they have costs, gas, maintenance, cleaning the car, these things. Not insurance, we pay that, but repairs, things like that. If you take all those costs into accounts. But 20 bucks an hour. 20 bucks an hour. So 20 bucks an hour. So let's just say that. So then you're thinking, well, gosh, that doesn't sound so bad. Well, okay, but here's the part that you also have to know, which is they're not always getting paid that 20 bucks an hour because sometimes they're waiting, waiting, and when they're waiting, they're not making money. Now when they're waiting, often they're on the other guy's app. And so net net, they still might be making $20 an hour if they're really good at flipping back and forth. And they'll. But you can't. I can't guarantee demand. I can't guarantee on my platform, on anyone's platform, there's always going to be demand. Okay, so that's a very. Now what do they get in return for all that? For the, for the, for not getting a guaranteed $20 an hour. They get the fact that they can turn the app on anytime they want, want off anytime they want. They can pick up their kids, they can go on vacation, they don't have to call in if they don't feel like coming to work. Like that's what they get. That's the big trait. The big trade is here's how much you're going to make and we're going to try as hard as we can to have you make more. As hard as we can. We're going to build AI. So we talked about, you mentioned AI a couple different times. A lot of our most interesting applications of AI right now are actually for drivers. We have a whole driver earnings assistant that allows a driver to go in and say, I want to drive Monday, Wednesday, Friday, not Tuesday, Thursday. I don't want to drive over the bridge. I got to go home, be at 5 o', clock. You know, give me the best possible plan. As an example example or a driver reference letter. You know, you started to drive two and A half years ago. You're one of our top 5% drivers. You're super reliable. Here's a reference letter you can literally take to your next potential place. So there are all sorts of things that we can do to. We can give gas discounts, we can do all kinds of things to try to make your earnings both on the platform and even if you decide to go, do something else, as high as possible. But the reality is, a, we can't guarantee demand, and B, it is absolutely true that, that there's a cap to how much we can Pay based on 800 million data points a year of roughly how much riders are willing to pay. And the last thing I'll say there is. You can see that if you look across the country. For example, in Washington state, Seattle in particular, rates are quite high there. Quite, quite high. An average, let's say bookings of $30 an hour versus $20 an hour because of local legislation that went in. And guess what, what the number one complaint I hear there is, I don't get enough rides. I don't get enough rides. What's happened to all the rides? I'm like, well, guess what? That's kind of what happens here. If you don't let the market kind of set the rate.
- [52:39]
Nilay Patel
The other side of changing rates, pushing them higher is that would be how you get more drivers on your platform versus Uber. The, you know, the driver availability battles of the early ride share days are pretty legendary. You had venture capitalists basically subsidizing both sides of the market. Market.
- [52:56]
David Risher
That's right.
- [52:56]
Nilay Patel
Right. So you pay drivers high rates. And then I remember I just, I just got around New York City for free on the bank of SoftBank's money.
- [53:02]
David Risher
That's right.
- [53:03]
Nilay Patel
I don't know what else the Vision Fund accomplished, but I traveled in style for about.
- [53:06]
David Risher
But you sound in style. Yeah, absolutely.
- [53:10]
Nilay Patel
Obviously, that has all come to an end right now. Now the market is actually connecting supply and demand more directly.
- [53:15]
David Risher
Yes.
- [53:16]
Nilay Patel
But that would be how you could take share from Uber. We have to take another quick break. We'll be back in just a minute. Foreign.
- [53:31]
Adobe Sponsor
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- [54:45]
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- [56:03]
Tom Elias
My name is Tom Elias. I'm one of the co founders at Bedrock Robotics. Bedrock Robotics is creating AI for the built world. We are bringing advanced autonomy to heavy equipment to tackle America's construction crisis. There's a tremendous demand for progress in America through civil projects, yet half a million jobs in construction remain unfilled. We were part of the 2020 AWS Gen AI accelerator program. As soon as we saw it, we knew that we had to apply. The AWS Gen AI Accelerator program supports startups that are building ambitious companies using gen AI and physical AI. The program provides infrastructure support that matches an ambitious scale of growth for companies like Bedrock Robotics. Now, after the accelerator about a year later, we announced that we raised about $80 million in funding. We are scaling our autonomy to multiple sites. We're making deep investments in technology and partners. We have a lot more clarity on what autonomy we need to build and what systems and techniques and partners we need to make it happen. It's the folks that we have working all together inside Bedrock Robotics, but it's also our partners like Amazon really all trying to work together to figure out what is physical AI and how do we affect the world in a positive way.
