I have been hearing about Uber since it was founded back in 2009 in San Francisco, but I have never had the chance to try it till the end of last year in London. In the past few weeks, I have been taking Uber every single day since they have expanded to Manchester, the second largest city in Uk. Although it was already in Rome, the place where I am from, I had never thought of trying it, since they are almost invisibile there and the local drivers want to “kill” them.
Innovation has given to Travis Kalanic the power to destroy an eighty years old market and when corruption, governments and lobbies are behind that market, it’s not easy to take over the world; but they are getting there, slowly. In the past year, Uber’s drivers and the company itself have risked to be beaten several times in Italy, where a driver license costs almost €200,000. It’s a lobby and the fact that Uber is not regulated makes them very angry.
Although they are facing all these issues with bureaucracy and drivers, they are already in 36 countries and over 60 cities. They are simply taking the world, city by city, with a good idea and a lot of money to invest. There are several reasons why Uber won’t even fail to penetrate more cities, but the most important bit is that Goldman Sachs and Google are two main investors, which means their network of “friends” is pretty large.
The company has recently expanded its operations in Manchester. They firstly used a two months period to operate in “beta”, then they threw a nice launch party and gave free rides for three days after that. Now, they are fully operating in the public eyes. What I have seen in the past weeks is a great service, with friendly drivers and nice customers. I’ll never go back to other services in Manchester, since Uber is cheaper and a lot easier.
What has surprised me the most is how easy and disruptive an idea can be. Uber is another example of the thousands of things that we have been used to do in the past brought on the internet. In the last few days, the company has apparently been in funding talks for a valuation that goes over $10 billion. The company is seeking to raise something close to a billion dollars to expand their operations.
If they close the funding, they will join the “ivy league” with Dropbox and Airbnb. There have been several opinions on this and lots of discussions on the massive value that the company can have. What people still don’t see is that Uber, even though as a strong tech background, is not a tech company. If we look at the recent bubbles, such as Snapchat, which is worth $2 billion without making any money, Uber should be worth much more than what they are aiming at raising. We are not talking about a tech company with millions of users without any revenues. Uber is making money, with revenues over $200 million a year.
This is just the beginning for a service which is only in two cities in UK and Italy. It’s going to be a slow journey because the company is killing old services city by city and that’s why they just have to keep iterating without loosing the quality. At the same time, different and similar services have started operating in the same market. I am talking about Lyft and even Hailo, which are tackling the problem from different sides.
However I think, in the end, they will take the world, which means that Uber might even have Facebook’s valuation. If they are able to also provide a cheap solution, such as UberX, they will completely destroy any single taxi service. The problems with Uber are the price and the idea of providing a high-class service, which means you automatically exclude a slice of market that doesn’t need a fancy car.
The possibilities for Uber in the next future are immense. Further, with the support of Google as an investor, we might be able to see the first self-driving private cars in the history of humankind. Think about a world where you pay a self-driving car to bring you from point A to point B. Well, that future is closer than you might have thought.
I believe this valuation is right and I can’t imagine ways to spend a billion dollar over the next years to triple the company’s revenues and delete taxi services from the face of the earth.