John Zimmer

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Hi everyone, this is Emily Chang, host of Bloomberg Studio 1.0. This month we speak to Lyft co-founder and president John Zimmer, a.k.a. the nice guy and the underdog in the race for global ride-hailing domination. Zimmer started sharing his car in college. And that casual carpooling business lit the spark that has become Lyft. He and his co-founder Logan Green now find themselves in one of the most competitive and sometimes dirty tech battles in history. But Uber's spectacular struggles have only kicked Lyft's business into overdrive. Lyft now says it has 50% market share in some cities. And working on the rest. Growing up John Zimmer, you grew up in Greenwich, Connecticut, which always sounds very quintessential. What kind of kid were you? Tell me about your upbringing.

I loved playing sports, uh, mostly soccer. I wanted to be a magician when I was a kid. I love making people happy and with surprise and delight. But my first real job was in a hotel. I worked in a Hyatt. And I was a phone operator. I convinced the general manager. He said, "We can't give a job to you because you're under 18." And I said, "Come on. I'm really interested. I'm really passionate about hospitality." And so I started— he put me far behind the front desk in this oversized suit that they had. And he had me answering the phone. And I saw, as a phone operator, I could impact someone's day in a meaningful way. So if someone had a light in their room that was broken, I would talk to engineering, have it fixed, follow up. And if I heard kids in the background, maybe send up milk and cookies to take someone's bad experience into a positive experience. And so I loved that, and actually ended up with me going to study hospitality at Cornell.

What did you learn about the customer? From that experience? Because often when you're getting that call, it's somebody who's not happy.

I learned that the most important thing is to put yourself in the shoes of the customer, to be genuinely empathetic, to understand where they're coming from. This person paid a lot of money to have this vacation, this relaxing time with their family. And so people, for the most part, are reasonable and rational. And so when you show and demonstrate that you're actually listening and do something about it, you can, you can make a meaningful difference.

At a certain point, you're majoring in hospitality at Cornell, and you are offering rides home to your friends.

Yeah, so I remember even freshman year in my college dorm, it was so ridiculous to me that there wasn't an easy way to find everyone else that was going either to New York or Connecticut to go home. And so I would obviously just talk to people and try to fill the seats.

For money?

Sometimes. Mostly we would just like, one person would drive sometimes, and one person would ride the other. Eventually, when we turned the first product Logan and I built into a business, we would charge for those seats. But it just seemed so obvious. Someone had to pay for gas, and, you know, 20 or more people were driving to the same location. It could be both— it could be more fun to meet new people, to talk to your friends, and cheaper for everyone.

Now, you didn't dive right in because you became an analyst at Lehman Brothers. You left 3 months before Lehman Brothers disappeared, essentially. Why did you leave?

I wanted to save some money so that I could make it easier to take a risk with no salary for many years, which is what we ended up doing. So I went to Manhattan, worked at Lehman Brothers in real estate, and had a, had a 2-year education in more than just the finance, actually, in company culture, the good and the bad. In company success, the good and the bad, and I saw it go from being very successful when I entered to disappearing. I think that was a really powerful lesson for me, to never be sure that something is a sure thing. Actually, when I was leaving, my best friend's mother who worked in the building said, "How could you leave a sure thing like Lehman to do a silly carpool startup?" And so that kind of was my message on the way out. And my reminder that nothing is a sure thing.

Zimride was founded in 2006.

Yep.

You were still at Lehman.

Yeah.

At the time. How did that start?

I was on Facebook one night, and a mutual friend was connecting Logan and I. Basically, Logan posted on a mutual friend's website that he was starting to build a website called Zimride after he took a trip to Zimbabwe and saw people sharing rides out of necessity. And I reached out to the mutual friend And Logan ended up coming out to New York, and we were both extremely passionate about this idea to build a new form of transportation that would change the way we lived in our cities.

Walk me through the early days, because this was before Uber, before this was a thing.

We started working in an office on University Avenue, actually, in Palo Alto that was not earthquake safe, so we got really cheap rent. They suggested we wear hard hats. We didn't do that. Although maybe we should have. And it was like a closet. But we were feeling so excited. There was 2 of us. We had hired our first engineer, so then it was 3. And we were building university carpooling software. And we ended up actually selling that to universities for a subscription, annual subscription. We eventually moved our office to an apartment, which we both lived in for a while. We called the apartfice. I slept on a couch for probably about 6 months. and then I upgraded to my, one of my friend's parents' house. And then in 2012, Logan and I looked at ourselves and said, "How are we doing? Our mission is to improve people's lives with the world's best transportation. We're only scratching the surface with this university carpooling program." We said, "What if we could get people using those cars that they only use 4% of the time to have an earning opportunity and to save others money versus car ownership?" And that was the impetus for what we first were thinking of was called Zimride Instant. And luckily, we changed to Lyft.

