Lyft Co-Founder John Zimmer Has A Message for the Auto Industry

November 17, 2015, 4:00 PM UTC
Zimmer of Lyft speak at TechCrunch Distrupt 2013 in San Francisco
John Zimmer, co-founder and president of Lyft, speaks on stage during a Founders Stories session at TechCrunch Disrupt SF 2013 in San Francisco, California September 9, 2013. REUTERS/Stephen Lam (UNITED STATES - Tags: BUSINESS SCIENCE TECHNOLOGY) - RTX13EG7
Photograph by Stephen Lam — Reuters

John Zimmer, co-founder of ride-hailing service Lyft, will look at out at a sea of automotive and tech executives Tuesday and issue a challenge: It’s time to redesign cities around people, not cars.

Automakers are in the business of making and selling vehicles, after all. But Zimmer, sees an opportunity that didn’t seem possible a decade ago.

“A new approach to cars in the automobile world is needed for this new generation—a generation that doesn’t value car ownership,” Zimmer told Fortune ahead of his keynote speech at the Connected Car Expo, an auto tech conference that acts as an opener to the Los Angeles Auto Show. “I think that the future of our cities (which I’m going to talk about), the future of our companies really depends on a brand new approach to the automobile.”

Zimmer isn’t in the automotive industry, per se. But Lyft relies on cars and trucks—and for now, the people who drive them.

Lyft, founded in 2012, is valued at $2.5 billion, an amount that puts it at 42 on Fortune’s unicorn list of high-flying startups valued at $1 billion or more. The company started by creating an app that connects drivers and riders. It expanded its service this year with Lyft Line, a carpooling service that provides an alternative to public transit. In September, Lyft announced a partnership with Didi Kuaidi, a China-based ride-hailing service that invested $100 million in the company.

Without cars, Lyft doesn’t have much of a business. Still, Zimmer believes the era of car-centric cities is ending.

“This is a generation that values the mobility of their cell phone more than ownership of an asset they use 4% of the time,” Zimmer says. “This is a wake up call to the auto industry that the world is changing and together we have this once in a lifetime opportunity to redesign our cities around people instead of cars.”

“More people are moving into cities and traffic is getting worse—it’s doubled and it’s going to double again. We cannot keep going down this path. When you build more roads, you get more traffic. We need a new way of thinking about this.”

Zimmer sees cars as the hardware and Lyft as an operating system—a viewpoint that offers a hint at where the company is headed. Could Lyft someday partner with an automaker to provide a fleet of self-driving cars, for example?

“We’re always going to have hardware in the system, and it’s very important to the experience that the passenger has,” Zimmer says. “And so, in the future one of the big questions in the talk and one of the big questions for the audience is how do we work together? I think that’s still being decided.”

Automakers hardly seem to be struggling or in need of a partner like Lyft. Several are still basking in the success of record monthly U.S. sales. But Zimmer insists this is a short-term blip on an otherwise downward, or at least changing, trend. Millennials and those younger than them don’t value cars as much as previous generations, Zimmer says. Advances in technology involving autonomous driving has created a unique opportunity, he added.

“This can be fantastic for the auto industry if they see the future before it happens,” says Zimmer, who notes that Lyft is now providing well over 1 million rides weekly.

And while there is some tension and a bit of denial because of recent strong sales numbers, Zimmer says some automakers understand what’s coming. Lyft has ties to car companies—Bill Ford of the Ford auto family is an investor—and has had multiple and ongoing discussions with automotive executives.

“It’s generally been a productive conversation, but I think we’re operating at different paces,” he says. “We see this happening fast and we want everyone to move and work on it together. I think they’re still trying to figure out how we all work together.”

Others in the auto-tech space see traditional automakers shifting towards a broader, more modern approach.

“But they’re going to do it at a rate and pace that reflects where they’re coming from and their current business models,” says David Jumpa, chief revenue officer of connected car services company Airbiquity. “The newcomers will definitely have big ideas with potential for disruption, some will have large cash hoards to fund their efforts, and the pressure they create will serve as a catalyst to nudge the scrum forward.”

The automakers themselves say they’re already investing in a variety of projects that focus on the future of how people move in and around cities. For example, Ford Motor Co. has about 25 different mobility projects going on right now, according to Alicia Agius, project lead of GoDrive, an on-demand car-sharing pilot the company launched last year in London.

“The philosophy has changed and is continuing to change,” Agius says. “There’s a realization in these densely urban cities that it’s just simply not practical for everyone to own a car. And yet people still have a need for cars in certain circumstances. We want to give those people, living in situations where ownership isn’t an option, the opportunity and access to a car.”

The Los Angeles Auto Show opens to the public Nov. 20 and ends Nov. 29. What will Fortune be paying attention to? The intersection of the automotive industry and tech—and of course, the actual vehicle unveilings. The Connected Car Expo kicks off Tuesday followed by two action-packed days at the L.A. Auto Show’s press and trade events. Several dozen vehicles are scheduled to be unveiled including Audi’s RS 7 Performance model, Jaguar Land Rover’s Range Rover Evoque convertible, and Mercedes-Benz’ SL Roadster and GLS full-size SUV.

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