Lyft might once again drop its shared rides offering, just one of several changes the company’s newly appointed CEO could make in a bid to focus on its core ride-hailing business and become profitable.

David Risher, who is taking over as Lyft’s CEO in mid-April, told TechCrunch in a wide-ranging interview that other features may also be axed. For instance, the Wait & Save feature, which allows riders in certain regions to pay a lower fare if they wait for the best-located driver, may end, he said.

“It’s possible that maybe we don’t need both of those anymore and that we can focus all our resources on doing a fewer number of things better,” Risher, the former Amazon executive, told TechCrunch. “Maybe it’s time for us to say the shared rides were great for a time, but it’s time to let that go.”

Lyft, co-founded by Logan Green and John Zimmer, launched shared rides in 2014 on a small scale before expanding the service. Uber launched Uber Pool the same year. Both companies dropped their carpooling services during the pandemic before reinstating new versions later. For Uber and Lyft, carpooling has historically been a money pit, a loss-generating ploy to attract riders with cheap fares.

While nothing is yet decided, the potential move is an example of how Lyft’s new management hopes to stem its losses and, eventually, pry some market share back from its main competitor and oft-described big brother Uber. Instead of adding new products like delivery or even selling the company (both of which Risher says aren’t going to happen), Lyft is going back to basics.

“The first order of business here is to focus on the basics of ride-share,” Risher said. “The reason I say that is because in this type of marketplace where you have competitors, you can’t be losing share to the other guy if you want to be around long term. And I think this duopoly is a good thing. In so many other markets, you really want, as a customer, some choice, and I think as a driver, you want choice. It keeps us honest and allows us to play off one another a bit.”

Uber, already a larger company, has taken more U.S. market share from Lyft in recent years, through an all-of-the-above approach that includes food delivery and even transit services. Today Uber’s market share has grown from 62% at the start of 2020 to about 74% today versus Lyft’s 26%, according to YipitData.

Another study from Similarweb shows that Uber leads in monthly active users (MAUs), and that lead has grown over time. In February 2023 alone, Uber had 9.4 million MAUs, a 62% lead over Lyft’s MAU of 5.8 million. This time last year, Uber only had a 48% advantage over Lyft. Similarweb’s data also shows that Uber outranks Lyft on both Apple’s and Google’s app stores, and that over the past 12 months, its Android downloads were 22% higher than Lyft’s.

Uber has taken a different approach to Lyft in pursuit of profits. While Lyft has stuck with ride-hailing, Uber has expanded into delivery through its UberEats platform and added a a slew of new products as it aims to attract users but also create a closed business loop wherein each product feeds customers back into other Uber channels.

“We are actively cross-selling food delivery consumers into grocery, grocery consumers into alcohol, and actually back now to mobility,” said Uber CEO Dara Khosrowshahi during the company’s third quarter 2022 earnings call held November 1. “All of the cross-sell that we have across the platform continues to increase, drive new customers and drive retention, as well.”

Risher said Lyft won’t try to compete with Uber by introducing a delivery product to the app, in part because he doesn’t consider delivery to be either a customer or driver-driven decision.

“From a driver’s perspective, they’re now shuttling in their mind between picking up a person versus picking up a pizza,” said Risher. “And when I pick up a pizza, I have to double park at the restaurant with seven other people, then I get a ticket once every couple of weeks, then I gotta get in my car again and drive, then get out and ring the doorbell. It’s a very different cycle than, ‘I’m picking people up and I’m just transporting them.’”

He also said riders might not want to be in a car that just dropped off a couple of pizzas.

The first order of business

“I think for a lot of people, Lyft has gone from top of mind to a little bit on the side, so it’s our job to remind people we exist and really give them a great experience,” said Risher.

That might mean ensuring Lyft doesn’t charge more than the competition and that its drivers pick up and drop off customers on time. In the past, Lyft was an attractive option because it offered cheaper rides than Uber. Now, after the post-COVID driver shortage, Lyft’s average price per mile is on par with Uber’s, according to more research from YipitData.

