Lyft picks new CEO as founders tap out amid fierce competition

© Reuters. FILE PHOTO: Lyft logo is seen in this illustration taken June 27, 2022. REUTERS/Dado Ruvic/Illustration

By Nivedita Balu

(Reuters) -Lyft Inc said on Monday founders Logan Green and John Zimmer would step down as CEO and president, with board member David Risher taking on the top role as the ride-hailing firm struggles to keep up with bigger rival Uber (NYSE:UBER).

Risher, a former Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) executive, ran non-profit Worldreader for over a decade before joining Lyft (NASDAQ:LYFT)'s board in 2021. 

The change of guard at Lyft comes after a weak quarterly forecast worsened concerns that profits would get squeezed by price cuts undertaken to keep up with bigger rival Uber - which boasts better pricing power, a global presence and a food delivery business.

Risher said he would focus on service for riders and drivers as well as the cost of rides.

"One of the first things we're very focused on is making sure we are matching Uber on price," Risher said in an interview.

Expanding the business to food and grocery delivery was not an open option because of what it could do to the rider or the driver experience, he added. 

    "The last thing they want is to get into a car that just dropped off a pizza. I think that's a business model that may or may not be ultimately very customer-friendly."

Shares of Lyft lost nearly three-quarters of their value in 2022 and are down about 13% this year. Uber has gained 24%.

Lyft stock gained about 3% in after-market trading on Monday.

The company, which was founded in 2012 and went public in 2019, is yet to report an annual profit but has trimmed losses over the years despite its business coming to a halt during the pandemic.

"Lyft needed to do something ... to begin rebuilding investor trust," Gordon Haskett analyst Robert Mollins said. "We believe today's announcement means a sale is unlikely – at least in the near-term - as David will likely be given a fair amount of time to improve (or at least attempt to) the company's competitive and financial position."

Mollins, however, said it was "odd" how Lyft emphasized Risher's work with Amazon's Jeff Bezos and Microsoft's Bill Gates, when he worked at the companies over 20 years ago. 

Risher helped build Amazon in the early years, and when he left, Bezos publicly thanked him, saying Amazon would "build on the foundation you helped pour".

At the helm of non-profit Worldreader, Risher helped deliver about 75 million digital books to 21 million children as a part of the group's mission to improve children's reading habits. 

Risher is set to become Lyft CEO on April 17. He will get an annual salary of $725,000 and a signing bonus of $3.25 million, the company said.

Green, who was 23 when he moved to the Bay Area and started working on Lyft in a 125 sq. ft. office, will serve as Lyft's chairman, while Zimmer will be the vice chair.