
Uber Raises Funding at $62.5B Valuation - chollida1
http://www.bloomberg.com/news/articles/2015-12-03/uber-raises-funding-at-62-5-valuation
======
blizkreeg
Uber is now too big to fail. Possibly the most important company this decade.
I never cease to be amazed by their phenomenal execution across the world.

I was in Mexico City last week where I truly came to understand the enormous
impact Uber as a company has had in these past few years. The service was
highly prevalent, popular, and the experience was completely seamless — just
like in the US. It barely skipped a beat. Their execution is likely a prime
business case study in that no other company has built a technology business
that has a huge, real-life logistical component this fast — and in dozens of
cities around the world, spanning an equal number of ways of doing business
and cultural barriers.

~~~
dopamean
The most important company this decade? I'm not saying you're wrong but I have
to ask... what makes Uber so important?

~~~
demian
The most successful redefinition of labour relations since the begining of
overseas manufacturing.

~~~
mwnz
Successful for the company. Not necessarily the population.

~~~
blizkreeg
I'd disagree with that. It is providing a means of income for many who are
unemployed/underemployed. It's much better than nothing. It probably can be
better, but most of these drivers aren't complaining.

~~~
Dirlewanger
They aren't complaining yet because 1. they effectively have no collective
voice other than social media, and 2. this "gig" industry Uber has propelled
into the stratosphere is just too relatively new to see any significant
societal fallout.

Wait until we see more and more drivers whose only job is Uber no longer able
to work. What do we say to the veterans who, after being rejected everywhere
else due to a dearth of skills took out a car loan on a new $60k SUV to drive
for Uber, only now to get injured? Who's going to take care of them? Won't be
Uber, who will just be shoving the middle finger in their faces. And I don't
think you can call this a strawman, given how aggressive Uber is with vets.

~~~
viscanti
Sure. But why don't we blame literally every other company who is worse and
isn't giving any better opportunity. It would be fantastic if everyone had
hundreds or thousands of options and they could compete for the best
opportunity, but for some people that's not the case. I'd blame every other
company before I blamed the one doing the most to help provide a compelling
opportunity.

------
chollida1
So by now Uber has raised capital and debt from:

\- some pretty famous angle investors

\- some pretty famous venture capital funds

\- some pretty famous investment banks

\- some pretty famous private equity firms

\- some pretty famous hedge funds

\- some pretty famous mutual funds

It's worth asking, if they have reached the point where their success becomes
less about their execution, though that's still important, and more of a self
fulfilling prophecy.

I mean you now have some very influential people to call on if you need help
on navigating the IPO process, or government lobbying for rules changes, etc.

I've completely changed my mind on Uber, 18 months ago I would have felt
nervous as employee joining them when determining if my options would be worth
much. Now, I'd be asking if i could put 50% of my paycheck towards buying more
options.

Steve Balmer was famous for acquiring as much Microsoft stock as he could,
even after he became the CEO. I'd be mimicking Steve Balmer here and acquiring
as much Uber as I could right now.

~~~
marcusgarvey
Your question about self-fulfilling prophecy is very relevant to a recent
piece written by a transportation expert. Among other points he makes:

>Uber-type companies need to be understood as a radical departure from
Amazon/EBay type models. Instead of displacing competitors through actual
efficiencies, or by creating entirely new markets, its model is entirely based
on getting the world to believe that it will inevitably dominate the entire
industry. This requires aggressively suppressing any discussion of empirical
economic evidence (which would undermine its case) and emphasizing the factors
driving inevitability--the brilliance of its early stage investors, the
ruthlessness of management, and the raw political power of the company’s
wealthy supporters. PR is a component of every start-up; at Amazon/EBay it
played a supporting role and relied heavily on economic evidence of
competitive strengths, but at Uber PR is the heart of the plan, and replaces
the need to figure out how to provide much better service at much lower cost.

[https://pando.com/2015/12/01/has-pando-missed-heart-uber-
pro...](https://pando.com/2015/12/01/has-pando-missed-heart-uber-problem-
transportation-industry-expert-
writes/a5c239cf3fc961d10b17a4892d0f74e899b77fd9/)

~~~
dopamean
I can only speak for myself here but I feel like I am part of a new market
that Uber and Lyft have created. I live in Austin TX and have had bad cab
experiences here and so I frequently use Uber. I am from New York, however,
and when I'm back there I almost never use Uber because I have no problems
with getting a cab.

