Very True by Verissimo

Alex (00:00)
Welcome back to Very True. I'm Alex Oppenheimer. This is part two of my conversation with Nick Greenfield. if you didn't catch part one, you don't need it. Each of these stands on its own, so start wherever you want. This one is the Lyft story. And Nick was inside it from close to the very beginning. He joined a company called Zimride out of school, back when the idea of getting into a stranger's car sounded insane to most people.

We go through the pivot that turned a struggling long-haul carpool company into Lyft, why the pink mustache was a stroke of genius, and how Nick more or less invented the job of launching a new city, a role that half of the consumer tech world would spend the next decade hiring for. We discuss why it was obvious that this was going to work and how that didn't make it any easier, and the importance of launching at a time when new technology enabled something that was previously impossible. Let's get into it.

Alex (01:41)
Nick tells me senior year, hey, I got this job. This was like I think after graduation or right before graduation. Like, I started speaking Spanish to this guy, and I'm gonna go join this company that does like, long haul ride sharing. and I remember the initial pitch was if you live in LA and you go to Stanford and it's like Thanksgiving and you want to book a ride with

someone

from school who's driving back, like that's what this is for. So tell me about that, that's that story and what that company was and that guy and what that became.

Nick (02:09)
I joined a company called Zimride out of school, which was co-founded by Logan Green and John Zimmer, named for a ride sharing service in Zimbabwe. But John happened to be John Zimmer. So it it it went very well hand in hand. And that company was a company that was trying to figure it out. It was Seed Company. And then right right as I was joining, they raised their Series A that had this concept that.

In other countries, specifically in Europe and in parts of Africa and South America, people's cars are not driving around with just the driver. In the US, I think it was at the time like 82% of pass of drivers were single, single vehicle drive, single single passenger drivers, meaning there was only one.

person driving the car. 82%, there was just that one person in that car. And you had the rest of cars on the road, the 18%, maybe they would have one passenger, two passengers, or three passengers. But generally people were driving around with a bunch of empty seats, which was inherently inefficient. And if you wanted to take cars off the road, you needed to allow the driver to sell the seats in their car. And over time this would create a very large marketplace of folks going from,

point A to point B and they would be able to pick people up along the way. And how do we solve that problem today? We solve it with mass transit. this was a kind of more grassroots version of mass transit, which is why it worked in places like Zimbabwe because they don't have the government funding necessarily to do mass transit. So people have driving around in a van, they pick people up and they're they're sharing rides along the way. The original hypothesis

against for Zimride was hey we're gonna build both

Alex (03:49)
W w just let's

pause real quick. What did they hire you to do?

Nick (03:54)
sales, because we we built these university and corporate closed rideshare systems where if you went to Washington State and you wanted to go from Pullman to Seattle, you were more likely, if somebody else had a a Wazzu email address, you were more likely to feel comfortable booking a ride with them. And that trip

Alex (04:13)
versus Craigslist.

Nick (04:14)
versus Craigslist, which was the only other real high liquidity marketplace for ride sharing at the time.

And that hypothesis was actually right. I mean, we had four or five universities where Zimride got really, really popular randomly, right? James Madison University and Washington State were two of them, where we just saw a high level of ride liquidity. And this business would not have worked in the US. Ultimately, like blah blah car and carpooling.com, which worked in Europe, and those actually ended up scaling to other places. Culturally, Europe could do ride sharing. The US

There's a reason people were driving around in their own cars and not wanting to share rides with people. It just didn't work. And we were trying to force it to make it work. And then in early 2012, there was this company called Sidecar. And Sidecar came out and allowed drivers to do short rides, which was, for lack of a better term, gypsy cabs, right? That was that was what they were doing. They were just

Taking the iPhone, enabling people to request rides of drivers who are in their area, and then drivers could make money selling their seats in their car on short trips. And we saw that, and they got a ton of marketplace liquidity really quickly because they were solving really immediate, high volume, high velocity from a marketplace standpoint rides. And ultimately that that they were the first company to do this kind of peer-to-peer ride sharing and you know, what became Uber X and Lyft.

