Like I'm going to wake up in a world and see Ubers drive by and know that I like put down my arms and didn't fight. But 80% of the business went away overnight.
When you have 5 months left to live, like what is the number one thing?
It makes things really clear, I guess, because you're in survival mode. Probably can't talk about as much because of NDAs, but...
All right, everyone. I am so excited to have John Zimmer here. Needs no introduction but co-founder of Lyft, generational company and took it from its foundation to IPO. Now he's the co-founder of Yes. And one of the things I admire most about John after doing extensive research is that you built Lyft in a values-first way in a market that usually rewards the opposite. And I think that's something that a lot of companies can learn today. So it's great to have you here.
Thank you. It's good to be here. So, first off, I've been banned from Lyft for a couple years.
Do you have any sway in getting me unbanned?
I can't talk about that here.
Okay. Well, it depends what you did and I can probably connect you to the right person.
All right. Well, we'll chat about that.
Let's start in the beginning of your career. You started in hospitality and this has been a big theme of your life, service first, but then you went into Wall Street. You worked at Lehman Brothers before the financial crisis. I'm curious what Wall Street taught you that you brought forward building a company that was involved in service.
Well, I hated the culture at Lehman. And I mean there were good things but there were a lot of things I didn't like and so it taught me a lot about how I wanted to build the company differently. So I went to Lehman Brothers in 2000. I graduated school in 2006, was there in 2006, and I left three months before they went bankrupt in 2008. And I was said, how could you leave a sure thing like Lehman to do a silly carpool startup? But there was less of a focus on doing excellent work and a lot of focus on things like FaceTime and just making yourself look good in front of the managing director instead of actually doing the best work and excellence around the work. And so, anyway, I wanted to build a company and culture, which I'm proud that we did that, where people could bring both the same person that they are at home as close as possible. I think there should be professionalism in the workplace, but I think I want to see the person for who they are at work. And I learned as I got to know people at Lehman, like they were really interesting, fun people and they behaved extremely differently in the office. And I just wanted to kind of like... yeah, authenticity.
Did that inform how you hired? Like you hired for that or you believe that is something that could be taught?
A bit of both. I think what we learned at Lyft not just in the culture of the company itself but also with the driver community and rider community is the power of suggestion is very high and strong. And so by suggesting whether they're like company values or norms, I do think people are good people. I do think people innately want to take care of each other. And so when you create an environment where people can authentically do that and comfortably do that, then I think sure there are bad actors so it's not perfect. But I think people want to be in that environment in order for people to do their best work. I think they have to be comfortable and so there's like an ROI component of it too. It's not just to be nice and part of it doesn't mean that we say yes to everything and let team members employees do whatever they want. But I think authenticity matters. So we definitely hired for it and built an environment that allowed for it.
Love that. In the early days of building your first company, you know, you were taking no salary, sleeping on a couch, having microwavable meals. This is like the classic founder story and I'm just curious to hear from your perspective. Did that actually matter later on that you had to go through that or do you think a lot of this early founder kind of suffering is a bit overromanticized?
I mean it's not a necessary thing to be successful. But I think it sometimes can be correlated in the fact that we were putting every ounce of our energy and resources into solving the most important problem at the company. And by sleeping, I mean, we had what we called the apartment, which was an apartment. And I would sleep on a couch like this. Logan, my co-founder, he got a real bed. He had the bedroom. But then my desk was like right next to the bed. I had the best commute. And then in the morning we would like rip off the blanket and like throw it in the closet and like when we hired a couple people and like tried to make it feel less weird.
Yeah. Minimal decision fatigue.
Yeah. So I don't know. I think it's not necessary. But I think character traits of believing so deeply in the mission in the company that you're willing to do what it takes, being extremely persistent particularly in those early years is super super important.
Yeah. And you know from that you built a working business with Zimride and you asked yourself how would this look differently if we rebuilt it for the mobile era and you decided to kill it for Lyft which at the time was an experiment that had traction but I'm sure killing something that was a full business was hard. What gave you the conviction to kill the thing that was working and did you ever kind of look back and doubt that decision?
We didn't doubt it. It was clearly the right decision. It was extremely hard to make that decision because we had spent at that time 5 years building the first company Zimride and you know becomes just like the next company just so important you pour so much into it and then you're like I'm going to take a risk on this new idea and just give up on the last 5 years of work was very very hard. What ultimately, in fact I had to get like my appendix out, which I think was highly stressed when we potentially related. But what eventually gave us the confidence to do it was just that customers riders were pulling on like we had to create a waitlist for Lyft within the first week and Zimride there was never that type of pull and so just listening to the customer it was very obvious this was the right thing.
Nice. There was a time where you know you were up against Uber. They had 10x more capital than you. They were paying people not to be drivers on Lyft. And sometimes when you have competition like that, your first intuition might be to copy what they're doing. And I'm curious, was there a moment where you felt like copying Uber's strategy would have helped you in the short term, but you decided not to do it anyways?