I would be surprised if the market for cab companies in Austin is as large as
the market Uber serves. I really cant recall the last time someone here told
me they got in a cab. I think those people just drove themselves places before
Uber instead of taking a cab. I certainly did.

~~~
cm2012
I live out in a relatively remote area of Queens in NYC and never, ever took
taxis before (I would have had to call an unreliable, surly car service). Now
I spend $100+ a month on Uber, which is never more than 5 minutes away.

~~~
myth_buster
OT, the "5 minutes" I believe is an estimation and one reason why we feel that
the response is fast. As a thought experiment, if they say your car is "10
minutes" away, it would perhaps be a different experience.

~~~
fapjacks
This is very important, because I time my rides to the minute, and almost
every time, the driver that accepts my ride is sitting in his living room (or
at his office) and takes five minutes alone just to get to his car and start
driving to my location. Drivers aren't just sitting there idling like taxis at
a taxi stand.

------
MitjaBezensek
That's close to Basecamps valutation :) [https://medium.com/@jasonfried/press-
release-basecamp-valuat...](https://medium.com/@jasonfried/press-release-
basecamp-valuation-tops-100-billion-after-bold-vc-
investment-c221d8f86ad7#.k5znmketf)

~~~
myth_buster
Reminded me of the SV episode where Russ Hanneman asks Richard to not generate
revenue because once you do people would start quantifying it.

If they don't generate revenue then the sky is the limit!

~~~
tomasien
They make a ton of revenue....

~~~
myth_buster

      They make a ton of revenue....
    

I was commenting on the medium article linked which said...

    
    
      In order to increase the value of the company, Basecamp has decided to stop 
      generating revenue. “When it comes to valuation, making money is a real 
      obstacle. Our profitability has been a real drag on our valuation,” said Mr. 
      Fried. “Once you have profits, it’s impossible to just make stuff up. That’s 
      why we’re switching to a ‘freeconomics’ model. We’ll give away everything for 
      free and let the market speculate about how much money we could make if we 
      wanted to make money. That way, the sky’s the limit!”

~~~
tomasien
GOTCHA gotcha.

------
funkyy
Yet mostly still unregulated. I cant get over all the bad stuff they did to
get where they are now. I am not defending taxi drivers (it seems that ANYONE
against Uber business model = taxi supporter - at least according to majority
of A/B society) but Uber is what corporations shouldn't be - breaking laws,
throwing money to shut people and lobbying every politician they can. While I
understand love by people that use it to make money or communicate, their
whole model is just wrong and example of how corporation shouldn't be imo.

~~~
blfr
It's so easy to never deal with Uber if you don't want to that I don't see the
point of regulation.

~~~
toomuchtodo
Because Uber pushes out transportation providers _who do follow the rules_.
Hence, regulation required.

~~~
blfr
This is an argument for deregulation, not regulation. Why bother with
regulation in a highly competitive market?

~~~
ethanbond
Taxis pre-regulation were highly competitive.

Each driver did his best to cut costs and raise revenue like: break traffic
laws, not pay for insurance, not service their cars, not clean their cars,
etc.

And since hailing a cab doesn't really give a lot of consumer choice besides
what cabbie happens to be driving by at the moment, "competition" is loosely
applied at best.

Pre-regulation, this would mean chances were fair that you'd enter a cab
driven by a verbally abusive asshole who can't drive well, blows smoke into
your face at a 15 second interval, doesn't know the city, and has basically no
regard for human life or decency.

At least according to Time magazine in 1976: Modern Living: Call Me a Taxi,
You Yellow Cab!

~~~
tlrobinson
And now the internet and mobile apps has changed all that. Now consumers can
pick the best service and simply download a different app, and the services
themselves can weed out bad drivers by looking at their ratings.

~~~
toomuchtodo
That's an extremely naive point of view about something so critical as
transportation infrastructure.

~~~
tlrobinson
Seems to be working pretty well so far, especially compared to the highly
regulated taxi industry.

"a verbally abusive asshole who can't drive well, blows smoke into your face
at a 15 second interval, doesn't know the city, and has basically no regard
for human life or decency" sounds a lot more like taxi drivers than Uber
drivers (with the exception of "doesn't know the city", fortunately we have
other mobile apps for that too!)

~~~
toomuchtodo
Unless you're disabled, which is part of regulations in place for taxi
companies (that Uber and Lyft ignore):

[http://fortune.com/2015/05/22/uber-lyft-
disabled/](http://fortune.com/2015/05/22/uber-lyft-disabled/)

[http://www.wired.com/2015/08/uber-
disability/](http://www.wired.com/2015/08/uber-disability/)

[http://www.thedailybeast.com/articles/2015/05/21/uber-
disabi...](http://www.thedailybeast.com/articles/2015/05/21/uber-disability-
laws-don-t-apply-to-us.html)

[http://time.com/3895021/why-the-disabled-are-suing-uber-
and-...](http://time.com/3895021/why-the-disabled-are-suing-uber-and-lyft/)

------
prbuckley
Lyft "lost $127 million in the first half of 2015 on $46.7 million in revenue,
according to the documents. Lyft said last month that it has gained market
share in key markets, such as San Francisco, and has a gross revenue “run
rate” of $1 billion."

I had no idea lyft was losing 3x the their revenue. That is crazy.