copied the original sidecar model with more more gusto and more competency to build businesses. But it was this difference. And I think that this is it, you know, in terms of lessons from a startup standpoint, if you're building a marketplace business, really understanding the supply and demand use cases and when there's enough liquidity where you can actually build a real business. With Zimride, we couldn't, except we had these like small, you know, you'd sell a $20,000 contract to

A random university, and they would install these domain-specific Zimride networks, and they would get some use, maybe, right? And we would sell to the transportation department in that company. And it just it wasn't gonna be a big business. And I think, you know, kind of by accident through a a hackathon, we made this pivot. And so I had been in sales and then was the guy doing consumer marketing because we had a public-facing Zimride network and

helping get drivers and passengers and launching bus networks because we didn't have enough supply side liquidity to get passengers booked when they came to the site there weren't rides. So then we wanted to put all the buses on. And then we wanted to launch our own bus lines because there wasn't there weren't enough buses going in the right routes. And we were I mean we were throwing everything you could possibly throw at the wall. and it really wasn't working the way it should have. And so when we made the the

Foray into the short distance liquidity rides, which is what we did with with Lyft in kind of late late spring of 2012. you could just see something working. And I think that that to me is like the magic of startups and the magic of product market fit, is you just you can see the massive difference between like banging your head on the wall trying to get something to work.

And then you launch something and you go, yeah, everybody wants this.

Alex (07:29)
And everyone, I would say everyone was interested in it. It everyone people were like, there was a lot of like, I don't want to call them haters, but just people who were like, nah, I wouldn't do that. Or like older people, like they were like, no way. And just to set the record straight, Lyft did this peer-to-peer short ride sharing thing before Uber X was a thing. Uber Black, which what w existed in San Francisco at the time, but

The getting in a random person's car thing did not exist in any meaningful capacity before Nick told me about it in like June of 2012. And I think I I moved to San Francisco right around then, I moved in July of 2012 to San Francisco from Palo Alto. but I think

Nick (08:09)
Yeah, if memory, if

memory serves me right, it was Uber X existed, but it was licensed drivers. So it was TNC drivers driving worse cars. Uber had like a lower price point version, which was they were mostly driving around in Priuses, and they were, they were like, you know, you you had to have a special, special commercial license. And then

Alex (08:30)
And

Nick (08:30)
Sidecar launched, and then we launched, and then Travis went, man, this is a good opportunity. And then he and then went all in on the non

licensed Uber X and and they were in 10, 15, 20 cities already and just like lit it up everywhere.

Alex (08:43)
And now

this, I think, for a lot of people like feels obvious. And you know, if you're in New York, th the it everyone's licensed and everything. But at the time, this was very novel for people. Like my parents were like, I wouldn't do that. So what were the non-obvious things that just worked so well? let's start with that and then we can get into some of the challenges that came up in those early days. Because I think now, this is such a big part of like almost every modern

urban person's life that it's hard to remember what it was like when this was that moment forget before you can just talk to your parents like hailing a cab, getting on a bus, riding your bike, whatever. Like and now we have after, but the during thing I think is that's where that's what's interesting. That's that's what people can learn from, right?

Nick (09:23)
One was a big time technology shift. Was folks were going from the BlackBerry to the iPhone. And the iPhone had maps on it, and you could use location services. So location services enabled the Lyft and Ubers of the world to be a thing. Because you could have a driver driving around with their phone and then

They could be, we could you could ping their location and then you could match passengers to that driver's location. And the passenger.

Alex (09:51)
Yeah, so just

yeah, go ahead. I would just I just want to throw this stat out there that the App Store launched in July of two thousand eight. So the App Store was less than four years old at this point. Remember the the original

Nick (10:01)
Yeah. And

Alex (10:02)
iPhone, you couldn't move the apps, you couldn't change the apps, you couldn't download apps.

