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I don't think Uber and Airbnb are particularly comparable to these companies. Uber and Airbnb have very clear business models.

by darawk 11y ago

edgyswingset 11y ago
I'd say Zynga has a pretty clear business model.
- supster 11y ago
  It's pretty hard to produce new viral games at low cost in a consistent fashion.
  - tracker1 11y ago
    GP didn't say it was a good, effective or predictable business model.. ;-)
danieltillett 11y ago
They have very clear business models, but even if they capture 100% of their market the possible revenue can’t support their current valuations. I think both these businesses are fantastic businesses that will make a lot of money, but I would not buy at their current valuations.
- RKoutnik 11y ago
  The annual revenue for taxis in SF was ~$100MM. Uber's annual SF revenue is estimated to be $500MM. So Uber has "captured" 500% of the market. Does that explain their valuation? They're not trying to capture an old market, they're building a new one.
  - danieltillett 11y ago
    Do you really believe that Uber is capturing $500 million out of SF alone? This number is totally unbelievable (and unverifiable), but even if it were true where is the evidence that this is not the result of a pathologically defective taxi market in SF. edit. The comments on this story sum up the ludicrous nature of this $500 million dollar revenue [1] - $625 per person per year! 1. http://sfist.com/2015/01/19/uber_says_sf_revenues_are_500_milli.php http://sfist.com/2015/01/19/uber_says_sf_revenues_are_500_mi...
    - panorama 11y ago
      Why is that number not believable? Like the comments you pointed out mention, it's likely gross not post-driver cut, likely includes more than just the 7-mile diameter of SF, includes tourists, surge pricing can be pricy, corporate comping, etc. I never incur surge pricing and infrequently take Uber yet I can easily pay $100-200 in Uber costs per month. Then you factor in the non-UberX options that are way more expensive, UberEATS, etc. etc...
      - danieltillett 11y ago
        It is not believable because it is comparing oranges to apples. It is comparing the revenue of the SF taxi industry (not the dollars going through the drivers hands) to the dollars going through Uber for some area of unknown size around SF. It is also unbelievable if you try to do the bottom up revenue numbers. Uber claims to have 11,000 drivers in SF [1], but most of them are part time. This implies a monthly revenue per driver of ~$3800 at the $500 million revenue number. Actual data from surveying SF Uber drivers working more than 41 hours a week showed they only generated revenue of $2971 a month [2]. The drivers working part time (20 − 25 hours a week) only generated revenue of $1376 a month. I can’t think of a way of making the top down and bottom up numbers agree. Edit. I fixed the broken link [1]. 1. http://archives.sfexaminer.com/sanfrancisco/uber-releases-driver-data-for-first-time-and-its-not-pretty-for-taxi-industry/Content?oid=2917635 http://archives.sfexaminer.com/sanfrancisco/uber-releases-dr... 2. http://www.sfgate.com/business/article/Lyft-Uber-drivers-turnover-high-wages-low-6585229.php http://www.sfgate.com/business/article/Lyft-Uber-drivers-tur...
        panorama 11y ago
        Unfortunately the first link doesn't appear to direct correctly. I'm still willing to think 500M is plausible, with Uber Black and SUV included (is it safe to say these professional drivers make more than 3000/mo on Uber?). Even if it's not quite 500M, or maybe they needed to flub the geography or numbers to get to that number, they're still generating huge sums of revenue in what is only one large metropolitan city out of hundreds around the world.
- bpodgursky 11y ago
  What? AirBnB's valuation is 25B. It could make a trivial dent in the worldwide hotel market and crush that valuation many times over. Uber is 50B. The global taxi market alone is worth many multiples of 50B, and that's not counting all the delivery services, bus/public transit-replacements etc that Uber is pushing for. I'm not saying these companies WILL capture all of their current markets, but it's ridiculous to say the valuations wouldn't be supported if they captured the whole market.
  - sly_foxx 11y ago
    These hypothetical situations need to be taken with a grain of salt. Many big companies have tried expanding and taking over other markers, unrelated to their core business - they usually fail or acquire a company in that space(e.g. Google-YT; Facebook-Instagram etc.)
    - tracker1 11y ago
      I think that Uber could make a killing as a general delivery service... If you included smaller "hand-offs" for drivers around town, they wouldn't match UPS/Fedex for remote distribution, even overnight, but could definitely be a boon for local businesses.
  - voronoff 11y ago
    Many multiples? Try two to three, currently. "For instance, there seems to be a consensus that the most lucrative cab market in the world is in Japan, where yearly revenues are estimated to be about $20 billion to $25 billion just in Tokyo, followed by the United Kingdom with revenues of $14 billion, the bulk from London, and the U.S. with $11 billion overall and about $3 billion in New York. Assuming taxi revenues in the rest of the world add another $50 billion to this total, I arrive at a total market of $100 billion." http://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ http://fivethirtyeight.com/features/uber-isnt-worth-17-billi...
    - adventured 11y ago
      Uber won't capture merely the value of the US cab market, they're going to vastly expand it. People are already using Uber for things that they would never otherwise have tried to hail a cab for due to either cost or inconvenience or annoyance. It has significantly opened up the potential scale of the US taxi market, and will continue to do so. Uber's use is also blatantly going to broaden beyond the classic taxi market, whether that's to autonomous (which will again drastically increase the size of the market by bringing down the cost) and or deliveries. You might as well pretend AirBnB is only trying to capture the hotel market's value. When in fact they're vastly expanding upon it while simultaneously taking market share away from hotels.
sauere 11y ago
And Box? They had a simple, clear defined business model.
- supster 11y ago
  Great business, great model, simply overvalued (expectations exceeded reality). Probably a winner in the long run IMO.
  - dkarapetyan 11y ago
    Their product is a bloated nightmare but maybe that doesn't matter.

