Lyft is going green to win the fight against Uber. The executive in charge of that has his work cut out for him.
- Lyft's director of sustainability, Sam Arons, is in charge of the company's effort to become completely emissions-free.
- That won't be an easy job. The company provided 600 million rides in 2018, most of those in carbon-spewing gas-powered cars.
- In an interview with Business Insider, the Google veteran explained how the focus could help Lyft catch up to Uber. And maybe even win.
- Read more stories from Business Insider's Driving the Future series.
When Lyft filed for an initial public offering this year, its prospectus echoed the lofty language of many visionary tech startups that recently hit public markets as well.
It's not about growing the business, the ride-hailing company pitched investors, mirroring claims by its biggest rival Uber, WeWork, Peloton, and more. No, it's about changing the world.
"Improve people's lives with the world's best transportation," the company's mission statement, on page three of the S-1, said boldly. The targeted market? Every dollar that Americans spend on transportation annually, to the tune of nearly $2 billion.
But as investors departed a sold-out roadshow meeting in New York, the carbon-neutral sustainability goals were far from anyone's minds. It's Sam Arons' job to change that.
The 37-year-old director of sustainability at Lyft has been tangentially involved with the ride-hailing company since it was known as Zimride years ago, but only joined the company in March 2018, after more than a decade at Google working to reduce the environmental effect of the search giant's massive data centers.
"Basically what we're trying to do is get more people into fewer cars, through shared rides," he says of his job at Lyft. "And when it makes sense, get them out of cars all together and into a more appropriate mode, like transit, bikes, scooters, and those sort of things."
"The first project was the carbon-neutrality project," he said, "to basically say, 'Hey, we're facing a climate crisis here. We don't have time to wait around for batteries to become as cheap as they need to be. So what we're going to do is, step one, we're going to offset all of the greenhouse-gas emissions from all of the rides and the rest of Lyft's operations."
In the next months, Lyft became one of the world's largest voluntary purchasers of carbon offsets. Buying those credits is one thing, but now the real hard work begins: reducing Lyft's environmental impact to zero.
In 2018, through its nearly 2-million-strong network of drivers, Lyft provided 619.4 million rides, most of those, presumably, in carbon-spewing vehicles containing one driver and one passenger. (The company does not disclose a breakdown of shared versus private rides.)
In some cases, like persuading riders to share a car for part of their journey, there's a business case to be made while also reducing pollution. After all, the company is still paying just one driver for the trip, effectively increasing the revenue per rider on the journey. But other investments won't be so easy.
There's transit, which in many cases might get a rider to their destination quicker and with less pollution, but it means that passenger is paying a public agency, not Lyft. And electric vehicles, which are expensive - very expensive.
Still, by 2025, Lyft says it will provide at least 1 billion rides annually using electric autonomous vehicles. Meanwhile, its electric-car fleet is set to expand beyond Denver as it moves to replace traditional internal-combustion engines powering rides on its platform.
"We all know that the future is electric and the future is renewable," Arons said. "That's Lyft's future. There could be some cost to that at certain points. Ideally, we'll get to a point where the cost for electric vehicles has come down. Nobody really knows for sure when, but that will happen, and the economics speak for themselves."
That's a move that will put Lyft even further ahead of most companies, who for the most part still think of things like environmental, social, and corporate governance as mainstream.
"We're at the tipping point," Robert Eccles, a University of Oxford visiting professor of management, told the Harvard Business Review this year. Some studies, he said, say that about only a quarter of investable assets in the US are in sustainably categorized investments.
"And so that's kind of where the frontier is," Eccles went on, "convincing the portfolio managers, who have historically built only financial models. And when the portfolio managers have a conviction that understanding the company's ESG performance - on the material issues, which vary a lot by sector - and they start factoring that into their models, and they start factoring that into the conversations that they're having with the CEOs and the CFOs, that's a game changer."
Anxious investors - as well the associated portfolio managers mentioned by Eccles - watching Lyft continue to lose money as its stock price falls (now down about 45% since the March IPO) had fair warning.
"We've said it from the beginning," Arons said. "Anyone who chooses to take Lyft, drive for Lyft, invest in Lyft, or work for Lyft understands that mission."