Startups will eventually have to stop giving out free VC money to acquire users. I think the user acquisition cost currently is way to high. Companies give away between $10-$25 (or $1000 for new drivers on Lyft) just to try their service. There are no major differentiators between many of them apart from free credits. Companies race to acquire users like how Groupon did in the coupon business when tens of clones popped up within days in multiple countries. There are many examples of these - I have no reason to stick with one service or have brand loyalty. As long as the service is within reason the cheapest one is the one I'd use.
At some point the incentivizing would stop after burning through a lot of cash - to show profits. At that very moment some other startup could begin giving out lots of free credits and users could very easily move.
That's when things could potentially come crashing down.
I think this is a huge point that is not talked about enough. Users seem to be over-valued especially since there is nothing keeping you around once you get your free credit. For instance I have gotten a free ride of 4 ride sharing apps (Uber, Lyft, Flywheel, Sidecar) but I just use Lyft as a customer. The rest just drove me somewhere once for free. Sucks to be them.
At some point the incentivizing would stop after burning through a lot of cash - to show profits. At that very moment some other startup could begin giving out lots of free credits and users could very easily move.
That's when things could potentially come crashing down.