Logan Green, Founder and CEO of Lyft (NASDAQ: LYFT) - part 1
Is Logan Green an outstanding leader? Time will tell but there are not so many 36 y/o founder-CEOs managing multibillion companies.
I’ve never been a fan of Lyft as a business. While the company definitely creates value for customers and drivers, Lyft has not succeeded in value creation for shareholders since IPO. In its best quarter ever – Q4 2019 – the company reported -38% operating profit margin, which indicates a long way towards GAAP profitability.
It’s not a secret that in a “winner-takes-all” world of tech companies being second frequently equals losing the game as the majority of profit pull is captured by the industry leader. Yet despite being second, Lyft definitely has value, both as a takeover target and as an option.
Here is how Melissa Schilling from New York University puts it:
Melissa A. Schilling, a New York University business professor and author of "Quirky: The Remarkable Story of the Traits, Foibles, and Genius of Breakthrough Innovators Who Changed the World," believes the challenge for Green is finding the next innovation.
"Serial breakthrough innovators have idealism. Green has that going for him," Schilling said. "But is he going to have another innovation and another innovation and another innovation? I don't know because we haven't seen it yet." (Mar-18) [69]
Green has more skin in the game than Dara (CEO of Uber), which in theory allows Logan to have a longer-term view.
Another interesting detail: I think Lyft has created a superior company culture compared to Uber:
1. Green as Lyft’s founder and guardian of company culture still remains its CEO, while Travis Kalanick, Uber’s founder, left in 2017. Typically, strong cultures are associated with company founder.
2. Lyft positions itself as a mission-driven company (its 10-K starts by stating company mission), while Uber’s 10-K does not mention company mission at all.
3. Reaction to scandal with Uber and to BLM movement also indicate Lyft founders have higher ethical standards
https://www.wmur.com/article/lyft-tells-employees-not-to-gloat-over-uber-crises/10208757
https://www.lyft.com/blog/posts/a-note-from-our-co-founders-a-call-to-action-for-each-of-us
Below are some quotes and other additional information to help you understand what kind of a person is Logan Green.
Great overview of Green’s early years:
In the tech world, where companies sink millions of dollars into creating a brand identity, Lyft has cast itself as the friendlier, more thoughtful ride-hailing company.
It’s an image born in part from the firm’s relentless marketing efforts. Its “Your friend with a car” slogan is plastered on billboards, bus stop signs, and online ads.
But it’s also born from Green himself, according to people who have known him since middle school.
Green was the kid who transcended social circles. He played ice hockey with the jocks, but also loved science and taught himself to code. He was the sweet kid, the calm kid, the 8th-grade kid who asked his parents to move the family TV into the garage because he thought it was too distracting.
He was also a product of his home: the son of a veterinarian and doctor who composted and recycled before it was cool, who regaled him with stories of helping organize farm labor unions, who biked the 350 mile trail from L.A. to Mono Lake as part of a campaign to save the lake.
And where most kids sat in L.A. traffic sighing and groaning, Green was plotting and scheming, always asking what if, what if, what if?
As soon as he got to college, finding an alternative to car ownership became a mission he continues to obsess over today.
At UCSB he helped the campus fund-raise for a new bike lane. He convinced the university to donate six cars to a car-sharing program, similar to Zipcar, so students on campus could leave their cars at home, too.
His enthusiasm for buses and car sharing caught the attention of the Santa Barbara City Council, which appointed him to its Metropolitan Transit District’s board of directors. He became its youngest-ever member.
“He walked in bright-eyed and bushy-tailed. He was a quick learner, very collaborative, always smiling,” David Davis, chairman of the SBMTD said. “Although I see he’s lost his hair since he left us.”
Green joined the board with huge ambitions for the public transit system. If the MTD could get more funding, from higher fares or taxpayer revenue, it could add more services, extend existing lines, and bring the city a step closer to doing away with car ownership.
But his three years on the board were an education in the economic and political pressures public systems face. When the board tried to increase fares, the public pushed back. When the board put a measure on the ballot to increase taxes, voters defeated it.
He learned that while people said they supported public transit, few were willing to pay for it. This left the district locked in place.
This also meant Green couldn’t count on the public sector to accomplish his mission.
