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- [00:00]
A
I am sitting down with the CEO of Lyft today, David Risher. We get into why the Stock is down 32% this year even after its best first quarter on record. What autonomous driving will do to Lyft, its business mode and its competitors like Uber. Whether David would entertain offers for an acquisition from Google or Tesla, and much more. This is a fantastic conversation. I learned a ton in this from David. I think you will too. David, I'm so glad we're here today. The first thing I have to ask you, what's going on with Lyft stock? It's down about 32% this year. Uber's down about 10%. So something is mispriced there because Lyft is also coming off its best first quarter ever, I believe.
- [00:42]
B
Yeah, yeah. So let's start with the, the sort of facts and then kind of maybe what's happening. So as you say, best first quarter ever, you know, we're growing at about 15, actually I think about 18% this quarter. Year on year, our profitability has never been higher. Generated about $1.12 billion in cash over the last 12 months. So all that's great. And the best customer stats we've ever had. Okay, so then the question is, well, what else is going on? And the answer is there is an enormous transition in our industry to the self driving car world. It's not here yet, it's in the future. But when markets, and I'm not an investor, but I kind of know this, just an observer, when markets see uncertainty, they get super conservative. And I think there's a conservative view that says go with a big guy. I'm not sure that's the right move, but anyway, and frankly, this is where money gets made, is people realizing that maybe things are more complicated than that.
- [01:28]
A
So you think that something is mispriced as far as people are underestimating the upside with Lyft embracing the autonomous vehicle transition?
- [01:38]
B
That's right.
- [01:39]
A
Okay. Something that's interesting too is that the average Wall street price Target is about $19 a share and lifts about $13. Why do you think the market, let's say the broader market has not caught up to Wall Street's estimates?
- [01:53]
B
I think there are two things, and again, I'm not an investor, so my job is to run the company and we focus on customer obsession driving our profitable growth. And that's what's been happening over the last three years. When I took the company on, we were losing share, we were losing money, we were consuming cash. Now we're Gaining share. We actually gained share quarter on quarter versus the other guy, which is nice. Still a huge market ahead of us. But anyway, that's a nice little sign. And obviously we're making money and generating cash. Okay, so what happens then? Then again you have to sort of look farther out and you have to say, well, in a world of sort of platform transition, right, self driving cars coming on and kind of shuffling the deck a little bit, who's better positioned? And I think the market is just kind of getting it wrong.
- [02:34]
A
What do you think Lyft is doing that makes you better positioned than Uber, which does have a much bigger market share?
- [02:41]
B
Yeah, love how you're getting in right to the center of the questions. It's fantastic. I mean, look, let's talk about self driving cars for a second because it's so on people's minds, it's going to require me to zoom out a little and then I can answer the question. I think for the industry it's going to be a huge tailwind. Self driving cars are, they are a new product, a novel product that a lot of people once they take, really like they find them safe, they find reliable. Okay, so that's on the demand side, let's say more demand because it's a new product. On the cost side, you know, a big cost of operating a rideshare network, for example, is insurance. Insurance will be lower with self driving cars because self driving cars on average will be safer than human drivers. Okay, so you have a product that people like and you've got a cost that is sort of superior, let's say better cost position than maybe what's currently available in the marketplace. So what has to happen for this to be great for the industry? And then for Lyft, we have to bring them onto our platform, right? We gotta give customers a choice, right? If you want a self driving car, you should be able to get one. If you want a human driven car, help with your groceries, help with your luggage, maybe you get picked up a little faster because they've got a lot more humans than there are self driving cars, you know, then you know, we're going to be your best, your best, your best bet. And then I think what differentiates? And by the way, we're going to do a billion rides this year. So we have a lot of demand on the platform, which is really important for self driving cars because people are putting billions of dollars into R and D. So someone's got to pay the bills for that. And that's the demand side. Okay, last thing I'll say behind the scenes with self driving cars, there is an enormous and super geeky and niche world called fleet management. Fleet management is all about keeping cars maintained, charged up, cleaned. We were just talking about cleaning lost and found items out of the car, you know, ready to go. And we have an enormous amount of expertise in this. We've been managing a fleet of cars, about 10 to 15,000 cars a year for the past decade. It's through our Flex Drive subsidiary and I can go into details on this. But that level of fleet management and excellence is really gonna make the difference in self driving cars. Cause I mean, it's just like an airplane, like if it's sitting there idle and being cleaned, it's not making money. If it's on the road and ready to go, it's making money. And we're really good at that.
