Lyft CEO reveals his biggest challenge in competing with Uber
CEO David Risher says risk should not paralyze you
New Lyft CEO David Risher reveals his plan to win back ridership from Uber
Lyft incoming CEO David Risher discusses the changes he will make to turn the company's stock around on 'The Claman Countdown.'
It's only been a year since David Risher took charge of a company that was struggling to match rideshare giant Uber's dominance.
Risher told FOX Business that his biggest challenge in revitalizing the company and establishing it as a prominent player in the industry is "fighting inertia."
"The inertia of staying home rather than getting out to connect with friends; the inertia of using the same old rideshare app instead of trying something new and better," Risher told FOX Business.
UBER, LYFT TO LEAVE MINNEAPOLIS DUE TO MINIMUM WAGE LAW
However, the former Amazon executive would say taking on the role was the "easiest decision" he'd ever made. In a letter to shareholders this week, Risher expressed that he is more confident about the decision today than ever before.
When approached to step in for co-founders Logan Green and John Zimmer and reverse the escalating losses, Risher acknowledged that he would be "trading a very certain future for a very uncertain one," as stated in the letter.
David Risher, chief executive officer of Lyft Inc., during a Bloomberg Television interview in San Francisco, California, on Wednesday, February 14, 2024. (Michaela Vatcheva/Bloomberg via Getty Images / Getty Images)
Lyft was competing against a company that benefited from its food-delivery business during the pandemic when ridesharing came to a near halt.
LYFT CEO SAYS GOVERNMENT SHOULDN'T BE INVOLVED IN RIDE-SHARE PRICE SETTING
Just as he took over, Lyft reported a net loss of $187 million, and ride growth was at 10%. At the time, the company had 19.6 million active riders.
But Risher argued that while the unknown may be scary, taking a risk shouldn't be paralyzing.
"It’s normal to fear the unknown. That’s why uncertainty paralyzes us. But risk should not. You can assess risk by looking at the downside and upside of opportunities," Risher wrote in the letter.
He continued, "You can even consciously assign more weight to the upside than the downside, to try to overcome our instinctive bias toward self-protection. And armed with that distinction, you can act."
Risher was no stranger to facing uncertainty.
In 1997, Risher, then an employee of Microsoft, was given the opportunity to take a job at Amazon, which was only a small online bookseller at the time. People thought he was "nuts" for even contemplating the switch, he recalled.
UBER, LYFT GET NEW COMPETITION IN RIDESHARE BATTLE
He acknowledged the potential downsides, including the risk of the company failing and the fear of appearing "foolish," as mentioned in the letter. On the other hand, he saw the rapidly growing Internet as an opportunity to create "an everything store."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LYFT | LYFT INC. | 16.62 | -0.33 | -1.95% |
| UBER | UBER TECHNOLOGIES INC. | 65.67 | -0.38 | -0.58% |
As senior vice president of U.S. Retail at Amazon, he helped drive a $16 million online bookseller to become a $4 billion "everything store," according to his WorldReeder biography.
However, Risher noted that the upside potential for a company like Lyft is "enormous," given the room for innovation and growth within the sector.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
To better compete, Risher reduced the workforce to bring rider fares in line with its rival, and to boost driver pay, which has long been a point of contention. He made earnings more transparent and recently promised drivers they would earn at least 70% of passenger payments after external fees.
A Lyft car driving on Park Avenue South on April 21, 2023, in New York City. (Michael M. Santiago/Getty Images / Getty Images)
He also implemented a variety of features to attract more riders and drivers to the platform, such as an on-time pickup guarantee for airport rides.
While Uber, which just posted its first annual operating profit, is still dominating the sector, Risher previously told FOX Business that the industry is still very much in its infancy.
In the fourth fiscal quarter of 2023, Uber reported revenue of $9.9 billion, up 15% year over year and beating Wall Street estimates. It reported net income of $1.4 billion.
CEO Dara Khosrowshahi said in the earnings report that its platform powered "an average of nearly 26 million daily trips last year."
Ride-sharing companies Uber and Lyft are threatening to leave Minneapolis over a new mandate guaranteeing a minimum wage for drivers. (Smith Collections/Gado via Getty Images / Getty Images)
Comparatively, Lyft's revenue notched $1.2 billion, growing 4% year over year. Its net loss was $26.3 million, down from the net loss of $588.1 million reported a year earlier.
Lyft's ride growth rose to 26% year over year after accelerating for four consecutive quarters. Active riders grew to just over 22 million.
Lyft's is slated to report its latest earnings on Tuesday.