- [57:19]
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- [57:58]
Nilay Patel
Welcome back. I'm talking to Lyft CEO David Rischer about the elephant in the room competing with Uber. You've talked about taking share from Uber several times now. One way you could do it is to just say we have more drivers because we pay them more money. Does that come out? Have you modeled that out?
- [58:12]
David Risher
So we actually try to pay drivers more again, just like we try to charge riders less, but it's very hard. This is not a high margin business, but we look at it literally every single week. Here's every single day. Actually, here's what I can tell you that it might be a little surprising. We have a 29 point advantage over the other guys on a dimension that I really care about, which is which rideshare platform would you prefer to drive for? 29 points in preference. There's actually another question that's adjacent to it that we ask every quarter, which is does driving for Lyft give you a sense of pride or driving for the other guys give you a sense of pride? And we also have just coincidentally, a 29 point gap in both of those for all sorts of reasons. Primarily among them, and all the way back to your first point, we do something the other guys do not do, which is we guarantee. We guarantee you will never, never, never as a driver, make less than 70% of what riders Pay after insurance is taken out over the course of a week. And literally every week, we send out millions of dollars, millions of dollars of direct deposits to drivers to top them up to at least a 70%. Usually the number is about 85%, but 70 is the absolute floor. That is a huge, huge driver of preference for us. And so the drivers that are being maybe a little bit more thoughtful or nuanced in their answer to you when you ask the question, would add. But I know a lot of the them, they know it, but they don't really say it because it's kind of not in their best interest in any way. They're still whatever. Like, I know that Lyft has actually done some real work here to make sure that our, our pay is at least a foot, because that we can guarantee. We can't guarantee demand. We can guarantee we're never going to pay you less than 70%. So that's a very long way of saying it's hard for us consistently to pay more. We try it sometimes, and sometimes market by market, we do. But broadly speaking, again, this is a very, very efficient marketplace. And so what we try to do instead is all sorts of other things to drivers to make them feel, you know, appreciated, you know, seen well paid, not, you know, unfairly paid and so on and so forth.
- [60:07]
Nilay Patel
That's kind of the, the other pressure on drivers and rates on this entire ecosystem is autonomous vehicles. Yes, there's a lot has been said about autonomous vehicles and how they might displace drivers, how might change those rates. The cars don't quite drive themselves yet. Right. There's Waymo and a handful of markets. There's whatever Tesla is doing in a handful of markets. But it's coming, right? We can see it's coming. That requires enormous amount of investment. Lyft, I would say mostly you guys are in the partnership game, sort of across the board. That's how you're operating. How are you thinking about that and how that might affect the drivers on your platform today?
- [60:48]
David Risher
Yeah, driverless cars are absolutely coming, no question. And we have got some great partnerships. Everything from May Mobility, which is in Atlanta, which is a relatively small company, to Waymo, which is a very big company company. We've said that we're going to be working with them in Nashville next year, to Baidu, which is sort of the Alphabet of China, where we're working together in Europe. So from the absolute biggest to the smallest, yeah, we're partnering and that makes sense. Right. We're good at supplying demand and matching with Supply and pricing and mapping and lost and found customer service, even fleet management, we do that. The other guys don't do that. We have a whole subsidiary that does that, which is keeping the car serviced and cleaned and ready. But we don't do AV tech ourselves and we're not an oem, we don't make cars. Okay, so we partner now to answer your question. Well, broadly speaking, actually there will be two big sources of AVs. Some will be from, let's say, people who have fleets of AVs. Maybe they bought a whole bunch of them and they want to monetize them like that, big fleets, and then some from individual owners. Right. And I really do believe this and I think this is where the intersection with your question gets so interesting. Today we have one and a half million drivers on the platform. What are they doing? They are trading two assets. They have their time and their car for money. Right? That's the trade. I put myself in the driver's seat, I drive around, I use my car, I get paid for that. Okay. Tomorrow you can imagine a world where they can do the exact same thing. They can buy a car, it's a self driving car. Because I think over time almost every car will be a self driving car. And they can then flip a switch and make it lift ready if we've done our job right, and put it on the lift platform. Platform, what does that mean? That car drives around, it picks people up, it drops them off. It uses all of our mapping and all of our pricing and all sorts of things. It uses our fleet management to make sure it's always cleaned and always charged by the time it gets back to you and then shows up again when you, when you need it again. So I think one way to answer the question is we want to make sure for individuals that they can continue to participate in this gig economy. It's just that now they can do it in a different way. They don't have to use their time, they can use their physical asset. The second thing is we are very.