Nick (10:06)
Yes. And then when did maps come out on the iPhone? I mean it probably

Alex (10:09)
Maps was out

on iPhone 1, but there was no actual GPS chip. They were just using cell tower triangulation and it did not work very well. The iPhone one was just like a cool

Nick (10:17)
Yeah. Yeah. I think it was the maybe the three.

Alex (10:21)
brick phone. Yeah, they went straight to the 3G,

Nick (10:23)
Was it the iPhone three?

Alex (10:25)
and then yeah, that I mean that's what the 3G came out, and then the App Store came out and and things moved from there. But I think again, I we could do the research on the adoption, but obviously that enabled the whole thing, right? I I just talked about this on another

Episode that like the greatest businesses of all time rarely invent the technology. They figure out what business models are enabled by that core technology coming to market.

Nick (10:47)
Right.

Alex (10:47)
Yeah, yeah. I mean, and I'll call it out because I I remember just loving Lyft. I remember there was a couple Lyft drivers that were like known in the city that were early. And there was a couple of things that

I would tell people the first was I think that the mustache, the pink mustache, was pure genius. Because people felt so awkward getting in somebody else's car. and it just kind of set the tone that this was like a light and like fun, goofy, friendly thing. and then people would also say to me, but like, why would you just get in a stranger's car? And I'm like, Have you ever been in a taxi?

have you ever met a taxi driver that's not weird and creepy? like that's the base case. And then also, by the way, nobody knows where you are, at least in this, like there's a record of you getting in this car. And then I was like, this was the real kicker. At the time, there were probably 200 lift drivers in San Francisco. And I was like, Nick has met every single one of them.

Nick (11:37)
That was true. So I think and this is not gonna be all that game changing, but we took a twenty-five dollar ride in a taxi to ten dollars in a Lyft

Alex (11:46)
People

forgot that that was a thing 'cause now it's just as expensive with all the taxes and stuff and the

business

Nick (11:51)
Yes.

Alex (11:51)
model, you know, whatever. But

Nick (11:53)
Has changed. But but the way that we innovated mostly was we built a bunch of supply and then we made the prices a lot cheaper and we made it really easy to get. It was really easy to press a button, get a car, and have it be less than half the price of using a taxi.

And and then you so then you were, if you think about what you were competing with and why the market grew so big, right? You you you'd start with Friday, Saturday night rides, which is where people were using taxis at the time, and then airport rides. But then it became an everyday consideration of, I can take a lift and it's gonna cost me $18 to go to and from work, or I can take Muni and the lift will take me 15 minutes, and the Muni will take 45 minutes each way.

So I'm gonna save a lot of time. Great, I'm gonna do it. It's really convenient. And it it's a it it ultimately it's just like price and

Alex (12:44)
Yeah.

Nick (12:45)
times. And that's gonna be the exact I mean, if we if we fast forward to probably three to five years from now when you have enough density on Waymo and some of the new autonomous stuff, that will be whether, you know, will Uber and Lyft survive? Either they have a lot of supply from those guys on there, or Waymo will get to enough of supply density where they can offer faster pickup times and cheaper rides.

And the consumer will go to the fastest pickup times and the cheapest rides. And yes, there's other things that matter, but like this is my number one most important takeaway for all startups is like they all hinge on some critical, like one or two critical components, which is in the case of Uber and Lyft, it was fast pickup times and cheaper rides. And you can think about any different service and you you can build your

Alex (13:31)
Yeah.

Nick (13:31)
you know nth feature.

But it's all like there's one critical pain point that you're solving.

Alex (13:37)
yeah, and then there's the side stuff, which like some of the stuff that I remember. One was, for example, like when you got in a Lyft they you didn't put enter a destination. You yeah, you fist bumps, you sat in the front seat, you didn't enter, there was no destination thing. That was like a big feature launch, I think, in like 2013, of being able to tell them where you were going and then and sending that to Waze or to Google Maps. It used to be so annoying. You'd get in the Lyft and they'd be where do you want to go? And then they'd like type it in and they didn't really know their way around the city. It was like,

Very frustrating. the other thing was you had to hack this thing where it was like a donation, And you could donate zero dollars if you wanted. And it was a suggested amount based on the ride time. Like all every little part of this has become like completely optimized. And I think people, again, they just forget that like you have to start with the basics and then you add in all these other things. I also remember there was no receipt.