- [04:50]
A
So just to clarify, when we talk about idle self driving cars, let's say it's midnight and there's no one asking for rides. You have to figure out what these thousands of autonomous vehicles are doing with themselves.
- [05:04]
B
So it's two things. The first is you gotta have the right number of cars. Let's just start with that because to your point, you know, at five o' clock in the afternoon there's going to be huge demand. At nine o' clock in the morning, there's going to be huge demand. After, in an NFL game, going to be huge demand. Okay, but if you have so many cars to satisfy that demand, you're losing money because they're sitting idle. I mean, then you've got thousands of cars just sitting around at 11 o' clock at night, 12 o' clock at night, 1 o'. Clock. Okay? So first you have the right number of cars. That's kind of where the hybrid network comes in, I think, because you can have a sort of base layer of autonomous cars and then drivers to kind of take the peaks off of the thing. So that's the thing. Okay, and then you're right. Then the question is, what's going on with that car at 12 o'? Clock? Is it getting hailed to go pick someone up at a bar? Maybe. But if it's not, is it being cleaned in the most cost effective, efficient way possible? Is it being charged in the most cost effective, efficient way possible? Is it in the right part of the city so that as demand starts to pick up, as you get to the morning hours, it's going to have small deadhead miles? These are all of. And again, I know this is sort of technical stuff, but it's, you know, from the surface, I think rideshare just looks like an app. Oh, this isn't that hard. I vibe code this sucker, you know what I mean? But from the, below the surface, and again, I think this is in part what investors are not seeing. There's a huge infrastructure and kind of expertise layer that companies like ours, I would say, are best in class.
- [06:22]
A
Would it be fair to say that you don't think Uber has the infrastructure for this?
- [06:28]
B
I mean, that's a fact, right? So this just happens to be, you know, strategies play out over years and years and years, years ago, before my time. I've been in the job three years now, but before my time. The founders of the company, John and Logan, said, you know what, let's make sure that even a driver that doesn't have a car at their disposal can drive on the Lyft platform. They acquired a company called FlexDrive. FlexDrive owns and manages cars. We actually have a partnership with Hertz as well. And so a driver can literally walk in off the street and sort of go through an application and a couple hours later be with a car which they can use for their personal or their rideshare. So we've got about 15,000 cars on the platform. Because of that decision made years ago, we have built up, as I say, year after year of expertise of keeping these cars maintained and cleaned and all the rest. And by maintained, I don't necessarily mean we're changing all the tires ourselves, but what I do know is, or what I do mean is we know exactly how long it's going to take. We know when the tires should get changed, we know how much it's going to cost, we know whether the car should be out of the repair lot already. And so that amount of expertise is what we've built up over the years. The other guys made a different decision. They've never gone down that path. So they'll talk about building it up or they'll talk about partnering with others, but we do it ourselves. And the nice thing about, about that is quality control, availability, because our cars are 90% available, which is industry leading and low cost.
- [07:50]
A
So let me ask you about specifically with Waymo and Tesla. The fleet management stuff is very pertinent to Waymo, as far as I understand, and please correct me if I'm wrong, Waymos need fleet managers. But Tesla, I think is less dependent on fleet managers because they own the cars, the softwares, the app. Do you see that as a risk to what you're doing with Lyft no, no.
- [08:15]
B
And I would actually disagree. So I'm a Tesla owner myself, Tesla Model 3. It's a great car. I use it all the time. Okay. If I. Let's say the world comes true, where I could put my car on a platform. Now, quick parentheses. Whether or not the technology is ready is a very active debate. Obviously Tesla's made certain choices, other people have made different choices. We can go into that, but let's, for the purpose of the conversation, say that that's possible. Okay. You still have to do everything from on the demand side, price it, you know, make sure it's, you know, positioned in the right place, all these different things. But then on the maintenance side, someone's got to keep this car clean, someone's got to keep this car charged. Now maybe in the distant, distant future, I might be willing to do that myself, but I think, you know, for most people, they're like, I don't really want to get up at 8 o' clock in the morning and have my car have. Bio waste is sort of the technical term, not going to get more graph, but you know, from some guy who, who, who took it home from the bar last night. So, no, I think the fleet management layer, that infrastructure layer is going to matter no matter what cars are on the platform.
