Lyft Co-founder on food delivery opportunities, future of ridesharing

Lyft Co-founder John Zimmer joins Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman to discuss how the ride sharing company is faring amid COVID-19.

Video Transcript

BRIAN SOZZI: Ride sharing giant, Lyft, is driving toward profitability next year. Let's talk about that with Lyft Co-Founder and President John Zimmer. John, good to speak with you again here. Lots to talk about coming off your quarter this week. Settle a debate with us here that we've been having in our digital newsroom. How big are you going to be, you think in terms of delivery, for the first time you tease that this week, and what are your plans with the delivery business?

JOHN ZIMMER: Sure, yeah, so we remain focused on consumer transportation. We think that's the biggest opportunity, but obviously during the pandemic, we've had a chance to, you know, look at delivery differently. We had a shared ride product with great technology to kind of match multiple people going the same direction. That is something we are not doing during the pandemic for health safety reasons, and so we asked that team to look at delivery.

And then we started talking to retailers across the board in various categories. And what we heard is that they need a logistics partner, not a consumer marketplace to step in between them and their consumer, but someone to help them get their packages from point A to point B and sometimes use that shared ride technology to get multiple packages going along one route. And so, you know, stay tuned. We're excited to have more of a B2B approach versus a consumer approach, and that will be additive to what we're doing in transportation.

BRIAN SOZZI: So John, your most recent quarter, it was a comeback quarter in many respects, like we talked about the other day. What are you seeing in the business right now? Lots of concern on COVID infections going back up across the country. What are you seeing in terms of rides?

JOHN ZIMMER: Yeah, so quarter over quarter, we saw revenue go up 47%, so we're happy to see that recovery. Ride sharing is recovering. Obviously, COVID is still a major factor, obviously in health safety for the country, for the world, and specifically for people's movement or around in their cities. But this is, you know, obviously I'm biased, but I can't think of a better recovery stock. As economic activity returns, so does the rest of our business. And so we're excited for a big year next year. And as more news comes out in the vaccines and those vaccines get distributed, obviously it will be good for the world and good for the business.

MYLES UDLAND: You know, John, something that stood out to me that you guys talked about a bit on the call was the revenue per rider going up. So the folks who are writing Lyft are, you know, paying a little bit more to do that. Is that a function of frequency? Is it because not as many drivers are on the road? Is it the people who are taking trips are longer trips? Because I would think longer term it's positive, obviously. If people are spending more with Lyft, even if there's fewer of them right now, how do you kind of break down that, if you can?

JOHN ZIMMER: Yeah, so with COVID, every quarter there can be, depending city by city, pretty big shifts in use cases. So for example, obviously at the start of lockdowns, airport trips were way down from their peak, which are the longer trips, but those are starting to come back. So I think that incremental, you know, revenue per rider growth that you're seeing is coming from that mix shift in rides back to a more normal situation.

JULIE HYMAN: Hey, John, it's Julie here. I want to ask about competition with Uber, because what we saw characterize what was going on between the two companies pre-pandemic was a lot of promotioning, that average revenue per user perhaps not holding up as well. Where do you see that going coming out of the pandemic as you do start to recover, and how are you going to hold onto and grow market share against your main competitor?

JOHN ZIMMER: Yeah, zoom out, you know, and say, you know, when people, you know, eight years ago and we started, you know, we were the first to do peer to peer rides, and then Uber came into this space and raised $3 billion and had 30 times more cash than us, and maybe we had single digit or low teens market share, and everyone said we'd be in trouble. We've tripled, you know, market share since then. We've continued to take incremental gains by just being better strategically, smarter in how we use our resources, frankly, in the beginning, because we had to, and by taking better care of our drivers and riders.

My backgrounds in hospitality. I think hospitality plays a big role in how we approach transportation. We're not going to win on, you know, coupons. That's not a long term strategy to win market share. We're going to win on having better services, taking better care of our customers. And for us, going deeper our consumer transportation.

You know, we have a portfolio of transportation options, including bike share. We have the largest bike share network in the country with exclusive contracts in cities like New York, Chicago, and San Francisco to have bike share. So when you come to Lyft for all of your transportation needs, you can get them, bikes, ride share, consumer car rentals, and you cannot get those on our competitor.

BRIAN SOZZI: John, a big win for the ridesharing industry with Prop 22 passing in California, but how concerned are you that other states may not be as friendly moving forward?

JOHN ZIMMER: Well, I think, you know, California with AB-5, the law that preceded Prop 22, was the most aggressive that we've seen to kind of push drivers into the employment category. Drivers do not want to be full time employees. Six to one, drivers prefer to be independent contractors and have the flexibility where they can not show up to work whenever they want. They can do it, you know, three hours one week and 30 hours the next week, not show up for several months after that. But at the same time, drivers deserve a set of benefits, you know, as the more they drive, they should get more benefits.

And so what Prop 22 said is not saying just no on AB-5, it's saying yes on a better solution where you can have both of those things. So I think what it is is it's a turning point in this conversation, creating a model that other states can replicate. And my goal and always has been true from the beginning of when we started is to try our hardest to work together with policymakers, to try our hardest to work together with all stakeholders on issues like this. And you know, in that last case scenario, do something like, you know, a proposition. And so I'm optimistic that we can have those conversations in other states and use this as a model.

BRIAN SOZZI: All right, we'll leave it there. Lyft Co-Founder and President John Zimmer, good to see you, and I'll talk to you soon.

JOHN ZIMMER: Thank you.