(Aug-16) [55]
ON EARLY YEARS:
On Zimride: College students are always looking for rides, and while other people have attempted to create ride-sharing sites online, they haven’t developed an identity. You see these anonymous listings and have no idea who you might be getting in a car with. With Zimride, people can create a profile or connect via Facebook, talk about music and smoking preferences, and where they want to stop to get coffee in the morning. We launched in 2007 at Cornell University, and within six months had signed up 20% of the campus. (Jan-11) [2]
I was frustrated with the lack of scalability in public transportation. Plus, on average, it takes twice as long to go the same distance when using public transportation. (Jan-12) [4]
On success of Zimride: I believe our focus on a specific municipalities, companies or universities has been key to our success. That focus differentiates us from other car pooler networks. (Jan-12) [4]
There was no way public transit [in Santa Barbara] was going to scale the way it was currently built. I became enthralled with the idea that there was an opportunity to create a scalable network by crowdsourcing it. (Oct-13) [13]
After high school graduation, Green enrolled at the University of California-Santa Barbara along with his girlfriend, Eva, who is now his wife. He left his car at home to experiment with transportation. When Eva transferred schools, Green endured three years of weekend commutes on Greyhound to visit her in Los Angeles, three hours away. "The point was to feel the pain," Green said. "When an axle, or whatever, fell out of the bus in the middle of an intersection in Oxnard, California, and I was sitting there for hours, it's moments of pain like that that really made me think, 'How can we do this better?'"(Mar-18) [69]
OTHER PEOPLE ON GREEN:
John Zimmer on Logan Green: He has a background in transportation hacking, he built the first car-share program at University of California at Santa Barbara, before even Zipcar. He was on the transportation board in Santa Barbara working on buses. He was frustrated that public transportation was based on tax revenue, so only about 30 per cent of the operating costs were covered by fares. When a bus line folded, he couldn’t add more bus lines, so he wanted to build a transportation form that would get better as it got used. (Sep-12) [6]
Howard Schultz, Starbucks founder on Lyft founders: “John and Logan are building a long-term business, not something that’s just for today. Starbucks will do as much as we can to support them.” (Mar-16) [42]
“He’s not grizzled, smoking a cigarette, complaining about Uber,” said John Siegel, a close friend from high school who introduced Green to Zimmer. “He and John are very thoughtful, strategic people. They’re focused on something that’s bigger than Uber.” (Aug-16) [55]
John Zimmer on Green: "When some people first meet Logan they say, 'I don't fully understand Logan yet. I don't know what he's thinking. It's just because he's an introvert and he's processing. He's trying to come up with the clearest, best answer that he can develop. (Mar-18) [69]
"I've been on a lot of boards," said Valerie Jarrett, the former advisor to President Obama who joined Lyft's board in 2017. "This is the first one where I've seen the CEO work quite so closely in such a deep partnership like the one Logan has forged with John." (Mar-18) [69]
ON HIS PHILOSOFY:
On advice to entrepreneurs: I would tell them that it is important to develop an internal culture that encourages experimentation. We did that and that’s how we came up with Lyft. I’d also tell them to be open to pivoting. Remember that the company you start off with isn’t always the company you end up with. And know that is okay. (Oct-13) [13]
Take on giant problems that matter to people. Listening to all of the chatter in the press, it is easy to come away with the impression that investors are always chasing the latest fad. But in our experience the best investors care most about putting their money into solving gigantic problems that improve the world in a meaningful way. (Jan-14) [14]
Who in technology do you admire most? I think I’m most excited by Elon Musk and the scale of the problems that he takes on. There are a lot of exciting things happening in the tech world, but we’re only more recently getting to a place where tech is impacting these giant aspects of the real world. From the way that we build cars or going after space travel, I get excited about the transportation space because it’s the second-highest household expense after housing. An average household spends 20% of combined incomes on transportation, and most of that goes toward owning and maintaining a car. I get excited about people who are taking on audacious real world problems. (Aug-14) [27]
Which companies do you admire? I really admire Airbnb as a pioneer of the sharing economy and for building community. They’ve found an elegant way to help hosts make more money and for guests to have authentic experiences. It brings those people together in a unique way. (Aug-14) [27]