- [09:18]
A
So I think one misunderstanding from let's say the market or just general customers is that robotaxis or autonomous vehicles are coming for Lyft and Uber, both of you guys.
- [09:29]
B
Yeah.
- [09:30]
A
But it sounds like what you're saying, this is actually a boost to your moat, is that right?
- [09:36]
B
So I absolutely think we can talk about the mode in a second, but I absolutely think it's a boost for the industry. And let's again, look at us for a second so we can look at some of the capabilities we've built up over the years. So first of all, we have 50 million people who already have our app who use this every year. So that's a big thing. It's hard to go from 0 people to 50 million people. Second of all, we have all of the infrastructure required to onboard you and make sure that we know who you are, you're a verified rider, and all these different things, which, if you're going to put riders in cars, they're very expensive assets. You kind of want to have, you know, kind of dialed it. And then there's all of the customer service stuff and all the things you have to do to operate a rideshare service 24 by 7. I'll give you a couple of examples here. In New York City, addresses are funny. It might say, you know, 370 Broadway, but actually the entrance is around the corner in suburbs. It might, the address might be on the other side of a gate which has a gate code. We have just millions and millions of data points about pickup and drop off and so on and so forth. So all of these things you have to kind of create. And then as I say, there's all of the. Oh, and then on the driver side, today we have to onboard we have 1.5 million drivers on the platform, which is an incredible asset. It means that these are people who are, you know, already know how to drive with Lyft. And as I say, I think that hybrid network of AVs plus drivers driving cars is the dominant financial model because otherwise someone's got to own a lot of cars. They're going to be idle. So you put all these things together and of course you can come up with an alternate universe scenario where some new person can do all this stuff from scratch and spend billions of dollars and get the brand out there and all the. Or you can say, how about a partnership model? And that's really our strategy is to partner with a B tech providers.
- [11:17]
A
Today's episode is sponsored by Public and they just launched a new product called Agents. And it's honestly one of the most compelling uses of AI in investing I've ever seen. The idea is simple. A lot of investing is repetitive. Monitoring markets, moving cash, managing risk, rebalancing positions. It's the kind of stuff investors constantly have to stay on top of. Public's new Agents product lets you automate those workflows using plain English. So instead of manually watching charts all day, you can create an agent by typing something like, if the Vix hits 25, buy a weekly put option on Spy. Or if my cash balance goes above 20,000, move the excess into my direct index Publix. AI then turns that into an automated workflow that you can customize, review and activate directly in your portfolio. Public is essentially building what they call an agentic brokerage, a platform where AI can help automate the operational side of investing. Based on rules and strategies you define yourself. If you want to start automating ideas inside your portfolio, visit public.com openingbell that's public.com openingbell now let's get back to the show. My understanding of the last few years, you've made several acquisitions, you have a bunch of partnerships. I think you have a partnership with, you know, Sephora, right? Like retail companies that you can actually incentivize in the right way to partner with you and users can get those benefits as well.
- [12:42]
B
That's right.
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A
Is that the main growth strategy right now, these partnerships and figuring out other, let's say, brands with distribution?
- [12:51]
B
Right. So let's talk about this. So let's, let's assume self driving cars are coming. What else do you have to do to be successful? Sort of regardless. And part of the answer is you've got to have a customer base that has a certain amount of loyalty. Right. So we have been for year after year after year after year partnering with some of the world's great brands. You mentioned Sephora. That was a very specific type of partnership. We've got a much bigger one with Chase for their Sapphire reserve product which allows you to get money every month to spend on.
- [13:18]
A
I use that.
