The mistake, IMO, is assuming that they will be able to replicate that in other cities. In NYC you can get a taxi 90% of the time by holding your hand up in a street corner. At peak times that's more difficult, but that's also when Uber has surge pricing. They will hold their own and take over the premium market from various non-descript livery car companies - but only the premium market. They won't take over the taxi market as a whole. Much the same applies to London.

Also, much of their current success is based upon how heavily regulated and backwards taxi authorities are. For example, in NYC taxi drivers are not able to use phones or navigation aids, and hailing by smartphone is in its infancy. But that won't be the case forever.

So yes, they deserve a good valuation. But, to me, there are still a lot of questions about whether they will expand to fit this valuation.

Up until the beginning of the year, 90% of the time you'll be hailing a gypsy cab. The only time you'd get a yellow when leaving the BX was at shift change which is around 5pm/5am for a lot of them. Not that there's anything wrong with a gypsy cab, but you're not supposed to hail them, which ties into a lot of the problems Uber appears to be facing in NYC.

I will say a lot has changed with the introduction of the Boro cabs (green cabs). I don't remember exactly when they were introduced, but getting a cab is considerably easier now.

So, while I agree with what you are saying, I think it's a little Manhattan-centric.

Agreed - and that was sort of my point about Uber taking advantage of regulation, though I didn't phrase it well. The artificial scarcity of taxi medallions meant that demand outstripped supply outside of Manhattan. Now they're finally, slowly, fixing that.

Even cabs (green and yellow use the same fare structure) are priced way out of line with what the gypsy cabs were negotiating in many parts of the outer boros. UberX is another 30+% again on top of that.

It looks to me like uber's biggest market in NYC is not people who live in outer boros and would otherwise have hailed a green or gypsy cab but people who would otherwise have taken a pre-arranged black car because hailing a cab is for the proles. That market isn't nothing, but it's far from the whole thing.

People finding cabs on 5th avenue at 6pm know there are no cabs to be had. You can't just raise your hand. It could take 15 to 20 minutes to find a cab.

So suggesting that you can get a cab 90% in NYC is a statement of fact, but it's not actually true.

Facts: http://www.schallerconsult.com/taxi/taxifb.pdf

That's one of the many reasons Uber is also crushing it in NYC.

There really are no other workable solutions. The other solution is to get more taxis on the roads, but that would just mean that a lot of taxis would be idle at non-peak hours, and that -- instead of peak hour-taxis being expensive -- the price of taxis in general would rise, because each taxi isn't getting as many fares.

That's fine. But it means that it isn't going to dislodge yellow cabs any time soon because the price point is entirely different.

I would have to disagree. I work near the Empire State building and have taken cabs home after work (6pm) plenty of times and have never had to wait more than two red lights to get a cab (lights going N/S take about 45s so that's around 2-3 minutes).

The times you have to worry about is Friday/Saturday night if it is raining. You might have to wait a few minutes then if you want a yellow cab. Black cabs are almost always instantly available but they are a little pricier so I don't count them.

Now car2go, there's the future of cars on call. Especially in a city like Vancouver where you can nearly always find one within a couple of blocks.

One reason is that a good part of their claimed novelty is being able to hail a cab via mobile-phone app (as well as get pricing and such), which is not actually novel in many markets. In much of Europe the existing taxi companies have that feature and it works just fine; it's not too hard to add it as an incremental improvement to the traditional radio taxi. I used the app from 'AAA Taxi' a bunch in Prague last week, and I don't see what Uber would offer above the existing functionality.

Both important to me, and I'd at least assume a few others. I absolutely hate the stress of having to deal with some angry cabbie and 5 minutes of BS because I dare use a credit card vs. pay cash.

http://www.theguardian.com/uk-news/2014/may/30/will-uber-kil...

Uber needs to obey the regulatory rules of the industry. Either they don't have a pricing meter (and thus journey price is agreed before hand) or they do have a price meter and all Uber drivers are regulated like any other black cab driver.

They can't ignore laws just because those laws are inconvenient to them.

I completely agree with you, but at the same time, for whatever reason companies (Uber / Airbnb) have been able to completely ignore rules & laws to the tune of tens of billions of dollars (in valuations).

It's almost "might makes right": ignore rules and grow as fast as possible, with the hope that you'll grow faster than the legal system can take you down. By the time the legal system could do anything, you're big enough to change the rules.

But now Chesky is rich, so he gives away money and pretends that he's something other than an enormous fucking asshole.

But that's how you disrupt markets!

The price of a London cab is regulated. Maybe that price is wrong. Uber can take advantage of it, but do you think the London taxi industry is really going to sit back and watch its market disappear without even trying to change price?

And the cab driver protests are more rooted in the fact that they had to spend a very long time learning 'The Knowledge' before being let out on the road, and that Uber has no such requirement. So, either it's necessary and they're letting Uber off the hook, or it isn't necessary and TfL has been lying to drivers.

