7 ms·

Uber Sets Valuation Record of $17B in New Funding

107 points by antr 12y ago

selectout 12y ago
Congrats to Uber, as someone that moved to the Bay Area a little over a year ago, this company has been one of the most reliable and helpful services I've used. It's amazing the growth they've had.
syntheticlife 12y ago
Irrational exuberance?
- dctoedt 12y ago
  (Clever) pun intended, I assume? ("Irrational exUBERance")
austenallred 12y ago
The "this valuation is crazy" and "this proves a bubble" comments are filling up my Twitter feed and HN, but I couldn't disagree more. Call me crazy, but I think this valuation is completely fair. For a few reasons: Uber has serious revenue. They do more trips in San Francisco than taxis do. This isn't a pie-in-the-sky "there will be money there, I'm sure of it" thing. They bring in billions, and they're starting to win entire markets. The on-demand-transportation market is enormous. I can literally see a future in which the majority of the taxi industry is now called "Uber." That's a big freaking deal. What Uber can do doesn't even stop at "transportation." How many "Uber for X" startups have you seen? Uber could be all of them, and do all of that. They've nailed the difficult math behind the logistics issues - basically a scaled version of the traveling salesman problem. They do real math, and solve real problems. I imagine a world where you can get anything on demand in minutes, and in that scenario Uber is the taxi, UPS, FedEx, etc. at the same time. In a few years when self-driving cars become the norm (crossing my fingers), Uber will be even more valuable. I may be dreaming, but empty cars you can grab any time and take anywhere or request anything... it really is a beautiful thing.
- Instacartlove 12y ago
  "They've nailed the difficult math behind the logistics issues - basically a scaled version of the traveling salesman problem." This is so much bullshit it makes my eyes hurt. They "talk" about this a lot but it's not even related dude! Read some books.
  - jcliff 12y ago
    so hostile. even if it's not a general solution, it's working. perhaps it's time for you to put down the books and build something.
  - encoderer 12y ago
    It's not strictly "traveling salesman" but it is a real and challenging logistical problem. I've chatted w/ some Uber engineers about this and the story I was told is that originally they were using Google Maps estimates. But the data is really important to capacity planning and giving travel time estimates within their app. And it was often very wrong. They even had a number -- something like "if you multiply google maps estimates by 1.5 they will actually be more accurate". So building a better version of this in-house, based on the millions of miles previously driven, was a very important and challenging problem.
    - phil21 12y ago
      Has anyone ever actually used the travel time estimates in their app? I've taken hundreds of rides, and I don't think I've even once looked. I find it to be a completely pointless part of the whole product - I already know roughly how far away something is, and how bad traffic may be. When I call an Uber, I simply look at the surrounding map and see where the cars are to get a decent estimate. The one they give is usually off by quite a bit, depending on who accepts the hail.
      - encoderer 12y ago
        Yes, every time I open the app and it tells me how long it will take an Uber to arrive at my location.
ausjke 12y ago
how many people use taxi these days? and how often? $17B, it got to be crazy.
- Duhck 12y ago
  Well, in NYC alone there are 236 MILLION trips per year [1] Without reading that entire document, lets just say NYC is a $20bn+ market for the taxi industry... 1. http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_book.pdf http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_...
  - mcintyre1994 12y ago
    Your market valuation puts the average fare in the region of $100, the linked document (page 10) says "The average yellow taxi fare in 2013 was $13.40" so I'm not so sure the market is $20bn, I'd guesstimate somewhere around $3-5bn for the vehicles they mention in the article.
- ChrisBland 12y ago
  Hi - I'm one of the people that uses Uber and loves it. I live in a big city, Chicago, and guessing from your statement you don't live in a taxi city. Let me tell you why I love uber and hate taxis (or why I only take Uber Taxi). 1) I used to travel for work, and for me that meant getting a 5:45am cab ride from downtown Chicago to the airport. Now, I'm sure you're aware that Chicago is freezing during the winter months, so standing out in the snow at 5:45am on a monday is not something I want to do. What were my options before Uber? 1) Wait outside and try to hail a cab. 2) Call dispatch and be told that a cab may or may not be on its way. This is the real pain that Uber solved for me. I cant tell you how many times I called and was told a cab would be there in 5 minutes, then 15 minutes later, no cab had showed up. So now, its 5:55am on a Monday in the cold Chicago winter, I'm stressing about missing my flight, all because a cab couldn't show up when I ordered it. Uber solved this exacty pain point that I felt. On another note of why I hate taxis and only take uber taxi. A few years ago when Chicago was going after the olympics, they required all taxis to accept credit cards. Now, try to pay for a fare in Chicago with a cab, 50% of the time 'The machine is broken', but when you have no cash, it magically starts working again. I get that these guys do not want to pay the 5% charge to process it (another issue is cab companies upcharging to process cc, but not for this discussion). With uber, I never have to worry about the driver not able to make change for me and just expects hes getting a bigger tip, I never have to worry about only having a CC on me and the driver bitching and complaining about accepting it. Uber solved this problem. Now, they haven't just solved my problem, they've also solved their drivers problem. Talk to a cab driver, ask them how they get paid for their credit card receipts. I'll be willing to bet that they have to go to a special office, receipts in hand, wait a few hours in line, all to get paid. That is ridiculous! Uber direct deposits the money in the drivers bank account, no time wasted by waiting in line, no worry about lost receipts. Now for my last point, imagine you left your phone/wallet/camera/foobar in a taxi in Chicago and you paid in cash. Try calling our 311 number and reporting it, you have about as good of a chance of finding it as comcast does at providing great customer support. With uber, you know your driver, you can simply contact uber and or the taxi company to give specifics on what you lost and where you lost it. tldr: I <3 uber and Uber > taxis
