Word is Uber, the company that developed an app that connects riders with drivers, now boasts an $18 billion valuation.
I’m not kidding.
The Wall Street Journal says this makes Uber the second-most highly valued start-up after Facebook (NASDAQ: FB).
Now, I’m not going to be so quick to dismiss this valuation as so many others have. On the surface, I don’t really get it. But I don’t really get Tesla’s (NASDAQ: TSLA) valuation either. This, by the way, is not a swipe at the highly successful electric car maker. In fact, I’m a huge fan of the company and of its CEO, Elon Musk.
My point is, you can only perform analysis on a particular company based on the data to which you have access. When I unloaded my shares of Tesla at $140, I thought I defied the odds and that the stock was on the cusp of a serious correction.
Then, Elon Musk pulled another trick from his sleeve, and boom, now the stock trades at more than $200 a share. Insiders were certainly in the know and held on tight.
I suspect there’s a lot more to Uber than meets the eye. After all, the players who’ve ponied up billions (not millions) thus far have this kind of cash for a reason. They’re usually on the winning side of deals like these.
And I must admit, I think the actual business is genius.
Why Cab Drivers Piss Me Off
A few days ago, after taking the 7:40 train to Baltimore from New York, I found myself waiting patiently in line outside of the train station. There were about 12 people ahead of me at the cabstand.
Fortunately, it didn’t take long to get a cab, and I was even able to share it with a young lady who was also going to the same address.
As is typical with most cab drivers in Baltimore, the driver was anything but courteous and, as usual, asked for directions to the destination. I don’t understand how you can be a cab driver and not know where you’re going.
In any event, the trip was short and sweet. However, when we arrived, the driver told us the fare was $12 — each.
The fare was $12, but since we were both in the cab, he said he had to charge each of us the same fare. I immediately called bullshit, and we spent the next fifteen minutes arguing. He finally conceded, reluctantly took my twelve bucks, and sped off.
For the most part (although there are exceptions), cab drivers tend to be real assholes. They act as if they’re doing you some kind of huge favor, despite the fact that you’re paying them. Outside of New York City, rarely can I find a cab driver who can get me to my destination (assuming it’s not a major destination) without asking for directions, and if you ever schedule a morning pickup with a cab company, I suggest you always have a plan B in place. I can’t tell you how many times I’ve scheduled a cab for an early morning pickup, only to be left scrambling 45 minutes later, trying to find a ride.
I do realize there are exceptions, and these experiences are only mine. Although I’ve shared many similar horror stories with other city dwellers.
So when I first heard about Uber, I was definitely excited. What a fantastic idea. I can actually have drivers compete to get my business, and do so based on a price I agree to before the trip even begins.
The fact is, Uber is offering much-needed competition in an industry that has long enjoyed special treatment by city governments and regulatory hurdles that have kept free-market competition at a distance. No wonder the taxi industry is fighting like rabid honey badgers to keep Uber out of the picture. But there’s nothing they can do.
The cat is out of the bag. There’s no going back, and quite frankly, I can easily see how Uber is going to completely transform an industry that is in desperate need of transformation. At least in the eyes of consumers.
Now, I don’t know if an $18 billion valuation for Uber makes sense. It does seem like a bit of a stretch. But one thing is certain...
This is definitely a company I’m not betting against.