- [13:19]
B
You do. Fantastic. Yeah. You're not alone. Actually, it's a very, very popular partnership. We have a newer one with United Airlines which allows you to earn mileage plus miles on Lyft. You can also, as of just a couple of weeks ago, spend them on Lyft as well. So you might have a couple hundred thousand or a couple thousand that you don't know how to get rid of. You can use it to get free rides on Lyft and with Hilton and with Alaska and with Built and annette. Okay. And 27% of our rides now approximately are tagged to a partner. So this, in other words, there's some sort of partner benefit that's, that's happening when you get in the car. So that speaks to your question of how do you continue to grow? We, as I mentioned, we do a billion rides. That's awesome compared to zero. But guess what? People do 160 billion rides just in the United States alone in their private car. So 1 billion, 160 billion. That's why sometimes the whole us versus the other guys thing to me feels a little bit, you know, you're kind of focused on a little, the small thing, the big thing is how do you sort of get more and more of those 160 billion rides on the platform? And part of it is, hey, United mileage plus person, come take a lift. Hey, you know, Hilton person, last thing I'll say on this is, and the average new car right now, do you know how much the average new car costs in New York? Maybe it's not as obvious because people don't own cars as much. Average new cars in the United States is $50,000. So that's $800 a month on average. Plus you've got 100 bucks in gas, couple hundred bucks in insurance, maybe 100 bucks in maintenance and other stuff. 11, 1200 bucks a month. Or you can take $20 Lyft rides all day long. So I think that's another part of the growth strategy, is just helping people understand it is a stinking great deal to get in a car we operate and it's only going to get better as part benefits improve and all these other things.
- [14:56]
A
So to push back on that slightly, when you take a lift or an Uber in New York City, at least among my friends, they say, oh, that's pretty posh of you or bougie of you to choose to take a ride share app instead of taking the subway, walking, whatever it might be.
- [15:10]
B
Yeah.
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A
And also no one here owns cars.
- [15:12]
B
Yeah.
- [15:12]
A
So there's an interesting dynamic in New York City specifically. But the narrative, I would argue is that Lyft and Uber both is what you do when you have a lot of disposable income. But you're saying that it's actually the more affordable path. Is that right?
- [15:28]
B
Look, I'll say a couple of things, that first of all, New York is our biggest market, so there are a lot of people who take lifts every single day, you know, every single day now. And that's for things like, you know, commuting, you know, where maybe you want to be able to, you know, fully focus on, you know, an email you want to write and you don't want to be jostled around by home, bunch of different people. It's also super popular for getting to the airport. Of course, everyone kind of knows that because sometimes the transportation ticket to the airport is a little bit complex. Even party time, you know, Friday night. And there's actually a funny phrase, maybe you've heard it of, you know, kind of subway out, lift back type of thing. So people, you know, they'll take the subway out because, yeah, I'll save a couple bucks that way. Maybe I'll save 10, 15 bucks that way. But late at night, you know, maybe I've had something to drink or maybe I just want a different experience. Maybe I'll do it with some friends, come back. So we fit in people's lifestyle and in a really foundational way, a lot of, you know, 24 by 7, 365 days a year. Here's the last thing I'll say on that. We have focused from the beginning on trying to keep Lyft as affordable as possible. One of the real innovations in the last couple of years has been a product called Wait and Save. And frankly, it's one of the world's great deals here in New York because you don't end up having to wait very long and you get a good discount. So we try to give you different options, but broadly speaking, we're part of a lot of people's lives and I don't see that going the opposite direction anytime soon.
- [16:43]
A
I think that's super fair. So if you were to suddenly wake up tomorrow, Lyft was a private company. No more quarterly reporting.
- [16:53]
B
It's a dream.
- [16:54]
A
It would be. Well, you have a lot less reporters down your throat probably. But what would you do strategically that you could not do as a public company?
- [17:03]
B
That's a great question and super thoughtful. The first thing I actually want to do is I say it's a dream. It's a joke. Of course, the quarterly earnings thing, I actually want to talk about that for a second. It does require of a company a certain amount of discipline. And I actually do respect that. I really do. I think that their companies can really find themselves getting off track. And so a little bit of that oversight, I think is healthy now. At the same time, there is this sort of quarterly cadence that can kind of feel like it restricts you. I've said from the beginning, customer obsession is what's going to drive our profitable growth. And so most decisions we're able to make quarter by quarter and continue to grow the top line, grow our profitability, grow our cash flow generation, and do that in a very customer obsessed way that has nothing to do with being a public or private company. I think the big answer to your question probably is every company right now. And again, to go back to the subject looking at the AV landscape, would like to figure out ways to spend money in a way that ensures their future. And that is somewhat harder to do under the scrutiny of the public eye. But I truthfully, I think right now I don't think we'd make any dramatically different decisions where I think I like our strategy as it is.