andywood 12y ago
My friends find it super convenient in their lives. That's what providing value is.
quaunaut 12y ago
Prepending Edit: If you're reading this and have a lot more familiarity in how investments of this kind are made, and what kinds of things these investors are thinking, I really am making this post looking for education. I didn't finish college, and don't know a lot, but I'm trying. If you'd rather not stir the pot by talking here, my e-mail is in my profile. The one thing that makes me skeptical about this, is historical data. From what I'm seeing, the entire US Taxi/Limo market is $11bn in value. So for them to achieve this, they'd need ~80%+ market share in the US, plus a high market share in both Europe and Asia. This is a valuation that smells similar to the WhatsApp deal, where the timeline to succeeding this valuation is 15-20 years out. Is there some data I'm missing here that implies my data(from [1] for example) is flawed? Or that maybe this isn't such an out-there valuation, by way of possible growth from ridesharing, or other avenues Uber could explore without straying too far from their primary purpose? http://www.ibisworld.com/industry/default.aspx?indid=1951 http://www.ibisworld.com/industry/default.aspx?indid=1951
- aneisf 12y ago
  I think UberX has the potential to become bigger than the taxi market. In the vast majority of American cities, especially in smaller ones, taxis are not readily available and are just too expensive for getting across a suburban sprawl. The main Uber service depends on the existing market to some extent but I think it also has the potential to grow it.
  - efuquen 12y ago
    > In the vast majority of American cities, especially in smaller ones, taxis are not readily available and are just too expensive for getting across a suburban sprawl. There is a good reason for that, it's so much easier to own a car in these and is pretty much mandatory to get anything done. Cars + Gas are still relatively cheap in comparison to paying someone to come out and drive you around anytime you need to go somewhere, which is compounded in the suburbs by the distance and time involved and the area any taxi service would need to cover. Sure, technology ala Uber helps here, but does this really change the fundamentals in theses areas? I don't think so, you still need to pay a driver and in areas where its easy and cheap to store a car it would make much more financial sense to just drive yourself around. Driverless cars are really the fundamental shift that might change this, but let's be real that is still a risky venture, despite all the Google hype people are drooling over. This large of an evaluation only makes sense with that in mind.
gtremper 12y ago
A series D? Crazy
deleted 12y ago
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jasonbarone 12y ago
Here is some fun Uber-related stuff from Baltimore, MD: UberX is cheaper than taxis for the short trips in/around the South Baltimore downtown area (by the sports stadiums). These are the quick trips jumping around the bar/restaurant areas. An UberX is only $30-$40 from the Inner Harbor area to most metropolitan areas 20-25 minutes outside of Baltimore, which is a crazy good deal, especially if you split fares. I've yet to see purge pricing or a lack of available cars on weekends in the major going out areas like Fells Point, Federal Hill and Canton. I've seen "normal" people with Uber on their home screen. I've heard quotes like this: "I spend so much money on Uber it's absurd." "I sold my car and use Uber." And "It's so convenient you can't NOT use it." So in regards to Baltimore, MD, I agree with the top commenter. This a real business doing really well here from a user's perspective.
- ssully 12y ago
  To give a perspective from Chicago: About a month ago my girlfriend told me how she was late for work on morning and wouldn't make it on time if she took her usual public transportation route, so she took Uber. I was surprised because I never talked to her about Uber and I usually introduce her to things like this. Turns out its fairly popular at her school and other downtown Chicago campuses. Students just like it better then cabs and find it easier to get a good rate and nearly any time in the day. I still have yet to use it myself, but I feel they are making huge in roads to being a common place name and that alone seems to justify this valuation. This isn't theoretical growth. They are getting huge, and its not just in the tech bubble.
j_s 12y ago
I hope their long-term plan accounts for driverless vehicles!
kiyoto 12y ago
I love the contrast between the 1st and 2nd link on HN right now (2014/06/06 10:49AM) http://gyazo.com/b5fb5ded81f2aab53cd4185c65158afa http://gyazo.com/b5fb5ded81f2aab53cd4185c65158afa
6cxs2hd6 12y ago