I remember telling you when you were living on Chestnut, like, dude, you gotta have them email a receipt out to people after it charges the credit card so people can expense it and that'll open up a whole another part of the market. Cause I remember being at Morgan Stanley, if you were there super late and you had to take a cab home, you would get a piece of paper, like like a business card as a receipt. It was a total joke. Now everything is like automated with all this receipt functionality inside email, but

That was not a thing. I think that's really important. That's like the fundamentals have to be there. There has to be something that is this is, I think, what people refer to as like the 10x improvement. It just has to be like so much better and meet such an acute need. And then all the little stuff that you have to work out and figure out along the way. So when you think about almost any business, there's the big stuff of like, are you meeting demand?

With a great piece of supply. And that needs to be there. And if that's not there and the indications of that not being there, then no matter how good you are at executing around the details, it doesn't really matter. And I think we see that sometimes with repeat founders, maybe who are really operationally proficient, just going after businesses that are not working, where they're like doing a really good job running after a treasure that's just never gonna come to fruition.

Nick (15:39)
Remember we tried to hire you at the time to be to come to Lyft, to be, you know, like the GM of Lyft in San Francisco. you you wanted to stay in your

Alex (15:46)
Yeah, one of the several

mistakes I made in my career. I I also remember

Nick (15:50)
Good.

Alex (15:51)
coming and sitting with you, and I think Grayson.

sitting with you guys in San Francisco I was at Morgan Santa at the time, and you guys were like, Okay, San Francisco is working so well. What are we gonna do next? And we were like, let's figure out.

Why San Francisco works so well. And I had all of this data from Morgan Stanley on like every city in America. So we basically just started like scientific method, okay, let's just brainstorm all the characteristics of SF that make it such the perfect city to launch something like this. And it was like population, geography, culture, quality of cabs and public transit, like income level, all these different things.

And then it was like, okay, so where do we go next? And this is where I feel like this was like your moment. when you you didn't just become a city launcher, you invented city launching. I'm not gonna let you take anything away from that. Nick, you're looking right here at the like this was like a big job, you know. In anyone who graduated college from like 2014 to 2020,

This was a big job for any consumer marketplace thing. It was like a city launch. And Nick was the first city launcher. Period. how do we write a playbook for how to launch a city? And it wasn't just for Lyft. How do you take a business that works in one city and go export it to another city and make it work there and figure out all the things you need to do to make that happen?

And that was so cool. It was a bummer for me because I just moved to San Francisco and then you moved to LA. But

I feel like that was your a a big part of your you know, fifteen hour, seventeen hour day moment was doing that for how long? Two years, a year and a half?

Nick (17:20)
Yeah,

about two years. Yeah. We we had to take some

Alex (17:23)
It was crazy.

Nick (17:24)
we had to take something that had radical product market fit and stamp it out around the country. And that meant ultimately getting as many drivers as you possibly could, and then as quickly as you could, then getting them enough business where we had this idea of the floor where we would guarantee them a certain hourly w rate over their first.

few weeks or months until we had enough demand that we could then remove that floor and they could be making a certain amount of money. And the first side was getting drivers and the second side was getting passengers. And

Alex (17:56)
And then you also had to deal with like local regulatory and stuff like that.

Nick (18:00)
Yes, you yes, but generally we didn't worry about that until they started worrying about us. Eventually it got proactive, but I think I was gone by the time it really things started to get really proactive. It was mostly like, you know, ask for forgiveness after you've

Alex (18:14)
Yeah.

Nick (18:14)
launched it. And you know, so I don't want to trivialize it, but it was like you gotta figure out how to get a lot of drivers, and each city had its own you its unique.

method of driver acquisition. Some cities were Craigslist cities, other cities were you know, different job boards and you you had to mix and match and figure out how to get enough people to show up.

