Uber‘s $1.2 billion financing capped another huge quarter for venture-backed companies – with investment levels hitting highs not seen since 2001. Uber is the most valuable private venture-backed company and as a result, it generates a lot of chatter and commentary from investors, journalists, startup founders and academics opining on its valuation, prospects and competition.
Below are 10 perspectives on the car/ride-sharing companies from a variety of investors. including a detailed market breakdown by Bill Gurley of Benchmark as well as a recent Twitter back-and-forth which included Fred Wilson of Union Square Ventures, Mo Koyfman of Spark Capital & others. If we have missed any perspectives that you think are worthy, please let us know.
But, before we get to the commentary, some data.
The chart below highlights the total funding for 10 venture-backed car-sharing and mobile taxi services that are actively operating in the U.S. Obviously, Uber and Lyft which have raised $1.51B and $332.5M respectively, have significant funding advantages over other players in the market. (Some other data on the car/ride-sharing market is here: the highest-ranking apps in the App Store and funding to transportation tech.)
Like the funding front, the landscape within the App Store also looks to be largely a two-horse race between Uber and Lyft. Uber has consistently ranked in the top 5 ‘Travel’ apps, while Lyft has consistently ranked in the top 20 apps in the category. Interestingly, RelayRides, which offers car-rental services, has jumped signficantly and now ranks at No. 60 as of July 6, 2014.
The Commentary
Uber – reminiscent of Webvan?
Benedict Evans – Andreessen Horowitz
Uber reminds me a lot of Webvan. Fascinating city-by-city algebra to make the numbers work, plus massive burn in a play to conquer the world
— Benedict Evans (@BenedictEvans) November 18, 2014
Webvan people swear margins were coming right in SF but they ran out of cash. Not clear Uber’s algebra has reached positive stability in SF
— Benedict Evans (@BenedictEvans) November 18, 2014
Uber is ‘ethically challenged’
Peter Thiel – Founders Fund
There’s always a question, you know, how intensely you’re allowed to compete, and Uber is right on the line…Uber is the most ethically challenged company in Silicon Valley.
‘Almost the perfect tech company’
Naval Ravikant – Angellist, investor
Uber is going to have a bigger impact than almost anybody realizes. It’s almost the perfect tech company, insofar as it allocates resources in the physical world and corrects some real inefficiencies.
They are much like Amazon in the early days of just selling books. As a bookseller, Amazon was good but replaceable. So Bezos pushed quickly to become indispensable. From the outside looking in, Travis seems to want to fight wars instead of win battles. He doesn’t seem to be focused on making Uber indispensable. I hope that, combined with the relentlessness, doesn’t backfire on him.
Mo Koyfman (Spark Capital), Fred Wilson (Union Square Ventures), Benedict Evans (Andreessen Horowitz), and Jason Calacanis (Angel investor) debating on Twitter – select tweets below and full Storify available here.
@mokoyfman are these lower prices from @Uber actually predatory pricing that should be looked at by the Justice Dept?
— Fred Wilson (@fredwilson) July 11, 2014
@mokoyfman@Uber is getting worse not better in NYC. I would like to see @lyft and @Sidecar come to NYC. Competition us best for consumers
— Fred Wilson (@fredwilson) July 11, 2014
@Jason@fredwilson@mokoyfman walk out of meeting, wave hand, get in cab. Very often quicker
— Benedict Evans (@BenedictEvans) July 11, 2014
How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size
Bill Gurley – Benchmark Capital
@bgurley
So now let’s consider scenarios whereby Uber’s potential market could be 25 times higher than Damadoran’s original estimate. His original estimate was based on Uber topping out at 10% of a $100 billion market. We would argue, for the reasons included herein, that the features and functions of Uber’s new car-for-hire service significantly expands the core market. Based on San Francisco alone, it appears that that market is already potentially 3X the original.
Uber is the new Google
Om Malik – True Ventures
@om
Uber, like Google, is taking a highly disorganized business–in its case, private transportation such as taxicabs and private limousines–and ordering it neatly. If Google’s primary weapons are relevancy and speed, then Uber’s are cost and speed. It not only has to get cars to customers faster, but it also has to do it at the lowest possible price. If Uber can get that right, it will surpass its competition–just as Google’s proficiency has kept us from searching elsewhere.
Uber could be worth $200B (video)
Mike Volpi – Index Ventures
@mavolpi
Uber is a terrific company…Could they be the next Microsoft or the next Walmart?…They could be, and if so they should be worth $200B not $17B.
Sidecar
Fred Wilson – Union Square Ventures
@fredwilson
The human touch means allowing riders to see the drivers in app and choose the one they most want to ride with. The human touch means giving the rider a real fixed price instead of some multiplier that goes up whenever you most need a ride.
Why Andreessen Horowitz invested in Lyft
Scott Weiss – Andreessen Horowitz
@W_ScottWeiss
Lyft may look similar on the surface to a company like Uber, but under the covers it is a completely different service. The vision these guys had from the very beginning is about how to do the next big innovation in transportation, rather than just automating existing businesses like towncars or taxis.
I think people ultimately like convenience. If there are cars going where I want to go and it’s really cheap, then I’d prefer that to spending the money on owning a car, maintaining a car and parking a car. I think this has the potential of having the same effect on auto ownership and public transportation that Southwest Airlines had on something like Greyhound. Why take the bus when there is a cheaper flight going faster to where you want to go?
Uber’s Wonderlamp
Christoph Janz – Point Nine Capital
@chrija
So Uber is great for riders, and based on what I know, it’s good for the drivers, too. But is it also a great business? I think so. If a company delivers so much value to both sides of a marketplace, it can take a significant cut and acquire buyers and sellers profitably.
Is Uber worth $17B? I don’t know enough about the company to judge that, but what’s clear is that Uber has a very realistic chance to revolutionize the worldwide taxi industry.
Why I invested in Lyft (video)
Keith Rabois – Khosla Ventures
@rabois
Long-term, Americans are going to get what they want. And Americans want options beyond taxis and so there may be a year, a month, a quarter where regulators and old-school archaic philosophies interfere with progress but eventually when American consumers want something, no politicians or regulators are going to get in the way.
It’s very clear American are voting every day with their feet in San Francisco and Seattle, in every city, that they prefer these options over taxis or certainly as a compliment to the taxi service
Digital mesh: The concept behind Uber’s shot at an empire
Shervin Pishevar – Sherpa Ventures
@shervin
Uber is creating a digital mesh — a power grid which goes within the metropolitan areas. After you have that power grid running, in everyone’s pockets, there’s lots of possibility of what you could build like a platform. Uber is incorporated in the empire-building phase.”
Unpacking the $17B Uber financing
Semil Shah – Haystack Fund
@semil
Most VCs don’t want to talk about Uber for too long. It’s one of the unicorns that got away. After 2.5 rounds of exposure to traditional funds, a few microVC and two larger VC firms were able to invest, and then it was all larger private funds. There were more Valley funds involved in Facebook and Twitter (especially through small cap M&A).
The appreciation on this Uber investment is so fast and steep that even though it is entirely a unicorn outlier, it is exactly this type of mega grand slam that large VC firms need to have in order to cement their survival over the long-term.
Non-Investors
Uber Isn’t Worth $17 Billion
Aswath Damodaran – NYU Professor
@aswathdamodaran
…the market would have to be three times my estimate — about $300 billion — or Uber’s market share would have to be more than double my base case estimate — more than 20 percent — to justify a $17 billion valuation.
photo credit: Adam Fagen