Although I like using Uber as a customer: > "Uber is creating 20,000 jobs per month, the company said in a blog post." Really? "Jobs" as in W-2 forms and health benefits? Or independent contractors? Not that the latter are necessarily bad, but they're fundamentally different. It is misleading to call them "jobs" in their blog headline, then switch to "partners" and "small business entrepreneurs" in the text.[1] I understand that traditional taxi drivers don't have "jobs", either, and Uber might be a better client for a contractor than traditional taxi companies. But that's beside the point I'm talking about, which is unwelcome and deceptive PR spin. [1]: http://blog.uber.com/uberimpact http://blog.uber.com/uberimpact
- conistonwater 12y ago
  The whole "creating jobs" narrative is a bit odd. It's not like the people working for Uber would have just sat on their hands otherwise. They would have found something else to do.
  - _delirium 12y ago
    Some of them would've even been doing a pretty similar thing. To the extent that part of Uber's growth is through taking market share from competitors in the car-driving-for-money sector, they're shifting jobs between companies, not creating new ones. Some may also come from expanding the size of the whole market, but you can't just count the total number of employees and use that number as the net-jobs-created.
- deleted 12y ago
  [deleted]
- jessriedel 12y ago
  I'd agree that "job" should imply "full time job" unless explicitly qualified; otherwise hiring 10 people for 4 hours a week would be 10 jobs rather than 1. But I can't see "job" why it should mean "job at an enterprise organization", which as far as I can tell is what you imply with W2s and health benefits. There are millions of Americans who are self-employed, file their own taxes, and have (unfortunately very expensive) individual health insurance. It would be bizarre to say they shouldn't be counted toward headlines statistics like "economy grows by 20,000 jobs".
ChuckMcM 12y ago
This is an interesting valuation[1]. It shows that a workable replacement for an established service business (one suffering from large regulatory capture) is considered so significant from the perspective of these bankers. It also suggests that AirBnB could do really well if they went back to the well (not that I recommend it, money drags you down). But more importantly this looks like an investment in a public company not a startup, or put another way, the difference between preferred and common stock has no doubt reached near parity. If the bankers believe the company will come out into the public markets at 34 - 50B then that puts them in some really rarified territory. Would the wider market share their enthusiasm? Or would this be like Facebook's debut, zero to down change for the first 6 - 12 months of existence. The good news is it gives them a chunk of cash for the big fights they are fighting. Of course I'm curious if the management took any money off the table or if this is all earmarked for lawyers and expansion. [1] I also agree the bubble hysteria is nonsense, whose money is at risk here? the .01% so don't sweat it.
- conistonwater 12y ago
  You are being very optimistic. For example, as the article says: > Kalanick added that Uber would continue to experiment “aggressively” with lowering prices, in an attempt to boost demand and increase the number of trips drivers can make each hour. Valuing the company at 80 times the 2013 revenues (http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-weve-confirmed-point-to-over-1b-gross-revenue-213m-revenue/ http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w...) is a little bit mad. > I also agree the bubble hysteria is nonsense, whose money is at risk here? the .01% so don't sweat it. Markets exist to allocate capital efficiently. Even if the capital belongs to people you don't like, you can still argue that misallocating it is bad.
  - ChuckMcM 12y ago
    I don't disagree that the valuation stretches credulity, perhaps past the breaking point. The narrative of the 'old bubble' was hyperinvestment by retail investors and mutual funds in unsustainable technology visions. The only thing 'wrong' about that old bubble, was that people who didn't know any better lost their money. Sometimes because their cousin or grandchild said they should put their savings bonds into tech stocks, sometimes because an aggressive fund manager put in more risk than they bargained for. Either way, people who didn't know better got hurt. In this hypervaluation the people at risk are investment bankers that do know better, and if they lose all their money, then fine. That was the bet they made. To use a gambling colloquialism, "Nobody cries for the roulette player that puts it all on 13 black." I don't necessarily agree that markets "exist" to allocate capital efficiently, I would agree they exist so that capital can be allocated. When the market is fair, capital is pretty efficient allocated, but the private financing market is not fair on at least two axes, there are artificially high barriers to creating new goods (startups in this case), and information is not evenly distributed amongst all parties. That does put a crimp on the efficiency of their operation.
fblp 12y ago
Uber was doing $213mil revenue late last year before they dropped their pricing/commission to dramatically increase both supply and demand. They've since increased their commission back to 20%, added a $1 surcharge, integrated with google maps, and they've probably validated the same day package delivery business model in NY. Valuation probably reflects crazy revenue growth they have in so many markets + future opportunities to dominate other verticals. http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w.. http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w.... [dec 2013] <--note week-on-week increases too!
skeper 12y ago
Serious question to those who have used uber: how safe is it? what makes it better than getting a ride off of craigslist?
- dmerrick 12y ago
  It's pretty safe, although their insurance policies are smaller than that of licenses cabs (think $10k vs $100k). Drivers undergo background checks and are rated after every ride. Uber does not tolerate drivers who get less than 4 stars. What makes it better than Craigslist is the convenience. Take out your smartphone, drop a pin on your location, and get a ride within minutes. Plus, you don't need to worry about payment, it all happens behind the scenes via your Uber account.
