A year into the job, David Risher talks innovation at Lyft, plus lessons learned from the recent earnings error.
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00:00 Brands are so interesting and reputations are so interesting because they take a long time to build and once you've got them
00:06 They actually persist for many years. So I was just we by the way at fortune
00:11 Hmm, we know that for sure you do hard to hard to kill a good brand once it once you
00:15 Are you guys trying?
00:18 Anymore, but there probably been times in our past when we were trying pretty hard
00:22 Welcome to leadership next the podcast about the changing rules of business leadership
00:27 I'm Alan Murray and I'm a colleague wrong
00:29 This is a hyper competitive business
00:34 Yeah, you're like coke and Pepsi or maybe more like Hertz and Avis or something that you know
00:39 I know when I'm when I'm getting a car. I just want the car to be there fast
00:42 I don't care who it comes from. So what is the nature? It's a fairly undifferentiated
00:47 Product what
00:51 What what can you do? What is what what how do you really make ground against uber in this battle?
00:56 yeah, it turns out you can do a lot and
00:58 It's interesting because so first of all, you know really focusing on the customer really makes a difference
01:06 So I'll give you some examples
01:07 When I started the company had started to focus a little bit too much on Wall Street and a little bit too little on its
01:12 Own riders and drivers and so, you know, if I'm honest we were paying our drivers not quite competitive rates
01:19 We were charging our riders a little bit more
01:23 Under the hopes of making more money faster just a bad strategy just because to your point a lot of people they'll say, you know
01:30 Who's gonna get me there less expensively who's gonna get me there faster?
01:33 So when I when I look forward, you know over the year, you know
01:38 Just fixing some of the basics really really helps and I'll give you you know
01:42 An example a year ago our what we call our pin ETA difference
01:46 So let's say the gap between how fast you might be picked up in the other guy versus us
01:50 Might have been three or four minutes, which is significant if you're in a hurry
01:53 Yeah, now it's ten seconds now. It's ten seconds
01:55 So when you get to the point where it's ten seconds now, you can start to compete on other things
02:00 You can start to compete on women plus connect which we launched which is a product that lets women choose women
02:05 You can start to compete on faster airport pickup where people are very stressed about getting to the airport
02:10 So it's sort of a couple stage thing. You got to make sure you're focused on your customers
02:14 You got to fix the basics to give yourself permission to do some of the other more innovative things
02:18 And then you can start to innovate and give people a real reason to choose one or the other
02:22 Instead of having them think it's kind of the same thing is
02:24 Transparency part of it too. I mean, I I would assume that drivers care very much about that. Have you made changes there?
02:31 Absolutely. Absolutely. And in fact, that's exactly it. So I have a public email address. It's David at lyft comm and
02:39 And and drivers, right and they're very clear about what it is that they like and they're also very clear about what bugs them
02:46 And so but again customer obsession, right? So our drivers are our customers
02:51 So we have to pay attention to what bugs them and the lack of transparency really bothers them
02:57 You know, they start to kind of come up with all sorts of theories of what's going on
02:59 So now and this again is a relatively new feature
03:02 We're actually just rolled it out over the last, you know
03:05 Six weeks or so at the end of every week you you get a full statement that literally starts with how much
03:11 Riders paid because that was the thing that would bug them so much is they would say, you know
03:15 I got a you know a trip where a rider paid me 50 bucks and I only made 10 and said
03:20 But what is that? So anyway, so now we show them, you know the complete statement
03:24 Literally everything that a rider paid everything that they got all their tips all the tools all the different, you know things and then again
03:30 If it's ever less than 70% after those past three fees, we literally send them a check
03:34 We send them a check and again this driver group. I talked to you the other day
03:37 They said I couldn't believe it the first time I got a rebate. I was sort of like getting a tax rebate
03:42 It was it was great. So David you're you're you're focusing on customers. You're focusing on riders
03:47 You're focusing less on shareholders
03:49 But at the end of the day you do have to make money sure and you haven't yet. Yep
03:53 How do you feel about?
03:55 Progress towards that goal great. And the reason is because our store our mantra is
04:00 customer obsession drives profitable growth
04:03 So, you know, let's look at the other numbers for a second. So
04:07 So first on the growth side, you know the first quarter that I was CEO
04:12 We grew about 10% a year on year then we grew about 17%
04:15 They were about 20% then we go about 26% So those are the first four quarters. So we're growing
04:20 So then the question is what are we doing it profitably?
04:22 Well as you point out we haven't made gap profitability yet, but it is absolutely on the you know on the roadmap
04:28 We were free cash flow positive last quarter. That's q4 of 2023
04:33 We will be free cash flow positive this entire year. Absolutely
04:37 We've promised it to Wall Street and when you look at our losses
04:40 They are diminishing to the point where they're really quite small right now and most Wall Street analysts show us turn your profit quite soon
04:46 So we are absolutely on that path some of it was through very hard decisions
04:50 You know, one of my first decision was was obviously very difficult involving cutting about 26% of our staff, which is very difficult to do
04:57 Incredibly hard, you know kind of heart-wrenching work
05:01 But you you have to do it if you're gonna be able to lower your prices and pay drivers more
05:06 You know and and and and now we're being very disciplined very disciplined quarter after quarter
05:10 Our listeners would never forgive us if we didn't ask you about the EBITDA mistake because it was such a fascinating
05:16 Moment, it's a misplaced zero in a press release that caused the stock to soar came back down
05:22 You now have class-action lawsuits. Oh
05:25 What did you learn from that? Did you learn anything? Was there were there any oh, yeah
05:31 We learned a lot. Yeah
05:33 I mean the first thing I have to say and I've said this before I'll say it again
05:35 That's on me. That's on me
05:37 And I want people really to understand that when you're the leader of the organization someone makes a mistake
05:42 It's your problem
05:43 And so now I will also say man did our team hustle and what happened what happened literally was an extra zero
05:50 That got inserted into an early version of the press release and it just rolled forward and this despite
05:57 Literally, no exaggeration hundreds of people's about hundreds people's eyes including my own seeing it over and over again
06:04 But what happened it was in a forecast piece which gets a little less scrutiny than the backwards looking stuff
06:09 The basis point versus percentage that I mean, they're very very different words
06:14 but unfortunately, of course
06:15 they mean something very very different and so and we literally found it in real time as we were reading out the
06:23 The sort of earnings report and we changed it within two minutes
06:27 I think and all of a sudden our legal team again and actually our policy team jumped into action
06:31 So very very quick response absolutely fantastic
06:33 And I certainly learned how fast a team can work when it when it is under that kind of pressure now
06:38 What about what have we also learned?
06:40 Well, we've learned that even though we have really exactly the same process that every other public company has all sorts of eyes
06:46 Also checks about it wasn't sufficient. It wasn't sufficient. So what are we doing? We actually now have a process
06:51 We're just about to go through this as our next earnings come out where we take all of our materials
06:56 We now give them to an outside third party
06:59 We've hired to do exactly this and what they do is without having any other context
07:03 They look not just in sort of double check the numbers
07:06 but they try to build the model that our press release and earnings statement is
07:10 Suggesting they build and then look at what that model results in and then we compare that back to our internal models
07:16 And if those models are vary by anything insignificant, we know there's a problem along the way
07:21 You
07:23 You
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