So, I think it's more complex than just being "threatened by Uber".

Case in point:

https://twitter.com/newyorkcityliz/status/470010209403150336

Edit: Fixed my idiom. Thanks dragonwriter.

http://idioms.thefreedictionary.com/case+in+point

Like many other things The Knowledge has been superseded by a computer.

Maybe you mean s/NYC/Manhattan/?

This is not true in much of the outer boroughs (and also in much of uptown Manhattan). In fact, in an attempt to address the problem, NYC created an entirely new class of cab that can only pick people up outside Manhattan.

I'd really be interested to see how their revenue breaks down between larger cities with urban cores (SF, Seattle) and other areas that are more spread out (LA, etc.)

If you are in select parts of manhattan below 150th st, you can get a taxi very easily.

If you're in any of the other boroughs, you usually can't count on being able to hail a taxi unless you live on a main route to one of the manhattan bridges.

Given they are getting banned in entire markets, I think this evaluation is crazy.

UPS, Fedex, etc already have software just as advanced for planning their routes. Uber isn't going to magically beat them somehow. Heck, part of why they lean on the USPS is there is some economics in delivery outside of big cities that create a situation where it makes no sense for more than 1 delivery company to deliver for the entire area (and even then the USPS loses money on rural deliveries in some areas!).

EDIT: To be clear, I'm not saying this proves a bubble...I'm just saying Uber is overvalued given the fact they are going to get hit with regulations eventually that will squeeze their margins or be forced to retreat from numerous markets.

("Urban transportation has looked the same for a long time—a really long time—thanks in large part to regulatory regimes that don't encourage innovation. We think it's time for change. Uber’s legal and public policy teams are helping facilitate that change around the world, and we’re looking for a hustler-wonk to help us develop that will change the world. This is no ordinary, run-of-the-mill gig -- seriously, have you read the news? We’re navigating some very interesting policy waters. Are you ready to dive in? This position is based in San Francisco or Washington, DC.")

http://www.valuewalk.com/2014/03/tesla-motors-inc-tsla-now-b...

Uber, unlike Tesla, is costing the government money in the form of licensing fees. Its contractors are not paying for such licenses frequently. You can't simply "fight" the tax system like that.

Can they fight lobbying by the taxi companies? Yes. Can they convince the governments to go tax someone else instead? I doubt it. The taxi companies haven't managed that trick either.

Well, I'm sure they will spend at least some of that $1.2b to bribe politicians into reversing those bans.

I'm pretty sure there will be no bribes. :P

I think part of my issue is alot of the rules that their contractors bend/break are reasonable.

It is like my issue with AirBnb. There is a good reason for many of the 'short term' rental laws.

We aren't talking about the bullshit Tesla bans here, after all.

http://bits.blogs.nytimes.com/2014/04/17/uber-faces-rebukes-...

"Oh lets operate in Paris and not pay the licensing fee for a taxi service." Etc.

They've been completely and/or partially banned by more markets, larger markets than the entire country of Colombia at this point.

It is the same thing as AirBNB. You build the software service and then hire out contractors who don't comply with local laws and rake in the money.

I don't see that as a good, sustainable service at an evaluation larger than the entire US taxi market in the US. http://www.ibisworld.com/industry/default.aspx?indid=1951

They are going to hit like AirBNB was and have to play by the same rules as everyone else which will squeeze their margins. :/

Maybe this speaks to my bias against people who bend reasonable rules for profit.

Also, many of the people who were looking into investing agreed with that: "The bidding for Uber was so heated that some venture capital and private equity investors bailed out after the valuation soared beyond $10 billion, according to people familiar with the situation, who asked not to be identified because the talks weren’t public."

I share the same "bias" (I would actually refer to it as "normal thinking", but hey…) and think it's a shame people in Silicon Valley have collectively decided it's fine to break the law as long as you can get away with it and get a high valuation out of it.

To take one example, AirBnB has clearly had a negative impact on many local rental markets via units being taken off the normal market and instead being turned into unlicensed hotel rooms, but their response has been basically complete and utter defiance to anyone to stop them, and this attitude gets applauded here on HN and elsewhere.

Even if Uber manages to capture 25% of the market, it isn't going to hit $170B market cap.

isn't it the best confirmation of how big deal they are? Their value isn't in the "logistics math" or other hi-tech mumbo-jumbo. Their value is in the successful building of the momentum, a huge storm wave which can break through existing regulations which hasn't changed in a hundred years. An ability to change political things to be in your favor is one of the most important and lucrative business tools, pretty much an equivalent of Gold Finger. Uber hasn't won this game yet, but he is pretty promising contender...