adventured 12y ago
By comparison, the taxi & limo industry does $11 billion in sales across the entire US market. For Uber to ever justify just this funding round, they'll probably need to become roughly the size of 1/3 the entire taxi business in terms of sales (assuming $3.x billion in sales and $600x million in profit off that base, and assuming a reasonable 20 to 30 pe ratio over time). I'm guessing Uber is betting on selling customers a lot more than their current service offerings. There's no other way they can justify this type of valuation. As of 2013, Uber was only generating $200 million in revenue for the entire year (according to the leaked numbers). Uber could grow crazy fast and still not justify this valuation for six or seven years. That's quite the long term bet being placed here. http://www.ibisworld.com/industry/default.aspx?indid=1951 http://www.ibisworld.com/industry/default.aspx?indid=1951
- gphil 12y ago
  Yeah, I was going to bring this up also. Obviously there are international markets as well, and the mere existence of Uber could in itself grow the size of this industry. However, if they are expected to become Google or Facebook-sized they're going to have to tap into some other verticals.
- jessriedel 12y ago
  According to this http://www.quora.com/Uber-1/How-is-Uber-doing-these-days-in-terms-of-weekly-revenue-growth-and-other-metrics http://www.quora.com/Uber-1/How-is-Uber-doing-these-days-in-... and this http://techcrunch.com/2013/12/18/uber-lyft/ http://techcrunch.com/2013/12/18/uber-lyft/ Uber could be growing at 20% per month, or 9x per year, even as recently as December. That suggests they could reach the revenue target you mention in less than two years. Obviously, growth becomes dramatically harder once you become a fraction of order unity of the market, but I don't think this bet is necessarily 7 years long.
gtirloni 12y ago
From Uber website: "Get a ride that matches your style and budget" In the low budget/style area, they are competing with the public transportation system? Do they have all this financial/momentum muscle? And in the high budget/style, they are competing with rich people who can own their own BMW/Ferrari with a private driver? Who "needs a ride" and chooses an expensive "SUV". How could this thing make a difference in anyone's life? "Oh sure, today I want to go to work in a fancy car, wheew!". Perhaps Barney Stinson? It seems there is a lot of opportunity in NOT solving the real problem (public transportation). Good for Uber.
- rxaxm 12y ago
  there are a lot of rich people without cars (a lot of manhattan). i know tons of people who hate cabs and can't really justify a full-time driver--these people take a lot of ubers. also, cabs can only take 4 people at a time. the ability to call a large car when going out has a made a huge difference.
  - xbeta 12y ago
    I would like to know how 'many' people are in this pool, and $ per user for Uber.
    - badusername 12y ago
      I know several people in the SF Area that take Uber almost everyday, multiple trips. It's not unreasonable to think that $/user in such cases is a few thousands.
candybar 12y ago
This is another way to think about Uber's valuation - the license to operate a yellow cab in NYC is a tradeable asset whose value can be observed. The value of all licenses in aggregate, comes to about 13 billion, give or take a few. And that's just one city. http://www.slate.com/articles/business/moneybox/2012/06/taxi_medallions_how_new_york_s_terrible_taxi_system_makes_fares_higher_and_drivers_poorer_.html http://www.slate.com/articles/business/moneybox/2012/06/taxi... http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-medallions-cost-1-million/ http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me... http://nypost.com/2014/02/26/taxi-medallion-auctioned-for-record-setting-965000/ http://nypost.com/2014/02/26/taxi-medallion-auctioned-for-re... http://www.nytimes.com/2013/11/15/nyregion/1-million-medallions-stifling-the-dreams-of-cabdrivers.html http://www.nytimes.com/2013/11/15/nyregion/1-million-medalli... You can make an argument in both directions. On one hand, clearly the taxi industry is large enough to justify this kind of valuation or even much more. On the other hand, Uber currently benefits greatly from this legally enforced supply restriction that chokes off their competition while not yet applying to them. Most large cities can dramatically lower the cost of and increase the availability of street-hail cabs by issuing more permits, which can cut into Uber's revenue. Cities can also decide to apply more regulation to car service businesses or even Uber-style businesses more specifically to even the playing field.
richcollins 12y ago
I wonder if a decentralized version of Uber could outcompete it.
- thibautx 12y ago
  What do you mean by decentralized? Something more along the lines of Lyft?
  - richcollins 12y ago
    No I meant that there would be no central system connecting drivers and riders. They would connect directly, as if all buyers and sellers met at a predetermined location to match each other.
xbeta 12y ago
Who really uses cab/taxi services? I grew up in Toronto, Canada (not a big city compare to NYC, but still pretty big) and now lives in SF Bay Area. I took public transportation (sure, they sucks sometimes) , riding bikes, and I own a very basic car (Toyota), I have never really have a need to use a taxi service in probably 17+ yrs of my life so far. I really not sure how this is improving people's life because I don't see a problem with the way I lived now. What are some advantages that I really need a taxi service? Sorry, I don't drink, so no need to worry about drink-and-drive. I would like to see someone here can enlightening me.