I don't think Uber and Airbnb are particularly comparable to these companies. Uber and Airbnb have very clear business models.

by darawk 11y ago

I don't think Uber and Airbnb are particularly comparable to these companies. Uber and Airbnb have very clear business models.

edgyswingset 11y ago

I'd say Zynga has a pretty clear business model.

supster 11y ago
It's pretty hard to produce new viral games at low cost in a consistent fashion.
- tracker1 11y ago
  GP didn't say it was a good, effective or predictable business model.. ;-)

danieltillett 11y ago

They have very clear business models, but even if they capture 100% of their market the possible revenue can’t support their current valuations. I think both these businesses are fantastic businesses that will make a lot of money, but I would not buy at their current valuations.

RKoutnik 11y ago
The annual revenue for taxis in SF was ~$100MM. Uber's annual SF revenue is estimated to be $500MM. So Uber has "captured" 500% of the market. Does that explain their valuation? They're not trying to capture an old market, they're building a new one.
- danieltillett 11y ago
  Do you really believe that Uber is capturing $500 million out of SF alone? This number is totally unbelievable (and unverifiable), but even if it were true where is the evidence that this is not the result of a pathologically defective taxi market in SF. edit. The comments on this story sum up the ludicrous nature of this $500 million dollar revenue [1] - $625 per person per year! 1. http://sfist.com/2015/01/19/uber_says_sf_revenues_are_500_milli.php http://sfist.com/2015/01/19/uber_says_sf_revenues_are_500_mi...
  - panorama 11y ago
    Why is that number not believable? Like the comments you pointed out mention, it's likely gross not post-driver cut, likely includes more than just the 7-mile diameter of SF, includes tourists, surge pricing can be pricy, corporate comping, etc. I never incur surge pricing and infrequently take Uber yet I can easily pay $100-200 in Uber costs per month. Then you factor in the non-UberX options that are way more expensive, UberEATS, etc. etc...
    - danieltillett 11y ago
      It is not believable because it is comparing oranges to apples. It is comparing the revenue of the SF taxi industry (not the dollars going through the drivers hands) to the dollars going through Uber for some area of unknown size around SF. It is also unbelievable if you try to do the bottom up revenue numbers. Uber claims to have 11,000 drivers in SF [1], but most of them are part time. This implies a monthly revenue per driver of ~$3800 at the $500 million revenue number. Actual data from surveying SF Uber drivers working more than 41 hours a week showed they only generated revenue of $2971 a month [2]. The drivers working part time (20 − 25 hours a week) only generated revenue of $1376 a month. I can’t think of a way of making the top down and bottom up numbers agree. Edit. I fixed the broken link [1]. 1. http://archives.sfexaminer.com/sanfrancisco/uber-releases-driver-data-for-first-time-and-its-not-pretty-for-taxi-industry/Content?oid=2917635 http://archives.sfexaminer.com/sanfrancisco/uber-releases-dr... 2. http://www.sfgate.com/business/article/Lyft-Uber-drivers-turnover-high-wages-low-6585229.php http://www.sfgate.com/business/article/Lyft-Uber-drivers-tur...
