Lyft, Uber & the Importance of Experience
At the end of its first day of trading, Lyft, the first major new mobility company yo go public, was valued at $22-billion. Uber, which has a private valuation on the order of $76-billion, will go to the market sometime soon, and it is estimated that its public value will quickly reach $120-billion, or about three times larger than Ford, a 116-year-old company. Hard to believe!
Lyft and Uber companies are claiming they are destined to become the “Amazon of Transportation,” that they are the future of how the world will move. As amazing as this all is, I couldn’t help thinking how little hands-on experience Logan Green, CEO and Co-Founder of Lyft, and Dara Khosrowshahi, CEO of Uber, have with the industry they aim to disrupt.
While both companies are mostly software-based companies right now, they will ultimately have to address hardware (many types of vehicles and infrastructure) to optimize the solutions they offer and to become the market leader. Based on the scope of the existing transportation system and the coming autonomous revolution, they will have to have meaningful understandings of things including the $1.7-trillion automobile industry (i.e., technology, design, and manufacturing); 54-billion passenger trips taken globally; the global bicycle market that is estimated to be on the order of $60-billion in a couple years; $670-billion freight industry; $1-trillion restaurant and grocery business (for e-delivery services); $681-billion airline industry. . . . Oh, and they’ll have to also understand planning and engineering so as to optimize the infrastructure. They will have to be leaders in e-commerce, and deeply understand government at multiple levels (as all of their anticipated services will require citizen-driven approvals to operate at all).
So what do Logan’s and Dara’s resumes include? Logan launched a website for college students to carpool to campus and back home, before starting Lyft, which is mostly an “internet-phone taxi” service. Before his top post at Uber, Dara was CEO of a website for people to book travel tickets (Expedia); before that role, he had high finance experience.
Contrast that with Pete Estes, who was the president of General Motors from 1974 to 1981. (Yes, this is something of an unusual pick, but I used to send Mr. Estes some of my automobile design ideas back when I was in junior high school).
Pete Estes went to the General Motors Institute to become an automotive engineer in 1934. Twenty-two years after graduation he became the chief engineer at Pontiac, then after working on a multitude of vehicle engineering programs—and 18 more years—he became president of GM. That’s 40 years from an engineering degree to the corner office. Green has a few years to hit age 40 and Khosrowshahi hits 50 this year. It isn’t all about age. But experience does matter.
While the expansive growth of Uber and Lyft is truly amazing, we should keep in mind the first autonomous cars, trucks and aerial self-flying vehicles have yet to become available to consumers in large numbers. While both Uber and Lyft are involved in autonomous technology development, isn’t it possible that there will be another company that will come to the fore and disrupt those two companies? Do Khosrowshahi and Green think about this, or does their limited experience cause blind spots?
While I certainly respect and admire what the two have accomplished, I’m not at all certain that will be enough. I would not like to be leading a company with a multitude of challenges that I’d not worked in, not gotten my hands dirty in, for a good amount of time. It will be interesting to watch how this develops over the next 10 years.
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