107 points by antr 12y ago

Congrats to Uber, as someone that moved to the Bay Area a little over a year ago, this company has been one of the most reliable and helpful services I've used. It's amazing the growth they've had.

syntheticlife 12y ago

Irrational exuberance?

dctoedt 12y ago
(Clever) pun intended, I assume? ("Irrational exUBERance")

austenallred 12y ago

The "this valuation is crazy" and "this proves a bubble" comments are filling up my Twitter feed and HN, but I couldn't disagree more. Call me crazy, but I think this valuation is completely fair. For a few reasons: Uber has serious revenue. They do more trips in San Francisco than taxis do. This isn't a pie-in-the-sky "there will be money there, I'm sure of it" thing. They bring in billions, and they're starting to win entire markets. The on-demand-transportation market is enormous. I can literally see a future in which the majority of the taxi industry is now called "Uber." That's a big freaking deal. What Uber can do doesn't even stop at "transportation." How many "Uber for X" startups have you seen? Uber could be all of them, and do all of that. They've nailed the difficult math behind the logistics issues - basically a scaled version of the traveling salesman problem. They do real math, and solve real problems. I imagine a world where you can get anything on demand in minutes, and in that scenario Uber is the taxi, UPS, FedEx, etc. at the same time. In a few years when self-driving cars become the norm (crossing my fingers), Uber will be even more valuable. I may be dreaming, but empty cars you can grab any time and take anywhere or request anything... it really is a beautiful thing.

Instacartlove 12y ago
"They've nailed the difficult math behind the logistics issues - basically a scaled version of the traveling salesman problem." This is so much bullshit it makes my eyes hurt. They "talk" about this a lot but it's not even related dude! Read some books.
- jcliff 12y ago
  so hostile. even if it's not a general solution, it's working. perhaps it's time for you to put down the books and build something.
- encoderer 12y ago
  It's not strictly "traveling salesman" but it is a real and challenging logistical problem. I've chatted w/ some Uber engineers about this and the story I was told is that originally they were using Google Maps estimates. But the data is really important to capacity planning and giving travel time estimates within their app. And it was often very wrong. They even had a number -- something like "if you multiply google maps estimates by 1.5 they will actually be more accurate". So building a better version of this in-house, based on the millions of miles previously driven, was a very important and challenging problem.
  - phil21 12y ago
    Has anyone ever actually used the travel time estimates in their app? I've taken hundreds of rides, and I don't think I've even once looked. I find it to be a completely pointless part of the whole product - I already know roughly how far away something is, and how bad traffic may be. When I call an Uber, I simply look at the surrounding map and see where the cars are to get a decent estimate. The one they give is usually off by quite a bit, depending on who accepts the hail.
    - encoderer 12y ago
      Yes, every time I open the app and it tells me how long it will take an Uber to arrive at my location.

ausjke 12y ago

how many people use taxi these days? and how often? $17B, it got to be crazy.

Duhck 12y ago
Well, in NYC alone there are 236 MILLION trips per year [1] Without reading that entire document, lets just say NYC is a $20bn+ market for the taxi industry... 1. http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_book.pdf http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_...
- mcintyre1994 12y ago
  Your market valuation puts the average fare in the region of $100, the linked document (page 10) says "The average yellow taxi fare in 2013 was $13.40" so I'm not so sure the market is $20bn, I'd guesstimate somewhere around $3-5bn for the vehicles they mention in the article.
ChrisBland 12y ago
Hi - I'm one of the people that uses Uber and loves it. I live in a big city, Chicago, and guessing from your statement you don't live in a taxi city. Let me tell you why I love uber and hate taxis (or why I only take Uber Taxi). 1) I used to travel for work, and for me that meant getting a 5:45am cab ride from downtown Chicago to the airport. Now, I'm sure you're aware that Chicago is freezing during the winter months, so standing out in the snow at 5:45am on a monday is not something I want to do. What were my options before Uber? 1) Wait outside and try to hail a cab. 2) Call dispatch and be told that a cab may or may not be on its way. This is the real pain that Uber solved for me. I cant tell you how many times I called and was told a cab would be there in 5 minutes, then 15 minutes later, no cab had showed up. So now, its 5:55am on a Monday in the cold Chicago winter, I'm stressing about missing my flight, all because a cab couldn't show up when I ordered it. Uber solved this exacty pain point that I felt. On another note of why I hate taxis and only take uber taxi. A few years ago when Chicago was going after the olympics, they required all taxis to accept credit cards. Now, try to pay for a fare in Chicago with a cab, 50% of the time 'The machine is broken', but when you have no cash, it magically starts working again. I get that these guys do not want to pay the 5% charge to process it (another issue is cab companies upcharging to process cc, but not for this discussion). With uber, I never have to worry about the driver not able to make change for me and just expects hes getting a bigger tip, I never have to worry about only having a CC on me and the driver bitching and complaining about accepting it. Uber solved this problem. Now, they haven't just solved my problem, they've also solved their drivers problem. Talk to a cab driver, ask them how they get paid for their credit card receipts. I'll be willing to bet that they have to go to a special office, receipts in hand, wait a few hours in line, all to get paid. That is ridiculous! Uber direct deposits the money in the drivers bank account, no time wasted by waiting in line, no worry about lost receipts. Now for my last point, imagine you left your phone/wallet/camera/foobar in a taxi in Chicago and you paid in cash. Try calling our 311 number and reporting it, you have about as good of a chance of finding it as comcast does at providing great customer support. With uber, you know your driver, you can simply contact uber and or the taxi company to give specifics on what you lost and where you lost it. tldr: I <3 uber and Uber > taxis