- [62:56]
Nilay Patel
Can I ask you one question about Lyft ready? Yeah, of course. You just described the same vision for Tesla Robotaxis as Elon Musk has described for Tesla Robotaxis. He has been less, I would say, clear that the cars would be cleaned when they returned.
- [63:08]
David Risher
Yeah.
- [63:08]
Nilay Patel
Doesn't seem to interest him. Have you talked to Tesla about saying, okay, you've got this big robo taxi idea. Do you want to put a lift up on it and just make this go?
- [63:17]
David Risher
So I don't want to describe Exactly. Conversations that happen or don't own. I would say in general, the vibe that Tesla gives off, I think is representative of how their company goes, which is we kind of like to do things ourselves. So I'll just sort of say that as a generic thing, fleet management, you've touched on sort of three things all @ once. I think there's a question of what's Tesla going to do? Interesting question.
- [63:39]
Nilay Patel
Well, they're the only car company that's selling cars to consumers today that can do what you're describing. Even if you believe that they should or should not be doing it. No one else is selling you a.
- [63:49]
David Risher
Car that can do what FSD can do 100% today. Exactly right, 100%. So they will need. My view there is. They will need some kind of fleet management. You can't these. Unless, unless you want to push all of this back to. Well, first of all, they're going to need a whole bunch of customer service and a whole bunch of other things that people don't sort of think too much about because the scale is so small. Right. But as, as you start to grow and people start to leave their umbrellas, iPhones in the thing and you got to onboard and off board, there's a whole bunch of infrastructure. Let's put this one way, creating a ride share business is not for the faint of heart. So the first thing that you might ask yourself is, is all of that a good idea for them to spend a lot of energy on or should they partner with other organizations who are already doing that? Which you're, you're kind of asking. And, and I'm declining to answer the specifics, but I think the general is, it's an interesting conversation that the companies should be having. And then there's then this more subtle part, I think, which is again, to your point, like it's all well and good to think that these cars just magically charge themselves, clean themselves, maintain themselves, but that's not the reality. We have a subsidiary called Flex drive that oversees 15,000 cars. We do it today mostly for drivers who don't want to use their primary car. And so we rent them a car, we buy these cars, we rent them the cars, we tell the drivers when it is they're going to need service. We, we, we make sure that we've got sensors on the cars to sort of, you know, bring, we know how long it's going to take to service all these different things. That kind of very unsexy fleet management stuff. Gosh, it's the difference between Profit and loss on an asset, and we happen to be very good at that because we've done it for many years. And so back to your point. I think part of the reason that other companies don't talk as much about this as we do is they don't do it, but we do it. And so we know. And it's part of the reason why our Waymo partnership in Nashville is, I think, quite interesting. Waymo and us said, gosh, this is really important, and you guys do this and do it well. So how about you do it here in Nashville for us? So I know we've covered, like, five different things all at the same time there, but I think that's part of the reason is people are not focused on it as much because. Because it's not a capability many companies bring to the table, but we do.
- [65:50]
Nilay Patel
Yeah. I'm very curious on the, you know, my car is going to make me money as I sleep. There's a lot there and there's, you know, but one company that can actually sell you that product today. But the rest of it, you know, I always think about it as like, man, this really implies there's a lot of demand in my sleepy town while I'm sleeping for my car, you know, like, is that going to work? Because I actually, I need my car quite often during the day.
- [66:12]
David Risher
I think that's also fair. I think that's also fair. I. I think that for many people, it won't necessarily be their primary car. I think there will be entrepreneurs who go out and buy five cars, just like people buy small fleets today for black car service. And that's probably more likely in the near term.
