Investor once told Lyft's founders he was 'not sure about this carpool thing' — now it's a $20 billion company

Lyft President John Zimmer (R) and CEO Logan Green speak as Lyft lists on the Nasdaq at an IPO event in Los Angeles March 29, 2019.
Mike Blake | Reuters

Lyft has Wall Street abuzz, as shares of the country's second-largest ride-hailing service started trading Friday in an IPO that values the company at well over $20 billion.

But before the ride-sharing giant officially launched in 2012, not everyone was convinced the business was a good idea. In fact, co-founders Logan Green and John Zimmer received some less than encouraging words from one of the company's top investors.

"Our investor Sean Aggarwal has been probably the best mentor and adviser that we've had. But way back in 2011, he told us point-blank to work on something else," Zimmer told Inc. magazine in a 2016 interview. "He was like, 'You guys are a great team. I'm just not sure about this carpool thing.'"

Things look different in hindsight, and Aggarwal (a former executive at PayPal and Trulia) currently serves as the chairman of Lyft's board of directors. But Zimmer and Green have admitted that, at the time, it wasn't easy to ignore his skepticism.

"It was psychologically tough to not listen to him, because he was this person who had been giving us a ton of great advice. So you wonder: Is this good advice as well?" Green told Inc.

But even after thinking deeply about Aggarwal's advice to walk away from the carpooling concept, Zimmer and Green remained convinced that the transportation model in big cities was broken and that their company could offer a solution.

Growing up in Los Angeles, "being stuck in traffic, seeing one person per car," got them thinking, "We can make this more efficient," Green told CNBC's Andrew Ross Sorkin on "Squawk Box" on Friday. They realized "at any given time there's got to be dozens, if not hundreds, of people on the road sitting there, going to the same place. So, let's put them in the same car," Green said.

Lyft IPO is a big deal for Nasdaq and JP Morgan, says trader

It's been an exciting ride for Lyft, which started off in just one city (San Francisco) seven years ago and has grown to the point that the company's service now boasts roughly 1.9 million drivers in about 300 cities.

The company's co-founders actually first met in 2007 after Zimmer saw Green's Facebook post about a company called Zimride (a service for long-distance carpooling focused on college students). Zimmer reached out to Green through a mutual friend and they decided to go into business together. Zimride later became Lyft as the company's focus shifted to offering users shorter trips.

It wasn't easy getting their company off the ground, as Zimmer and Green famously did not take salaries for the first three years of operating Zimride, and the two relied on microwavable Trader Joe's meals to save money. They also lived together in an apartment that also served as the company's first office, which they nicknamed their "apartfice," Zimmer told Business Insider in 2017.

Since then, though, Zimmer and Green have built Lyft into a multibillion-dollar company in which the pair of co-founders own a combined stake of less than 10 percent. With the IPO, that combined stake becomes worth billions of dollars.

Don't Miss: Why Lyft co-founder John Zimmer says he didn't take a salary for three years

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