The valuation of car-hailing service company Uber has always given sceptics apoplexy.
One of the most commonly invoked takedowns of the ever-increasing and mind-blowing valuation levels the company has achieved — $US40 billion at last count — is this:
“Investors are valuing Uber as if it’s bigger than the whole taxi market!”
Investors are nuts.
Well, investors are indeed valuing Uber as if it’s bigger than the whole taxi market.
But it turns out that that’s not nuts.
In its most mature market, San Francisco, the 4-year old Uber is already bigger than the whole taxi market. Much bigger, in fact.
According to Uber CEO Travis Kalanick, who spoke at the DLD Conference in Munich yesterday, the whole taxi market in San Francisco is about $US140 million per year.
Uber’s revenues in San Francisco, meanwhile, are now running at $US500 million per year.
That’s more than 3-times the size of the taxi market.
And Uber’s revenues in San Francisco are still growing at about 200% per year.
Kalanick dropped some other startling statistics about Uber yesterday:
- Uber’s rides in San Francisco are growing 3X per year
- Uber’s rides in New York are growing 4X per year
- Ubers’ rides in London are growing 5-6X per year
Uber has recently launched “Uber Pool” that will allow riders to share rides and, thus, reduce their costs. This ride-sharing, in which drivers will pick up other riders along the first rider’s route, will also increase the utilization and productivity of Uber’s cars. Pooling will continue to drive down the cost of using Uber vs. owning a car — thus, eventually, perhaps, removing some cars from the road.