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It's not easy to correctly value Uber, because it's not so easy to value the taxi industry, either. By some metrics, the global taxi industry is worth no more t

It's not easy to correctly value Uber, because it's not so easy to value the taxi industry, either. By some metrics, the global taxi industry is worth no more than $25B.[0] This seems spurious, and Nate Silver, using a different metric, values the taxi industry at about $100B.[1] So it might seem as if Uber would have to seize a large fraction of the taxi market in order to justify its valuation. Some (myself included) say this is unrealistic, because Uber is unlikely to hold on to a monopoly or majority share of the rideshare market.[2] The important factor, however, is that Uber is rapidly expanding what previously was the conceived size of this market. People who were not taking taxis previously are now using Ubers. There was an article on here recently about parents using Uber to ferry their children around. Some folks are leaving their cars at home, and are using Uber instead, because it makes sense financially (gas+car maintenance costs, in some cases, are higher than those of taking an Uber). Beyond this, I expect to eventually see the integration of the rideshare market (Uber, Lyft, etc.) with other services, like delivery and last-mile transportation. This is already being done by Uber Rush. I would not be surprised to see Uber and its competitors greatly expand what we previously thought of as the Taxi industry, such that even a small share of this very large industry could be well worth the $25B valuation. [0] http://iterativepath.wordpress.com/2014/05/22/if-you-most-aggressively-value-uber-from-its-only-known-revenue-model/ http://iterativepath.wordpress.com/2014/05/22/if-you-most-ag... [1] http://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ http://fivethirtyeight.com/features/uber-isnt-worth-17-billi... [2] http://johnloeber.com/w/uber.pdf http://johnloeber.com/w/uber.pdf shameless plug

mastermojo 12y ago
I also like to keep in mind that investors who purchase a percentage stake in the company valuing a company at 25 Billion probably have favorable terms and preferred stock such that they will make money even if Uber goes through a liquidation event at less than that amount. I see Uber being a 10 Billion dollar company without any problem.
- shawn-butler 12y ago
  How? Aren't they 1) basically facing a serious organized labor problem once they become actually legal, and 2) 5-10 years away from being made irrelevant by autonomous technology?
  - benzoate 12y ago
    I think they're 5-10 years away from having a solution to their organised labour problem
    - electromagnetic 12y ago
      Well there's a big issue here. If they have labourers, they're 5-10 years away from an end to their problem. If they have organized labourers, they're 5-10 years away from their end. Uber is facing union efforts. If they go through, Uber will end in 5-10 years. Autonamous transit will deploy far faster than Uber will be able to shirk off any unionized labour. If they get unionized labour, their first attempt to implement autonanous vehicles will lead to a strike, meaning a competitor can swoop in and replace them.
      - fragmede 12y ago
        > If they have organized labourers, they're 5-10 years away from their end. Ignoring the self-driving car bit, how does unionization of drivers end Uber?
      - hyperbovine 12y ago
        Autonomous transit will not deploy in 5-10 years, I guarantee you.
    - prostoalex 12y ago
      Wouldn't a software-laden self-driven car also eliminate the need for a dispatching company?
      - bthornbury 12y ago
hkmurakami 12y ago
regarding last mile transportation, it's worth noting that Uber employees themselves not infrequently take Uber from 4th and Kings station to their office at 10th and Market, which is only a few miles away.
- johnloeber 12y ago
  What I meant by "last mile transportation" was the transportation of physical goods, like packages, mail, delivery food, etc. Drivers could probably fit a couple of these "errands" in at no loss, while increasing the efficiency of last mile transportation/delivery for the services seeking to deliver goods.
- mikeyouse 12y ago
  Uber employees also get a lot of Uber credits as part of their compensation package. I'd be curious to see how many would still use Uber if it cost money out-of-pocket.
nrao123 12y ago
The Uber article that you referred to as Nate Silver is not actually by him. Its by Ashwath Damodaran (The NYU corp finance prof) http://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ http://fivethirtyeight.com/features/uber-isnt-worth-17-billi... His basic assumption was to use the taxi market as the total addressable market (TAM) Bill Gurley, a VC from Benchmark and one of the investors in Uber, lays out alternative scenarios for TAM including going after car ownership. http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-an-alternative-look-at-ubers-potential-market-size/ http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-an... Damodaran's response to Gurley concedes its probable/plausible/possible for uber to get into non-Taxi and larger markets: http://aswathdamodaran.blogspot.in/2014/07/possible-plausible-and-probable-big.html http://aswathdamodaran.blogspot.in/2014/07/possible-plausibl... Bottom line: the optionality of uber going into these larger markets is what is driving these valuations
- jboggan 12y ago
  Anecdotal support; Uber is keeping me from purchasing a car. I have an inexpensive motorcycle that handles 95% of my rapid transportation needs, and I try to live in areas where walking or mass transportation solve my "slow transportation" needs. I use Uber for all the edge cases where walking or motorcycling doesn't cut it, and I cannot see any scenario where I'd prefer to own a car and drive myself compared to the ease and reliability I have experienced with the service so far. Maybe Uber won't be the king of the hill when the dust settles, but so-called "ride sharing" services absolutely are taking dollars that would otherwise go into purchasing a vehicle, a much larger market.
  - jusben1369 12y ago
    Important to note you haven't given up vehicle ownership though. You just haven't switched types of ownership. Uber needs to be more than your 5% edge cases if we're talking about disrupting ownership habits.
- johnloeber 12y ago
  Regarding mistaken authorship: whoops, sorry. That was inattentive on my part.
randomflavor 12y ago
Isn't Uber/Travis always making little comments like "if we can get you a car in 5 mins, we can get you anything in 5 mins" - they are tuning an enormous logistics engine with unlimited optionality. Cars are just the start... Boober here we come (according to the ceo and pandodaily)

