Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.


The best of solutions journalism in the sustainability space, published monthly.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Mike Hower headshot

The Return of the Pink-Mustached Jedi: Lyft Raises $250 Million

By Mike Hower

A few months back, I wrote about Uber’s efforts to level Lyft by leveraging its hefty $258 million in new funding from Google Ventures and TPG Capital. Shortly after, Uber attempted to stifle Lyft’s launches in St. Paul, Phoenix and Indianapolis by offering free rides in these cities. Since then, it has gone on much like this: Lyft expands to new cities, and Uber comes up with ever-more-crafty ways to steal the limelight. Not even kittens are safe.

For the longest time, Uber has been the well-heeled Galactic Empire, and Lyft the scrappy but stalwart Rebel Alliance. Uber respects markets; Lyft values people. But no matter how hard Uber has tried to squash its competitor with silly marketing schemes, attack ads and even lowering rates, Lyft continues to not only survive – but thrive.

And then last week happened. Lyft closed a $250 million Series D round, bringing its total funding up to $332 million – several million above Uber’s $307 million (although some reports claim Uber has actually raised between $361 million and $405 million).

It’s the return of the Jedi, baby. And this one wears a pink mustache.

The new funds are more than double what Lyft and its original parent company Zimride had raised to date. In the past year alone, the company has used its $80 million in venture capital to expand from two cities to 30. This money was sorely needed to continue to compete with Uber, as well as sparring with government regulators, offering enough drivers to meet customer demand and eventually expanding abroad.

Lyft likely will also use the new funds to shore up its safety and security infrastructure. The nature of the business  means that the company will inevitably face disastrous accidents, personal injuries, assaults or death incidents involving its drivers. The company already has acted to expand its insurance policy to cover drivers when they are between rides but logged in to the app.

In the wake of Lyft’s recent victory, Uber executives must be feeling a lot like the Empire after Luke Skywalker blows up the first Death Star. Uber’s financial advantage allowed the company to lower rates in several key markets, which should have spelled Lyft’s doom, according to the rules of the market.

Lyft has succeeded not because it always offers the cheapest rides (it doesn’t), but because it offers something more than just a ride. Uber’s failure to crush its competition stems from a fundamental misunderstanding of the sharing economy.

Case in point: In January Uber began running a Facebook ad that depicts a middle-aged man and woman bumping fists – Lyft’s signature – with the copy, "Don't pay a premium to fist bump."

I recently wrote that transportation network companies (TNCs) such as Lyft and Uber “aren’t just about logistics – getting from Point A to Point B – but about bringing communities together, so that we can move forward.”

Despite the fact that people today are more connected to one another than ever before in human history, thanks to Internet-based social networking sites and text messaging, they also are more lonely and distant from one another in their unplugged lives, according to MIT social psychologist Sherry Turkle, PhD. This is not only changing the way we interact online, but also straining our personal relationships.

Lyft is building its business on the idea that at the end of the day, we all seek community.

In a recent blog post, Lyft wrote:

“In just the last week, a Lyft driver travelled to Africa to shoot photos of budding musicians because of a ride he gave to the executive director of PeaceTones, a nonprofit empowering Kenyan musicians. Another driver witnessed an elderly woman having car trouble and dropped everything to help get her home, while in Los Angeles a group of passengers invited their Lyft driver to lunch after their ride.”

Maybe I got a little carried away with my Star Wars metaphor. Uber is not a malevolent company led by an evil emperor and fallen Jedi who killed younglings (some may disagree). Nor is Lyft without its faults.

But Uber continues to operate under the false notion that the sharing economy is a zero-sum game. It’s them, or Lyft. This is why Uber spends millions trying to tear down the competition. Now that Uber has lost its monetary advantage, it would do well to take a look in the proverbial mirror. Lyft isn’t going anywhere, and you know why?

Sometimes people just want to fist bump.

Image Credit: starwars.wikia.com

Based in San Francisco, Mike Hower is a writer, thinker and strategic communicator that revels in driving the conversation at the intersection of sustainability, social entrepreneurship, tech, politics and law. He has cultivated diverse experience working for the United States Congress in Washington, D.C., helping Silicon Valley startups with strategic communications and teaching in South America. Connect with him on LinkedIn or follow him on Twitter (@mikehower)

Mike Hower headshot

Currently based in Washington, D.C, <strong>Mike Hower</strong> is a new media journalist and strategic communication professional focused on helping to drive the conversation at the intersection of sustainable business and public policy. To learn more about Mike, visit his blog,<a href="http://climatalk.com/&quot; > ClimaTalk</a>.

Read more stories by Mike Hower