UBER UBER ALLES: Investors value ride app at $17 BEEELLION Designer taxi purveyor Uber has inked an investment deal which will value the company at three times the combined salary of every taxi driver and chauffeur in the United States. The company confirmed Friday that it had secured $1.2bn in funding from investors, valuing the company at $17bn. While Uber did not say who had …
Great. So build a me-too version called Unter that always undercuts them on price and provides slightly more usability and become a billionaire. Should take about 6 months if you get the right people in and work hard. After that all the billions will be yours.
Although on reading this article, I think the word "Investors" in the headline should be changed to "Idiots"
But then again, I haven't got rich from one of these ludicrous mobile app flotation scams myself yet, so who's the idiot?
And that's their big weakness - which they would have to disclose if this were an SEC filing rather than a private round.
Uber put these billions into buying politicians to make this legal and fight the cabbies and building awareness among non-geeks. Then a 100 other companies simply clone it and benefit from the law changes.
The drivers will simply have an app for each and pickup whichever customers are paying most. There will then be a series of startups with apps which do arbitrage and pick the best service for drivers and passengers.
The poor bankers need something to speculate irresponsibly in, and someone pulled the plug on property and gold a bit recently, so new bubbles have to be found to attract new recklessness and empty the savers pension pots.
This is bitcoins biggest enemy, ramping, speculation and short-term cash ins mean it'll always have to struggle for legitimacy when every possible valid exchange variation will be amplified by rampers and reduce its use as a currency (for simple, useful definitions of currency)
Rampant speculation is a part of any commodity that gets its value from manufactured scarcity. Bitcoin can deal with that or it simply doesn't have enough wherewithal to be a thing.
Unlike Twitter, and so many of the other tech things that get absurd valuations, Uber has found a way into an already established market. That makes it an entirely different sort of speculation. When you make a direct assault on an established market (as opposed to an end run around a market) you can justify far greater investment as you've got the established market to chip away at plus you've got the opportunity to expand beyond that established market by capturing customers who shunned the previously established market for whatever reasons.
My point, is that the established market gives you a foundation for 'traditional' speculation, where your risk is based on the known size of the market and gives you much greater stability for 'hopeful' speculation where risk is a basically an unknown. Although the valuation is large, it isn't unreasonable as transportation via automobile isn't tied to fashion or in any risk of being displaced by alternative transports. All in all, there's about 5000x greater actual business opportunity here than with just about any consumer oriented software since Android appeared.
>>Although the valuation is large, it isn't unreasonable as transportation via automobile isn't tied to fashion or in any risk of being displaced by alternative transports.<<
Value is large? Instagram's value was large, this is fucking staggering! They tale a small percentage of small value transactions, so that means doing a HELL of a lot of those - a complete monopoly for many years to earn back lose to enough to reward investors - if their cut on a journey is say $1.70 for easy maths, then that's 10 billion journeys before costs. If we assume 20 global cities the size of London (which sustains a taxi population of around 25,000) with a monopoly position ie EVERY taxi journey giving $1.70 to Uber, then that's still 20,000 journeys PER TAXI. And that's ignoring all costs, credit card fees etc.
I agree it's a huge global potential market, but the business model can be reproduced, so that complete monopoly won't last - therefore the valuation is pure speculation according to my fag packet maths.
Quote: " If we assume 20 global cities the size of London"
That is the wrong value assumption. In London you can hardly spit without hitting a taxi.
The value of apps like Uber is not London. The value is in smaller cities. I end up in let's say Six Mile Bottom, East Anglia and I need a taxi. I have no clue what the local taxi company number is, I pull an app, I punch it, pay for the taxi getting there from Cambridge and getting me where I want to go. That is also a bigger journey (both financially and in terms of Uber's cut) than a lot of journeys in London.
If we look at the city size distribution analysis for large developed countries that is where the market is. Also, in that market the real competition to Uber are not taxi, it is the hire industry. If I can rely on a sane tariff and sane service between A and B in any unknown location around the developed world I am not going to pay Hertz and Avis the stupid amount of money I pay them now.
Hertz valuation is 12Bn, Avis 6.33Bn add to that Sixt, National, etc and you have a very healthy size market into which Uber+taxis can eat for the next decade.
There is already a plethora of car sharing apps like Carpooling on the market. For longer inter-urban journeys, once a critical mass is reached, this would out-compete Uber on cost. It's an interesting thought that typical alone-in-a-car commuters could stand a 100% increase in the cost of petrol - without a fall in living standards -just by sharing the vehicle. It there's even another oil crisis this may happen.
>>>Quote: " If we assume 20 global cities the size of London"
That is the wrong value assumption. In London you can hardly spit without hitting a taxi.
The value of apps like Uber is not London. The value is in smaller cities. I end up in let's say Six Mile Bottom, East Anglia<<<
Yep, I hear you, but how many Six Mile Bottoms does it take to generate $17beeeeelion? The big city thing was actually a crude estimator - I think there are probably fewer than 20 Londons charging the kind of prices where Uber can make $1.70/ride. Lagos, for instance, massive volume, but low prices. Dubai, Singapore, plenty of cabs, but rather low fares. Maybe there are 10 Londons and a shitload of Six Mile Bottoms, I have a feeling it'd average out in this world of 'back of e-cig packet' maths
If you look at the taxi industry here, they are basically a cartel that have organised via political favours an artificial limit in plates and therefore are creaming an absolute fortune in fares.
I feel for the drivers. They are paid utter pittance for the abuse they incur; to the point where they make more money driving for Uber than their day job. Many of the taxis are old having many hundred thousand kms.
So what do we want from a taxi industry. It really isn't hard to understand:
* Competent screened drivers who are paid a liveable wage. We get that this is not free.
* Well maintained, clean, comfortable vehicles with appropriate insurances.
* A way to book them where a driver actually turns up who drives you to your destination with courtesy. One of the last taxis I caught nearly killed us and several pedestrians going 80 through a 30 zone because we had the audacity to expect a ride to a place that was "too short"; By too short, far enough away from the airport to be impractical to walk but obviously too close for his liking.
* Reasonable fair structures, taxes and credit card surcharges.
A component of each fair must go towards each of these costs, yet the elephant in the room is the plates. Seriously it is over 10x the cost of the car itself. This means that they have to spend most of the fares they collect just to pay for the plates. Those not working for the man basically have their life savings paying off a piece of paper saying that they can carry passengers. Now I am sorry, but that is the real bubble here.
What Uber have brought to light is that the true cost of offering a taxi service is much lower than what we pay when we hop into one. I don't necessarily think Uber's cost model works out (many drivers haven't really thought through the true cost of wear and tear and depreciation on their vehicles from being involved in this), but it is definitely a step in the right direction. If the taxi industry were deliverying a service people were reasonably happy with, it would have gone nowhere.
As an occasional regular taxi customer, I expect them to realise that the fare equates to a not insignificant amount of my disposable income and well and truly covers the cost of their wage, fuel, insurances, wear and tear, car lease and a pretty handsome profit. The fact they get paid crap is because THEIR boss / industry body is screwing them, not their customers.
Icon; because bubbles can be good.
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