Right now, the deep pockets want nothing to do with that business because the future is uncertain and there's a large liability risk. One of many probable ends for Uber and Lyft is being sued out of existence ala Napster. But if Uber succeeds in proving the market, competitors will follow. What does Uber have that's hard to match? Their technology can be replicated by those that know how to build software. Their drivers will bolt to any competitor that will pay them more. Their customers will bolt to any service that's cheaper. Without some sort of network effect, they'll either fail in their legal challenges or they'll find themselves in a race to the bottom and see their margins evaporate.

Worse yet, they could see themselves competing against companies that can bolt the Uber revenue source onto their current product. Facebook Transport, which leverages your network of friends for stuff like trusted reviews from people you know. Domino's ToGo...a ride home and a pizza. Amazon Local Lift...handle your grocery shopping on your way home. And that's not even considering if Google gets to self-driving cars first and decides to compete rather than license/sell the technology to Uber.

At the moment, Uber and Lyft feel like the penguins that gets pushed into the water to test whether there's a Shark or Whale nearby. They're either going to get eaten, or everyone else is going to follow them into the water.

This is so much bullshit it makes my eyes hurt. They "talk" about this a lot but it's not even related dude! Read some books.

I've chatted w/ some Uber engineers about this and the story I was told is that originally they were using Google Maps estimates. But the data is really important to capacity planning and giving travel time estimates within their app. And it was often very wrong. They even had a number -- something like "if you multiply google maps estimates by 1.5 they will actually be more accurate". So building a better version of this in-house, based on the millions of miles previously driven, was a very important and challenging problem.

I've taken hundreds of rides, and I don't think I've even once looked.

I find it to be a completely pointless part of the whole product - I already know roughly how far away something is, and how bad traffic may be. When I call an Uber, I simply look at the surrounding map and see where the cars are to get a decent estimate. The one they give is usually off by quite a bit, depending on who accepts the hail.

Uber has made some impressive achievements, but ultimately their big success was in figuring out how to run a taxi-like service without paying for taxi medallions.

And, with that, the feeling that Amazon.com will snap this company up for cash and stock is almost palpable. Forget drones, that's PR stuff for now. Uber is the real PTTH (product to the home) service.

Robo-Uber as I like to call it is all very exciting and transformative. And I have little doubt that it will happen someday. But we're talking decades according to many people who really know the topic. For example, John Leonard who was on the MIT DARPA Challenge team has said "I don’t expect to have truly driverless taxis in Manhattan in my lifetime." http://digitalcommunity.mit.edu/community/featured_content/b...

Next time you drive in a city, think about all the little decisions that you're making constantly. I'd love to have a service like this but it's not going to happen within a time horizon relevant to any current financial investments.

They're solving autonomous vehicles for known environments that are mapped down to extremely high resolution. Once you have that solid ground truth, adapting to changing conditions on top of it is far easier.

Which is why they've already logged 1.1 million kilometers of autonomous driving, including city streets with high complexity.

What the more traditional autonomous vehicle researchers didn't/don't appreciate is that it turns out to be easier to make the whole world[1] into a well-known environment than make a car than can handle unknown environments.

[1] more precisely, the parts of it that the average person would actually drive on, which is much smaller and simpler.

I fully agree. And it's the reason we could probably see fully autonomous operations on designated sections of limited access roads in the relatively near future. The unknowns in that environment--mostly other vehicles--are relatively well-defined.

The reason for the skepticism about more general self-driving without even a human backup available is that even if the roads are precisely mapped the environment in a city is still largely "unknown." (Although obviously some cities are more complex than others.)

"The University of Michigan, along with the local government and major automakers, is building a model town to test a system of self-driving "connected" cars.

.. It's laying the groundwork for the real-world system planned for 2021 in Ann Arbor."

i have this stuff here. it weighs this much, here's the shape. i want it over there by this time bound.

whether that motion is carried out by drivers in cars, drones, autonomous shipping vessels, nanobots, whatever. it's going to be huge.

They've since increased their commission back to 20%, added a $1 surcharge, integrated with google maps, and they've probably validated the same day package delivery business model in NY.

Valuation probably reflects crazy revenue growth they have in so many markets + future opportunities to dominate other verticals.

http://techcrunch.com/2013/12/04/leaked-uber-numbers-which-w... [dec 2013] <--note week-on-week increases too! and

Yeah, but it's such an easy problem to solve. I already had a few car services on speed dial so this wasn't really a big problem to begin with. All they did was centralize and market it. I live in NYC which is probably the #1 taxi market in the world and have rarely heard someone having trouble calling for a cab.

I also spend a lot of time in Chicago, and there I do agree - the cab infrastructure works pretty well. I still use Uber, as it's far more convenient and reliable than calling a random cab company and waiting around for it to possibly show up (or waiting outside in the cold spending 30 seconds to 10 minutes flagging one down). Even in Chicago you get a 30% failure rate on radio dispatches.

It might be an easy problem to solve, but Uber is the first to realistically turn it into a useful service in many markets.

Not some company with a website.