Lyft Puts New Megabucks to Work: Launches in 24 Cities, Cuts Prices Again, Drops All Fees
Ride-sharing service Lyft has $250 million in the bank in new funding. It’s not going to let the money just sit there.
Today it is launching in 24 more American cities, including Albuquerque, N.M.; Buffalo, N.Y.; and Oklahoma City, Okla. It is making all rides free in all 24 cities for the next two weeks. That brings Lyft to 60 total cities launched, all in the U.S.
Plus: On top of system-wide price cuts of up to 20 percent earlier this month, Lyft is chopping off an additional 10 percent in all its existing markets.
Plus: Lyft is passing those full fares onto its drivers, cutting its own revenue to zero for the foreseeable future.
So basically: Hey Uber, two can play at this game.
Lyft’s well-funded rival Uber — which started out in the luxury black sedan business but moved into peer-to-peer ride-sharing — had over the past four months beaten up on Lyft in markets where they compete by cutting prices by up to 34 percent and reducing its commission from 20 percent to 5 percent.
Sensing its opportunity, Lyft is zagging in the other direction — trying to reclaim its place as the cheap and friendly way to quickly find a ride across town.
“We were the most affordable, now we’re more affordable,” was Lyft co-founder and president John Zimmer’s message in an interview Wednesday.
Lyft has been working for the past year on making its operations easy to replicate. It no longer requires new drivers to come into its office to join the team; they now apply online, go through a background and driving record check, and get on the road. In each of the 24 new cities, the company has 50 to 100 drivers ready to go at launch, Zimmer said.
“A big demonstration of our peer-to-peer model is we don’t have offices in these cities. We’re not limited by that in any way,” he explained.
As for Lyft deciding to throw tanker-loads of money into its business by passing full fares along to drivers in both new and old cities, giving away free rides in new cities and cutting prices in old ones?
“We got the fundraise under our belt,” Zimmer explained. He said he didn’t know how long the promotions would last.
It’s all about maintaining that friendly image. “While experimenting with demand, we will not take commission,” said Zimmer.
The full list of new Lyft cities is Albuquerque, N.M.; Ann Arbor, Mich.; Buffalo and Rochester, N.Y.; Colorado Springs, Colo.; Corpus Christi, TX; Fairfield County and New Haven, Conn.; Fresno, Modesto and San Bernardino, Calif.; Jacksonville, Fla.; Kansas City, Mo.; Lexington and Louisville, Ky.; Lincoln and Omaha, Neb.; Memphis, Tenn.; Northern New Jersey; Oklahoma City and Tulsa, Okla.; Raleigh Durham, N.C.; Spokane, Wash.; Toledo, Ohio; and Virginia Beach, Va. Lyft has yet to launch internationally, though Zimmer said the company has plans to after raising some of its latest funding from Chinese e-commerce giant Alibaba.