Which area of technology excites you most? We’re seeing a whole new host of businesses pop up—and Lyft is one of them—that are possible now that everyone has a phone and [there are] all the things that are packed into a phone. Lyft wouldn’t have been possible a few years ago. You couldn’t have assumed that every driver on the road would have a smartphone that could track their exact location, and you couldn’t assume that every potential passenger on the road could pull a phone out of their pocket to get a ride. The different pieces of mobile have been around for a few years, but being able to make the assumption that everyone has one and the ubiquity of it has finally unlocked the businesses that are built on top of that network. (Aug-14) [27]
What advice would you give to someone who wants to do what you do? Picking an idea and a problem that you’re incredibly passionate about personally is really important. When you’re starting a company, almost anything that can go wrong, will go wrong, and it will probably look like and feel like you made the absolute wrong decision to start the company. If you’re not absolutely determined to solve a problem or see something through, it might not make sense to keep going. You have to find a way to keep going. (Aug-14) [27]
What is the best advice you ever received? The best advice was early on when one of our advisors at Zimride. He told us that we should stop working on Zimride. Having a trusted close advisor tell us to stop and that we should try something else forced us to strengthen our resolve and question whether it was the right thing to do. We were that much more determined and confident to keep going forward. This was before we had the idea for Lyft. He made us stop to think about it, and question it. We thought twice about it and came back doubling down saying that, “No, we’re going to find way to make it work.” (Aug-14) [27]
What is one goal—either personal or professional—that you would like to accomplish during your lifetime? I want to be able to go to any city and be able to get around that city for less than the cost of owning a car and with the ease of a car without actually having to own a car. I want to be able to consume transportation as a service. (Aug-14) [27]
But Green’s company doesn’t just traffic in world-saving ideals. If it will survive, it must eventually turn a profit. Green is adamant that Lyft will find a way to do so on its own terms — as a socially responsible company. “That’s one of the things that keeps me up at night,” Green said. (Aug-16) [55]
We're like cutthroat missionaries. I think people see the missionary aspect, or see that we care about taking care of people, and assume it means we'll be soft when it comes to competing. (Mar-18) [69]
As an entrepreneur, you always kind of want what you’re pitching to sound somewhat off the wall. You’re trying to pitch the future that doesn’t exist, and you want it to be — it needs to be — a little bit of a stretch. (Jan-19) [75]
ON LYFT:
We started Lyft to create a system for matching up people who need a ride with people who can offer a ride. (Feb-13) [8]
Lyft came out of a hackathon project where we were trying to figure out what does Zimride look like on mobile. (Sep-13) [11]
The ambition of our mission is to bring people together through transportation. (Apr-14) [15]
We refer to Lyft as a ‘mullet app. Simple up front, a lot going on in the back. (Apr-14) [18]
We don’t want to be the option that people use only when they’re heading out for a nice evening. We want to be something that people use twice a day, every day.(Aug-14) [21]
We're not just into the idea of semiprofessional drivers. The idea we are [embracing] is that every car on the road can be a Lyft. You know, every mom in a minivan, every person commuting. Anytime they are on the road, they should be able to go into driver mode and give a ride to a neighbor. That's how we achieve scale. (Mar-15) [34]
On price sensitivity: "We’re innovating to bring our price point down. For every dollar you knock off the price, you open up to a huge portion of the market." (Mar-15) [37]
Every time we plan what we're doing next quarter, every time we plan out the next year, it's going to look like a different company. The number of elements that change every quarter, every year it's mind boggling how fast it's moving. (Mar-18) [69]
We've never laid out our path for profitability and we know that's a question on a lot of investors' minds. We're going to hit this target [of profitability] in Q4 for 2021. (Oct-19) [87]
Our commitment to being the lowest-cost operator will give us a further advantage in the coming months and years. It’s a value we’ve upheld since the beginning, and one we’ve embedded in our culture. From the rule that all team members fly economy, to ruthlessly managing each component of variable cost, we will continue leaning into this philosophy to ensure we emerge with an even better cost structure. (Apr-20) [94]
On the other side of this crisis, we believe people will depend on Lyft more than ever — both for transportation access, and for critical earning opportunities. Over the next decade, we’ll shift the trillion-dollar personal car ownership market to a transportation-as-a-service model. In the process, we’ll establish a lasting business and use the scale of the network to deliver value to customers that no other single company can provide today. (Apr-20) [94]