~~~
rdtsc
Because most people Uber...?

It became a "verb" and well, here we know what that means: "xerox that paper",
"google this term"... Nobody is Lyft-ing and everyone is Uber-ing. Once it's
verbified, it's hard for competitors to overcome it.

I, for one, have used neither. But I have friends and family who travel a lot.
Some are in their 20s, 30s, and some in the 60s and they all say they Uber
places vs taking a taxi. They don't know about Lyft-ing.

Now what is the underlying reason for that. Maybe luck, maybe time to market,
maybe pricing, I can't tell you.

~~~
tedmiston
Disagree that "most people Uber" is the reason Lyft is losing so much money.

I'm not exactly sure when Lyft stopped focusing on international markets to
double down on the U.S., but I feel like much of the losses are from "failed"
international experimentation.

With my experience in Ohio, I use both preferring whichever can reach me
quickest (a 15-20 minute wait here is not abnormal).

~~~
rdtsc
Yeah I went by most people I know (some from Ohio too! btw, but they use Uber
when traveling only to other cities) and extrapolated to "most" just by them
being average Americans -- non techies, various ages,...

Most tech people I know have both apps installed and use both, like you do.
But I don't think that's representative of the general population.

------
Matt_Mickiewicz
Whew!

I get worried when more than 60 days goes by without them announcing a
MegaRound(tm) at an InsaneValuation(R).

------
paxtonab
I think Uber used their last round of funding to poach the entire Carnegie
Melon robotics department for their self-driving cars, so it will be
interesting to see they do with this $2.1 billion dollars.

------
samclearman
Presumably the deal terms include a liquidation preference and thus the
implied valuation is essentially horseshit.

------
chris_va
Funding rounds are usually preferred stock (though I hear Uber may have done
some common stock in the last round, anyone know more?).

Preferred stock gets paid out first, so the actual "valuation" here is less
meaningful. Preferred investors would still make a profit if Uber exited for
$8B instead of 62.5B.

~~~
askafriend
How will this affect the employees?

~~~
chris_va
After the preferred money is paid out, the preferred stock converts to common
stock at some multiplier. The multiplier is usually 1x, though it varies. At
that point, whatever money is left is generally split between all common
shareholders (investors and employees).

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NDizzle
Wow, we need a new monetary unit. I dub it the Lucasart, and it's worth an
even $4B USD.

Uber is now valued at 15.6 Lucasarts!!! Hooray and congrats to all involved in
this grounded and logical valuation!

~~~
fapjacks
Hah! We play this game in the office. "Any new Space Shuttle program would
cost like 0.25 <our company name>s"

------
dsugarman
>The number is typically calculated by annualizing a recent week, month, or
quarter of the company's gross revenue, which means actual annual revenue may
differ substantially.

Maybe I am reading this the wrong way but in broader context of this article
it reads as they are trying to say that the actual revenue may be much lower.
They should explicitly say that for a growth company like Uber, the actual
revenue # would be much larger.

~~~
mikeyouse
Uber, Lyft, Airbnb, etc. all typically report 'Gross Revenue' which is pretty
misleading since the majority of Gross Revenue is passed through to the driver
/ apartment owner -- That may be what that sentence is in reference to. The
interesting number is 'Net Revenue' which is how much Uber actually receives
to pay their bills, etc.

Quick example, if 10 riders take an Uber and their cost is $20/each, Uber
would report $200 in Gross Revenue. Since their driver split is something like
80/20, their Net Revenue would only be $40.

~~~
SeeDave
From my limited understanding, I believe Groupon tried something similar and
was shut down by the SEC during IPO.

------
srameshc
Close to 1/10th of Apple's market cap, still a huge huge number. Nearly $2bn
in revenue when reported by recode on August 2015. Facebook market cap was
approx $81bn when launched. Probably once it will get closer to $100bn and
then we will see an IPO.

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free2rhyme214
Their IPO is going to be huge.

