If you’ve used Uber, there’s a good chance you love it. The company lets users request an immediate black car service from a mobile app. The car usually arrives in a few minutes and takes you wherever you want to go. The fee is automatically charged to your credit card on file.
The service launched in Summer 2010. By February of this year they’d raised $12.5 million, with Benchmark leading the most recent round. That valued the company at $60 million.
Now, Uber says it’s worth $300 million. At least that’s what it’s telling venture capitalists while pitching a new round of financing. Some have passed. But others are still at the table.
Uncrunched 
Back of the envelope suggests that all revenue from taxi rides in the US is $1bn in that mkt.
That does not sound right…London alone is worth close to £1bn a year in fares (black cabs only)
Hmm where did my words go: Back of the envelope suggests that all revenue from taxi rides in the US is less than $10bn annually. Tough to build a niche-audience business to a billion dollars in that mkt.
I’ll be the first one to say, yes I love Uber, as a company they get it. I have high expectations for their success.
$300 million evaluation is a little steep, I know they don’t have the cash flow so they must be projecting an evaluation 30X their projected bottom line.
I still am not in love with Uber like everyone else is. I use Taxi Magic and it costs 60% less than Uber (ie, the regular cost of a taxi). I guess I am just too cheap to cough up that kind of dough for a short ride across San Francisco and I don’t really understand the point when you are in NYC with all the cabs readily available. Uber might be nice for the 1% to get their cars quickly, but is it really something that mainstream American needs or cares about especially when they can’t even afford to eat?
I agree. I hitched a ride with an Uber user and found the service great but I wasn’t the one paying for it. But then again, Netjets isn’t for everyone and it’s still a nice little business.
@Stephanie – I speak for myself… love Uber and do not mind paying a few extra dollars for a for a ride on a nice, clean car with a driver that, for a change, can speak English and who do not get lost…
“Mainstream America?” There is HUGE market in the US for Uber… political correctness aside, many, many Americans would choose Uber over the alternative.
Excuse my ignorance regarding the VC world, but how would a company justify a $300 million valuation when, I assume, that revenues for this startup are still relatively light? Do the VCs accept projections and guesstimate potential or are there other more solid factors that they take into consideration?
@hank miller : I suppose they are based on projections related to future revenus…
As @Stephanie Robesky said , I don’t think Uber will b a mainstream success unless they make their services affordable for the average consumers… which I think will be possible when they will reach a critical mass.
(sorry for my english…)
Unless Uber has cracked a larger queueing problem beyond car service dispatch (which is very possible) then this valuation seems a bit crazy.
How big is the entire black car limo industry in the US? What kind of crappy margins does it run on?
What does Über offer that Addison Lee doesn’t in London? If nothing why is everyone so excited?
I love Addy Lee. 🙂 A hell of a lot more than Uber. But then again, I used to have an expense account when I lived in London…
AddLee is a cab company – not limo/ esec car . .add lee has become massive . they are regularly late in London when I ues them, drivers dont know where they are going and many stink ! literally I mean . . they are fine for trips of £10 or so . . Uber however for a £30 trip will often be the same price or cheaper . . thats a much be3tter deal . .
PS -add lee raised the bar for booking in london but the cars are not that confortable IMO . . . Hailo is also very useful for short trips . .
I tried Uber in NYC to travel from the West Village to the Upper East Side … about five and a half miles by Google Maps. I had a $20 credit from seeing their demo at the NY Tech Meetup, and a $10 credit since the first two times I’d tried to use the service there were no cars anywhere to be found. Even with $30 knocked off my bill I wound up paying $16 for my ride home. Here’s their receipt:
Base Fare $7.00
Distance $34.17
Time $5.53
Trip Charges $46.70
Rounding Down -$0.70
New York Tech Meetup -$20.00
Trip Discounts -$20.70
Trip Total $26.00
Uber Account Credit $10.00
Credit Card Charge $16.00
Payment Total $26.00
Yes … the SUV was nice. And yes, it’s neat to be able to press a button to call your car. But the same ride costs around $18 including tip according to a couple online taxi-rate calculators I just checked. Throw in some traffic and let’s call it $25 to assume there’s gridlock along the way.
I can’t justify spending almost double for their service. I held out hope that it might be a possible option to keep on hand for those “no cabs anywhere” nights, but they’ve now introduced something called “Surge Pricing” where their rates may increase as much as 100% in response to demand. So my trip within Manhattan could have cost as much as $93.40.
I’m sure there’s some people for which this is a great choice. But there’s no way I’d consider them as a viable option when they can charge up to $93 for what could be a $20 cab ride.