andywood 12y ago

My friends find it super convenient in their lives. That's what providing value is.

quaunaut 12y ago

Prepending Edit: If you're reading this and have a lot more familiarity in how investments of this kind are made, and what kinds of things these investors are thinking, I really am making this post looking for education. I didn't finish college, and don't know a lot, but I'm trying. If you'd rather not stir the pot by talking here, my e-mail is in my profile. The one thing that makes me skeptical about this, is historical data. From what I'm seeing, the entire US Taxi/Limo market is $11bn in value. So for them to achieve this, they'd need ~80%+ market share in the US, plus a high market share in both Europe and Asia. This is a valuation that smells similar to the WhatsApp deal, where the timeline to succeeding this valuation is 15-20 years out. Is there some data I'm missing here that implies my data(from [1] for example) is flawed? Or that maybe this isn't such an out-there valuation, by way of possible growth from ridesharing, or other avenues Uber could explore without straying too far from their primary purpose? http://www.ibisworld.com/industry/default.aspx?indid=1951 http://www.ibisworld.com/industry/default.aspx?indid=1951

aneisf 12y ago
I think UberX has the potential to become bigger than the taxi market. In the vast majority of American cities, especially in smaller ones, taxis are not readily available and are just too expensive for getting across a suburban sprawl. The main Uber service depends on the existing market to some extent but I think it also has the potential to grow it.
- efuquen 12y ago
  > In the vast majority of American cities, especially in smaller ones, taxis are not readily available and are just too expensive for getting across a suburban sprawl. There is a good reason for that, it's so much easier to own a car in these and is pretty much mandatory to get anything done. Cars + Gas are still relatively cheap in comparison to paying someone to come out and drive you around anytime you need to go somewhere, which is compounded in the suburbs by the distance and time involved and the area any taxi service would need to cover. Sure, technology ala Uber helps here, but does this really change the fundamentals in theses areas? I don't think so, you still need to pay a driver and in areas where its easy and cheap to store a car it would make much more financial sense to just drive yourself around. Driverless cars are really the fundamental shift that might change this, but let's be real that is still a risky venture, despite all the Google hype people are drooling over. This large of an evaluation only makes sense with that in mind.

gtremper 12y ago

A series D? Crazy

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jasonbarone 12y ago

Here is some fun Uber-related stuff from Baltimore, MD: UberX is cheaper than taxis for the short trips in/around the South Baltimore downtown area (by the sports stadiums). These are the quick trips jumping around the bar/restaurant areas. An UberX is only $30-$40 from the Inner Harbor area to most metropolitan areas 20-25 minutes outside of Baltimore, which is a crazy good deal, especially if you split fares. I've yet to see purge pricing or a lack of available cars on weekends in the major going out areas like Fells Point, Federal Hill and Canton. I've seen "normal" people with Uber on their home screen. I've heard quotes like this: "I spend so much money on Uber it's absurd." "I sold my car and use Uber." And "It's so convenient you can't NOT use it." So in regards to Baltimore, MD, I agree with the top commenter. This a real business doing really well here from a user's perspective.

ssully 12y ago
To give a perspective from Chicago: About a month ago my girlfriend told me how she was late for work on morning and wouldn't make it on time if she took her usual public transportation route, so she took Uber. I was surprised because I never talked to her about Uber and I usually introduce her to things like this. Turns out its fairly popular at her school and other downtown Chicago campuses. Students just like it better then cabs and find it easier to get a good rate and nearly any time in the day. I still have yet to use it myself, but I feel they are making huge in roads to being a common place name and that alone seems to justify this valuation. This isn't theoretical growth. They are getting huge, and its not just in the tech bubble.

j_s 12y ago

I hope their long-term plan accounts for driverless vehicles!

kiyoto 12y ago

I love the contrast between the 1st and 2nd link on HN right now (2014/06/06 10:49AM) http://gyazo.com/b5fb5ded81f2aab53cd4185c65158afa http://gyazo.com/b5fb5ded81f2aab53cd4185c65158afa