And by this point, Uber did exist.

Yep.

I'm curious what opportunity you saw that Uber wasn't going after. I mean, because you started off with a very different culture.

Yeah.

The pink mustache.

Yeah.

The fist bumps. Yeah. The, "We're all friends here." How did that come about?

Uber launches in about 2010, I believe. and their tagline was "Everyone's private driver." And they were doing limos and black cars. And this served 1% of the population for a luxury need. That wasn't interesting to us. We wanted to create a full alternative to car ownership. We wanted to create a service that empowered people to earn money and also empowered people to get around at scale. But back then, unless that car was yellow or black, people weren't getting into it because as a society we were, you know, it was normal to get into those color cars, but there wasn't a regulatory framework or societal acceptance around getting into someone's personal vehicle. So by saying, you know, Lyft is your friend with a car, by in the early days suggesting people sit up front, we had to change behavior. That was a behavior people were used to when you were in college, you're riding with your friend with a car.

I still remember you and Logan coming on the show in the early days and bringing the pink mustache and the pink mustache on the table. When you think about that, Is it like, oh my God, I can't believe I wore Birkenstocks to high school? Or is it, you know, is there like a soft spot there?

We embrace our past. I did never wear Birkenstocks, which I'm happy about. There was this kind of fun, rebellious tone to what we were doing, but doing it in a way that, you know, we always believed we're on the right side of history. And we were doing it with safety first. We actually established the regulatory framework internally before there were regulations. Those ended up being adopted by California, but we had more strict criminal— and still do— more strict criminal background checks and driving record checks than taxis or limos. We have, you know, a mentor program where we would meet— actually, in the early days, Logan and I would meet every single driver. And so we were taking public safety extremely seriously while at the same time having to change behavior and introduce something new. We said, let's have fun with it. The pink mustache was meant to be a launch tactic for a few weeks, again, to get people to smile, to set the tone, and it ended up lasting for, I think, a year and a half.

Talk to me about how your relationship with Logan has evolved and how you as leaders have divided responsibilities.

Yeah.

I understand you still carpool to work.

Yeah.

Together?

Yeah.

Every day. Why?

Well, Logan's my best friend, and actually the interesting thing, a lot of times entrepreneurs are friends and start working together. We didn't know each other when we started working together. And I think like any relationship, we had to work at it. We had to work on— our communication styles are very different. I'm an extrovert, he's an introvert. Logan likes to focus on, you know, the product and the technology. I like to focus on the hospitality and the humanity behind the business. And that's a perfect and needed complement to what we're trying to build. And so we live near each other. He was the best man in my wedding. And we have conflicts, but those are healthy and allow us to see different perspectives.

You're listening to my conversation with Lyft co-founder John Zimmer. Up next, we'll talk about a new business model Lyft is testing out, a subscription service for rideshares similar to a subscription cell phone plan. I'm Emily Chang. You're listening to Bloomberg Studio 1.0. Lyft is now valued at $11 billion, as we understand it. You've raised more than $4 billion. You've surpassed 500 million rides. Where are you in terms of growth?

Yeah, last year alone we did nearly 400 million rides. We grew 2.3x. We brought our market share over the last few years from low teens to now over a third of the market that Lyft has. We have markets over 50% market share for the first time in history. And so there is an incredible amount of momentum behind what we're doing at Lyft. And at the same time, I'd say we're just getting started. Lyft and Uber combined do just half a percent of miles traveled in the United States. I believe over the next, call it, 5 to 10 years, that this 0.5% is gonna grow significantly to the point that eventually the majority of miles traveled in the United States will be on a network like Lyft. And you'll be subscribing to a Lyft transportation plan similar to how you have a music program, maybe Spotify, or a minutes plan like you have on AT&T or Verizon.

The last year especially has been very transformational. For Lyft, and we have seen a shift in the balance of power between Lyft and Uber. I'm curious, in 2016, when maybe it felt like Uber would be the dominant ride-hailing company forever, what did that feel like, and how does it feel today?

Yeah. So I take it back, take it back maybe 3.5 years, 3.5, 4 years now. Uber raises $3 billion. We have what I believed was a lot of money, and is a lot of money, $100 million in the bank. So they had 30 times the amount of capital as us. And they're trying to destroy our business using that money. And that was, to be blunt, you know, it was scary. You know, someone attacking the business, incentivizing drivers not to drive on our platform. But the team had such drive and such passion, and we were smart about the tactics we used that were asymmetrical, and we rose up. That was, you know, the time we had maybe even single-digit market share. And we raised the capital we needed. We built an incredible team. And by kind of coming up as the underdog, but with the vision, I'd say the leaders on vision, we've been able to build a team that's not just doing it for, you know, a monetary reason. And not just doing it to win, although we intend to win, and that's something that drives us. We're very competitive. But we also have a team that's values-based. And mission-driven. And ultimately, that's why we will win.