Is this some kind of a joke – $300M… . Come one. By comparison, the most successful software as a service travel management company, which does 1/3 of all corporate travel booking and at least 2/3 of all corporate expense management in the US, has a market cap of $2.5. Concur is playing in a space that is minimum 20x that of Uber. Ground travel is about 10% of all travel spend, and that includes rental cars – so that leaves about 5% for taxi and sedan. So lets not kid ourselves.
Separately, you can check with the show ongoing in SF right now, taxi industry as a whole is about $7B total (all $ that go through it), of which about 1/3 is paratransit (Medicare etc.), while black car is about $3B, of which 1/2 is in NYC. So total market in the US is about $8B. In an industry that small you want to have a company that in Series B is going to be valued $300M? Note that Uber has 0 activity in the taxi market, which is far bigger (and the taxi industry, with all of its political might, thinks Uber is illegal). This is about 100x worse than GroupOn going public for $30B. This gets way beyond a bubble, its just stupidity.
At no time when I have booked Uber in SF have I seen more than 20 cars available, usually much less. Lets be really generous and assume that they have 50 drives in SF (highly unlikely but just for the same of it). And then lets say that these drivers get as many rides as an average cab, which is 8. That means Uber is doing 8 rides a day. What does it make of a ride – say $10 (hugely optimistic), so about $1.5M in revenue a year. In reality this is order of magnitudes off (I’d guess about 10x off). But someone is going to value a company with under $2M in revenue at $300M? Again, nuts.
Uber is great for a few things that taxi is not (in the Bay area): (1) airport pick ups, (2) rides from SF to the valley and back (on a taxi they are more expensive), and (3) guaranteed ride on a weekend night, when getting a cab in the city is hard. This works in SF because there are too few cabs and its a community of many different cities and so cabs do not work well. In NY, you can now order thousands black cars at a rate very similar to a cab, and Uber wants to go to war with those guys? In Chicago, the cab industry is far superior than in SF, so there is no need for a black car. So unless Uber is planning on becoming a car company itself, there is no growth prospects here.
See all that #OWS stuff happening?
See, elitism just lost some of it’s cool-factor. And, if nothing else, Uber reeks of elitism.
Let’s face it, Uber would probably never have gotten as far as it has without the hype machine of @techcrunch. Yes, @arrington, in his past life, helped grow this beast…and encouraged these kind of absurd valuations.
The presumption of what’s good for techie-elites in Silicon Valley (or Seattle) is good for the Country, is, well, very Republican.
What’s the phrase? A fool and his money. . .part with your VC dollars on a clean taxi company where @callahan above can hear Tom Brokaw-English spoken because he’s incapable of living in a multi-cultural and multi-lingual world. . .
#endofWesternCivilization
@Joe –
“… what’s good for techie-elites in Silicon Valley (or Seattle) is good for the Country, is, well, very Republican …”
Republicans in Silicon Valley??? You must be from another planet!!!
BTW, SV is Obama country…
Hello. Taxi Magic app, people. It books the taxi via GPS and you can pay cash. Plus you can book ahead. At the same price as a taxi. Just because they don’t have an overly slick interface, tons of investor cash and Arrington blowing them doesn’t mean that it isn’t a good service. Try it out. Works great in SF. Not sure how many cities it is hooked into taxi dispatch, but it hasn’t failed me in SF thusfar…
Not having to think about cash is one of a number appealing things about uber for me personally… Uber doesn’t operate here yet but taximagic has not worked well when I’ve used it in DC.
What’s going on in the background in regards to software and engineering is where I see extreme potential and value.
International growth and possibly the implementation of their technology into other on-demand services could be huge. (Uber backed Task Rabbit)
You guys are all missing the point. I don’t think in their VC-pitch deck that they included ONLY car service as their growth (especially growth justifying a $300M valuation). Think about this service–being able to instantly request service via iPhone and have someone show up within 5 minutes–integrated into a variety of verticals.. this could be a game-changer (I kinda hate when people drop “game-changer”). Possibly industries–locksmiths, towing, plumbing, the list goes on. Any of these industries that requires service on-the-fly is calling for disruption like this.
Right on. We have to consider the application of the technology outside of the car industry. Consider the stagnet markets already mentioned and expand outward to all service industries; in-home and out. Think of time spent waiting for plumbers, contractors, home plain e servicing, and all delivery services. The technology has application outside of the retail market as well. Large chains use 3rd party delivery and installation service where they que up for next opportunity. This technology could change things on the whole sake side/commercial side as well
look at all the dumbfuck comments above in 2011, and see where Uber’s early investors are now in 2015. look at every thread, and if there is a company no one likes, invest in that.