- [66:27]
Nilay Patel
Let me ask you about Waymo real quick, and I want to come kind of zoom out again. Your Wayo's partner in Nashville, wh, is partnered with Uber and other markets. Waymo is running their own service in some markets. It does feel. And, you know, they're obviously backed by Alpha Alphabet. They've been backed by Alpha for a long time. They're going to spend a lot of money to win. It just seems very obvious if you ask Sundar about it, he's like, we're just going to keep spending money because now it's very clear that, you know, we're close to winning. They're going to spend a lot of money until they win. They're looking for partners. Right? They're looking to see what winning looks like. Yeah. You're obviously, you're in a kind of a weird competition, right? You're in a Weird kind of bake off. You're the partner in one market, they're the partner in another market, they've got their own service and yet another other. How do you perceive that competition? Have they told you what winning looks like?
- [67:12]
David Risher
You know, I think they're figuring it out. I really do. I, you know, and I take them at their word that they look, they, I think a word that they use pretty often is optionality. Right. They have something pretty cool, right. They've got technology that works about as well as anyone's in the world. You know, again, I think really only Baidu would be the real competition there. I think everybody else is some, is some, some degree off of where they are and it works and it works well and people like it. So that's a good place to be. Thus, if you're in that position and you think, well, gosh, I'm not really sure how this is all going to play out. A totally reasonable strategy is, well, let's try a little bit of everything. Let's try doing it ourselves, end to end. Let's try partnering in a certain way with one company, let's try partnering in a different way with another company and we'll kind of see. When I fast forward, I think a very likely outcome is they will realize, gosh, as I just said, running a ride share business is, is quite expensive and it's not. And it's very physical. It involves million like again, think of the scale, 800 million rides we do every single year. 50 million riders. They, you know, one and a half million drivers. I know those aren't part of the picture, but someone's got to own those cars. So, so there's going to be someone else in this picture who's owning these things and wants these things utilized. If you're Google, do you want customer service? Do you want all these different things that you have to do to operate that service? Maybe you don't mind it in a couple of markets. Maybe it's kind of cool. You can have direct access to your customers and you can do brand building and maybe get some data from it, Whatever, whatever, all good. But do you really want to do it in 280 cities around the United States or all around the world? I don't know. So I think a very likely outcome is they will be, you know, frenemies, right? Or what's that coopetition or whatever. Like they'll compete in some markets and in others they'll partner. And our job is to be the best partner they can possibly have. So that they over time give us more of their business and stay focused in their own way in some small number of markets. And that's great.
- [69:18]
Nilay Patel
You obviously focused the company Lyft used to have its own autonomous car division that was sold before you became the CEO. But you have other partnerships, right, that sort of bring you closer to actually making the hardware. You just announced one, a company called Tensor. Yeah, there's some weirdness with Tensor. It used to be a Chinese company called Auto X and we were told that that all got wound down. Have you ridden in a Tensor car? Do they exist?
- [69:42]
David Risher
They do exist. I have not ridden in a Tensor car myself, but colleagues, you know, people on my team have. I'll tell you about tensor just for 30 seconds. It's very interesting company. So they, they are also trying to create somewhat uniquely in the market a car that is a self driving car and a robotaxi. So in other words, drive me or drive somebody else from the start. Right. They partnered with VinFast, which is, you know, a Vietnamese company. They have a small number of cars here in the United States. But I think what's the most interesting to them about Finfast is it's a very new company and therefore their assembly lines are quite new. They have very modern technology and so on and so forth. And they have outfitted their cars like a crazy number of sensors. Everything is redundant. I mean, you talk to the guy's name is Professor Axe who runs the company. You talk to him and he'll tell you how important it is to have redundancy around braking, redundancy around steering. Like he wants this thing to be absolutely bulletproof, that the steering wheel literally moves out of place. If you don't want the steering wheel there, I mean, it's a very, very interesting product that they're designing. It's very expensive. It's $300,000, something like this. But of course it'll come down. But still it's really meant to be a very bespoke thing. And as I say self driving from the start. He'll tell you about LIDAR and how there are different versions of LiDAR. They've got the best, all this stuff. Okay, why do I go into detail about this? I think over time, and you can see this through history, people start by retrofitting something existing as a way to get started. And then eventually they realize, gosh, this is a new thing. And so therefore let's create our own purpose build thing. And I think they just decided in particular, particular we're going to jump over the Bespoke or the, the kind of the, you know, take somebody else's and try to retrofit and we're just going to go, it's small scale, it's super expensive, we're going to kind of ride that cost curve down. Other people, obviously Waymo's done exactly the opposite. They use the Jaguar I pace and they're going to move to the zeekr Zoox is kind of more, you know, so anyway, long, long, long answer to kind of a particular question. But I think Tensor is very interesting because they really are kind of our first proof point for the lift ready concept. Even though super small, super experimental, but really interesting. And I'd love the fact that they're trying to introduce innovate.
