
Uber Valued at More Than $50B - prostoalex
http://www.wsj.com/article_email/uber-valued-at-more-than-50-billion-1438367457-lMyQjAxMTI1MDMzMTczNjE3Wj
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cblock811
This may be just me..but I feel like Uber is being built up way too much.
People outside SF see it as some shining beacon of Silicon Valley tech
startups. If they make missteps and show weakness I wonder if it will shake
people's perception of how strong the tech industry is now.

~~~
paulgb
I remember following Groupon closely and feeling like Groupon was spending a
bunch of money teaching people around the world how to use daily deals, only
to have competitors come in make it a race to the bottom because the barriers
to entry were so low.

I feel like Uber is doing the same: spending a bunch of money teaching people
how to hail a cab from their phone. When competitors like Lyft, Hailo, and Via
enter the market and compete with them, it starts to look like the same race-
to-the-bottom that happened with Groupon.

(Last I heard, both Via and Lyft Line are cheaper than UberPool right now in
Manhattan. I suspect both are taking a loss on many rides to compete.)

~~~
henrikschroder
You also have existing taxi companies to compete against. Way before Uber was
a thing, my preferred company in Stockholm had a simple hailing app, it was
basically one button for "I want a cab, here, now". No tracking, no payments,
nothing fancy, but still.

These days, Taxi Stockholm has a hailing app that is on par with Uber's app,
and I just can't see how Uber can compete with that. I can use Taxi Stockholm
and get a professional cab driver in a nice luxury car that is insured,
regulated, cctv'd and has a trusted brand name, or I can use Uber and get a
non-professional in a regular car, no taxi license plate, unknown insurance
situation, for maybe a cheaper price.

Uber is fantastically successful in places where the existing taxi market
sucks for whatever reasons, but there are plenty of places where it doesn't
suck, and it's very questionable what Uber can bring to the table then. Or
Lyft, Hailo, etc. Any technology they make can be easily copied by their
competitors, but local vehicle fleets can't.

~~~
moistgorilla
> nice luxury car

Are the cabs in Stockholm actually nice?

~~~
henrikschroder
Compared to SF, oh yes, much better! The most common taxi in Stockholm is
probably a Mercedes, and the average car of the kind of people who would want
to drive for Uber is definitely not. I don't see how Uber could mobilize a
comparable fleet to compete with that. I can see UberPool working where people
expect a "regular" car, and I could see them becoming the dispatch of choice
for non-affiliated taxi drivers, but that's the bottom of the barrel of that
market.

If people think that taxi markets everywhere look like the one in SF, then I
understand why people value Uber so highly and think they'll conquer every
market easily. But the truth is that Uber doesn't have anything that isn't
easily replicatable by entrenched taxi companies that are willing.

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birken
I love when the press accelerates startup success, even among the most
successful companies of all time. They want everything to be an overnight
success.

There is no timeline where Uber could be justified as being 5 years old. For
example, there is a Techcrunch article [1] about the company launching the
initial product over 5 years ago (which I'm sure took some time to develop!).
Uber's website says the company existed in 2009, along with Travis' LinkedIn
profile.

And then they spend a good chunk of the article comparing the speed that the
two companies reach different valuations. I wonder what arbitrary date they
picked as the date Facebook was founded...

1: [http://techcrunch.com/2010/07/05/ubercab-takes-the-hassle-
ou...](http://techcrunch.com/2010/07/05/ubercab-takes-the-hassle-out-of-
booking-a-car-service/)

2: [https://www.uber.com/about](https://www.uber.com/about)

~~~
sickrumbear
Slightly confused; are you saying they should say they're more than 5 years
old? 2009 was 5 years ago, and if that's when the company was founded, saying
they're 5 years old makes sense.

~~~
aaronbrethorst
2014: 1 year ago

2013: 2 years ago

2012: 3 years ago

2011: 4 years ago

2010: 5 years ago

~~~
drivers99
> 2010: 5 years ago

Not necessarily.

Date diff today (2015-07-31) and (2014-09-01) is 4 years, 10 months, and 30
days.

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mikeyouse
Wow.. I was curious if the pending employment law debates and changes were
going to impact their valuation, it appears not.

