Lyft CEO David Risher Courtesy of Lyft
In an effort to turn around its long-running lack of profits, Lyft has hired a new CEO from an odd place: a nonprofit.
David Risher, who will replace co-founder Logan Green as CEO of the ride-sharing company on April 17, has spent the past 14 years overseeing Worldreader, a nonprofit group that makes digital books more accessible to children around the world.
If that background — however laudable — has a tinge of irony, given that Lyft has never managed a quarterly profit in its history as a public company, Richer doesn’t see it. In an interview with Wealthnew CEO of Lyft argued that a leader with soft skills acquired in the nonprofit world is exactly what the company needs.
“Nonprofits have to tackle, hopefully solve, some of the world’s biggest problems, but with the fewest resources. It’s part of the part of what other sectors are,” Risher said. “So I’ve gotten really good at doing more with less, and I think that’s a really important skill in a company like this, which is again a low-margin business, so we have to be really efficient.”
Turning a profit at a ride-sharing company isn’t one of the world’s biggest problems, but it’s huge for a business that’s losing market share to bigger rival Uber and struggling with shortage of drivers, among other problems. In a recent note to investors, Wedbush analyst Dan Ives described Lyft as a “train wreck,” writing that Richer will be on hiatus as he seeks to restore Lyft’s confidence among Wall Street investors.
Of course, Richer, 57, is no stranger to the cut-throat world of tech business and ride-sharing. He has been a director on Lyft’s board since July 2021, and before founding Worldreader, he was Amazon’s first product manager and an executive at Microsoft. And while Worldreader’s nonprofit status means it doesn’t share any profits with private individuals, that doesn’t mean the organization is a financial basket case. Richer pushed net income from negative to nearly half a million from 2010 to 2020. Meanwhile, contributions, the main source of income, have fluctuated since peaking at $10.5 million in 2015.
Getting Lyft into the black will require us to take a hard look at the company’s cost structure and make sure that the volume of rides on its network is stable, Richer said.
“That’s the game plan. It’s figuring out what the contribution per trip is and then making sure we’re driving enough volume to cover our costs and then looking at the costs and making sure they’re appropriate for the size of the business,” Risher said.
One key factor in the volume of rides Lyft allows is the supply of drivers on its platform. Lyft is struggling with a driver shortage, and the company’s efforts to increase the number of drivers have been moving as slowly as the Titanic, CEO Logan Green said in May. Lyft said in October that the supply of drivers was strong, pointing to its fastest quarter-over-quarter growth in total active drivers in a year. But keeping drivers happy may be difficult, as past investments in incentives have weighed on Lyft’s revenue. And drivers are often not happy with the reduction in driver payments. A February report by the UCLA Labor Center found that both Uber and Lyft have taken a larger share of drivers’ profits as fares have increased in recent years.
Even then, the drivers’ money isn’t enough for Lyft. To cut operating costs, the company cut 13 percent of its workforce, about 700 employees, in November. The move comes just months after Lyft froze hiring, laid off dozens of employees and ditched its in-house car rental service.
Lyft faces these challenges as it competes with Uber, which dominates 71% of the ride-sharing market compared to Lyft’s 29%. While Uber operates globally, Lyft is only in North America and has no plans to branch out into the food delivery space like Uber did to diversify its revenue.
For Richer, however, Lyft is in a good place when it comes to competing with Uber. “I think the world wants and needs a strong number two,” Richer said.
I’m talking to Wealth on Tuesday after an all-Lyft meeting and lunch with co-founder John Zimmer, Richer seemed optimistic about bringing his nonprofit skills to Lyft.
“At the highest level, all businesses are the same,” Risher said. “What I mean by that is you have to make more than you spend. And you have to have a model that allows you, the better you do, the more you do. I mean it’s that simple.