- [71:47]
Nilay Patel
When you look at that kind of bet, right, that mean that you're describing the big disruptive bet. We're going to, we're going to take the new technology and we're going to start with that as the foundation of the product and we're not going to worry about all the stuff that happened before.
- [71:57]
David Risher
Yeah, sure.
- [71:58]
Nilay Patel
That pattern repeats. Right in the middle of that, just to bring it back around is the driver, right. The, the idea that Lyft ready will put a bunch of ride share cars in people's houses or that there's, it's worthwhile to make a technology bet on, you know, self driving cars in that specific way that Tensor might be making. All of that puts pressure on the driver, right. The logical end state of that is one day there will not be drivers on this platform at all. How long do you think that will be?
- [72:28]
David Risher
Many, many, many years. Many, many years. Beyond the sort of workspan of 99% of drivers on our platform. Part of it is just basic, basic, you know, laws of physics like at the Taylor Swift concert or at the end of the NFL game or even at 5 o' clock every afternoon or 9 o' clock in the morning of every day. There just aren't enough self driving cars. There's certainly not enough riders who only want self driving cars. Right. A lot of them just want to get where they're going fast and therefore, and cheap and therefore I don't really care whether it's a robot or not, but I really want to wait for 15 minutes when I could wait for two minutes for human driven. And then there are people who want help with their luggage and then there are people who want to have the conversation and then there are people who just don't like technology. So there are all sorts of reasons. And then there are Regulatory things and then there's snowstorms and then there's ice pellets and all kinds of things. So there are a billion reasons why in the near term the hybrid network is the better approach. Supply, demand, all the things in the medium and long term. Right. There will be fewer drivers as a percent. But remember, 160. Let's just remind ourselves of just this crazy fact. So today as I say, we do 800 million rides. Maybe the other guy do 1.5 billion rides. So maybe two and a half billion rides between the two of us every year in rideshare in the United States. I'm talking about, okay, what's the total number of rides that people, you know, get in the car and drive themselves? 160 billion a year. So 2.5 billion, 160 billion. So there is a lot of room between 2.5 billion 160 billion for us to continue to grow and expand and have more drivers in the platform. And by the way, like all the estimates around the number of self driving cars by say 20, 30 are like 33,000. Okay, 30,000 is a tiny thing. We have 1.5 million drivers on about 30,000 now they're working 24, 7. High efficiency, high utilization. So it's not apples to apples, but still. So that's again, sorry for all the verbiage there, but it's a way of saying I think the hybrid network dominates for a long. Hybrid meaning some driven by humans, some driven by autos, I mean by robots, dominates for a long, long, long time. And I think by the time we get to a point where, where there are relatively smaller number of drivers than there are today. Gosh, I think we're talking about, you might as well think of it as a generation. I don't mean 25 years, but I mean most people who drive on the platform don't do it for more than 3, 4, 5 years type of thing. At that point it'll be a whole different world. And then the last thing I'll say is I mentioned as sort of a joke at the beginning, but not really the car tender idea. Like I think there will be fun things that people are going to be doing in the cars that are not just driving. It's making drinks, it's telling stories, it's being the local guy, it's again helping you with the luggage, it's doing all kinds of other stuff that drivers do today kind of on the side. And now I don't know, just being a. I don't know. Who knows, who knows?
- [75:08]
Nilay Patel
Are you going to expose that sort of driver individuality? Right. I mean you could, you could do it from the top down, right? You could say you're all, you're all bartenders now. We're doing old fashions in the car and maybe the platform will support that, maybe the ecosystem will support that. But you know, the other thing I've heard from drivers, you know, sometimes you get into a lift and the driver has set up 15 charging cords and we'll let you play with the music. Music. And sometimes it's just a guy in a Camry and there's no rate differential there. Like the extra effort is not rewarded or are you thinking of, I mean there essentially it's commodity, right. The point of the platform is to commodify the service. Do you think you're going to let the drivers decommodify in that way?