I often look at it from a male and female perspective, and women-led companies get just 2% of overall funding. But often, you know, there are other biases that exist in the system as well.

Yeah, I think that, you know, for a while investors and others looked at us as, "Oh, you guys are nice." And we said, "Okay." We believe it's important to treat people well, not just because it's the right thing to do, because it's great for business. And now we're seeing that play out.

So being nice was a debt— was to your detriment?

I think in the early days people misunderstood it as a weakness. You know, we are aggressive, but in our own way. We are aggressively working to treat people right, aggressively working to win. We are highly competitive. As I mentioned, we are taking market share from our competitors, so that's working. I think what's happening in Silicon Valley and maybe more broadly is positive in that they're looking for other models of success and other factors, not like an— not just an outgoing form of overconfidence.

Do you think Silicon Valley has rewarded the wrong kind of confidence, the wrong kind of arrogance?

I would say more broadly, not just pointing at Silicon Valley, but across the country historically, yes, absolutely.

2017 was very transformational for Lyft, in part because of what happened at Uber. We saw the Delete Uber campaign, Susan Fowler's blog post that went viral. Ultimately, Travis Kalanick, the CEO, was ousted. How did that particular sequence of events impact your company?

Yeah, I mean, it definitely impacted us. But what— we've had so many moments as a company, both competitively and internally, that have been difficult over the 5 years of running Lyft. And the thing, the muscle that we've developed is to focus on our drivers and our passengers because we can't control the things that are happening outside of Lyft. And so that muscle that, again, took years to develop, and in early days maybe we were more distracted by the competition, paid off because we put our heads down, we said, "We need to continue to serve our drivers better than anyone else." serve our passengers better than anyone else. And let's, you know, let's move to offense. In the Delete Uber movement that you talked about, the ability to have enough drivers in a moment when demand increases is difficult to do market by market. And so our team did a fantastic job during those moments. But we had been working hard, heads down for a while.

Is there any way to quantify how many drivers and riders or how much business you gained? As a result of anti-Uber sentiment over the last year?

I'd say in one week alone, I think there was like a 20% rise in the business. So it was, it was real. We held on to that and we continued to take market share throughout the year.

As I understand it, the market share in the US is about 25% Lyft, 75% Uber. What do you think it is?

We, we have good reason to believe that it's about 33 or 34% Lyft. The goal is to get over 50%. And as I mentioned, we have markets now that do have over 50% market share. So we have a playbook. We know how to get there on the West Coast. If you just focus on the West Coast, you have closer to 40%, actually in some cases over 40% market share on the West Coast as a whole. And so we, we, we just need a little bit more time.

Now that Uber has new leadership, are you seeing any attrition? Are customers going back to Uber? That had chosen Lyft.

We're not seeing that.

Lyft says it's available in 95% of the United States, but there are many rural areas where you can't get a car even though Lyft is technically available. Explain that.

Yes, so, um, 95% availability means you open the app and we have an option for you. In some very rural areas, that might be a scheduled ride option. So if you open up the app and there's not a driver, you know, in under, uh, within a few minutes of you, we'll fall back to say, "Hey, do you want to schedule a ride?" whether it's 30, 45, or an hour from now.

You launched your first international city last year, Toronto. How is that going?

It's going well. Yeah, it was a big undertaking by the team to be ready for Toronto. New currency implications, and so we're happy with the launch and we'll continue to scale out in Canada.

Uber, on the other hand, internationally is everywhere. Hasn't always been easy, but they expanded to China, they expanded to India and Russia and Europe. Why has it taken you so long?

Focus. I mean, I think as the underdog, you know, focus is extremely important. Now we're on offense, and so, you know, we're starting to look at international opportunities. But we don't need to build a, you know, massive international business to have, you know, one of the largest companies in history. There's $2 trillion spent every year in the U.S. alone on car ownership. I believe that will fundamentally shift to transportation as a service. And so by focusing on not just the US, but personal transportation, not food and logistics and other things, by focusing on what I believe to be the largest market opportunity in the world right now, we can, we can build a fantastic business.

That was Lyft's John Zimmer. Up next, we'll discuss Lyft and Uber's ongoing war for talent and why the company is working on self-driving cars. I'm Emily Chang. You're listening to Bloomberg Studio 1.0.

