I think Uber's value comes from the fact that they will eventually expand beyond taxi service. They could leverage their network of UberX drivers to disrupt courier and delivery services. Imagine being able to order food from a grocery or restaurant web site that is tied into Uber's system. Uber would alert a nearby driver to stop and pick up your food and deliver it to your house. They could even smartly aggregate the driving, picking up something for you at one restaurant and picking up something from another nearby restaurant for your neighbor.
Mysteriously, if Uber had to spend $35k+ [or eat a one time capital expenditure of 6-7 figures per driver] more a driver, I suspect people would be thinking the $18 billion valuation was ludicrous. And realistically, since they act as a taxi service, that is what they would be paying in markets like SF, NY, etc.
They clearly would have a competitive advantage in the range of $25k/driver + taxi company like margins, but does that really justify an 18 billion dollar valuation even if you tack on a courier service?
Agreed, although Uber has been able to skirt by regulation because the quality of driver is generally high (and driver performance in terms of road and passenger safety relative to taxis is probably better), as they expand aggressively within individual markets they will exhaust their supply of "competent driver". In the case of Lyft, which in several markets arguably has a culturally-set (i.e. informal) higher standard than Uber, this has already happened.
It's also somewhat rosy to think that Uber will eat the entire market. I'm not sure an 18B valuation makes sense. Maybe a few billion, but not 18.
(I say this as someone who drives for Uber - and Lyft)
Yes, but almost every regulator now has both of them on their radar and they are going to end up eating regulatory costs roughly equal to a taxi company. It is going to happen sooner or later because the cities need the revenue and "regulatory equality between taxi companies and Uber" is not likely to result in the voters getting pissed off. Otherwise, they'd have to raise sales taxes or something which would piss them off.
I think its worth around 10 billion [which is where the original article said VC's started dropping out of the auction en masse].
I guess I don't understand why if those things were possible why UPS wouldn't already be doing it? What is Uber's secret sauce that would make them be able to solve that problem?
Regulations governing licensing, employee welfare, public liability, and other such, which Uber currently works around (but might not be able to indefinitely, people are looking very carefully at the situation).
Even ignoring this difference, UPS might not consider the profit margin worth the risk and the cost of the up-front infrastructure changes.
UPS is a shipping company first and a technology company second. Uber is a technology company first and a (taxi|courier|etc) company second. It's a difference in mentality.
