There’s been a lot of gnashing of teeth and rending of garments since it emerged that Uber has raised a $1.2 billion round that values the company at $17 billion.
For The Guardian, James Ball noted that’s enough to build the newly constructed One World Trade Centre six times over while Slate compared the figure to the market cap of the rental-car leaders Hertz (just $12.5 billion) and Avis (a comparatively tiddly $6.32 billion).
Closer to home my editors at Tech City News wondered what makes Uber so different from all those other companies using software to take on the traditional taxi model. Why aren’t Wheely, Lyft, Hailo et al getting the same kind of love and, more importantly, cash?
‘An asshole named Taxi’
I don’t think the answer has anything to do with cars. It’s down to two things: the story and the storyteller.
Unlike many of its rivals, Uber has tantalised its investors – including Fidelity, BlackRock, Kleiner Perkins Caulfield & Byers and Google Ventures – with a vision that goes beyond its initial billing as “everyone’s private driver”.
It’s pointing to a future where its growing experience dispatching and allocating drivers can be transferred to all kinds of logistic problems.
That huge valuation isn’t just predicated on ever more black salon cars thronging the cities of the world but on Uber turning itself into the Amazon of logistics, a platform for delivering a galaxy of services.
Ben Horowitz of Andreessen Horowitz says “a company without a story is usually a company without a strategy.” In the case of Uber, the story is the strategy and its made more compelling by its bullish storyteller, Uber’s CEO Travis Kalanick. Of course it helps that he can tell reporters that Uber is doubling its revenue every six months but it’s his aggression that really gets Silicon Valley’s red-in-tooth-and-claw investors excited.
Kalanick talks of destroying his opponent “an asshole named Taxi” and seemingly never shies away from a fight, be it with competitors or regulators. That appeals to tech investors who often yoke aggression and boldness together.
The cheap response to that $17 billion valuation is to gripe that Uber is only worth the money if someone is willing to pay it.
Groupon was once valued at a similarly huge figure ($16.6 billion) but crashed as soon as it went for its disastrous IPO. Only when Uber goes public will we really know how much Kalanick’s story and vision are worth to the markets.
Betting against Uber is a kind of tech Pascal’s Wager – commentators won’t get called out for saying the company was overpriced even if they end up being wrong so it’s the easier position to take. That Kalanick comes over as arrogant and standoffish in profiles – witness this painful encounter with the FT – doesn’t help. While investors admire his aggression, the press are less inclined to indulge it.
I don’t imagine I’d enjoy having lunch with Kalanick but that’s besides the point. The seeds of why that $17 billion valuation could turn out to be a smart bet lie in his statement at the recent Code conference: “[We’re] changing the way cities work, and that’s fundamentally a third rail.” That’s an insight into how he’s selling Uber to the men and women who just stumped up $1.2 billion.
The firm describes itself as a “mobile applications company” – no mention of cars there – and those investors aren’t buying the Uber we see on the roads today, they’re making a bet on a bigger play and on the man outlining that vision.
Unfashionable as it may be, I think it’s far too early to predict how the ending to Travis’s Kalanick’s $17 billion dollar story will play out.