Lyft’s co-founders to step down as ride-hailing company struggles

NEW YORK - Lyft’s co-founders said on Monday that they would step down from their day-to-day responsibilities at the company, which has struggled through layoffs and disappointing financial results even as Uber, its biggest rival, has strengthened.

The founders – Mr Logan Green, Lyft’s chief executive, and Mr John Zimmer, its president – will stay on the company’s board of directors, they said.

Mr Green and Mr Zimmer, now both 39, started Lyft in 2012.

They presented Lyft as a friendly alternative to Uber and its aggressive CEO Travis Kalanick and avoided many of the controversies that enveloped their competitor.

Vehicles driving for Lyft were easy to spot when the company started.

They often had a fuzzy, pink moustache stuck to their front grille, and Lyft passengers for a time were even encouraged to sit in the front with the driver.

But Lyft, like many other gig companies, has been unable to turn a profit despite years of fast growth and recently has fallen further behind Uber in the ride-hailing business while failing to branch out into other areas, such as food delivery.

Mr David Risher, CEO of a non-profit called Worldreader and a member of Lyft’s board, will replace Mr Green, whose last day is April 17.

Mr Green will become board chair.

Mr Zimmer will depart his current role at the end of June and become vice chair, the company said.

Mr Green and Mr Zimmer bonded over their interest in improving transportation and reducing traffic through ride-hailing services.

Although the business was far smaller than Uber, they saw promise in 2017 when a campaign to delete the Uber app took off and drove interest in Lyft.

But critics have said they squandered their brief advantage by making bets that lacked ambition, including on small businesses such as scooters and bicycles.

Lyft’s business has been slow to rebound from the lockdowns of the early days of the Covid-19 pandemic, as driver supply problems have caused high prices and long waits for passengers.

Lyft’s stock price has dropped below US$10, down from about US$40 a year ago and close to US$80 at its peak.

News of the resignations, which was reported earlier by The Wall Street Journal, sent the company’s stock price surging in after-hours trading.

Mr Risher, 57, was a general manager at Microsoft and a vice-president at Amazon in the 1990s before founding Worldreader, which helps children get access to digital books.

Early in the Covid-19 pandemic, Lyft and Uber were on nearly equal footing: the vast majority of their businesses had to shut down, and they laid off many of their employees.

But Uber, which has a global presence that Lyft lacks, bounced back more quickly, partly because its worldwide availability and food-delivery business kept drivers on its platform and blunted the impact of the Covid-19 pandemic, analysts and former employees have said.

Uber also invested more in financial incentives to persuade drivers to return to the platform after the Covid-19 pandemic ebbed, while Lyft did not initially have enough drivers to meet resurgent rider demand.

In November, Lyft laid off 13 per cent of its employees.

Then, in February, it spooked investors when its financial projections for the year fell below their expectations, sending its stock price tumbling.

Lyft said at the time that it needed to lower prices to be more competitive.

Lyft did report record revenue of US$1.2 billion (S$1.6 billion) in its most recent quarter – as well as US$588 million in losses.

Uber, on the other hand, reported US$8.6 billion in revenue and told investors that it expected to achieve operating income profitability at some point in 2023, which indicated that its business was strengthening.

Mr Tom White, a senior research analyst with the financial firm D.A. Davidson, said he considered the leadership change a “potential modest positive”.

A new leader, he said in an e-mail, “could signal increased willingness to broaden Lyft’s strategic aperture a bit as it relates to other possible adjacent products (delivery?), partners or ways to create value”. NYTIMES