Uber Offers Free Rides to Level Lyft

Mere weeks after securing a staggering $258 million in new funding from Google Ventures and TPG Capital, car-booking service, Uber, is already training its venture-infused guns on its closest competitor - Lyft.

In response to Lyft’s launch in St. Paul, Phoenix and Indianapolis last week, Uber announced that it is offering free rides in these cities from UberX -- the lower-cost version of its premium booking service. Uber says it is counting on consumers to favor its upscale-style offering over Lyft’s more informal pink-mustache and fist-bump-filled rides.

Earlier this year, Uber launched a “Shave the Stache” campaign, which featured Lyft-bashing ads plastered on the sides of trucks and, perhaps ironically, city buses. The ads criticized Lyft’s “donation” approach to payment and sought to convince drivers to switch to Uber.

Despite the Uber threat, Lyft remains in high spirits. On Monday at TechCrunch Disrupt in San Francisco, Lyft President John Zimmer said the company will rely on its (often quirky) community to build a larger user base. In other words, the pink mustaches and obligatory fist-bumps are here to stay.

“We both have raised a good amount of money,” Zimmer told the audience on stage at TechCrunch Disrupt. “I think it comes down to experience. We’ve really invested in this sense of community.”

While it is might seem piffling when compared to Uber’s recent Google endowment, Lyft has still managed to raise a respectable $82.5 million to date. Lyft says it has doubled its number of rides given in the last month alone, and is quickly expanding. Just a year ago, Lyft operated only in San Francisco, but since has expanded to 10 U.S. cities. Uber already operates in 45 cities in 18 countries.

Zimmer added that Lyft has not “seen any impact” from Uber’s attacks.

As firms like Uber, Lyft and Sidecar battle for dominance in the ridesharing space, they face a common, albeit less potent, enemy in the form of traditional taxi companies.

During a July protest of a pending California government move to adopt several proposals that would effectively legalize ridesharing, municipal taxi drivers in San Francisco branded ridesharing drivers “road bandits” for lacking regulation, training, proper insurance and inspected vehicles. They also claimed that “rideshare” is but a buzzword.

Given the explosive growth of Uber, Lyft, Sidecar and other ridesharing players, it appears that the taxicabs are wrong - ridesharing is here to stay. The fact that Uber and Lyft feel secure enough to duke it out shows that they may no longer view the traditional taxi companies as their greatest threat. However, Uber’s overwhelming financial advantage may eventually prove too much even for Lyft’s loyal pink mustached community to overcome.

Competition is as critical to innovation as oxygen is to fire, but an overpowering surge of both threatens to stifle ingenuity and extinguish the flame.

Based in San Francisco, Mike Hower is an Associate Editor at Sustainable Brands and writes about companies and organizations engaged in sustainability strategy, clean technology and social entrepreneurship. As a natural politico, he has a soft spot for anything related to public policy and the intersection of business and government. Mike also is Editor of Article 3, a media platform focused on the intersection of technology, politics and law, and Communications Manager at Rocket Lawyer. You also can connect with him on LinkedIn or follow him on Twitter (@mikehower).