- [18:08]
A
That's fair. I know the scrutiny specifically for autonomous vehicles is extremely high and I imagine it's higher for public companies because even, you know, Tesla Waymo is part of Google, you guys Uber. Anyone that does anything wrong with autonomous vehicles will get in a bunch of trouble right now, even if it's one in a million incidents. So here's a question for you, and I know this is a public company talk here. If Tesla or Google were to approach you as the CEO of Lyft and say, hey, we can use A percentage of our cash to acquire the company and integrate you with our autonomous system. How would you approach that conversation?
- [18:56]
B
So I mean, I get, look, as a CEO of a public company, the first thing I always have to say is, look, if anyone wants to, you know, buy shares in our company, we're, you know, available, you know, every single day the market is open. Now having said that, it's not our strategy to sort of try to, you know, put ourselves in that position. And looking at it from the other perspective, I don't know that it would be in other people's interest right now to do that either. And here's why. Again, we're so early in the self driving world. So, so, so very early. And you have these companies that have spent literally billions of dollars developing the hardware, the software, the capabilities around them. Their high order bet, their first principle has to be how can I figure out a way to commercialize that? Right? How can I start making money back on my, on my investment so that my investors understand that this is a smart decision? The value maximizing mode at that point is to be, you know, you might say polyamorous, play the field a little bit because you don't really want to lock yourself into a single distribution mode. So for example, if someone hooks up with us, you know, they may find it difficult to sell their product to our competitor who might say, I don't really want to support you guys at this point. So I don't think. And the same is true in reverse, we might have a perspective, we do have a perspective on who's better positioned than others. We have partnerships, for example, with the two worldwide leaders. There is no question right now that Waymo is the number one leader in self driving technology. There is no question that Baidu out of China is number two. And we have partnerships with both now. That's great because it allows us to sort of spread our risk a little bit because maybe one of them doesn't end up working out in the long term. Or maybe it works, but maybe it's very expensive. Or maybe it's slow and the other one accelerates. Or maybe there's a third guy that we haven't even thought of yet. Maybe it's Nvidia who comes with an incredible new set of capabilities that they sell to 10 different OEMs. That's great for us frankly to have multiple. So I think that sort of interlocking at this point probably for. I don't think either company would think it's really in their best interest at this point.
- [20:53]
A
So it sounds like doubling down on partnerships instead of, let's say, outright acquisitions or ownership.
- [20:59]
B
I think it's a better strategy and I think it's also one where we happen to be well positioned. If you look at some of those partnerships we were mentioning before, the doordashes, the Chases, the Hiltons, the Alaska Airlines, many of these are partnerships that have gone on for year after year, or in the case of doordash, just for about a year, but we just expanded to Canada. Why do I say this? Because maybe it sounds like a different thing. No. Either you're a partnering company or you're kind of a go it alone company. I don't find companies sort of, you know, walk down the middle of that road. They either know how to do it well and they believe in it and they think that the whole is greater than the sum of the parts in your partner. And if you want to go far, you go together or you think, now I'm just going to do everything myself. I tend to think that ecosystem approaches work better and partnership approaches work better because it allows you to really focus us on rideshare, doordash, on food delivery, for example, as opposed to sort of being okay at both. Other people have a different strategy, but I think it comes back to self driving cars as well. I think we do a really good job in our space. I think other companies do a really good job in their space and I think those partnerships will tend to be accretive to both.
- [21:57]
A
I like that. And the doordash analogy is Uber. And Uber eats, right?
- [22:04]
B
You said it, not me.
- [22:05]
A
Okay, fair enough. Elon Musk has talked about how AI autonomous vehicles will eventually take everyone's jobs, including Lyft Uber drivers. Do you see a world where there are no more human Lyft drivers?