mastermojo 12y ago

I also like to keep in mind that investors who purchase a percentage stake in the company valuing a company at 25 Billion probably have favorable terms and preferred stock such that they will make money even if Uber goes through a liquidation event at less than that amount. I see Uber being a 10 Billion dollar company without any problem.

shawn-butler 12y ago
How? Aren't they 1) basically facing a serious organized labor problem once they become actually legal, and 2) 5-10 years away from being made irrelevant by autonomous technology?
- benzoate 12y ago
  I think they're 5-10 years away from having a solution to their organised labour problem
  - electromagnetic 12y ago
    Well there's a big issue here. If they have labourers, they're 5-10 years away from an end to their problem. If they have organized labourers, they're 5-10 years away from their end. Uber is facing union efforts. If they go through, Uber will end in 5-10 years. Autonamous transit will deploy far faster than Uber will be able to shirk off any unionized labour. If they get unionized labour, their first attempt to implement autonanous vehicles will lead to a strike, meaning a competitor can swoop in and replace them.
    - fragmede 12y ago
      > If they have organized labourers, they're 5-10 years away from their end. Ignoring the self-driving car bit, how does unionization of drivers end Uber?
    - hyperbovine 12y ago
      Autonomous transit will not deploy in 5-10 years, I guarantee you.
  - prostoalex 12y ago
    Wouldn't a software-laden self-driven car also eliminate the need for a dispatching company?
    - bthornbury 12y ago

hkmurakami 12y ago

regarding last mile transportation, it's worth noting that Uber employees themselves not infrequently take Uber from 4th and Kings station to their office at 10th and Market, which is only a few miles away.

johnloeber 12y ago
What I meant by "last mile transportation" was the transportation of physical goods, like packages, mail, delivery food, etc. Drivers could probably fit a couple of these "errands" in at no loss, while increasing the efficiency of last mile transportation/delivery for the services seeking to deliver goods.
mikeyouse 12y ago
Uber employees also get a lot of Uber credits as part of their compensation package. I'd be curious to see how many would still use Uber if it cost money out-of-pocket.

nrao123 12y ago

The Uber article that you referred to as Nate Silver is not actually by him. Its by Ashwath Damodaran (The NYU corp finance prof) http://fivethirtyeight.com/features/uber-isnt-worth-17-billion/ http://fivethirtyeight.com/features/uber-isnt-worth-17-billi... His basic assumption was to use the taxi market as the total addressable market (TAM) Bill Gurley, a VC from Benchmark and one of the investors in Uber, lays out alternative scenarios for TAM including going after car ownership. http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-an-alternative-look-at-ubers-potential-market-size/ http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-an... Damodaran's response to Gurley concedes its probable/plausible/possible for uber to get into non-Taxi and larger markets: http://aswathdamodaran.blogspot.in/2014/07/possible-plausible-and-probable-big.html http://aswathdamodaran.blogspot.in/2014/07/possible-plausibl... Bottom line: the optionality of uber going into these larger markets is what is driving these valuations

jboggan 12y ago
Anecdotal support; Uber is keeping me from purchasing a car. I have an inexpensive motorcycle that handles 95% of my rapid transportation needs, and I try to live in areas where walking or mass transportation solve my "slow transportation" needs. I use Uber for all the edge cases where walking or motorcycling doesn't cut it, and I cannot see any scenario where I'd prefer to own a car and drive myself compared to the ease and reliability I have experienced with the service so far. Maybe Uber won't be the king of the hill when the dust settles, but so-called "ride sharing" services absolutely are taking dollars that would otherwise go into purchasing a vehicle, a much larger market.
- jusben1369 12y ago
  Important to note you haven't given up vehicle ownership though. You just haven't switched types of ownership. Uber needs to be more than your 5% edge cases if we're talking about disrupting ownership habits.
johnloeber 12y ago
Regarding mistaken authorship: whoops, sorry. That was inattentive on my part.

randomflavor 12y ago

Isn't Uber/Travis always making little comments like "if we can get you a car in 5 mins, we can get you anything in 5 mins" - they are tuning an enormous logistics engine with unlimited optionality. Cars are just the start... Boober here we come (according to the ceo and pandodaily)