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There's a war for talent, whether it's Uber or any other tech company, there's a war for talent. But there's also a war for drivers. And I'm curious, what your value proposition is to drivers when there is another company out there that is incredibly aggressive about recruiting?

We have historically and need to continue to treat drivers better than any other company. And that's not one feature, that's not one action. That's a collection of actions throughout the years. Examples being, you know, we launched with tips. It took our competitor many years to add that.

Do drivers earn more? Using Lyft?

There was actually a study from The Rideshare Guy that not only showed that Lyft drivers are more happy with Lyft than Uber drivers are with Uber, but one of the main reasons is that they say they earn more.

You're also pushing into driverless cars. When did you start researching autonomous cars, and how did you decide this is something that you wanted to pursue?

It was, it was several years ago that we decided this is, we knew this is where things were headed. And the most important thing to the customer is, you know, how, if I'm spending $9,000 a year owning and operating a vehicle, how could I spend $8,000 or $7,000 or $6,000 to get an even better service? That's what we're working towards. Two of the ways to bring down costs right now are through shared rides, which is what we call Lyft Line, and you get multiple people that are going the same way. And the other is autonomous. But again, we're at half a percent of miles traveled on Lyft and Uber, and so there's a lot of scaling and change to come.

There are two reasons not to build driverless cars. One, it's expensive, and two, it can alienate drivers who worry that their jobs are going to be replaced. So why pursue this?

We want to design our cities around people, not cars. So we need to replace car ownership. Whether or not it costs a lot to do the R&D, it is ultimately where the business is going and will ultimately provide a net positive benefit to society. On the driver side, I don't believe there'll be less earning opportunities for drivers on our platform as we continue to scale.

Why not?

Because if you have 0.5% of miles traveled on Lyft and Uber today and you scale to 80% of miles traveled on Lyft and Uber in the future and just 5% of those 80% miles are in human-driven cars, you have— what is that— 4%, which is 8 times the number of drivers we would need today.

Let's say, okay, 5 years from now.

Yeah.

10 years from now. Yeah. What is— what do the roads look like?

So I think, let's say 10+ years from now, I believe cities will start to divide where certain forms of transportation travel within a city. And so pedestrians, bikes, they should have a very safe separate area to get around in a city than, say, both autonomous and human-driven vehicles. That, I believe, is kind of how our cities will function in the future. It'll make our cities more walkable and enjoyable. It'll change real estate values. It'll— you'll get parking lots that you can either turn into parks or housing. And so I think the, the changes that we'll see 10 years from now in our cities will be the largest physical infrastructure changes we've ever witnessed in our life.

Now, when it comes to Lyft building its own driverless technology, you're clearly behind. What is it going to take to make that happen?

We are definitely honest with the team and with ourselves that, that we're coming from behind, but just as we did with the original business and taking market share from Uber, we're, we're making up ground every day. There's also not just the data advantage we have. But starting now, sometimes in certain industries, there's a second mover advantage. There's a lot of technologies that didn't exist 5 years ago when others were starting their autonomous efforts that exist today that allow us to kind of leapfrog.

We know that at times over the course of Lyft's lifecycle that you've considered selling the company. And I'm curious, when did you most seriously think about selling the company?

As we've said, Lyft, Lyft was never for sale. If someone comes in with an offer, we have a responsibility to our board to look at it.

Do you think Lyft will remain an independent business?

Our plan is to build an independent business that is eventually a public company.

You said you were on track to be profitable this year. Are you still on track to be profitable this year?

We are moving towards profitability, but, you know, given how much money we've raised, our focus is on growth. We would actually be doing a disservice to our investors if we weren't using the capital efficiently to build the largest long-term business.

So does that mean you won't be profitable this year?

Not the focus right now.

Uber has set a goal of going public by 2019. How does that compare with your goals?

I think the advantage is that we're not talking about our timing. And so if that's their timing, great. Helpful to know. But We have the flexibility given the capital we have, given that we haven't made any commitments both to, you know, publicly or to our investors, that we will do it at the right time for the business.

Is Lyft a public company someday?

I believe so.

What is your advice for the founders of tomorrow?

I think every company is a tech company. So, what technology does, it allows you to have a really big impact, and with that comes a really big responsibility. And what I'm so proud of and so happy about is that we're able to build and scale what can be one of the biggest businesses ever built with a positive impact on society. We're out to prove that, that you can be, you can take care of people, you can make our cities better places to live in, and you can build a big business. And I think future entrepreneurs will continue to do that.

All right. John Zimmer, co-founder of Lyft and president, thank you so much for joining us today. Bloomberg Studio 1.0 is produced and edited by Kevin Hines. Our executive producer is Candy Cheng. Our managing editor is Danielle Culbertson. I'm Emily Chang. This This is Bloomberg.

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