Alex (18:31)
Yeah, I remember you telling me like in LA, you're like, yeah, there's so many drivers because so many people come here to be actors and musicians. Everyone has a car

Nick (18:37)
Yeah.

Alex (18:38)
here, and so many people don't have nine to five jobs and need to make money. And so it was like, just call do a casting call, right?

Nick (18:46)
Which we did. I mean, David, who was doing this with me, he came down shortly after I went to LA. He joined and came down to LA. Yeah, he ran, I mean, b basically casting calls. and he did that on the supply side for drivers and you know, getting a bunch of drivers to come in and, you know, doing tryouts.

Alex (19:03)
Best looking drivers in the world.

Nick (19:05)
Yes, as as he knows how to do. And then he found models and dressed those models up and took them all around LA and you know, got got riders, right?

this was gonna work no matter what? Lyft and Uber were go because of the point before of dramatically lowering the price and then combining that with making pickup times really effective. You just create a consumer value that's so high that it would have worked. Now the operations and the execution against it and figuring out the strategies and how do you change the slope of that curve are really, really important. But when I hire now, I think about hey.

This is the person who figured the thing out. Did they change the slope of the curve? did they understand what the pain points and problems were? It turned out, and we identified this. I remember sending a long email to Logan, which he did not like because it was a long email and he wanted short, very specific, like three bullet point emails. But I sent him a long email. Yeah.

Alex (19:58)
was before you could throw it in Claude and be like, make this short.

Nick (20:02)
that we it was like all the things that we could do.

to retain drivers because it became obvious in just even in San Francisco and LA that the single thing that would tank that business would be driver churn, which is you had to spend a 500, 1000, $2,000 to acquire a driver. And then how long would that driver actually stay on the platform? And early days Lyft and Uber, there wasn't enough marketplace liquidity. So it was very hard to guarantee that folks were going to make money and especially getting these drivers on Friday and Saturday night.

And that and that's really where things turned, which is we figured out how to get drivers, but could you get the drivers to stay? And could you get those drivers to drive in the in the high peak time hours, early morning, rush hour, and Friday and Saturday nights? And eventually the marketplace has gotten to a point where it's there's so much brand awareness that if you lose your job or you you want to have a part-time thing, Lyft and Uber become very obvious places to go because you can just turn them on pretty much immediately. But but at the time, nobody knew that that was a thing.

And we had to create that concept and figure out again some of these intricacies. And so now when I'm hiring and I'm interviewing, I usually try to get folks who have cracked those codes before. And so for young folks who are looking for jobs, figuring out how you solve these really important problems that maybe people don't even know are important problems. And then it un it can unlock that next level of growth or unlock a business because

Maybe there is radical product market fit, but you can't get enough supply side liquidity in a marketplace business to make it work. So figuring out how to get that supply side liquidity is a great example of an unlock. And when I'm, again, looking for people, I want the folks who who who know how to crack that code.

Alex (21:44)
So

yeah, I I just I remember being such like a fanboy of Lyft and I probably yeah, I probably should have just joined you. They also wanted to cre recruit me at Dropbox. and I still have my old Zimride shirt. still have it. It's antique.

Nick (21:55)
Y yeah, life is better

when you life is better when you share the ride.

Alex (21:59)
Amazing. so let's fast

Alex (22:01)
That's part two. A few things I take away from it. First, product market fit isn't subtle. you spend months pushing on something that won't move, then you ship the right thing and everyone wants it, and you know the day it happens. Uber and Lyft won on two things, cheaper rides and faster pickups. Everything else, the receipts, the destination field, the suggested donation, all of that came later, once the 10x thing was already true.

Get the big thing right first. The details only matter after that.

Part three is for founders and investors. We start with Nick's journey as the CEO of Candid. Then we get into why almost every direct consumer business quietly dies and where the profit in a consumer company actually ends up going. It's Google. Then we flip it and talk about the business models that don't have that problem, using Candid, Ramp, and Shopify as great examples. Part two was how you build the thing. Part three is whether that thing can make money. I'm Alex. This is very true.