- [22:21]
B
No. And there's, and there's, there's several reasons for that, actually. I think the first reason, which is sort of a nice place to start because it turns out to be quite important to society, is the economics don't really work of only self driving cars for the reason we said before. It's, it would be very expensive to have. Look, we have quite an interesting business model. You know, here we are giving a billion rides over the course of a year, but we own very, very few cars. I mentioned 10 to 15,000 1.5 million drivers. We own 10,000, 15,000 cars. So that means a lot of drivers are responsible for their own maintenance, their own gas and all the rest. And we compensate for them for that. That's the, that's the sort of deal. And by the way, they don't have to tell us when they want to go on vacation. They don't have to tell us when they're logging on or logging off. It's really quite a stable structural system that it's really important for a lot of drivers, so it's in their best interest to keep doing it. But it's also really important for us because guess what? Again, there won't be enough self driving cars, you know, to meet people. So number one, number two, from a human experience perspective, there are people who don't necessarily trust robots. There are people who want help with their luggage. There are even some people, believe it or not, who actually want to say, hey driver, how's your day going? And vice versa. They want to have a human interaction. They might not even know that. But sometimes at the end of the ride they say, this is the best ride I ever had and I hope I can get you again. I want to use you as my favorite. So there's that. Then there's some policy things. Self driving cars will come state by state, country by country. There will probably be some cities that say, you know what, we just don't want them or we don't want them for five or 10 years, whatever it is. And interestingly enough, and this is, I don't know how deep you want to go on this, I was just in China a couple of months ago, not even six weeks ago, looking at the self driving technology there. Interestingly enough, the Chinese government is being very, very deliberate about the number of licenses they give out to companies for self driving cars. As much as they want the technology to be prevalent, they don't want hundreds of thousands, millions of drivers all of a sudden feeling threatened or out of a job. And I think to a certain extent different countries will approach that in different ways. They'll say, you know what, we also want to, we've seen what happens when technology rips through an industry and this one maybe we just don't necessarily want that to happen. So I think there are a whole bunch of different things that are going to make this a hybrid network for a long, long time to come.
- [24:35]
A
I think that would be encouraging to hear for most people frankly, because the social fabric question of autonomous work, autonomous vehicles, AI, I think that's probably the biggest question we're facing as a country, as a society. And even the political ramifications I think are pretty severe. If you tell industries of people that their jobs are at risk because of AI, most people do not want to Hear that? Including drivers.
- [25:01]
B
Yeah.
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A
Do you see?
- [25:03]
B
And I'll say, if you don't mind my interrupting, I'll say one other thing. I do think private. So this is for sure a time where government has a role to play. Whether or not it will lean into it or not, whether or not it's capable or not, these are separate questions. But it has a role to play for sure. But I would say private industry does as well. And I'll give you an example from our perspective. So you've mentioned Nashville, where we have a partnership with Waymo in Nashville. We are just in the process of building out an 80,000 square foot maintenance center, a depot to keep cars charged and so forth. It used to be a USPS facility. It's been decommissioned now we're recommissioning it. Okay. The majority of the workers there are ex Lyft drivers. We asked for, you know, anyone who wants to apply can, but we will give preference to people who have driven on the Lyft platform. And right now, including the site manager is a Lyft driver. He's a 10 year Lyft veteran on the platform. So I would also say, you know, just sort of, from an industry perspective, don't just sort of watch this happen. Play your own role, right. And make sure that you're trying to. And again, none of us just like government doesn't have all the power, we don't have all the power too. Sometimes technology overtakes even us. But I think we have a role to play that's important as well.
- [26:09]
A
I want to ask you about your day to day as a CEO, but also specifically, you are still driving Lyft cars yourself as the CEO. Talk to me about that.
- [26:21]
B
So I do it every six weeks. I actually took my first Lyft drive ever about four days before I started. So I started on April 17, 2023. And I think it was April 14. April 13, I took my first ride as a driver. And right then and there, I didn't tell anyone I was doing it, just got in the car. I still remember the first guy I ever picked up. It's a funny story. About a year later, he comes up to me, I'm sitting in a Starbucks and he's like, you're David? And I'm like, yeah. He's like, yeah, you were my Lyft driver. And I was so drunk and I was like, yeah, you were. I remember it was like 11 o' clock in the morning, he was still hungover. But anyway, ever since then I just really realized that I can't talk about customer session over and over again and not feel the customer experience both as a driver, because drivers are customers as well. And then also hearing what riders care about is just. There's literally no substitute, no data in the world will substitute for, you know, one or two driver anecdotes that'll really help me visualize something.
- [27:14]
A
So when you're driving customers around, are you essentially interviewing them, like response surveys?
