Lyft co-founder John Zimmer says the company competes on rider experience, not driver acquisition, and positions its 20 million active riders as a network advantage for rolling out self-driving cars. He defends contractor flexibility under California's AB5 law and argues Lyft's 30% U.S. market share proves it can scale internationally.
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When we came into the market, it was a new category of transportation. We started peer-to-peer transportation. We initiated kind of that, that new category. And since then, there's been a lot of competition in the early days, some rational, some irrational. And we're heading into a period of profit focused on profitable growth and rationalization. So I think it makes sense that there's some consolidation.
Uber's clearly your main competitor for ridesharing here in the US. Is it harder to steal a passenger from them or to steal a driver from them?
I think the way I think about it is on the, on the customer side, we are competing, I'd say, more than we are on the, on the driver side. For drivers to be able to have access to both platforms, for us in a newer market, that's advantageous that they can, you know, put some hours on one and some hours on the other. On the customer side, it's all about how can we provide the best product experience. And that's, I'd say, where the competition is more heavy.
Since becoming public, have you felt more pressure to hit profitability as opposed to just hit revenue growth in the past?
Yeah, I think that that's definitely the case. I'd say there's been, you know, outside of just our industry, there's been a market shift that I would say is healthy and has also been fast, focused on profitability. It makes sense. And again, it's increasing rationality, which is positive for both players.
Autonomous vehicles, clearly a big future possibility for your area of business. What makes you confident that when that shift happens, whenever that might be, that you'll be able to capture a large portion of the economics versus what you do today if, say, Waymo, for argument's sake, is the leading tech. Why wouldn't they claim more of the economics than you will?
Yeah, so we are the network. We have the relationship with the customer. You know, we have over 20 million active riders on our platform today. And the way that this will roll out will be gradually. If you think about how 3G on phone networks went from, you know, went from 3G to 4G, I think something similar will happen. It wasn't that 4G was everywhere all at once. Autonomous is not going to all of a sudden be everywhere all at once. But, you know, when will autonomous be in an urban core under 35 miles an hour with no bridges and tunnels and good weather? That's a lot sooner than doing it everywhere. So it'll roll in. AV could do 10% of rides, then it will do 20% of rides, then it will do 30% of rides. But the customer wants 100% of their rides fulfilled. And so the customer will come to us because they can get both an autonomous vehicle for 10% of their trips and a driver for 90% of their trips. We're going to be able to provide all their transportation through that transition. And therefore, we are positioned as the network to best capitalize on that future.
Do you accept, though, that as things stand, at least you're going to have to rely on an external software provider more so than Uber might? And therefore, in that holy grail age of all autonomous vehicles, your margin might be a bit lower because of that?
No, I don't accept that. We have better partnerships and I'd say a better team that's executing on our own self-driving system. So I don't agree with that.
Fair enough. We were just talking about how none of my friends back home have even heard of Lyft. Do you fear because of your focus-first strategy that if and when you do expand geographically, that you've lost a little bit of the early runway, as it were, because you don't have the brand recognition?
I mean, look, like the way we grew up, Uber had launched before us. They had launched with a different product, the black car product. But, you know, 7 years ago when we were launching, everyone asked that question of us. And we have a track record of going, you know, now over 30% market share when people, you know, said you're never going to survive in this market. So that, that's kind of how we've grown up. That's something that we can execute on if we decide to go international.
How much of an if is it versus a when?
It is a real if, but, you know, market by market. We've launched Canada, so we have US and Canada. By launching Canada, it gives us kind of the product platform such that we can do currencies and other languages. But I think about it more like a call option. We are focused on North America right now. We'll make that decision in the future.
I want to talk about the AB5 law in California. I saw from one of the analyst notes that 91% of your drivers in California drive less than 20 hours a week, 76% less than 10 hours a week. So is that new law bad for those drivers?
Yeah, that's what we've heard from those drivers. I mean, we also have one— only 1% of drivers drive over 40 hours a week. And so I think what we're dealing with is that the way labor law has been written historically in the United States is that you have certain protections that are good for workers that only apply to the employment category. So like discrimination protection, wage protection, things like that. That don't apply for independent contractors. They should. And so similar to how we created a new category of transportation, my belief is that we're going to be able to create new protections while maintaining flexibility for drivers. If you were to force all drivers into kind of the employment category, those drivers that are using this for supplemental income would likely not be able to use the platform because we would have to move more towards a shift model. So I believe there is a balanced approach that we're talking to legislators about that eventually will come to fruition.
So is that law in the meantime short-sighted?
I don't think it's beneficial for me to comment specifically on that law. I think a better solution is possible.
Uber, a story today says, considering rolling out audio recordings of their drives, of the routes. Is that something you consider as well?
Absolutely. We'll look at all different safety measures. We were the first in the early days. We instituted a criminal background check, a driving record check. We do continuous background checks. So we're always looking to innovate around safety.
I noticed recently that food delivery apps like Grubhub are clearly struggling. The stock prices has collapsed lately. Very intensive competition. How low would the price have to be for a company like that for you to consider buying it?
We're not interested. We, we are focused on consumer transportation that may have you know, an interesting market. Food may have an interesting market at some point in the future. But to us, it is extremely different. You know, if it is part of someone's transportation wallet, we are interested in it. If it is within the consumer transportation use case, we are interested in it. Outside of that, we're going to stay very focused and we think that's paying off.
My final question, John, was related to where the share price is now. But given all of these stresses we've seen with the particular example of, of WeWork, Do you feel guilty in any way the way you sold the company and the stock price now down from some of those investors that bought on day one?
Look, you know, I care deeply about every investor. Over our course of history, we've made a lot of our investors a lot of money. I care about our employees that, you know, have jobs from us, that have in some cases equity from us. So I feel a deep amount of responsibility. I feel like the stock is undervalued and that We've had 3 quarters of beating expectations and that, yeah, over time people will see us put up more numbers and it will, it will solve itself.