- [75:46]
David Risher
I do, I really do. And I think, look, we just, we just announced two days ago, I guess the acquisition of a company called tbr which is a very, very high brand, ultra luxury sort of chauffeur driven service. It's for, you know, non deal road shows and you know, super bowl events and stuff like this. It's a, it's a very, very bespoke thing. But one of the reasons we did it is because the level of service that they provide is unbelievable. And gosh, can we learn a lot about. And there the drivers do all kinds of interesting things, right? I mean they'll get you your coffee, you know, before you get in the car because they know that you like a, you know, a latte and not a, not a, you know, flat white. And then when you spill the coffee on your shirt, they'll pick the new shirt up while you're in the meeting so that it's ready for you when you come out. And they've already called the next person saying we're going to be two minutes late because the guy's got to do something before he gets there. So I'm not saying you can provide that level of service to Every single person 24 7. But I think the idea that I mentioned briefly before, this notion of inshidification, you know, a service that starts out amazing and then kind of gets a little bit less. So over time. I think Rideshare for so long has been caught in this kind of binary of, you know, us versus the other guy and very competitive, focused and everything's a commodity and everything's about cost and so forth. And I think over time you get to the point where it's like that's no longer interesting. What's much more interesting is the next 160 million rides that people are taking in rideshare that they're not today. And how do you let that driver show up in a way where they become different from a robot? Not just sort of a robot with a human robot, a flesh robot. So yeah, I think there's a lot. And then the question is how do you do it at scale and how do you do it in a high quality way and how do you do it in an economic way? But those are what, aside from self driving and all the rest, the human side is what makes this industry so interesting.
- [77:33]
Nilay Patel
I do have to offer a plug here. Cory Doctorow, who wrote a book called Intradification and Coin the term on decoder. Very soon you can hear him talk about that.
- [77:39]
David Risher
Oh, fantastic. I'm a fan. Ask him about. He actually came, so I sent him a little note after I wrote this. So I wrote about a certification. Last year I got introduced to Corey. He actually came to the office. He at the time said all kinds of nice things. So anyway, he's a good guy. I hope you have a great conversation with him.
- [77:53]
Nilay Patel
It's Sarah Jeong on my team who did it, but she's smarter than me. So they had a great conversation. Both of them are. That's just the way it goes. Let me ask you just one question about the curve here and then we can wrap it up. You're saying sort of in the aggregate that attrition will solve this problem, right? Drivers will graduate off the prop, off the platform, they'll find other work or they'll retire or do whatever they do and they'll go. And as that happens, robots will come online and you'll find some sort of happy medium. Right? Like that's, that's broadly the plan. We're not going to replace a lot of drivers. Drivers are going to graduate. Robots might replace them. Some other drivers might replace those. Who, who knows? That's the time, that's the long horizon. I and I can see how that might work out in the short term. What I hear very directly is, oh, the robot cars have come to my town now the demand is moving away from this platform. I'm waiting around for even more rides than I was before. Right. Or the dynamics have changed or the rates have changed and it's very individualized and it's hard to make an argument that says, well, you know, look, one day you're going to retire, right? You don't get to make the long Term argument to the driver themselves when they are faced with the threat of autonomy. How do you make the argument to the individual driver that this will be good for them?