- [27:20]
B
There's a rage, there's a ridge. I'm usually pretty quiet at the beginning. I'll sort of try to check the vibe a little bit. And you feel like talking or you don't? Some people, they go right into it, how's your day? And you drive for the other guys and so forth. But I do usually about two or three minutes in, assuming there's a lull in the conversation or they open, I'll say something like, are you a rideshare regular? And if you are, why did you choose Lyft versus the other guys today? And honestly, that's usually enough for people to just start getting into it. They'll say, well, you know, I use, you know, Lyft every single day because it's actually how I get to work, because I don't have a car or I'll use it on, you know, days where, you know, I know I need to be somewhere and I know that parking is going to be a mess or traffic's going to be really hard, and I want to be, you know, doing work in the back of the car or, you know, I'm a line cook and I know that if I'm not there, I sometimes use public transportation, but if I'm not there by 10 o', clock, I'm going to lose my job. And you guys are super reliable in that way. So anyway, you start to get a sense of why people are choosing you, and then the conversation goes from there.
- [28:19]
A
I think that's amazing. And more CEOs should be taking the day to day work on, I believe. Can you share a strategic call that you've made in your years as Lyft CEO that you would undo if you could?
- [28:34]
B
Whoa, all right. That came out of nowhere, my friend. Okay, hold on. So a Lyft call that I would undo, right? A strategic call, it's just harder and harder. Let me think about that one for a second. Okay, here's a call that I would undo. I don't think it's strategic, honestly, but it's not, because I'm not trying to. I'm trying to Hide something. I just. I just can't think of that at this very second. What I can tell you is one of the early things that I did is so, okay, I take this job on, I make some really big decisions. And some of them were quite uncomfortable, but they were necessary. Our pricing was too high, our driver pay was too low. We were losing share. So I had to find ways to lower prices and raise driver fares and driver pay. And as a result, we had to let go about 26% of the company. It's a $300 million decision, is a very significant personnel decision. It's quite, quite hard on the company, but it was absolutely necessary for us to be customer obsessed. So I was feeling like, okay, this is my time to make kind of big decisions. And so I greenlit an idea that was actually already in development and almost done. In fact, it was done, really about a feature that would allow us to kind of automatically time your arrival at the airport, such that by the time you got out to the curb, your car would be waiting for you. And it was not a gigantic idea, but it seemed like a really, really cool idea. And I talked about it. I promoted it. We launched in a couple of cities, and it really wasn't until a couple of weeks later that I realized, you know what? This doesn't work. It doesn't work. It's not reliable enough. And it sounds good, and it grabs some headlines and so forth, but it's just dead wrong. And so we undid them. We just stopped it. It's still live in a couple of airports in a small way, but we just stopped it. Again, strategic, I don't know. But what I can tell you is my team appreciated the fact that I was not thrilled that we had launched something that wasn't really ready. It really gave me some insight into where the company was in terms of understanding whether its futures were good to go and maybe even gave me a little credibility inside that I was able to undo a decision that I had made. But certainly I would probably have tried not to launch that one because it just didn't work.
- [30:46]
A
That's great anecdote. If I take us back to the stock price real quick, down about 32% this year. What is something that you're working on every day that you think if the market understood how good it is or how exciting it is, you think the stock would reflect that?
- [31:04]
B
Yeah. So, I mean, the first thing I have to say is, you know, it's down from a high, but it's up from when I started significantly so, and I'm. But, but this cannot be what I focus on every single day because otherwise becomes very distracting. Okay, but now to the core of your question. I think of this as a company where we are performing as we are transforming. We are performing day by day for our riders, day by day for our drivers. We now have a 38 point advantage for drivers who drive on both apps. People who say they prefer driving for us. That is huge. We gain share in Q1. That is huge. Huge. We just, as you pointed out, acquired companies overseas that we're integrating onto our platform, meaning that our cost position is going to get even better because we take our fixed cost, spread it over. That is huge. We have driven, you know, driver cancellations down from 15% to four and a half percent. That is huge. And we're generating free cash and all those things. Okay, that's the performing side. And there aren't that many companies that are at the, you know, $20 billion in bookings level. Right. Five billion a quarter that are continuing to grow 15 to 20% and improving their margins and generating cash and so forth. Just not that many companies. So that's the one thing I think that the street should look at and maybe not spend as much energy on what might have happened six or seven years ago as sort of a kind of old ancient history. Then on the transforming side, as I've said, I think I've made the argument, and I think it's a solid one, that autonomous is going to be good for rideshare and that Lyft is very, very well positioned, I would argue the best position to take advantage of that. And I think if analysts and investors look dispassionately at both of those and say again, let's sort of look at the facts as opposed to maybe pre perceptions or from a million years ago or whatever, I think they'd come to a different conclusion.