~~~
paulpauper
it was way overblown, the details ignored in the anti-Uber cacophony.

This ruling only effects California and a single driver, as explained by an
article in Forbes: [http://www.forbes.com/sites/quora/2015/06/30/the-
california-...](http://www.forbes.com/sites/quora/2015/06/30/the-california-
ruling-on-uber-drivers-would-be-disastrous-but-its-probably-an-aberration/)

California did not rule that Uber drivers are employees. Rather, a single
labor commissioner made that finding (not a ruling) in an informal, non-
binding hearing that is based on the facts of the specific driver’s
circumstances, applies only to that driver, is likely to be appealed, and is
of no precedential effect. Other commissioners in other circumstances have
found the opposite

~~~
mikeyouse
It's clear that there are coming changes to the contractor / on-demand economy
and how labor is treated, the value of Uber is likely a proxy for the depth of
the changes that are expected.

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Animats
Uber's revenue numbers are awful. _" According to Bloomberg, Uber had revenue
of $415 million (we assume net revenue after payments to drivers, not gross
revenue) and an operating loss of $470 million."_ That's for 2014, and it's
leaked data. But it's not good. Why are they losing money? They're an app and
a server farm, some "driver centers", and an admin staff. It's not like
Amazon, with giant warehouses full of expensive inventory. They're already
scaled out; the expansion phase is over.

[1] [http://www.businessinsider.com/uber-leaked-financials-
look-u...](http://www.businessinsider.com/uber-leaked-financials-look-
ugly-2015-6)

~~~
untog
They're losing money because they are aggressively expanding into new markets.

 _They 're an app and a server farm, some "driver centers", and an admin
staff._

And, you know, a _lot_ of cars and drivers. Of course Uber would want to make
sure we all remember they are _not_ Uber property and employees, but they
still have to spend a lot of money to get them on board.

~~~
alkonaut
What is their remaining market? Are there many countries/cities that still
have easily disruptible taxi markets (e.g. "Medallions" or similar)?

~~~
untog
4 hours ago:

Uber invests $1 billion in Indian market

[http://money.cnn.com/2015/07/31/technology/uber-
india-1-bill...](http://money.cnn.com/2015/07/31/technology/uber-
india-1-billion/)

Yeah, there are some big markets out there yet.

~~~
alkonaut
Yes, but a market being big doesn't mean there is a lot of low hanging fruit
in that market. In a market with a regulated number of cabs it's easy to see
how uber can find market share (like in NYC). In a market without medallions
or similar, where there is already competition among taxi companies making
margins slim, I don't see how Uber can be so disruptive. Having an app,
dynamic pricing, and abusing the workforce should be obvious steps already
taken by existing taxi companies in those markets!

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msoad
Didn't somebody do the math and came up with $40B for entire taxi business
globally?

~~~
bbali
Uber is best positioned to usher in self-driving cars. If they are successful
at it, their market opportunity is much larger than the Taxi-cab industry.

~~~
prostoalex
> Uber is best positioned to usher in self-driving cars.

Fleet management is all about buying, parking, filling up, maintaining,
cleaning and eventually selling the vehicles once they ran their course. Why
would Uber be better at all those things?

~~~
bbali
Economies of scale that it can drive from its platform given that it will have
the largest base of customers as well as suppliers. It is very close to what
Amazon did to bookstores and eventually to ecommerce business.

~~~
prostoalex
Some of that doesn't scale rapidly. If they need to buy a thousand car washes
nationwide, an owner in Omaha is not going to sell at a discount just because
they already own 10 car washes in Los Angeles. Similarly with pricing for
gas/electricity.

Their economies of scale are akin to those of Avis or Enterprise Rent-a-Car,
and those companies are not valued at high multiples, due to high upfront
capital requirements, insurance burden, fast depreciation, low barrier to
entry, etc.

Current multiples for Uber are there precisely because of the lack of all
liabilities associated with car ownership and maintenance.

~~~
bbali
I would be surprised if the prevalent economic models will continue to apply.
Think Walmart, Costco, Amazon and how they leveraged their scale to drive
efficiency through the ecosystem.