6cxs2hd6 12y ago

Although I like using Uber as a customer: > "Uber is creating 20,000 jobs per month, the company said in a blog post." Really? "Jobs" as in W-2 forms and health benefits? Or independent contractors? Not that the latter are necessarily bad, but they're fundamentally different. It is misleading to call them "jobs" in their blog headline, then switch to "partners" and "small business entrepreneurs" in the text.[1] I understand that traditional taxi drivers don't have "jobs", either, and Uber might be a better client for a contractor than traditional taxi companies. But that's beside the point I'm talking about, which is unwelcome and deceptive PR spin. [1]: http://blog.uber.com/uberimpact http://blog.uber.com/uberimpact

conistonwater 12y ago
The whole "creating jobs" narrative is a bit odd. It's not like the people working for Uber would have just sat on their hands otherwise. They would have found something else to do.
- _delirium 12y ago
  Some of them would've even been doing a pretty similar thing. To the extent that part of Uber's growth is through taking market share from competitors in the car-driving-for-money sector, they're shifting jobs between companies, not creating new ones. Some may also come from expanding the size of the whole market, but you can't just count the total number of employees and use that number as the net-jobs-created.
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jessriedel 12y ago
I'd agree that "job" should imply "full time job" unless explicitly qualified; otherwise hiring 10 people for 4 hours a week would be 10 jobs rather than 1. But I can't see "job" why it should mean "job at an enterprise organization", which as far as I can tell is what you imply with W2s and health benefits. There are millions of Americans who are self-employed, file their own taxes, and have (unfortunately very expensive) individual health insurance. It would be bizarre to say they shouldn't be counted toward headlines statistics like "economy grows by 20,000 jobs".

ChuckMcM 12y ago

This is an interesting valuation[1]. It shows that a workable replacement for an established service business (one suffering from large regulatory capture) is considered so significant from the perspective of these bankers. It also suggests that AirBnB could do really well if they went back to the well (not that I recommend it, money drags you down). But more importantly this looks like an investment in a public company not a startup, or put another way, the difference between preferred and common stock has no doubt reached near parity. If the bankers believe the company will come out into the public markets at 34 - 50B then that puts them in some really rarified territory. Would the wider market share their enthusiasm? Or would this be like Facebook's debut, zero to down change for the first 6 - 12 months of existence. The good news is it gives them a chunk of cash for the big fights they are fighting. Of course I'm curious if the management took any money off the table or if this is all earmarked for lawyers and expansion. [1] I also agree the bubble hysteria is nonsense, whose money is at risk here? the .01% so don't sweat it.

conistonwater 12y ago
You are being very optimistic. For example, as the article says: > Kalanick added that Uber would continue to experiment “aggressively” with lowering prices, in an attempt to boost demand and increase the number of trips drivers can make each hour. Valuing the company at 80 times the 2013 revenues (http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-weve-confirmed-point-to-over-1b-gross-revenue-213m-revenue/ http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w...) is a little bit mad. > I also agree the bubble hysteria is nonsense, whose money is at risk here? the .01% so don't sweat it. Markets exist to allocate capital efficiently. Even if the capital belongs to people you don't like, you can still argue that misallocating it is bad.
- ChuckMcM 12y ago
  I don't disagree that the valuation stretches credulity, perhaps past the breaking point. The narrative of the 'old bubble' was hyperinvestment by retail investors and mutual funds in unsustainable technology visions. The only thing 'wrong' about that old bubble, was that people who didn't know any better lost their money. Sometimes because their cousin or grandchild said they should put their savings bonds into tech stocks, sometimes because an aggressive fund manager put in more risk than they bargained for. Either way, people who didn't know better got hurt. In this hypervaluation the people at risk are investment bankers that do know better, and if they lose all their money, then fine. That was the bet they made. To use a gambling colloquialism, "Nobody cries for the roulette player that puts it all on 13 black." I don't necessarily agree that markets "exist" to allocate capital efficiently, I would agree they exist so that capital can be allocated. When the market is fair, capital is pretty efficient allocated, but the private financing market is not fair on at least two axes, there are artificially high barriers to creating new goods (startups in this case), and information is not evenly distributed amongst all parties. That does put a crimp on the efficiency of their operation.

fblp 12y ago

Uber was doing $213mil revenue late last year before they dropped their pricing/commission to dramatically increase both supply and demand. They've since increased their commission back to 20%, added a $1 surcharge, integrated with google maps, and they've probably validated the same day package delivery business model in NY. Valuation probably reflects crazy revenue growth they have in so many markets + future opportunities to dominate other verticals. http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w.. http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w.... [dec 2013] <--note week-on-week increases too!

skeper 12y ago

Serious question to those who have used uber: how safe is it? what makes it better than getting a ride off of craigslist?

dmerrick 12y ago
It's pretty safe, although their insurance policies are smaller than that of licenses cabs (think $10k vs $100k). Drivers undergo background checks and are rated after every ride. Uber does not tolerate drivers who get less than 4 stars. What makes it better than Craigslist is the convenience. Take out your smartphone, drop a pin on your location, and get a ride within minutes. Plus, you don't need to worry about payment, it all happens behind the scenes via your Uber account.