- [79:02]
David Risher
Yeah, so two things, I mean, I think first, and we look at this data a lot. I would say that the stories you just told is not really supported by the data. In other words. So for example, we're actually, we are growing. Lyft is growing faster in markets where there are AVs, even when we're not participating in the AV faster than average. So our average growth rate is called 15%. We're growing faster than that in places like San Francisco and Phoenix and places like that. So I think there's sort of a false causality where people see a self driving car and they're like, oh, I didn't get a ride today and that must be that. But that's actually not really the case. In general, self driving cars actually expand the market. They actually oxygenate the market in new ways. Bring tourism in all kinds of things. So point two, however, that's just data which isn't necessarily going to convince anyone who's feeling this. Okay, so let's talk about the feeling side. We are being really, really very active in this. We have a whole driver roundtable thing and the whole topic of that where we bring drivers together. We just did it again last month. We're doing it different parts of the country is. Let's talk about what happens when AVs come to town and how you're going to be okay. How are we going to collectively make something that is okay for you? I mentioned this part very briefly before, but I'll come back to it. One of the things I am super excited about is this driver accomplishment letter that we now let driver drivers create for themselves. So once you've driven a certain number of rides on the platform, you can go in and thanks to AI, push a button that says, you know, David started driving. And this is actually true. I drive for Lyft and I think my first, my first drive was on April 13th or 14th of 2023. So anyway, he's been driving since April 2023. He's one of our top. Now this part, I'm making up 5% drivers. He's super reliable. Here are a couple of representative comments. I would recommend David for any service, service oriented business you might have and that credentialing because guess what? Drivers are in the service business. So I think one answer to your question is not just let's wait for attrition but let's help Drivers who want to use this as a sort of mobility thing. By the way, remember that thing I just talked about with tbr, the company we just acquired? Those drivers make quite a lot of money, Quite a lot of money. And so to the extent that you want to drive up in the ecosystem black and sort of higher level, that's another possibility too. And that ain't going away anytime ever. No robot takes, you know, the place of the, of the chauffeur that gets you coffee. So, so I think this is, you know, it might sound a little vague, but all I want to say is this is not something we're just saying, oh, too bad for them. We're actually saying the opposite, which is how can we help this transition happen in a way that feels orderly? Yes. How can we share the data of what's happening? Of course. But also how can we help drivers to transition? And by the way, maybe we can hire them in customer service. This is something we talk about all the time, is all of our driver customer service folks. How cool would it be if every one of them were ex drivers as examples? So I think there, I think there's some answers to this question.
- [81:57]
Nilay Patel
Yeah. Well, David, this has been a great conversation. I'm excited to have you back. As more and more of these things develop, what's next for Lyft? What should people be looking out for?
- [82:05]
David Risher
If you look maybe six months ago and then six months from now, six months ago we were only domestic. Now we were an international company. We acquired a company called Freenow in Europe, which is awesome. So now when you go to Europe actually and you open your Lyft app, you'll get a note saying, please download the free now app. There's our partner, partner over time that'll just be the Lyft app. So that'll be wonderful that we'll be able to operate in Europe kind of natively. If you're a United customer, you're soon, very soon going to be able to open up the Lyft app and get points from United Airlines. So put that in your cap. If you're a CEO soon you'll be able to use TBR as part of the overall Lyft ecosystem. So a couple of very obvious ways where you might say expanding out and expanding standing up right up in terms of sort of demographics and service level out in terms of geography in more and more markets, you're going to be able to take a self driving car on the Lyft platform. Today you often do it off platform or on somebody else's platform. So that's super exciting. All those things are kind of near term. I think if you look medium and long term, I'll come back to the beginning. Our purpose is to serve and connect, and this is almost more of a philosophical thing than a company thing. Every minute you're spending, you know, watching Netflix at home, every minute you're spending, you know, getting, you know, food delivery, it's awesome. Those are great experiences. But gosh, do I really want to be a helpful force in your life to also make sure you're connecting with people and getting out and about and experiencing the real world. And so as you look over, you know, two, three, five years, you should expect Lyft to become, I hope, you know, more and more helpful in that part of your life as well.
- [83:35]
Nilay Patel
Terrific. Well, I'm excited to get a ride in a Tensor car very soon.
- [83:39]
David Risher
Awesome.
- [83:39]
Nilay Patel
It just, it looks crazy. I just want to see one in person. I want to have you back. Yeah. Thank you so much, much, David, Neil.
- [83:45]
David Risher
It'S been a huge, huge pleasure. Thanks so for the time and the questions.
- [83:51]
Nilay Patel
I'd like to thank David for taking the time to join Decoder and thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode or really anything else at all, drop us a line. You can email us atdecoder the verge.com we really do read every email. Or you can hit me up directly on threads or Blue Sky. Also, if video's a thing, we're on YouTube now. You can watch full episodes at decoder pod on YouTube. We also have a TikTok and an Instagram. They're Decoder Pod as well and they're a lot of fun. If you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Decoder is a production of the Verge and part of the Vox Media Podcast network. Our producers are Kate Cox and Nick Statt. Our editor is Ursa Wright. Decoder music is by Brickmaster Cylinder. We'll see you next time.
- [84:30]
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