The prevailing models during those times were revisited which included prices,
contracts, payments.

In your specific example about car washes, I envision a huge warehouse with
multiple floors to do automated car washes which is super efficient. This will
happen as there will be a metric that will show how a minute saved on the car
wash floor can save the company millions of dollars because of their scale.
There will be no "car wash" dealership to negotiate with.

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brayton
With this much funding can Lyft survive? Uber and Lyft have to be hemorrhaging
a ton of money so maybe Uber will be able to out last them?

~~~
untog
That's the depressing part of this. It's simply a race for who can raise and
spend money the fastest. And yes, Lyft will lose.

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kin
Looking at it as it is, this can seem ridiculous. But, considering their
domestic and international expansion it really isn't. Uber can pretty much
replace cabs worldwide. When Uber has its driver API service fleshed out, you
can expect tons of companies to be able to tap into that and essentially get
anything delivered beyond Uber Eats.

------
gdeglin
Just one year ago, a NYU finance professor calculated Uber's risk-adjusted
value to be 5.9 Billion. ([http://fivethirtyeight.com/features/uber-isnt-
worth-17-billi...](http://fivethirtyeight.com/features/uber-isnt-
worth-17-billion/)). I wonder what he would say now...

~~~
spiantino
His analysis used the size of the current taxi market as the ceiling for
Uber's revenue. In San Francisco Uber is already generating 3x as much as the
traditional taxi market was.

~~~
moistgorilla
I know many people (myself included) who never used or would have considered
using taxis but now use uber all the time.

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taytus
I feel so unintelligent. I try my hardest to understand these valuations and
I'm failing miserably.

~~~
bbali
We don't have access to their pitch deck - market size, roadmap and traction.
If we were privy to that info, am sure some of this would make more sense.

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paragpatelone
I wonder how far their valuation can go before they go public.

$100B, $200B, $400B?

~~~
paulpauper
Easily $100 billion. The momentum is too strong.

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DannoHung
This seems ridiculous.

~~~
paulpauper
Looking back since 2008 or so, with the possible exception of groupon, I can't
think of a single $5+ billion dollar web 2.0 company that has crashed and
burned.

A significant number of these web 2.0 companies seem to have defied the ‘crash
and burn’ that characterized the first boom. Pets.com and Webvan were pretty
much failures from inception, but sites like Pinterest and Airbnb keep getting
more successful and more valuable.

~~~
tdicola
Yelp is not doing so well. They were valued at $5B, but since going public
it's not been good: [http://www.cnet.com/news/yelp-is-in-a-death-spiral-
industry-...](http://www.cnet.com/news/yelp-is-in-a-death-spiral-industry-
expert-says/) Their stock dropped 28% this week on poor earnings.

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xgarland
It'll be worth even more in the coming years, which is not hard to fathom when
you look at Uber as a logistics company rather than a taxi-replacement.

~~~
nemo44x
I agree. I know people who crunch data for Uber and some of things they're
doing are really valuable. All these rides - pickups, dropoffs, times of day,
routes, etc. And this is just the tip of the iceberg what they're doing. These
kinds of basic projects inspire more complex analysis I'm sure.

The information gathered will allow them to move into new phases of
development. The cab hailing service is not the end game here.

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EugeneOZ
I'm glad to see their success. Keep going, Uber! Thank you for changing the
way I use taxi.

------
curiousjorge
I'd hate to be Uber right now. The early innovators always bear the full cost
of discovery and paving the way for future entrants who will gladly waltz
right in once Uber establishes itself in cities by lobbying and fighting
regulation. The barrier to entry is not as high they make it seem and like
Groupon, a focus on future potential earnings without facing realities, almost
always ends up in favor of late market entrants. I recall Peter Thiel talking
about this in more detail how you should never be the first at anything and
that if you can't build a monopoly you will face the same fate that other
first movers have met.

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fooballs
Wonder when we'll see the first $1T startup valuation. Probably not too far
away.

~~~
xgarland
I don't think any business that achieves that sort of valuation should be
considered a "startup".

