Lyft commands 30-something percent of the U.S. ride-share market; Uber dominates the rest. Lyft is focused solely on ride-sharing in North America, while Uber operates abroad and offers services like food delivery and freight. Lyft still loses a lot of money, but Uber is now, at long last, profitable.
Despite Lyft’s position as a distant No. 2, CEO David Risher tells Fortune that the company could eventually become profitable by doubling down on the ride-sharing experience for both drivers and passengers. “I’m running a ride-share business with a single-minded focus on getting people to where they want to go,” says Risher, who took the reins last April and whose résumé includes senior jobs at Microsoft and Amazon, reporting directly to founder Jeff Bezos.
When he became CEO, replacing Lyft founder Logan Green, Risher was charged with solving the company’s eroding market share, low employee morale, and a sense that Lyft was unable to counter Uber’s supremacy. These problems not only spurred investor discontent but led to the C-suite departure of the company’s two cofounders, Green and John Zimmer, though they remain on the board. In his first year, Risher cut 30% of Lyft’s workforce, introduced new features like one that matches women passengers and women drivers, and made returning to the office mandatory. He’s also cut prices to better compete with Uber.
There are green shoots to bolster Risher’s case that Lyft is turning things around. Bookings on the Lyft app rose 15% last quarter, lifting revenue by 10% to $1.16 billion and dramatically shrinking its net loss, which fell from $422 million to $12 million. Although Risher won’t say when he thinks Lyft will be profitable, he maintains that Lyft won’t chase Uber down every rabbit hole. As is, Uber has nine times more revenue and a market value that’s 26 times greater. Risher presses that he’s just fine with a smaller but more nimble and competitive Lyft.
“We really need to nail it, and by that, I mean the basics,” he says.
This article has been edited and condensed for clarity.
Fortune: I was recently in the U.K. and had to download the Uber app since Lyft doesn’t operate there. Now that I’m back in the U.S., what’s the case for keeping yours?
I’m only eight months into the job, but some of the things I’ve been really focused on include making sure we are well-priced compared to Uber and paying our drivers fairly. We have to differentiate Lyft segment by segment. For example, we have our Women+ Connect program, which we launched in September and allows a female passenger to choose a female driver. I sometimes drive for Lyft and talk to riders all the time who say, “I just like your values better.” Uber has made missteps. We’re also very focused on ride-share, while they’ve got a bunch of other businesses.
Do you have enough women drivers to support the Women+ Connect program?
We don’t. Only 23% of our drivers are women, and they drive only about 15% of our hours. It’s a long-term strategy, not a short-term flip-of-the-switch thing. We’re trying to build an ecosystem where up to 50% of our drivers are women.
Uber Eats is a giant in delivery, but you’re adamant that food delivery is not for Lyft. Why?
I’m running a ride-share business with a single-minded focus on getting people where they want to go. We really need to nail it, and by that, I mean the basics and leveling the whole thing up. The ride-share industry has been a little stale in terms of innovation. It’s not just a philosophy: It dovetails with what the world needs. The Surgeon General says loneliness is a killer. There is so much opportunity to get people out, and it’s the exact opposite of delivering lo mein to their house, which, if anything, encourages people to stay home.
Let’s talk about bike-sharing programs, a small but non-negligible part of your business. The comptroller of New York City, where you operate the Citi Bike program, recently said the program’s reliability has fallen since Lyft took over. Is this program worth the hassle?
New York City’s comptroller is wrong. They used data that is really quite out-of-date. But yes, bike-sharing programs are operationally intense. It’s a capital-intensive business, so we’ve been looking for a partner who can help us on the financial side and understand city infrastructure.
One of Lyft’s longer-term goals is for the vehicle fleet to be 100% electric. Given that some EV manufacturers have trimmed production, is that goal still reachable?
We are making great progress in some states, California being exhibit A. One of the things I learned from Bezos was to be single-minded about your strategy but also flexible about the details. Unfortunately, I think the world is telling us, not just Lyft, that there are different pieces that all have to line up, like charging ports, human interest, and gas prices, to spur EV adoption.
When you became CEO last year, how did you get buy-in from the rank-and-file, many of whom had only ever known the founders?
I came in with a very clear message, which is that we’re going to focus on ride-share and be obsessed with our customers. Neither of those things was really true with John and Logan. They expanded into things like rentals and food delivery. I also made sure our drivers earned a good wage and were treated with respect. One general truth about humans is that nobody likes the feeling of something being taken away from them, like their leader. And John and Logan were incredibly supportive. There was none of that subverting thing or hanging around. They just wanted the company to succeed.
Before Lyft, you led a nonprofit called Worldreader. What did you learn there that helps you at Lyft?
People in the nonprofit world often say that nonprofits should be managed like for-profits. I’m here to tell you that for-profits should be managed more like nonprofits. Purely from a cost basis, nonprofits take on some of the world’s biggest problems, and they have some of the smallest budgets, so they’ve got to be ruthless about cost control and to raise money every year. So you really have to be smart, disciplined, and focused.
You studied literature at Princeton as an undergraduate. Do you wish other tech CEOs had backgrounds in the humanities too?
I absolutely do. When you read a book, you’re looking at the world through someone else’s perspective. You’re learning ideas from people and pushing yourself into other people’s brains. The technology world can be, to its detriment, too analytical, sort of arrogant, and self-important, and those characteristics are anti-empathy. So, if you try to understand people through literature and texts, you are well equipped to enter a world where the stuff we in tech do has a huge impact on society.
