Lyft’s Director Cultivates Vision in Disruption
Maggie Wilderotter, also a director at Costco, HP, Chobani, among others, shares her take on Lyft’s future and good private company governance.
Maggie Wilderotter recently joined the board of ride-sharing firm Lyft, at a time when the private company faces an ever-changing business landscape.
Business disruption does bring with it “pressures from the status quo,” explains Wilderotter, the former CEO of Frontier Communications who also sits on the boards of Cakebread Cellars, Chobani, Tanium and Ardent Health — all private firms — and publicly traded Costco Wholesale Corp., Hewlett Packard Enterprise, Cadence Design Systems and DocuSign.
Despite the challenges, she says, the “visionary” nature of company founders and management is what gets her excited to serve on a board.
The following is a Q&A with Wilderotter, who is also a senior adviser to the Blackstone Group and Atairos Private Equity, about her role at Lyft, the benefits of being a private company and the similarities and differences she sees in serving on a private and public board.
Directors & Boards: You’re on several private boards of companies that are definitely disruptors in the industries in which they operate, including Lyft and Chobani. Do you look for companies that are changing business models? What attracts you to them?
I love to work with visionary, entrepreneurial founders and CEOs. When I became CEO of a private tech startup in the mid 1990s, I got a great education on how hard it is to build a business from scratch that is taking on the status quo. But, I also got to experience firsthand how private companies have more freedom and flexibility in addition to the luxury to think long-term and take risks that public companies can’t. Therefore, I have an affinity for helping other great private company leaders do the same.
Why did you decide to join Lyft’s board in particular? How did you come to sit on the company’s board?
I have been a fan — and loyal rider — of Lyft for the past few years. I sit on the board of HPE [Hewlett Packard Enterprise] with Dan Ammann who is the president of General Motors and who served on the Lyft board. Dan felt Lyft would benefit from an independent director with great public and private company board experience. He asked me to consider replacing him on the Lyft board and when I told him I would be interested, he then discussed this with the founders. I then met with both Lyft founders, Logan Green and John Zimmer. I also spent time with Brian Roberts, their CFO. I wanted to make sure Logan and John were comfortable with me joining the board and I was comfortable with both of them and how the company operated from a governance perspective. There were several other Lyft board members that I know as well who also weighed in.
Lyft has quite an impressive board of directors, including Valerie Jarrett, who was the senior adviser to former President Barack Obama. How committed to good governance do you think Lyft’s founders are? Do they listen to directors’ recommendations? Has that contributed to the company’s success?
I am a recent board member, but in the diligence process and in my interactions with the founders since joining the board, I find both Logan Green and John Zimmer open to feedback and seeking advice. The board meetings are interactive and we have access to the top leaders in all departments. I believe that the founders want independent thinking and diverse points of view so we can collectively make the best decisions for all shareholders.
Also, with Jarrett, and your appointment, that brings the total women on the board to three. Is there a concerted effort to have gender diversity on the Lyft board? How does that help?
There are three women on the Lyft board which is a great sign that diversity matters in getting the best decisions. I do think it is by design that there are three — all of us with different backgrounds and experiences, all of us accomplished in our own right and all of us collaborative and confident in our voices being heard.
Lyft, along with other ride-hailing companies, has faced some pressure from certain jurisdictions when it comes to traffic and competition with local taxi services. What role has the board played in navigating these issues?
Whenever you have disruption, there are pressures from the status quo. In my short time on the board, I have been impressed with the focus and partner orientation the company has with elected officials. Even when Lyft doesn’t agree with a position or outcome, they are still respectful in their dissent. The board will continue to be involved in this area as it is one of the key risks of the business.
There has been quite a bit written about Lyft being close to going public. How will that change the governance at the company?
Lyft is committed to operating with good governance now as a private company. I cannot comment on if or when that private status will change, but the board and the founders agree that many of the governance processes found in public companies make sense for Lyft as we continue to grow and scale the business.
Given high-profile condemnations of being a publicly traded company — including Telsa CEO Elon Musk’s recent tweet storm about wanting to go private, and then changing his mind — what are the factors that need to be weighed before a private company takes such a step?
Public companies that want to revert back to a private company status need to look at several key factors: A) Does such a move make sense for operating the business in a different fashion that will result in better value creation? B) Is there a credible recapitalization and value analysis that justifies paying public shareholders a premium to sell their shares back to the company? C) Is there a strong “go-forward” strategic plan and implementation path to create sustainable value for new shareholders at the appropriate pace to give them their expected return on investment? D) How will your current and potential customers, partners and employees perceive this transaction; will it be better for them or create a sense of unease and drive defections? Finally, all boards should look at the material risks of such a transaction and the company’s planned mitigations. It is really tough for even the best operating teams to mitigate and overcome many material risks at the same time, despite their optimism.
What are the key traits that successful private companies have when it comes to governance and an effective board of directors? How does your public board experience inform your private board roles and vice versa?
Successful private companies have discipline in financial reporting and attracting, hiring and developing great talent including CEO succession; a deliberative process for setting and implementing strategy; have a diverse board with experience that is helpful to the company’s success; and utilizing the board for advice, counsel and making good choices. Private companies also have the luxury to think and invest from a long-term perspective with less scrutiny than public companies. The attributes I mentioned above are the same in all successful companies. I have sat on 34 public company boards and 14 private company boards and I don’t change how I interact based on the company’s status. I believe all directors of any corporate for-profit board have to exercise the duty of care and the duty of loyalty whether the shareholders are public investors, founders or family members.
Do you have any insights regarding whether sitting on a board of a private company that’s owned by a family, an individual or a group of owners is any different than sitting on a board of a company owned by a private equity firm?
In my experience, private equity firms drive for sustainable financial results as a priority. All of the firms have different time horizons depending on what their investor expectations are for payouts. Larger PE [private equity] firms are more long-term and the trend across the board is that PE is extending time horizons for liquidity events. PE firms that I have worked with on private company transactions are also very good at governance, setting strategy, making sure there is a solid operating plan to achieve the strategy and are disciplined at putting great people in charge and on their boards. Again, based on my experience, I have found that private companies with single founders or family ownership use a combination of intuition and analysis in their decision-making. Their business leadership styles can vary based on generations of owners and based on entrepreneurship, innovation, legacy and risk taking. There is usually a combination of EQ and IQ in business decision-making; which is typically the formula of success that has worked for them in building their businesses to date.
What advice would you give someone looking to join a private board? Are there essential questions they should be asking to make sure management isn’t just looking for a rubber stamp?
Again, I believe the diligence someone does before joining a private board is basically the same as the diligence for a public board. However, there can be nuances with private boards, for example, making sure the private owners really value your advice and counsel — and aren’t just checking a box. You also need to look at the culture and ownership structure. In many private companies that are family businesses, succession in management, ownership and/or involvement on the board of future generations can be a big area for the board to focus on. There can also be classes of stock ownership that have different voting/control attributes for founders versus other shareholder investors or employees which tends to be more common in private companies and can carry over into how a public company’s voting control gets established. Understanding how a company makes decisions and who are the decision makers is critical as it really separates where board members are decision makers and where they are just advisers. In public companies, the decision rights are clearer and are transparent. That isn’t always the case in private companies.