Lyft Co-Founders Tap Out – C-Suite Transitions

On a recent trip to the East Coast, I started reading the book The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale by John List. Dr. List is not just a Professor of Economics at the University of Chicago but also had the unique experience of working with Travis Kalanick at Uber (UBER) as Uber’s Chief Economist and then later held the same title at rival Lyft (LYFT).

In the book, Dr. List describes how he worked with and challenged Lyft’s Co-founder and CEO Logan Green about a subscription product the company was planning on rolling out. It was interesting for me to see that both of Lyft’s Co-founders decided to step down from their roles as CEO and President this week. We have written about Uber several times in the past and I wrote the following in an article titled Insider Weekends: Dara Khosrowshahi’s $9 Million Purchase Of Uber in November 2021:

When I looked at my phone this morning, Uber was offering a discount on its $9.99/month Uber One subscription service that gives subscribers $0 delivery fees and priority service for Uber rides. This is another way Dara is attempting to build a sustainable and predictable business at Uber. When investors think of Uber, they are immediately reminded of its much smaller rival Lyft (LYFT). While both companies are in the ride hailing business, that is where the similarities with Lyft end. Uber is growing faster than Lyft, globally diversified and has better gross and net income margins.

While both companies have had a difficult couple of years, Lyft’s stock has been particularly hard hit, down nearly 77% over the last year. Decelerating growth and a disappointing outlook caused some serious damage to the stock last month when the company reported Q4 2022 results. It did not help that the company reported a massive GAAP loss of $588.1 million on revenue of $1.2 billion in the quarter.

Welcome to edition 34 of C-Suite Transitions, a weekly series on InsideArbitrage that tracks appointments and departures at publicly traded companies during the prior week. We highlight five appointments and departures each week by picking the largest companies from the full list of management changes.

Sudden Departures

1. Benchmark Electronics (BHE): On March 21, 2023, Michael D. Buseman notified Benchmark Electronics of his intent to resign from his position as Executive Vice President, and Chief Operating Officer effective April 5, 2023, to pursue an opportunity outside the company.
2. Eastern Co. (EML): On March 21, 2023, James Woidke resigned as Chief Operating Officer of The Eastern Company. On March 24, 2023, the company announced that it had eliminated the position of Chief Operating Officer effective as of April 1, 2023. The Eastern Company and Mr. Woidke have agreed to treat Mr. Woidke’s departure as a termination by the company without good reason for purposes of Mr. Woidke’s receipt of any accrued compensation and severance pay under Mr. Woidke’s termination agreement with the Company, dated January 14, 2022
3. Albany International (AIN): On March 23, 2023, Albany International Corp announced that it had accepted the resignation of Stephen Nolan, its Chief Financial Officer, and Treasurer effective April 7, 2023.
4. Papa John’s International (PZZA): Papa John’s International announced that Ann Gugino will step down from her position as Chief Financial Officer effective March 22, 2023.
5. Enviva (EVA): On March 21, 2023, Michael A. Johnson gave notice of his resignation from his position as Vice President and Chief Accounting Officer of the company.
6. Eos Energy Enterprises (EOSE): On March 24, 2023, John Tedone informed Eos Energy Enterprises of his decision to resign from his position as Chief Accounting Officer of the company effective April 21, 2023. Mr. Tedone’s decision to resign was due to personal reasons.

Lyft Chooses a New CEO as Founders Depart

Lyft (LYFT)  a ride-sharing company founded by Logan Green and John Zimmer in 2012 in San Francisco, California, USA, operates in over 600 cities across the United States and Canada, serving millions of riders each year. The company announced on Monday that its founders Logan Green and John Zimmer would step down as CEO and President, respectively.

Logan Green, the Chief Executive Officer, and John Zimmer, the President, have decided to step down from their full-time executive management positions and take on non-executive roles as the Chair and Vice Chair of the Lyft board, effective April 17, 2023, and June 30, 2023, according to a statement from Lyft. Board member David Risher will take over those positions as the ride-hailing company struggles to compete with larger rival Uber.

Lyft began as a ride-sharing service with a focus on offering customers safe, reliable transportation. These days, Lyft has widened its offerings to include car rentals, bike, and scooter rentals, and partnerships with significant public transportation systems in a few cities.

The company went public exactly four years ago in March 2019 at a price of $72 per share. The stock hit a record low of $8.99 per share earlier today after initially peaking in 2019 at $78.29 per share.

Co-Founder and CEO Logan Green

Since the company’s inception, Mr. Green has held the positions of CEO and Director. He started the first car-sharing program at the University of California, Santa Barbara, and served on the board of the Santa Barbara Metropolitan Transit District before co-founding Lyft. Mr. Green also serves on the board of eBay.

He announced the transition on Twitter when he tweeted the letter he had sent to his employees.

