The Uber article that you referred to as Nate Silver is not actually by him. Its by Ashwath Damodaran (The NYU corp finance prof)

http://fivethirtyeight.com/features/uber-isnt-worth-17-billi...

His basic assumption was to use the taxi market as the total addressable market (TAM)

Bill Gurley, a VC from Benchmark and one of the investors in Uber, lays out alternative scenarios for TAM including going after car ownership. http://abovethecrowd.com/2014/07/11/how-to-miss-by-a-mile-an...

Damodaran's response to Gurley concedes its probable/plausible/possible for uber to get into non-Taxi and larger markets: http://aswathdamodaran.blogspot.in/2014/07/possible-plausibl...

Bottom line: the optionality of uber going into these larger markets is what is driving these valuations

Anecdotal support; Uber is keeping me from purchasing a car. I have an inexpensive motorcycle that handles 95% of my rapid transportation needs, and I try to live in areas where walking or mass transportation solve my "slow transportation" needs. I use Uber for all the edge cases where walking or motorcycling doesn't cut it, and I cannot see any scenario where I'd prefer to own a car and drive myself compared to the ease and reliability I have experienced with the service so far. Maybe Uber won't be the king of the hill when the dust settles, but so-called "ride sharing" services absolutely are taking dollars that would otherwise go into purchasing a vehicle, a much larger market.

Important to note you haven't given up vehicle ownership though. You just haven't switched types of ownership. Uber needs to be more than your 5% edge cases if we're talking about disrupting ownership habits.

Bill Gurley's post is very interesting and in-depth. One thing he doesn't mention is the potential of UberPool(combining multiple passenger trips into a single car) to further increase demand. I wonder why is that ?

Regarding mistaken authorship: whoops, sorry. That was inattentive on my part.

I also like to keep in mind that investors who purchase a percentage stake in the company valuing a company at 25 Billion probably have favorable terms and preferred stock such that they will make money even if Uber goes through a liquidation event at less than that amount.

I see Uber being a 10 Billion dollar company without any problem.

How?

Aren't they 1) basically facing a serious organized labor problem once they become actually legal, and 2) 5-10 years away from being made irrelevant by autonomous technology?

I think they're 5-10 years away from having a solution to their organised labour problem

Well there's a big issue here.

If they have labourers, they're 5-10 years away from an end to their problem. If they have organized labourers, they're 5-10 years away from their end.

Uber is facing union efforts. If they go through, Uber will end in 5-10 years. Autonamous transit will deploy far faster than Uber will be able to shirk off any unionized labour.

If they get unionized labour, their first attempt to implement autonanous vehicles will lead to a strike, meaning a competitor can swoop in and replace them.

Autonomous transit will not deploy in 5-10 years, I guarantee you.

> If they have organized labourers, they're 5-10 years away from their end.

Ignoring the self-driving car bit, how does unionization of drivers end Uber?

Wouldn't a software-laden self-driven car also eliminate the need for a dispatching company?

This is difficult to say, and (in my opinion) largely depends on the price of self-driving cars.

If Self-driving cars become available but are unaffordable (due to very expensive equipment onboard), Uber will be in an excellent position to make an investment in these cars where the average taxpayer will not.

Uber will then be rid of it's largest cost, human drivers. They will have the dispatch system in place to organize their self-driving vehicles and will be able to offer their service at an incredibly low price compared to the price of buying a self-driving car. Uber looks at a massive upside.

If self-driving cars are offered affordably, Uber can still offer it's services way cheaper and nothing changes on the consumer side. People still have cars. Theoretically, the demand for their service would still increase.

> Uber will then be rid of it's largest cost, human drivers.

Drivers also currently clean, maintain, fill up (charge up) and park the vehicles for the night, so those will be some costs to be assumed by the new car owner. Someone of that size can probably cut pretty good deals with car washes, parking garages and gas stations (electric charging facilities), but it will eat up into margins.

> Uber looks at a massive upside.

Maybe. If it's a business with superb returns, manufacturers might just look into setting up their own rental/dispatching company, the way car rental companies have an equity relationship with auto manufacturers to maintain the sales. It becomes a business with a fairly low barrier to enter.

>5-10 years away from being made irrelevant by autonomous technology?

I'm a skeptic on this one. I'd love to be proven wrong but getting from autonomous under limited circumstances (say designated section of limited access highways) to the more general case seems an enormous distinction that will span decades. Fifty years? Yeah, I could believe that. But not 10.

(And I'd also argue that if AI is at a level where you could have truly autonomous cars, you're also at a level of truly profound change in many, many different areas.)

The Google car's 300,000 accident-free miles demonstrates that we are technologically quite close to a level where we can have truly autonomous cars, even if the regulatory and societal frameworks need some time to catch up. And yes, we are also at a level of truly profound change in many, many different areas (such as the conversion of the middle-class salaried job into a freelance mixture of Ubering and Taskrabbiting). I think the time you're describing is already here.

How many of those accident-free miles were in uncontrolled conditions? How many of them were negotiating traffic in a rainstorm, or unplanned detours around construction, or getting boxed in by semis on the interstate, or dealing with people maybe or maybe not about to jump across from the median, or anything near the sort of calamitous and hard to manage situations typically leading to human accidents or fatality?

The Google car is brilliant but from what I understand "quite close" is stretching it.

The Google car project is what, 5-10 years old? I assume that in 5-10 years it will be more capable than a human driver across the naturally encountered spectrum of driving conditions. That's "quite close" to me.

The average guy or gal on the street across much of the US has never heard of Taskrabbit and many have never heard of Uber. And, frankly, that's a pretty dystopian future you describe. Fortunately, it's not here for most people. And if I drive or walk in a large city and try to imagine an AI navigating that chaos from door to door, my mind boggles. Not to take away from the impressive work that has taken place over the last five to ten years but the "replace human 100%" use case seems really really challenging--and far out.

on the contrary uber is position to dominate the self driving car industry in terms of actual service provided to passengers

Isn't Uber/Travis always making little comments like "if we can get you a car in 5 mins, we can get you anything in 5 mins" - they are tuning an enormous logistics engine with unlimited optionality. Cars are just the start... Boober here we come (according to the ceo and pandodaily)

regarding last mile transportation, it's worth noting that Uber employees themselves not infrequently take Uber from 4th and Kings station to their office at 10th and Market, which is only a few miles away.

Uber employees also get a lot of Uber credits as part of their compensation package. I'd be curious to see how many would still use Uber if it cost money out-of-pocket.

What I meant by "last mile transportation" was the transportation of physical goods, like packages, mail, delivery food, etc. Drivers could probably fit a couple of these "errands" in at no loss, while increasing the efficiency of last mile transportation/delivery for the services seeking to deliver goods.