Uber will be one of the first companies to a $1T valuation. (First two will be Facebook and Apple).
Here's why. Uber isn't about ride-sharing, at all. Uber is about rewriting your idea of needing a car. The market they're going after is literally automotive industry.
So right now, they're burning money hand over fist, but they don't /need/ to be doing that. It's a strategic choice, to drown their competitors (see Amazon, that's exactly what they do by tapping good sources of financing in the past). Uber will continue to do so until it is not viable to compete with them.
The only companies that will be able to compete is one with infrastructre and rivers of gold. Google. Google owns all the data of Ubers (maps), and they've got everyone on their own maps, they've got hundreds of millions of users that are tied into a google profile in some capacity (gmail/youtube/etc...) and a lot with linked credit cards. This makes for the biggest threat to Uber. Google can afford to lose, and Uber not buying Lyft is going to be the only potential down fall of the company. If Google buys them (which I don't think they will) then that is the headshot on Uber unfortunately.
Back to my point, basically Uber is going to burn and burn while capital is cheap, and force other players out. Makes sense. They can stop subsidizing their rides for users once they've bullied out the others, and there we end up with decently priced normal rides (Which is still ridiculously better in price and experience than a taxi). But by the time this happens (3 years-ish) Autonomous vehicles will be making their ways into cities at much more capacity. This will reduce their costs significantly, and all these price points they have which they have to pay for, will pay for itself by autonomous tech (instead of just forking out their own money to make our rides $5, the lack of labor because of the autonomous vehicles will force the COGS down essentially).
People will have a huge uproar at Uber for creating and then cutting hundreds of thousands of jobs (the drivers) - But their service and value add of an autonomous driving network will wash away everyones humanity side because it's just "too good". Leaving them in the tallest tower in the city with a penthouse office and a cat sitting on Travis' lap while he looks out the window down onto his autonomous city laughing in an evil tone.
$1T company, without fail.
RE Groupon:
Groupon as compared to in the article is a different situation. Groupon had minimal barriers to entry and is only a sales machine. People, people, people, and more people were needed in order to bring in the next deal, the next bargain, etc... Uber is absolutely incomparable as they have an innovation in technology, financial defensibility, and humungous footprint of recurring revenue. Groupon had none of those so I feel the article writer putting that out there doesn't seem like a just example. The only thing they have in common is that they're losing money.
Why Uber? What do they really have, at the end of the day? They're one of several companies investing in driverless cars. They're competing with companies that have cash cows (e.g. Google and Apple) as well as companies with a century+ of car-making experience, from the ground up. Uber has a cool app and some name recognition.
If/when self-driving cars are a thing, why does anyone need uber? GM/Ford/Toyota/whomever all make their own cars and will presumably make the cars of tomorrow. If not, Tesla would be a solid bet. Again, all companies that MAKE cars. Apple & Google are probably betting on their technology being better and licensing it to manufacturers. Why would Uber have a better shot at any of this than the other players? They have a slick app and have successfully found a grey area where they push most liability and upkeep costs onto their not-employees. In some markets, by some measure, maybe they're profitable.
Now what? To get to $1T is either going to take a monumental shift in everything they've accomplished, or it's going to take some silly investors (or financial tricks). I'd say it's much more likely that in 15 years we look back at Uber as something closer to WebVan than they get a $1T market cap.
The value of Uber is not in it's app, it's design or any of that. That's all bs cosmetics stuff. The value is in it's execution, infrastructure, and processes.
Tesla - Doesn't make nearly enough cars to even be considered in the same spectrum of any other of the players. Autonomous, great. Ride sharing/micro-logistics infrastructure? Not enough strength unfortunately.
GM/Ford/Toyota - Great, they've got cars, let's say those cars are autonomous. Now what about the logistics management that they've got zero experience in? Uber has serviced millions of rides and learned and learned from that. The tech is not enough, the experience/data is what counts imo.
Any company looking to just "jump in" because they've got money and a car, is going to get vaporized, unless they've got data and resources (Google being the only one that fits this mould imo).
Just how Facebook and Google got vaporized in the "daily deal" market. They had more access to the businesses, and more access to consumers than the daily deal sites ever could. Yet they struggled to find any kind of market share. Another example is Google Shopping.
Resources aren't the only thing needed, experience and processes. Which is why I say that Google is a threat, but if they're buying out Lyft. Otherwise, Google will potentially compete, but more than likely cater to a different segment than what Uber does.
Time will tell I suppose :) Definitely see what you're saying, but I just don't think you're focusing on the most valuable pieces of Ubers business.
Either way, we're very fortunate to even be in a position to discuss such cool stuff! Exciting for sure :)
Although unlikely, Uber might actually rewrite the auto industry. Investors are essentially playing roulette with Uber, and view the company as a potentially huge payout, although with low odds. As an illustration, investors might model a 12% chance of $500B, and model a 88% chance of bankruptcy, which would be $60 Billion of valuation.
I hate the news posted here and elsewhere about Lyft's struggles. I've found their drivers to be far friendlier and, afaik, their business practices far less sketchy than Uber in the past.
Uber will be one of the first companies to a $1T valuation. (First two will be Facebook and Apple).
Here's why. Uber isn't about ride-sharing, at all. Uber is about rewriting your idea of needing a car. The market they're going after is literally automotive industry.
So right now, they're burning money hand over fist, but they don't /need/ to be doing that. It's a strategic choice, to drown their competitors (see Amazon, that's exactly what they do by tapping good sources of financing in the past). Uber will continue to do so until it is not viable to compete with them.
The only companies that will be able to compete is one with infrastructre and rivers of gold. Google. Google owns all the data of Ubers (maps), and they've got everyone on their own maps, they've got hundreds of millions of users that are tied into a google profile in some capacity (gmail/youtube/etc...) and a lot with linked credit cards. This makes for the biggest threat to Uber. Google can afford to lose, and Uber not buying Lyft is going to be the only potential down fall of the company. If Google buys them (which I don't think they will) then that is the headshot on Uber unfortunately.
Back to my point, basically Uber is going to burn and burn while capital is cheap, and force other players out. Makes sense. They can stop subsidizing their rides for users once they've bullied out the others, and there we end up with decently priced normal rides (Which is still ridiculously better in price and experience than a taxi). But by the time this happens (3 years-ish) Autonomous vehicles will be making their ways into cities at much more capacity. This will reduce their costs significantly, and all these price points they have which they have to pay for, will pay for itself by autonomous tech (instead of just forking out their own money to make our rides $5, the lack of labor because of the autonomous vehicles will force the COGS down essentially).
People will have a huge uproar at Uber for creating and then cutting hundreds of thousands of jobs (the drivers) - But their service and value add of an autonomous driving network will wash away everyones humanity side because it's just "too good". Leaving them in the tallest tower in the city with a penthouse office and a cat sitting on Travis' lap while he looks out the window down onto his autonomous city laughing in an evil tone.
$1T company, without fail.
RE Groupon: Groupon as compared to in the article is a different situation. Groupon had minimal barriers to entry and is only a sales machine. People, people, people, and more people were needed in order to bring in the next deal, the next bargain, etc... Uber is absolutely incomparable as they have an innovation in technology, financial defensibility, and humungous footprint of recurring revenue. Groupon had none of those so I feel the article writer putting that out there doesn't seem like a just example. The only thing they have in common is that they're losing money.