“Building Lyft with John over the last 16 years has been the adventure of a lifetime,” said Mr. Green. “Billions of rides later, our industry is defined by the model of ridesharing that Lyft pioneered. All founders eventually find the right moment to step back and the right leaders to take their company forward. In a field of accomplished candidates, David stood head and shoulders above the rest. As a member of the board, he knows both the challenges and opportunities ahead. David has the right energy, ambition, and experience to lead Lyft into the future. Leaders in our industry who worked with David affirmed that he’s a customer-obsessed leader who drives hard — when David left Amazon, Jeff Bezos publicly thanked him, vowing to ‘build on the foundation you helped pour.’ David is the absolute right person to build on our foundation.” 

Co-Founder and President John Zimmer

Since June 2010, Mr. Zimmer has been a member of the Board of Directors. He previously held the position of Chief Operating Officer from July 2008 to March 2013. Mr. Zimmer has also held the positions of Vice-Chair since January 2019 and President since March 2013. Mr. Zimmer served as an analyst at Lehman Brothers before co-founding Lyft.

He wrote the following in a letter to Lyft team members

Mr. Zimmer commented, “Logan and I were told we were crazy to think people would share a ride in another person’s car. Over a decade later, Lyft is creating economic opportunity, building a sustainable future, and helping people make meaningful connections — with the support of millions of riders and drivers. I can’t wait for what’s next, and look forward to working with our deeply-capable successor, David, to improve people’s lives with the world’s best transportation.”

Incoming CEO David Risher

David Risher has over three decades of experience in technology and leadership in both public and non-profit organizations. Since July 2021, he has been a member of the Lyft Board of Directors. Mr. Risher co-founded Worldreader, a nonprofit organization that has so far assisted 21 million people with reading and has been its CEO since November 2009. Prior to joining Worldreader, Mr. Risher worked for Amazon.com, Inc. as Senior Vice President, of US Retail. Before joining Amazon, he was a general manager at Microsoft Corporation.

As Amazon’s 37th employee, David helped transform the company from an online bookstore with $15 million in annual sales to an “everything store” with over $4 billion in sales. Jeff Bezos added a permanent thank-you to the Amazon website in honor of Mr. Risher’s contributions. Mr. Risher, who joined the Lyft board of directors in July 2021, will be fully in charge of the company’s operations.

 

Mr. Risher commented, “When the search committee asked me to consider this role, at first I was gobsmacked, but the more I thought about it, the more I realized that the competitive spirit I learned at Microsoft, the customer obsession I learned at Amazon, and the do-more-with-less lessons I learned leading Worldreader are exactly what Lyft needs right now.

Mr. Risher will lead Lyft as CEO from April 17, 2023. The company announced that he will receive a $3.25 million signing bonus in addition to a $725,000 annual salary.

Top 3 goals for Lyft’s new CEO https://www.youtube.com/shorts/KYWYXQaI8lA

Compared to Peer UBER (UBER)

“One of the first things we’re very focused on is making sure we are matching Uber on price,” Risher said in an interview.

Lyft’s business has been slow to recover from the lockdowns of the early stages of the pandemic. Uber, which has a larger global presence than Lyft does, recovered more quickly, in part because its food delivery service kept drivers on its platform.

Lyft is undeniably hoping for a turnaround with Mr. Risher as the new CEO. Lyft never expanded its business beyond ride-hailing as Uber did by delivering groceries and meals. Uber, led by Expedia veteran Dara Khosrowshahi, doubled down on growing its meal delivery business while working to cut costs elsewhere, including by selling off its self-driving car unit to Aurora Innovation.

In order to cut costs in advance of uncertain economic conditions, Lyft announced last November that it would be eliminating 13% of its staff or nearly 700 jobs.  In July, Lyft fired 60 workers or less than 2% of its workforce. It also announced last May that it would be slow hiring and cut the budgets of some of its departments.

Uber reported $8.6 billion in revenue for Q4 2022 and told investors that it expected to be profitable in 2023. On the other hand, while Lyft reported record revenue of $1.2 billion in its most recent quarter, it also suffered losses of $588 million.

On February 9, 2023, Lyft announced financial results for the fourth quarter and fiscal year ended December 31, 2022.

Fourth Quarter 2022

• Revenue of $1.2 billion increased 21% from $969.9 million in Q4 2021. Revenue increased by 12% when compared to third-quarter 2022 revenue of $1.1 billion.
• Net loss of $588.1 million compares with a net loss of $283.2 million in the 4th quarter of 2021 and includes $201.3 million of stock-based compensation and related payroll tax expenses.

Fiscal Year 2022

• Revenue increased from $3.2 billion in fiscal year 2021 to $4.1 billion, a year-over-year increase of 28%.
• Net loss of $1.6 billion compares with a net loss of $1.1 billion in fiscal year 2021 and includes $767.8 million of stock-based compensation and related payroll tax expenses.

For Q1 2023 Lyft Anticipates

• Revenue of approximately $975 million
• Adjusted EBITDA between $5 million and $15 million

Appointments

1.  Fleetcor Technologies (FLT): $207.43

On March 28, 2023, FLEETCOR Technologies announced the appointment of Tom Panther as Chief Financial Officer, effective May 12, 2023.