I think we had to learn and it was a lot more of different capital. They had raised $3 billion from the Saudi government and we had five months of cash left and everyone said you are royally screwed and like you might as well return the capital to your investors at this point.
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Again, I always go back to the mission. So our mission was to improve people's lives with the world's best transportation. So if in order to do that we should copy part of a strategy, do it. If it's tied for me to the mission and you think you'll get to a better place. But given that we had such little capital compared to theirs, we couldn't copy their strategy and we had to think like we were guerrilla fighters. And so we went to the markets where we had the lowest market share and we spent as much money as we could because, let's say we had 10% market share in a market and they had 90%. If we subsidized something a dollar or gave a dollar off, they would have to pay $9. And so we would start making it more expensive. So if we had 5% and they had 95% obviously you can do the math and so we had to think differently but certainly there were things that they ripped from us and vice versa.
Yeah. And in fact the whole idea of they ripped from us in bricks... we can get into that. Yeah. Why go, follow-up question. Why go into the markets where you have lowest share versus trying to dominate the ones where you have highest share?
It was just too, we couldn't afford to do it. Look, we wanted to be in those markets, but we were trying, they were trying to kill us with cash and we were trying to make them stop. And so we said, 'Okay, you really want to play this game, spend more, then you have to spend 9x, 10x, 20x.' And so we'll raise a billion. Go raise 20 at some point. Like put down your weapons. It's like let's fight a different battle.
Yeah. So, a lot of people know about the story of Travis trying to acquire Lyft and an investor actually telling you to shut the company down. I'm curious to know the 48 hour period between you receiving those options and deciding no, I'm going to go all the way. Like what were the conversations that you had that made you say hey we're going to take this all the way?
So those are two different moments. So the first moment of you should shut the company down was actually that kind of capital moment I talked about where they raised three billion and we have 5 months of cash left and it looks pretty dire. In that case, I'm really grateful to Ben Horowitz and Marc Andreessen that they said look like this almost happened to one of our companies and then we turned it around and you know went public and became a billion dollar company, and so they had seen working with investors that have seen with their own companies things almost go to the end before being turned around was very helpful. And inspired us. But also again just to keep harping on it, we believe so much in our mission. The words were actually even different than what I just said when we started was reconnecting people in communities with the world's best transportation. And we were just so mission-oriented that like we just hadn't had a, and Uber took a very like kind of played a dark foil for us. And we're like we don't want to live in a world, I'm going to wake up in a world and see Ubers drive by and know that I put down my arms and didn't fight to have competition that would then compete for drivers, pay drivers better, compete for riders, give riders better service. And so we were just like missionaries. We were like, we're just, I don't know how we're going to do it, but we're going to keep going. And that also brought the team closer together and had the team, you know, work extra hard and kind of it was just like the best sports team you've ever been on, like everyone fighting towards something that we all believed in. The other time probably can't talk about as much because of NDAs. I'm glad we remained independent.
Yeah. So there's a lot of, there's a belief in startups that you have to be cutthroat to win that nice guys finish last. We even have an investor who famously quotes that humility is for losers. And you charted your own path, lifted things a very different way, values first and something that I know you kind of learned from Howard Schultz. Was there a moment where you felt that doing things in this kind of like right way was a disadvantage and you had to decide whether to stick with those values or not?
I definitely felt that way and I do think there are patterns of entrepreneurs who are cutthroat and aggressive and do extremely well. And so I think it was scary to say no like treat people well and then you'll do well because they'll want to work for you. They'll want to buy your product. So I think there's two paths. I don't think Uber is a bigger company because they were more cutthroat than us. I think they started earlier and they raised more capital earlier. And so I just think there are two paths and this is the path I like to build a company and a product where you treat people well. It doesn't mean you're not like, and you do have to be cutthroat about certain business decisions. We did have to lay off a lot of people and that was extremely hard. And so it's not about just always being nice and always saying yes. So, I think it's a balance of like, but I could like I had someone after I fired them give me a hug, which was a little weird, but like that wasn't the goal, but like treat someone with respect. And I've had a lot of good things happen to Lyft or me because of that. And so I think it was an advantage for us. I think we survived because of it.
Yeah, it's a very long-term mindset in a way. But you can I mean you will need to be sharp and cutthroat in business.
I mean we were like aggressively fighting Uber. And so I think it's more nuanced than maybe like the good guy bad guy thing.
Sure. Yeah. And on that you know Lyft famously invested in brand and trust and community and safety as kind of core tenants to what differentiated the company. What made you confident that that was the vector to differentiate it in or was it more just this is the kind of company I wanted to build?
