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Excellent article. I realize positions need to be based off something, but it always seems strange to me to see analysis like the one being challenged here for

by netcan 12y ago

Excellent article. I realize positions need to be based off something, but it always seems strange to me to see analysis like the one being challenged here for a young (albeit large) innovative tech company. Think of Google in 2003, Amazon in 99' or MSFT in 89'. None of your medium-long term assumptions can stand on very solid ground. What the market is, it's size, it's structure and the company's potential role in it. Assumption: "the primary market Uber is targeting is the global taxi and car-service market ($100 billion)" - is this correct in 5-10 years? Could Uber target other markets? Deliveries Assumption: Uber are taking over market share. Can other forms of transport, public or private be replaced by Uber? Where do new technologies (like self riving cars) affect things? My own speculations gravitate towards efficiencies from having all that data valuable at once. The 5 seater is a general purpose vehicle for 1-5 people and used for highway driving and for short trips along congested streets. Could Uber's smart system offer regular Sedans for 25 mile highway journeys and golf cart like cars for 1 person inner city journeys? Could hub and spoke systems exist where several cars take single passengers to a van/shuttle for longer (more expensive) journeys. Everything is low probability big payoff. Even the the straightforward mission:'take over the existing taxi-limo' is still a high risk-reward proposition. Basically, I think this rebuttal is better than the original analysis. I think neither ow them can give you a number.

rayiner 12y ago
> I realize positions need to be based off something, but it always seems strange to me to see analysis like the one being challenged here for a young (albeit large) innovative tech company. Think of Google in 2003, Amazon in 99' or MSFT in 89'. You mention Google, Amazon, and MSFT in the same breath, but one of those is not like the other. Google in 2003 and MSFT in 1989 were targeting markets that were small, but young and uncertain. However, Amazon's target market was mature and well established, but huge. Assigning a big valuation to Google in 2003 or MSFT in 1989 would mean having the confidence that lots of people in the future would be doing something that they didn't do at the time. However, assigning a big valuation to Amazon in 1999 meant having the confidence that Amazon's technology would allow them to dominate an existing, large market. After all, people aren't buying more books and toilet paper in 2014 than they did in 1999: they're just doing more of it through online sources instead of brick & mortar ones. The problem with Uber is that the most obvious target market, taxis & cabs, isn't big enough to justify its valuation even if they totally take over the market with better technology. They're targeting a mature market that's about $100 billion, versus Amazon, which is targeting a mature market that's in the trillions of dollars. To make the case for a high valuation for Uber, you have to redefine the market. Either by saying that the real target is logistics more broadly ("Uber for X") or by saying that the real market is auto transportation generally. In the latter situation, Uber isn't going to create a higher demand for getting from point A to point B. Instead, they have to take market share away from personal automobiles. In a country with almost as many cars as people, and urban and suburban areas that are designed around personal autos, that's a really uphill battle. E.g. running errands in a suburb isn't like in a city where you just go into town, buy everything you need, and take a cab back home. It's a multi-hop tour through strip mall after strip mall. Personal autos are well-suited for that: Uber totally is not.

by netcan 12y ago

rayiner 12y ago

> I realize positions need to be based off something, but it always seems strange to me to see analysis like the one being challenged here for a young (albeit large) innovative tech company. Think of Google in 2003, Amazon in 99' or MSFT in 89'. You mention Google, Amazon, and MSFT in the same breath, but one of those is not like the other. Google in 2003 and MSFT in 1989 were targeting markets that were small, but young and uncertain. However, Amazon's target market was mature and well established, but huge. Assigning a big valuation to Google in 2003 or MSFT in 1989 would mean having the confidence that lots of people in the future would be doing something that they didn't do at the time. However, assigning a big valuation to Amazon in 1999 meant having the confidence that Amazon's technology would allow them to dominate an existing, large market. After all, people aren't buying more books and toilet paper in 2014 than they did in 1999: they're just doing more of it through online sources instead of brick & mortar ones. The problem with Uber is that the most obvious target market, taxis & cabs, isn't big enough to justify its valuation even if they totally take over the market with better technology. They're targeting a mature market that's about $100 billion, versus Amazon, which is targeting a mature market that's in the trillions of dollars. To make the case for a high valuation for Uber, you have to redefine the market. Either by saying that the real target is logistics more broadly ("Uber for X") or by saying that the real market is auto transportation generally. In the latter situation, Uber isn't going to create a higher demand for getting from point A to point B. Instead, they have to take market share away from personal automobiles. In a country with almost as many cars as people, and urban and suburban areas that are designed around personal autos, that's a really uphill battle. E.g. running errands in a suburb isn't like in a city where you just go into town, buy everything you need, and take a cab back home. It's a multi-hop tour through strip mall after strip mall. Personal autos are well-suited for that: Uber totally is not.