Risher didn’t say if Lyft will cut its workforce in an effort to rein in costs. However, CFO Elaine Paul hinted at taking such measures during the company’s fourth quarter 2022 earnings call. Paul also suggested Lyft shift to hiring workers outside the U.S. who are less likely to expect equity as part of compensation.

Risher seems most focused on creating more demand for the services, while making operations more efficient. Those efforts extend to increasing demand for Lyft’s micromobility business through some method of cross pollination between the two verticals, according to Risher.

“I don’t think we’ve given riders or bikers enough of a good reason to come and try us out on ride-share, as an example,” he said, noting that he is an avid cyclist. “If we have both of these ways for people to get around, how can they reinforce each other, because right now they’re a little too parallel.”

Lyft currently offers the Lyft Pink membership program that provide riders with ride-hail perks like free priority pickup upgrades and relaxed cancellations, as well as bike and scooter discounts. The membership also includes free Grubhub+ for a year and SIXT car rental upgrades, which represent a half-hearted attempt to capture more of the transportation market through partnerships.

Analysts are still wary on Lyft’s recovery

Lyft went public in March 2019 at a value of $24 billion. Today, Lyft’s market capitalization is around $3.35 billion. Uber’s market cap is $60.44 billion. Investors initially reacted favorably to Risher’s appointment, pushing its share price to $10.14 immediately following the announcement. But the positive reaction has been short-lived. Lyft’s share price has fallen 11.4% from Tuesday’s high to close Wednesday at $8.98.

Tom White, senior research analyst at D.A. Davidson, told TechCrunch he remains neutral on the company with a $12.50 price target.

“We’ll admit the news came as somewhat of a surprise to us, but perhaps it shouldn’t have given the relative underperformance of LYFT shares and in Lyft’s core ride-sharing business in recent quarters,” said White.

Lyft’s Q1 2023 revenue outlook remained unchanged by Risher’s appointment, but analysts recall that Lyft’s target ($975 million) was lower than what they had expected ($1.09 billion).

Lyft attributed the reduced outlook to colder weather, which leads to fewer ride-hail rides, shorter trips and a major dip in micromobility usage. Since Lyft is only active in North America, the company lacks the ability to balance poor ridership in one wintry part of the world with increased usage in other, warmer places.

Although Lyft’s strategy so far lacks the dazzle of shiny new products that might directly compete with Uber, Risher has some pretty good incentives to turn the company around (that is, aside from the pride of a job well done).

“As part of his equity compensation, [new CEO John Risher] received 12.25 million performance-based restricted stock units, broken into nine tranches, each vesting separately at LYFT price hurdles from $15.00 to $80.00,” said Ben Silverman, director of research at investment research management firm VerityData. “The vesting schedule is vastly different from the founders’ awards received by Logan [Green] and [John] Zimmer in 2021 and 2022 which only vest if LYFT hits or exceeds $100.00. Clearly, that aspirational view has been muted. Regardless, Risher is tasked with a massive turnaround and if fully successful, can earn $980 million.”

Yesterday, the ride-sharing company Lyft said its two co-founders, John Zimmer and Logan Green, are stepping down from managing the company’s day-to-day operations, though they are retaining their board seats. According to a related regulatory filing, they actually need to hang around as “service providers” to receive their original equity award agreements. (If Lyft is sold or they’re fired from the board, they’ll see “100% acceleration” of these “time-based” vesting conditions.)

As with so many founders who’ve used multi-class voting structures in recent years to cement their control, their original awards were fairly generous. When Lyft went public in 2019, its dual-class share structure provided Green and Zimmer with super-voting shares that entitled them to 20 votes per share in perpetuity, meaning not just for life but also for a period of nine to 18 months after the passing of the last living co-founder, during which time a trustee would retain control.

It all seemed a little extreme, even as such arrangements became more common in tech. Now, Jay Ritter, the University of Florida professor whose work tracking and analyzing IPOs has earned him the moniker Mr. IPO, suggests that if anything, Lyft’s trajectory might make shareholders even less nervous about dual-stock structures.