A little bit of both. I mean it was like what felt right what I wanted to build. I mean coming from a hospitality background it's all about service. It's all about who are you serving? So, we always felt like we were serving our drivers, our riders, and our employees. And so, to me, that just makes sense. And again, we had this foil of a company that was treating their drivers like shit. And that helped us in those early years. I think they've turned around that. Good. And that's good. That's why competition is good. They were forced to like that's not going to be a winning strategy.
Yeah. Brand is becoming more and more important today in the AI era as like what you can differentiate and kind of is going to zero.
Were there any non-obvious things that you did with the Lyft brand?
We put a pink mustache on the cars. That was pretty non-obvious. Yeah. But no, we did other things. We created a ritual in the beginning early days. The premise was like you're going to get into a car with a stranger in their Honda Civic. That was not aspirational. That was not cool. That was scary, right? Like your parents said never take a ride with strangers. And so the non-obvious thing was, okay, we're going to not make this look like a Honda Civic. We're going to have people smile instead of be scared. And so we did something absurd, which was the pink mustache. It was just ridiculous. And you have to make something more ridiculous than what was already kind of ridiculous. Yeah. And it changed like people would smile and point at little kids would run and like tell their parents like look at that and then they would have a conversation and we never paired the pink mustache with the logo because we wanted people to be forced to talk about what it was what they were seeing. It seems really smart now but I mean we were just like let's try this. Who knows? It was just kind of a random idea. But with the intention of like let's make a Lyft not a Civic Accord, you know, all these different vehicles.
We also in the early days suggested that you sit in the front and that you fist bump your driver. Again, we were trying like our tagline in this was like the first couple years was like your friend with a car. This is not like get into a taxi, a stranger's taxi. This was like when you were in college and one of your friends had a car. We wanted to and then we obviously did criminal background checks, driving record checks and in the early days literally myself and Logan met every driver. And then that couldn't scale and so we had to adjust that. But so those were some of the things we did on brand. We had really fun content we were creating. I remember when some of the marketing leaders we were working with or interviewing would talk about we need to do ads and commercials and we're like, why don't we make really cool content? And so we got celebrities to be undercover Lyft drivers. Which was super fun. We had Shaquille O'Neal driving in the worst possible disguise, but somehow people were still surprised. Anyway, so we just had fun and did things that would get attention and be not what is interesting about what you're saying with where we are with AI now, I do think brand, like you said, is becoming more and more important, but also to do things that haven't been done before.
And take more risk because everyone else can do things that have been done before by using AI to give them that idea. But if you do something that's unexpected and risky, often times that can pay off.
And when Lyft had gotten to the point of mass adoption, were there any continued risks like that that you continued to take or you didn't really need to at that stage?
Oh, no. We took risks. I mean, because we're still there by being the underdog. I think the onus was on us to take risks and to punch up a bit. And so we did some like political things that were controversial and got a lot of attention. But we always asked ourselves when we took an action is this authentic because I think consumers can see through stunts particularly in now because other companies have done this a lot and people copy. But I think if there's something authentically that you because you are that company can do and that you because you were that person believe that those were risks that we took.
And it seems like behavior normalization was like really the key battle. Were there any specific uphill battles in normalizing this behavior in the stranger's car even after trying some of these stunts?
Honestly, it became like a cultural moment and so it kind of just took a life of its own. Because it was absurd with both the pink, I mean there was a Conan O'Brien recorded like a nine or 10 minute piece that's like his most viewed or second most viewed video on YouTube where him, Kevin Hart, Conan O'Brien and Ice Cube got in a Lyft and we had no, we didn't like it wasn't didn't come through us. It was the early days. It was like incredible. It's a really funny video still. If you want to see it on YouTube. But I think it just hit a cultural vein that it became, we didn't have to work hard to get people to use the product or like we just the hardest hurdle was the government relations and like creating new laws.
Yeah, that's a good segue to my next question. A lot of people talk about Uber being Lyft's most existential risk. I'm curious if there are any kind of unspoken internal risks outside of Uber and outside the government that you view as some of your biggest challenges while running the company.
I mean those early years it was like capital, government relations, competition from Uber and then yeah you can like your company culture could be both like the accelerant or the risk. I think for us it was mostly the accelerant. I think COVID was a super hard moment. So that became a pretty big existential risk both literally to the company. People didn't for some reason, this is a joke, for some reason didn't want to ride in enclosed environment with other people, especially when they didn't understand what COVID was. So 80% of our business went away.
That's why you need a... within weeks and cars.
Yeah. But 80% of the business went away overnight. So we had just been like, 'Oh my god, we've kind of survived. We raised enough capital. We brought the company public. We're on a path to profitability. We're no longer fighting for survival.' Where you need to build a profitable successful business and then COVID and Uber had Eats and Eats does very well and so that was a pretty rough moment and then it has cultural problems too where you start not working together in the same environment.
