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>playing the middle-man between taxis and passengers everywhere, forever. A 1% chance at a one trillion dollar market cap Investors in Uber had to be hoping fo
by smeyer 9y ago
>playing the middle-man between taxis and passengers everywhere, forever. A 1% chance at a one trillion dollar market cap
Investors in Uber had to be hoping for either a larger than 1% chance, expanding beyond taxis, fundamentally growing the taxi market, or all of the above. The existing taxi market has a total market cap of well under a trillion dollars, even including companies like Uber. The total US stock market only has a combined market cap of about 30 trillion, so I think you're overestimating the number of trillion dollar market cap industries that exist and the extent to which investors are gambling on success having payoffs quite that high.
- dalbasal 9y agoTrue, the actual outcomes and probabilities are complicated, and there are many success scenarios where uber doesn't yield a trillion dollar market cap. I was being simplistic, to demonstrate the principle. Apple, Amazon & Apple are headed towards that trillion now, so I think this is a possibility, and possibilities drive investment. If the stock market itself stays good, it is almost inevitable one of the three will tip that number soon. Once one does, I'd expect a half dozen within a decade. On the taxi market cap... This is an interesting one. I agree that uber had their eye on more/bigger opportunities (especially self driving), but ignoring that... The market cap of an industry is not only related to its size. It's related to the margins, lock-in and other attributes of the companies operating within it. Also, debt & capital efficiency. A more competitive market may have lower market caps, because margins are thinner and companies can fail. IE, while market cap of the industry might be Y, "an uber" dominating that industry might still achieve a market cap of 5Y.
- sophacles 9y agoI don't know... Uber (et al) opened a lot of people to the "lets a hire a driver" mindset. Outside of some major urban centers, the idea of taking a cab was just weird. Uber came a long and suddenly people were taking them everywhere. Not just people who would have otherwise taken a cab, but people who otherwise would have driven themselves. This is just anecdata from my observations and discussions with others who had similar observations. But it would be interesting to find real numbers on this.
- ghaff 9y agoMy experience is that outside of "major urban centers," Ubers are pretty thin on the ground. I live about 40 miles outside of Boston and the couple of times I've looked, there's been little or nothing available around me.
- gutnor 9y agoEspecially seen from the US: I think that investor thinks that Uber is the future of transport, period. The replacement for buses, local train, taxi, car rental, car ownership. In that world, cities pour money in Uber instead of their failing bus/metro public services. Car manufacturer and insurer are commodities behind Uber, driving is either automated or as cheap as legally possible, but also commodity behind Uber. Basically Uber would be in control of the totality of money for transporting people semi-locally from A to B, which means the lion share of the margin. That's worth 1 trillion or more, even if Uber does not manage everything.
- golergka 9y agoMe and everyone I know have barely ever taken taxis before the taxi apps arrived. It was a long wait, expensive and quality sucked. And if you hailed a cab on the street, you had two options: expensive or incredibly shitty (unoficial ones). Now it's common to order an Uber everywhere, few times a day. Open competition brought prices down, short wait removed the barrier, and star feedback have had a very significant effect on quality. It's not just monopolizing existing market, it's improving it for customers.