For one thing, with the possible exception of Google’s founders — who came up with an entirely new share class in 2012 to preserve their power — founders lose their stranglehold on power as they sell their shares, which then convert to a one-vote-per-one-share structure. Green, for example, still controls 20% of the shareholder voting rights at Lyft, while Zimmer now controls 12% of the company’s voting rights, he told the WSJ yesterday.

Further, says Ritter, even tech companies with dual-class shares are policed by shareholders who make it clear what they will or will not tolerate. Again, just look at Lyft, whose shares were trading at 86% below their offering price earlier today in a clear sign that investors have — at least for now — lost confidence in the outfit.

We talked with Ritter last night about why stakeholders aren’t likely to push too hard against super-voting shares, despite that now would seem the time to do it. Excerpts from that conversation, below, have been lightly edited for length and clarity.

TC: Majority voting power for founders became widespread over the last dozen years or so, as VCs and even exchanges did what they could to appear founder-friendly. According to your own research, between 2012 and last year, the percentage of tech companies going public with dual-class shares shot from 15% to 46%. Should we expect this to reverse course now that the market has tightened and money isn’t flowing so freely to founders?

JR: The bargaining power of founders versus VCs has changed in the last year, that’s true, and public market investors have never been enthusiastic about founders having super voting stock. But as long as things go well, there isn’t pressure on managers to give up super voting stock. One reason U.S. investors haven’t been overly concerned about dual-class structures is that, on average, companies with dual-class structures have delivered for shareholders. It’s only when stock prices decline that people start questioning: Should we have this?

Isn’t that what we are seeing currently?

With a general downturn, even if a company is executing according to plan, shares have fallen in many cases.

So you expect that investors and public shareholders will remain complacent about this issue despite the market.

In recent years, there haven’t been a lot of examples where entrenched management is doing things wrong. There have been cases where an activist hedge fund is saying, “We don’t think you’re pursuing the right strategy.” But one of the reasons for complacency is that there are checks and balances. It’s not the case where, as in Russia, a manager can loot the company and public shareholders can’t do anything about it. They can vote with their feet. There are also shareholder lawsuits. These can be abused, but the threat of them [keeps companies in check]. What’s also true, especially of tech companies where employees have so much equity-based compensation, is that CEOs are going to be happier when their stock goes up in price but they also know their employees will be happier when the stock is doing well.

Before WeWork’s original IPO plans famously imploded in the fall of 2019, Adam Neumann expected to have so much voting control over the company that he could pass it along to future generations of Neumanns.

But when the attempt to go public backfired — [with the market saying] just because SoftBank thinks it’s worth $47 billion doesn’t mean we think it’s worth that much —  he faced a trade-off. It was, “I can keep control or take a bunch of money and walk away” and “Would I rather be poorer and in control or richer and move on?” and he decided, “I’ll take the money.”

I think Lyft’s founders have the same trade-off.

Meta is perhaps a better example of a company whose CEO’s super-voting power has worried many, most recently as the company leaned into the metaverse.

A number of years ago, when Facebook was still Facebook, Mark Zuckerberg proposed doing what Larry Page and Sergey Brin had done at Google but he got a lot of pushback and backed down instead of pushing it through. Now if he wants to sell off stock to diversify his portfolio, he gives up some votes. The way most of these companies with super voting stock are structured is that if they sell it, it automatically converts into one-share-one-stock sales, so someone who buys it doesn’t get extra votes.

A story in Bloomberg earlier today asked why there are so many family dynasties in media — the Murdochs, the Sulzbergers — but not in tech. What do you think?

The media industry is different from the tech industry. Forty years ago, there was analysis of dual-class companies and, at the time, a lot of the dual-class companies were media: the [Bancroft family, which previously owned the Wall Street Journal], the Sulzbergers with the New York Times. There were also a lot of dual-class structures associated with gambling and alcohol companies before tech firms began [taking companies public with this structure in place]. But family firms are nonexistent in tech because the motivations are different; dual-class structures are [solely] meant to keep founders in control. Also, tech companies come and go pretty rapidly. With tech, you can be successful for years and then a new competitor comes along and suddenly . . .

