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Uber has apparently raised $12.5 billion[1] and is valued at over $60 bilion. So seed investors are in fat city as long as the valuation holds. If the valuation

Uber has apparently raised $12.5 billion[1] and is valued at over $60 bilion. So seed investors are in fat city as long as the valuation holds. If the valuation goes down, it all depends on the preference multiples (which are likely greater than 1), and how low the value goes. Uber has very significant revenue and growth (see the new Mary Meeker presentation), so they are a very valuable company. It may not be wise the way they are burning cash in China but hey we're all just spectators. [1] Crunchbase says $9B and hasn't been updated to add in this money), https://www.crunchbase.com/organization/uber#/entity https://www.crunchbase.com/organization/uber#/entity

rexreed 10y ago
It's only Fat city if there's an exit at that valuation. We're talking Theranos style valuations here that can disappear at any time. They better find an exit scenario before the music stops or it's a world of hurt, especially for the later stage investors.
- supster 10y ago
  True, but those are the obvious risks you take as an investor. And late stage investors often negotiate downside protection in the form of liquidation multiples or ratchets.
  - rexreed 10y ago
    You can ratchet your way all the way to 100% of zero, but getting a greater percentage of negative is not the way to positive. I think what we're all sensing here is there's a colossal infusion of cash that's not supported by the business model and at some point, there won't be any more cash available. They better find a business model that's not so negative quickly.
  - CPLX 10y ago
    Yes precisely. But early stage investors almost never get those kind of protections. How can they possibly not be getting wiped out just a little more with every sky-high valuation round with a preference attached?
- nugget 10y ago
  The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles, whereupon ride sharing becomes a physical-capital intensive business (cars) rather than the current human-capital intensive business (drivers/their driver network). Autonomous vehicles (and the infrastructure to support them) significantly reduce the amazing network efforts that Uber has enjoyed to date. An investment into Uber at these valuations is a bet that this future adoption (to the point where it would disrupt the massive revenue Uber realizes from places like LA, NYC, and SF) is decades further out than some futurists predict. Even transitioning into this brave new world Uber still has a lot of brand value, although there will be a ton of competition (all auto makers such as Tesla, GM, Ford, and new entrants such as Apple, Google, and Amazon), ultimately benefiting consumers: enjoy your $12.50 ride (est. 35% of which will be local and state taxes) from SFO to 3rd and Market.
  - cc439 10y ago
    >The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles Or their customers losing interest as driver/fare subsidies are slowly dialed back. I've already begun planning on Uber with hesitation as I have now twice been left "stranded" for ~30 minutes without an active driver available in my city. I'm fine with the surge pricing which comes along with that but Uber is becoming increasingly unattractive to drivers and that's a real problem alongside increasing fares. Most of the casual drivers who fuelled Uber's early explosive growth are long gone now that the true costs of using your personal vehicle as a taxi became clear. Even the dedicated drivers are staying in on weekdays because Uber oversaturated the driver pool in small markets while cutting back on payouts. There aren't enough riders on a Tuesday evening for more than 1-2 drivers to dedicate their time and when those 1-2 call it a night, there's no one willing to stay up for a single $7 fare.
    - deleted 10y ago
      [deleted]
    - nugget 10y ago
      What city do you live in? I've traveled all over the US in the past year and haven't experienced this. I can imagine in a relatively remote, low-density city with sub 50k population it could become an issue at the most off-peak hours.

rexreed 10y ago

It's only Fat city if there's an exit at that valuation. We're talking Theranos style valuations here that can disappear at any time. They better find an exit scenario before the music stops or it's a world of hurt, especially for the later stage investors.

supster 10y ago
True, but those are the obvious risks you take as an investor. And late stage investors often negotiate downside protection in the form of liquidation multiples or ratchets.
- rexreed 10y ago
  You can ratchet your way all the way to 100% of zero, but getting a greater percentage of negative is not the way to positive. I think what we're all sensing here is there's a colossal infusion of cash that's not supported by the business model and at some point, there won't be any more cash available. They better find a business model that's not so negative quickly.
- CPLX 10y ago
  Yes precisely. But early stage investors almost never get those kind of protections. How can they possibly not be getting wiped out just a little more with every sky-high valuation round with a preference attached?
nugget 10y ago
The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles, whereupon ride sharing becomes a physical-capital intensive business (cars) rather than the current human-capital intensive business (drivers/their driver network). Autonomous vehicles (and the infrastructure to support them) significantly reduce the amazing network efforts that Uber has enjoyed to date. An investment into Uber at these valuations is a bet that this future adoption (to the point where it would disrupt the massive revenue Uber realizes from places like LA, NYC, and SF) is decades further out than some futurists predict. Even transitioning into this brave new world Uber still has a lot of brand value, although there will be a ton of competition (all auto makers such as Tesla, GM, Ford, and new entrants such as Apple, Google, and Amazon), ultimately benefiting consumers: enjoy your $12.50 ride (est. 35% of which will be local and state taxes) from SFO to 3rd and Market.
- cc439 10y ago
  >The only thing that can ''take out'' Uber is widespread adoption of autonomous vehicles Or their customers losing interest as driver/fare subsidies are slowly dialed back. I've already begun planning on Uber with hesitation as I have now twice been left "stranded" for ~30 minutes without an active driver available in my city. I'm fine with the surge pricing which comes along with that but Uber is becoming increasingly unattractive to drivers and that's a real problem alongside increasing fares. Most of the casual drivers who fuelled Uber's early explosive growth are long gone now that the true costs of using your personal vehicle as a taxi became clear. Even the dedicated drivers are staying in on weekdays because Uber oversaturated the driver pool in small markets while cutting back on payouts. There aren't enough riders on a Tuesday evening for more than 1-2 drivers to dedicate their time and when those 1-2 call it a night, there's no one willing to stay up for a single $7 fare.
  - deleted 10y ago
    [deleted]
  - nugget 10y ago
    What city do you live in? I've traveled all over the US in the past year and haven't experienced this. I can imagine in a relatively remote, low-density city with sub 50k population it could become an issue at the most off-peak hours.