adventured 12y ago

By comparison, the taxi & limo industry does $11 billion in sales across the entire US market. For Uber to ever justify just this funding round, they'll probably need to become roughly the size of 1/3 the entire taxi business in terms of sales (assuming $3.x billion in sales and $600x million in profit off that base, and assuming a reasonable 20 to 30 pe ratio over time). I'm guessing Uber is betting on selling customers a lot more than their current service offerings. There's no other way they can justify this type of valuation. As of 2013, Uber was only generating $200 million in revenue for the entire year (according to the leaked numbers). Uber could grow crazy fast and still not justify this valuation for six or seven years. That's quite the long term bet being placed here. http://www.ibisworld.com/industry/default.aspx?indid=1951 http://www.ibisworld.com/industry/default.aspx?indid=1951

gphil 12y ago
Yeah, I was going to bring this up also. Obviously there are international markets as well, and the mere existence of Uber could in itself grow the size of this industry. However, if they are expected to become Google or Facebook-sized they're going to have to tap into some other verticals.
jessriedel 12y ago
According to this http://www.quora.com/Uber-1/How-is-Uber-doing-these-days-in-terms-of-weekly-revenue-growth-and-other-metrics http://www.quora.com/Uber-1/How-is-Uber-doing-these-days-in-... and this http://techcrunch.com/2013/12/18/uber-lyft/ http://techcrunch.com/2013/12/18/uber-lyft/ Uber could be growing at 20% per month, or 9x per year, even as recently as December. That suggests they could reach the revenue target you mention in less than two years. Obviously, growth becomes dramatically harder once you become a fraction of order unity of the market, but I don't think this bet is necessarily 7 years long.

gtirloni 12y ago

From Uber website: "Get a ride that matches your style and budget" In the low budget/style area, they are competing with the public transportation system? Do they have all this financial/momentum muscle? And in the high budget/style, they are competing with rich people who can own their own BMW/Ferrari with a private driver? Who "needs a ride" and chooses an expensive "SUV". How could this thing make a difference in anyone's life? "Oh sure, today I want to go to work in a fancy car, wheew!". Perhaps Barney Stinson? It seems there is a lot of opportunity in NOT solving the real problem (public transportation). Good for Uber.

rxaxm 12y ago
there are a lot of rich people without cars (a lot of manhattan). i know tons of people who hate cabs and can't really justify a full-time driver--these people take a lot of ubers. also, cabs can only take 4 people at a time. the ability to call a large car when going out has a made a huge difference.
- xbeta 12y ago
  I would like to know how 'many' people are in this pool, and $ per user for Uber.
  - badusername 12y ago
    I know several people in the SF Area that take Uber almost everyday, multiple trips. It's not unreasonable to think that $/user in such cases is a few thousands.

candybar 12y ago

This is another way to think about Uber's valuation - the license to operate a yellow cab in NYC is a tradeable asset whose value can be observed. The value of all licenses in aggregate, comes to about 13 billion, give or take a few. And that's just one city. http://www.slate.com/articles/business/moneybox/2012/06/taxi_medallions_how_new_york_s_terrible_taxi_system_makes_fares_higher_and_drivers_poorer_.html http://www.slate.com/articles/business/moneybox/2012/06/taxi... http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-medallions-cost-1-million/ http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me... http://nypost.com/2014/02/26/taxi-medallion-auctioned-for-record-setting-965000/ http://nypost.com/2014/02/26/taxi-medallion-auctioned-for-re... http://www.nytimes.com/2013/11/15/nyregion/1-million-medallions-stifling-the-dreams-of-cabdrivers.html http://www.nytimes.com/2013/11/15/nyregion/1-million-medalli... You can make an argument in both directions. On one hand, clearly the taxi industry is large enough to justify this kind of valuation or even much more. On the other hand, Uber currently benefits greatly from this legally enforced supply restriction that chokes off their competition while not yet applying to them. Most large cities can dramatically lower the cost of and increase the availability of street-hail cabs by issuing more permits, which can cut into Uber's revenue. Cities can also decide to apply more regulation to car service businesses or even Uber-style businesses more specifically to even the playing field.

richcollins 12y ago

I wonder if a decentralized version of Uber could outcompete it.

thibautx 12y ago
What do you mean by decentralized? Something more along the lines of Lyft?
- richcollins 12y ago
  No I meant that there would be no central system connecting drivers and riders. They would connect directly, as if all buyers and sellers met at a predetermined location to match each other.

xbeta 12y ago

Who really uses cab/taxi services? I grew up in Toronto, Canada (not a big city compare to NYC, but still pretty big) and now lives in SF Bay Area. I took public transportation (sure, they sucks sometimes) , riding bikes, and I own a very basic car (Toyota), I have never really have a need to use a taxi service in probably 17+ yrs of my life so far. I really not sure how this is improving people's life because I don't see a problem with the way I lived now. What are some advantages that I really need a taxi service? Sorry, I don't drink, so no need to worry about drink-and-drive. I would like to see someone here can enlightening me.