So the bottom line, in your view, is that dual-class shares aren’t going away, no matter that shareholders don’t like them. They don’t dislike them enough to do anything about them. Is that right?

If there was concern about entrenched management pursuing stupid policies for years, investors would be demanding bigger discounts. That might have been the case with Adam Neumann; his control wasn’t something that made investors enthusiastic about the company. But for most tech companies — of which I would not consider WeWork — because you have not only the founder but employees with equity-linked compensation, there is a lot of implicit, if not explicit, pressure on shareholder value maximization rather than kowtowing to the founder’s whims. I’d be surprised if they disappeared.

Tesla is bringing back its referral program to Europe, a strategy that taps into the brand loyalty of customers as it seeks to preserve market share and boost sales before the first quarter of 2023 closes.

The referral program follows Tesla’s move to reduce prices in a variety of markets, including Europe, China and North America.

Starting Tuesday in Europe, new Tesla buyers can receive 100 so-called “Loot Box Credits” when referred by a current Tesla owner, who will get 2,000 credits for the referral. If the referred customer takes delivery before March 31, 2023, they’ll get a bonus of 5,000 free Supercharging kilometres, and the referrer will get 10,000 credits. Those credits can be redeemed for software upgrades, up to 10,000 kilometers of free Supercharging “and more.”

Tesla has never used traditional advertising, so the company has historically used its referral program to get its loyal customer base to promote vehicles. Those rewards have changed over the last few years. At certain points, owners could win rewards like having a photo of their choosing launched into deep space orbit, an invite to an upcoming Tesla event, or even free new Roadsters to owners who accumulated enough referrals.

Tesla realized such extravagant rewards were starting to eat into profits, so in 2019 the automaker paused the program and came back with a more reasonable one that gives the referral giver and receiver 1,000 miles of free Supercharging each.

Last November, Tesla launched a revamped referral program in the U.S., which gives out credits that can be put towards the purchase of Tesla solar products, like the Solar Roof and Solar Panels. Tesla also launched a program in China called Treasure Box, where owners get credits that can be used towards the purchase of accessories like vehicle chargers, t-shirts or shot glasses.

The move in Europe suggests that Tesla is trying to hold onto, or even grow, its market share dominance. Tesla was the most popular EV brand in Europe last year, with the Model Y and Model 3 topping the ranks at 138,373 and 91,257 sales, respectively. Following behind were the Volkswagen ID.4 with 68,409 unit sales, the Fiat 500 electric with 66,732, and the Ford Kuga plug-in hybrid EV with 55,018 sales, according to Inside EVs.

While Tesla was the most popular EV brand in Europe last year, it actually falls behind the large multi-brand OEMs. Volkswagen Group, which includes brands like Audi and VW, actually has the largest market share of plug-in EVs with 20.6%. Stellantis, BMW Group and Hyundai follow with 14.6%, 10.5% and 10.1%, respectively. Mercedes and Tesla are tied at around 9% share.

As of this week, Tesla has finally hit production capacity of 5,000 vehicles per week at its Berlin gigafactory — a milestone CEO Elon Musk had originally promised for the end of 2022. While production numbers don’t equal sales, it’s possible that the increased production in Europe could help the automaker maintain its position and gain even more market share in the future.

The referral program isn’t the only move Tesla has made to boost sales, particularly before it reports quarterly earnings. In January, Tesla cut prices for Model 3 and Model Y vehicles in the U.S. and Europe by 20%. Earlier this month, the automaker slashed Model S and Model X prices in the U.S. as well.

In December 2022, Tesla also provided up to $7,500 discounts for vehicles purchased and delivered before the end of the year in the hopes of attracting buyers who might otherwise wait for the new year when Inflation Reduction Act incentives would kick in.