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Uber Sets Valuation Record of $17B in New Funding

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Re: Uber Sets Valuation Record of $17B in New Funding

#101

Post by curmudgeon224 »

opendais wrote: post #50
lotsofpulp wrote: post #36

Earlier quoted context omitted.

It's a fantastic business model (low liability, high scalability), and if they can pull it off, it will be worth way more than $17B. That's the bet that these investors are making. Same thing with AirBnB (and many many other tech companies).

Yes but the market isn't that large and if they can pull it off, so can other people. Even if Uber manages to capture 25% of the market, it isn't going to hit $170B market cap.

Exactly. And those other people can do it a lot cheaper than Uber because they'll be taking advantage of the costs/time Uber is spending on lobbying.

Re: Uber Sets Valuation Record of $17B in New Funding

#102

Post by ef4 »

ghaff wrote: post #91
milesskorpen wrote: post #55

Earlier quoted context omitted.

Given that Google has a huge stake in Uber, I think an Amazon acquisition is unlikely. I see Uber as Google's go-to-market plan for driverless cars (along with the trucking industry) ... if they can pull that off, something like this valuation is justified.

>Google's go-to-market plan for driverless cars Robo-Uber as I like to call it is all very exciting and transformative. And I have little doubt that it will happen someday. But we're talking decades according to many people who really know the topic. For example, John Leonard who was on the MIT DARPA Challenge team has said "I don’t expect to have truly driverless taxis in Manhattan in my lifetime." http://digitalcom…

Google has done an end-run around the challenges that make something like the DARPA Challenge difficult. Driving an autonomous vehicle in an unknown environment is still hard. But that's not the problem Google is tackling.

They're solving autonomous vehicles for known environments that are mapped down to extremely high resolution. Once you have that solid ground truth, adapting to changing conditions on top of it is far easier.

Which is why they've already logged 1.1 million kilometers of autonomous driving, including city streets with high complexity.

What the more traditional autonomous vehicle researchers didn't/don't appreciate is that it turns out to be easier to make the whole world[1] into a well-known environment than make a car than can handle unknown environments.

[1] more precisely, the parts of it that the average person would actually drive on, which is much smaller and simpler.

Re: Uber Sets Valuation Record of $17B in New Funding

#103

Post by jessriedel »

6cxs2hd6 wrote: post #38

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 und…

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".

Re: Uber Sets Valuation Record of $17B in New Funding

#104

Post by candybar »

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...

http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...

http://nypost.com/2014/02/26/taxi-medallion-auctioned-for-re...

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.

Re: Uber Sets Valuation Record of $17B in New Funding

#105

Post by runeks »

davidu wrote: post #85
untog wrote: post #23

Earlier quoted context omitted.

They will be successful in San Francisco, of that I have no doubt. From what I understand the taxi market there is horribly broken, Uber saw a gap in the market and leapt at it. The mistake, IMO, is assuming that they will be able to replicate that in other cities. In NYC you can get a taxi 90% of the time by holding your hand up in a street corner. At peak times that's more difficult, but that's also when Uber has s…

The average wait time in NYC is between 5 and 9 minutes depending on time of day. But many people would say it feels worse than that at peak times (and it likely is). People finding cabs on 5th avenue at 6pm know there are no cabs to be had. You can't just raise your hand. It could take 15 to 20 minutes to find a cab. So suggesting that you can get a cab 90% in NYC is a statement of fact, but it's not actually true.…

Seems to me that a simple solution would be people wanting a taxi bidding up the price. So if a taxi is two minutes from completing its current fare, people can start bidding on getting a taxi, and the moment this taxi is free, whoever has the highest bid will win it.

There really are no other workable solutions. The other solution is to get more taxis on the roads, but that would just mean that a lot of taxis would be idle at non-peak hours, and that -- instead of peak hour-taxis being expensive -- the price of taxis in general would rise, because each taxi isn't getting as many fares.

Re: Uber Sets Valuation Record of $17B in New Funding

#107

Post by jessriedel »

adventured wrote: post #76

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 custo…

According to this

http://www.quora.com/Uber-1/How-is-Uber-doing-these-days-in-...

and this

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.

Re: Uber Sets Valuation Record of $17B in New Funding

#108

Post by runeks »

fnbr wrote: post #39
quaunaut wrote: post #10

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 histo…

Assuming your figures are correct, $11bn in annual revenue allows for a much higher valuation than $17bn. One of the main methods of valuing a company is the "multiples" approach [1], which values the company at a multiple of it's annual revenue, with the multiple typically falling between 5-15. A commonly used multiple is the price to earnings multiple of the entire industry, which is absurdly high for major tech co…

> Assuming your figures are correct, $11bn in annual revenue allows for a much higher valuation than $17bn.

[...]

> So if we want to use the average P/E ratio, we can say that a very very very rough price for the entire Taxi/Limo market is $150bn.

P/E is price/earnings ratio, it's not calculated using revenue. Earnings is revenue less expenses.

So if the taxi industry in general is operating at a 10% profit margin, that would mean they're earning $1.1bn per year, and with a P/E of 15, that would be a $16.5bn market cap.

Re: Uber Sets Valuation Record of $17B in New Funding

#109

Post by willgetdeaded »

JonFish85 wrote: post #75
DanBC wrote: post #73

Earlier quoted context omitted.

The London black cab has a meter that prices the journey. Other taxis in London do not have a price meter. Uber needs to obey the regulatory rules of the industry. Either they don't have a pricing meter (and thus journey price is agreed before hand) or they do have a price meter and all Uber drivers are regulated like any other black cab driver. They can't ignore laws just because those laws are inconvenient to them.

"They can't ignore laws just because those laws are inconvenient to them." I completely agree with you, but at the same time, for whatever reason companies (Uber / Airbnb) have been able to completely ignore rules & laws to the tune of tens of billions of dollars (in valuations). It's almost "might makes right": ignore rules and grow as fast as possible, with the hope that you'll grow faster than the legal system can…

Yep. The AirBNB folks engaged in flagrant spam, sending out fake unsolicited emails from fake identities, and refusing to remove anybody who wanted to stop receiving them.

But now Chesky is rich, so he gives away money and pretends that he's something other than an enormous fucking asshole.

Re: Uber Sets Valuation Record of $17B in New Funding

#110

Post by brackin »

runeks wrote: post #105
davidu wrote: post #85

Earlier quoted context omitted.

The average wait time in NYC is between 5 and 9 minutes depending on time of day. But many people would say it feels worse than that at peak times (and it likely is). People finding cabs on 5th avenue at 6pm know there are no cabs to be had. You can't just raise your hand. It could take 15 to 20 minutes to find a cab. So suggesting that you can get a cab 90% in NYC is a statement of fact, but it's not actually true.…

Seems to me that a simple solution would be people wanting a taxi bidding up the price. So if a taxi is two minutes from completing its current fare, people can start bidding on getting a taxi, and the moment this taxi is free, whoever has the highest bid will win it. There really are no other workable solutions. The other solution is to get more taxis on the roads, but that would just mean that a lot of taxis would…

Surge pricing essentially does this on Uber's platform
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