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FutureStarrLyft's New CEO Makes Tough Calls - Nashville Jobs Get the Axe
As Lyft works to recover its losses, its new CEO plans on increasing demand for Lyft's core ride-hailing services as one way of taking market share from Uber. Lyft could also look to expand their global presence as another potential growth strategy, but will this work? The Company’s Problems After years of rapid expansion, Lyft has fallen into losses as it attempts to compete with Uber. In its quarterly forecast released earlier this month, the company warned profits would be negatively affected by price cuts it took on in order to remain competitive in attracting drivers. On Monday it announced co-founders Logan Green and John Zimmer will step back from day-to-day operations while remaining board members; their place will be taken by former non-profit Worldreader founder David Risher who now runs Lyft board member David Risher as previously ran non-profit Worldreader which makes digital books more accessible for children. As Bobby Allyn of NPR reports, the job of Uber's new CEO is no easy one. While investors continue to abandon it, it has become clear that core business operations alone won't generate sufficient profits to sustain profits for long. Because the pandemic has severely limited travel, both Uber and Lyft have found it challenging to find enough drivers to meet demand - leading them to charge higher fees and create long wait times that frustrate users. Risher will need to make some difficult choices if he wants Lyft to prosper again, including potentially discontinuing some less popular features of its service such as shared rides. These allow passengers to pay a discounted fare by sharing rides. Uncertain of whether these moves will help the company recover losses and wrestle market share away from Uber is yet another matter; but, should progress be slow in coming, investors could start pressing it to sell or restructure. Risher may find this strategy uncomfortable, but it may be necessary in the short-term while it tries to return to profitability. The question now is whether Risher can still focus on making transportation accessible across communities - this may present its greatest challenge yet - while still fulfilling its mission of increasing access for its mission of making transport more available - this might present its greatest hurdle but with their track record and strong vision they may have what it takes. David Risher’s Vision David Risher had an unfavorable debut week as Lyft's CEO. Shortly after taking over last month, he announced to employees in an all-hands meeting that they must return to work at least three days each week, starting this fall. No numbers were provided by Lyft; according to an anonymous WSJ report citing sources within their workforce, approximately 1,200 workers may be affected - 26% of their full-time workforce could be impacted. Risher's move was one in a series of cost-cutting measures designed to make Lyft more profitable, cutting 13% of its work force since late March and responding to investor pressure to become profitable. Her focus will be reducing expenses while making operations more efficient while recruiting drivers to use Lyft platform. Risher clearly has an eye for distinguishing Lyft from Uber and improving customer and driver experiences alike, including making sure drivers arrive on time to pick up passengers as well as following their appropriate routes. Risher will focus on improving ride quality and Lyft's reputation as an environmentally- and socially-responsible organization, but his greatest challenge will lie in improving their disappointing financial results, which have contributed to investor anxieties regarding Lyft. Investors have put pressure on Risher to be more transparent with its financial performance, which has proven difficult due to relying on independent contractors instead of salaried workers. On Thursday, Risher is scheduled to release first-quarter earnings, with investors anxiously watching to see whether things have begun turning around. Risher was recruited after co-founders Logan Green and John Zimmer announced they were leaving management roles at Lyft. Both will remain on the board in non-executive capacities; with Green becoming chairman and Zimmer vice chair. To replace them, consultants and the board chose Risher, an accomplished technology executive who served as Amazon's first head of product and head of U.S. retail before founding an organization to encourage children to read more often, as their new leader at Lyft. Getting Started After an initially turbulent start that saw Lyft shares decline, the company appears to be stabilizing, although still far behind rival Uber. While Uber's ridership has recovered to pre-pandemic levels, their offerings also include food delivery and other services which make competing with such an established competitor even harder for Lyft. It will be fascinating to witness whether or not Lyft's new CEO can successfully lead them toward growth and diversification while keeping employees happy and motivated. Though some cuts may be difficult for employees to stomach, their continued survival depends on Lyft making hard choices like these in order to thrive. Risher will begin his new position on April 17. With experience at Amazon and Worldreader delivering digital books to over 75 million children worldwide, these two experiences could help him enhance customer experiences while increasing revenues at Lyft. Risher could also make an impactful contribution by increasing Lyft's conversion rate of prospective driver partners. The process for hiring drivers can take considerable time; potential partners must first be assessed, interviewed, and scheduled for meetings with the company before becoming active members of Lyft's driver pool. Risher's background with Amazon and experience with multiple tech startups may help speed up this process and bring on more drivers faster. Risher could help Lyft increase its profitability by exploring technologies that reduce operational expenses, allowing it to pass more of what it earns on to drivers - keeping existing ones happy while drawing in new drivers, which in turn should drive up its stock price. Investors hope a change of leadership will be enough to restore the fortunes of the ride-hailing company, which lost more than half its value last year. For this to occur, it needs to increase market share, diversify operations and cut costs to increase profits and assure investors it can compete with Uber Technologies Inc. The Future Typically when founders step back from a successful company they've built and overseen for themselves, it is due to its growth. Lyft has recently done just this with their appointment of David Risher as CEO. In this position he must make some tough calls in order to manage operations while competing against Uber - an upstart that has quickly increased market share from Lyft over recent months. Risher boasts an impressive career history. He has successfully taken various businesses from their start-up stages through to turnaround efforts and is an excellent choice to lead Lyft. Since 2016, Lyft has been engaged in an aggressive battle with its rival Uber to capture market share, at considerable expense to both itself and its employees. If Lyft wants to remain competitive while increasing profits, difficult decisions must be made now in order for Lyft to keep competing effectively against Uber and increase profit. First and foremost, they need to reduce costs. Though the company has attempted to control expenses by cutting staff and expenses, this alone hasn't stopped its bleeding; indeed, its latest earnings report shows it still far from turning a profit. Lyft can save money and enhance its workforce while cutting employee compensation expenses - one key strategy to lowering costs is cutting employee pay, though this might prove challenging at times. But ultimately it is necessary for its success. Lyft can reduce costs further by streamlining its processes, using cloud applications with built-in best practices to streamline business operations and make them more efficient. Oracle software offers capabilities that can assist Lyft in doing just this - such as multicurrency and multilingual apps. Lyft will need to focus on its core ride-hailing business in order to increase profitability, which could involve cutting some products or features - including shared rides in certain areas - or discontinue Wait & Save features (which allow riders to pay lower prices by waiting longer for drivers).