- [32:44]
A
If the market is mispricing the stock, or let's say if the stock is mispriced in the market right now. I know you personally have made purchases of the stock in recent quarters. You own the stock as CEO. I do. Is there a way to maybe without disclosing any critical information, you anticipate continuing to be a net buyer of the stock as well as your team in your executive board.
- [33:13]
B
As you say, there's no way I can really say anything on that publicly. I do like to buy things on sale. I think that's a good move. I think my more general comment would be this. And again, I am not an investor to be clear, my investment strategy. Here's been my investment strategy. My investment strategy was join Microsoft in the early 90s and a company I really believed in and thought I might be able to add some value to. And that was very good things to do. And then, frankly, go long on Microsoft in the 90s as Windows took off. I then was the 37th employee at Amazon very, very early in that company's history, helped them build the music store, the video store, the toy store, and tool store. I went very heavy in that again, because I got to know the company really well. My basic view is I can't know a lot about everything, but I can know something about the company I'm working for. And now, as you say, not only am I getting, you know, paid in stock, but also I'm a buyer myself. This, I think, is where people can do quite well, is they can see opportunities that other people don't. In this case, as I say, I think there's some uncertainty in the market around rideshare because of autonomous. And I think when that happens, people get conservative and they tend to place their bets on the sort of safe and you might even say lazy, lazy bet. I think the contrarian move right now, which is, you know, bet on the guy that maybe is even better positioned to take advantage of this is the stronger move. And I'll continue to do that both financially and in any way that makes sense for me. But also personally, I mean, I jump out of bed every morning and put my most important asset to work, which is my time.
- [34:37]
A
Wow, I love that. Is there something that you believed before you started working at Lyft about the rideshare or even autonomous industry, that since working there, you've changed your mind on
- [34:52]
B
about the industry? Yes, but it might not be exactly what you're thinking or. I don't know. I think we play a really important role in society and the reason I start here, so something that maybe people don't know about me is after I worked at Amazon, Microsoft for many years, Amazon for many years, I ran a nonprofit, which is very unusual. I know people don't typically. It's a sort of curious career move. But anyway, I started a nonprofit. It's about getting kids reading using technology. We've got 22 million kids reading on the platform. It's called World Reader. It's an awesome org. It continues to this day. Now, that maybe tells you. And I did that for 12 years, I ran that company. Okay. So that probably tells you something about the way I make decisions, which is it's not entirely based on, you know, value maximizing over the short term. It's about value maximizing over multiple dimensions, both societal and financial. Over some long. Long term. I believe more than ever that we are best when we are physically out and together and not just in virtual worlds. And I know this is. It's not exactly a hot take, but I think it's. There's a little bit of pushback. You were mentioning a pushback against Deb. I think there's legitimate pushback against an increasingly virtualized world where we're all kind of at home and sort of, you know, talking with agents or talking to people that way. So from a societal perspective, I'm a huge believer that rideshare is a net good. And I believe that 10 times more now even than when I started.
- [36:12]
A
That is something most people would not think of. I must say. When the time comes for you to stop being the CEO of Lyft, either retire, go back to the nonprofit books company, whatever it might be. Where do you hope you leave Lyft?
- [36:30]
B
Well, maybe I'll answer small and big. So small is, you know, it has to be the most AV ready, AV embraced all that. We've talked about autonomous vehicles over and over again. Again. Think about these sorts of shifts. Think about the shift from. From physical film to digital film or digital photography. You know, there were huge losers and huge winners in that. Now think about maybe DVD distribution to streaming, to content. And you can see, as soon as I say it, Netflix did such a good job on that. So my model on that is Netflix. I want to be that company that figures that as the platform moves around, how we can be, you know, 10 times stronger, you know, coming out of it than we are going into it. And we're already a strong company. That's the small thing. The big thing is I want to uplevel this whole industry. I want to upload again. People are doing a billion rides on this just on Lyft. I want it to be 10 billion, 20 billion, 30 billion, because I think it's a better way to live your life. You're out about, you're texting in the backseat, you're dozing off, you're being with friends, you're going to parties, whatever it is. And so I think if I do those two things together, I've done a pretty good job.
- [37:30]
A
That would be an amazing legacy. David, thank you so much for taking the time today. And come back anytime.
- [37:36]
B
I appreciate it. Thank you so much for the great questions.