      - panorama 11y ago
        Unfortunately the first link doesn't appear to direct correctly. I'm still willing to think 500M is plausible, with Uber Black and SUV included (is it safe to say these professional drivers make more than 3000/mo on Uber?). Even if it's not quite 500M, or maybe they needed to flub the geography or numbers to get to that number, they're still generating huge sums of revenue in what is only one large metropolitan city out of hundreds around the world.
bpodgursky 11y ago
What? AirBnB's valuation is 25B. It could make a trivial dent in the worldwide hotel market and crush that valuation many times over. Uber is 50B. The global taxi market alone is worth many multiples of 50B, and that's not counting all the delivery services, bus/public transit-replacements etc that Uber is pushing for. I'm not saying these companies WILL capture all of their current markets, but it's ridiculous to say the valuations wouldn't be supported if they captured the whole market.
- sly_foxx 11y ago
  These hypothetical situations need to be taken with a grain of salt. Many big companies have tried expanding and taking over other markers, unrelated to their core business - they usually fail or acquire a company in that space(e.g. Google-YT; Facebook-Instagram etc.)
  - tracker1 11y ago
    I think that Uber could make a killing as a general delivery service... If you included smaller "hand-offs" for drivers around town, they wouldn't match UPS/Fedex for remote distribution, even overnight, but could definitely be a boon for local businesses.
- voronoff 11y ago
  Many multiples? Try two to three, currently. "For instance, there seems to be a consensus that the most lucrative cab market in the world is in Japan, where yearly revenues are estimated to be about $20 billion to $25 billion just in Tokyo, followed by the United Kingdom with revenues of $14 billion, the bulk from London, and the U.S. with $11 billion overall and about $3 billion in New York. Assuming taxi revenues in the rest of the world add another $50 billion to this total, I arrive at a total market of $100 billion." http://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ http://fivethirtyeight.com/features/uber-isnt-worth-17-billi...
  - adventured 11y ago
    Uber won't capture merely the value of the US cab market, they're going to vastly expand it. People are already using Uber for things that they would never otherwise have tried to hail a cab for due to either cost or inconvenience or annoyance. It has significantly opened up the potential scale of the US taxi market, and will continue to do so. Uber's use is also blatantly going to broaden beyond the classic taxi market, whether that's to autonomous (which will again drastically increase the size of the market by bringing down the cost) and or deliveries. You might as well pretend AirBnB is only trying to capture the hotel market's value. When in fact they're vastly expanding upon it while simultaneously taking market share away from hotels.

sauere 11y ago

And Box? They had a simple, clear defined business model.

supster 11y ago
Great business, great model, simply overvalued (expectations exceeded reality). Probably a winner in the long run IMO.
- dkarapetyan 11y ago
  Their product is a bloated nightmare but maybe that doesn't matter.