Uber Valued At $18b? Bubble Time

Shanghai, China. February 13th 2014. Driver images for UBER marketing content.

Uber just raised $1.2B in cash thus valuing the company at around $18B, which if you ask me, is nuts for something which nearly literally is no different from a taxi service. I can’t imagine what makes Uber worth the money – is it the fact that it’s breaking up the unionized, city run hegemonies in the cities it operates in, which I applaud – the locked down, unfree market which it is busting up is great news. Or is it the “experience” – instead of picking up the phone and telling a local limo service where you are and where you are going, you press a button on an app and a car appears? Or is it the “sharing economy” side of it – Uber drivers are regular folks (although I guess not AS regular as Lyft) who just use their owns cars and drive in their spare time? Which is it? Or is it a magic combination of all three?

Let’s break it down a bit more.

  1. Uber caters to a niche market, who not only can afford this type of service, they luxuriate in the experience.
  2. Uber has created a mystique, a persona of exclusivity and coolness – I hear that women are now expecting to be picked up by Uber for dates. No Uber, no second date
  3. Uber breaks the lockdown that cities have had on taxi services for a long time. This has led to it being banned in many places. Controversy keeps it in the news
  4. Uber subsumes the payment process – no exchange of money happens. My people will talk to your people.

So what does this tell us? People are willing to pay huge money in order to get a “rock star” experience. And investors can see the potential in catering to those people. Whether they can really afford it or not. Uber does have the “perfect storm” of attributes which investors really like, which makes it the perfect candidate for crazy valuation.

Then again, we have entered a new land of crazy valuation, what with Whats App and similar. It’s almost as if all of this money which has been  lying low throughout the recession is now trying to find a place to land. Are we back to pre-crash levels? Seems to me that there is a big difference: instead of a lot of little piles of money flowing to a whole bunch of deals, some of which might fail, now we are seeing big piles of money flowing to only a few deals, which if you ask me is terrible for innovation.

We’ll see – but personally I’d love to see less money lavished on something like Uber, and maybe a little more spread around to interesting new startups…

Uber, a controversial car-hiring app, just raised $1.2 billion in fresh investor cash, giving it a total value of either $17 billion, according to the company, or $18.2 billion, according to The Wall Street Journal. Really, though, what difference does a billion here or a billion there make any more, when money no longer has meaning?

Uber, the value of which has quadrupled in less than a year, is now the most expensive member of the WSJ’s “Billion Dollar Startup Club,” made up of companies being financed by venture capital that are worth more than $1 billion. There are now more than 30 such companies, most of them in tech, including Airbnb ($10 billion), Dropbox ($10 billion) and Pinterest ($5 billion).

via Uber Worth $18 Billion Because Sure, Why Not?.

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