Forbes just said this in an article, “As Uber plans a $2.1 billion funding round that would bring its total capital raised to almost $10 billion, the ride-hailing app is hoping to fetch a valuation as high as $68 billion. That’s a significant jump from the $52 billion earlier this year, and it also marks a significant milestone: for the first time, Uber is going to leapfrog iconic carmakers General Motors, Ford Motor, and Honda Motor in terms of valuation while almost catching up to other luxury carmakers like Volkswagen and BMW”.
Like many, I have been a regular user of Uber here in the bay area for last couple of years. During a recent overseas trip, I deliberately wanted to get a first hand experience of its international presence. First in Delhi, India I used Uber and it was quick and much cheaper than the regular taxis. Of course the Indian competitor Ola Cabs was the other choice. Then in Singapore I used Uber couple of times and talked to each driver on their experience. They all sounded positive. In Kuala Lumpur, Malayasia I used Uber to take me thru the long drive from the airport to my hotel in downtown (about 60 km) and the fair was around $24. I did not have to exchange dollars to local currency, it was directly billed (as here) to my credit card. When going back to the airport, the Uber driver mentioned that regular taxis waiting at the hotels do not like Uber to pick up passengers, so he had to be careful not to be noticed by those guys. While I did not use Uber in Bali, Indonesia, I was told that they were very much there. So Uber has done a great job disrupting the taxi business all around, now operating in 50 plus countries and hundreds of cities. Consumers like me love the model, hence it’s progress is unstoppable despite protests in various cities like Paris.
The skyrocketing valuation has triggered ongoing debates about whether there’s a bubble in the private fundraising market. Does Uber really deserve a higher valuation than the companies that manufacture and sell the bulk of cars around the world? While skepticism remains, Uber’s latest rounds have attracted powerful backers not only from Internet giants like Baidu but also Wall Street movers such as Tiger Global which has also invested in some of Uber’s competitors in Asia.
One may question the lofty valuation of Uber which produces no cars, compared to giants like GM. “Google and Uber plan to revolutionize mobility based on a new transportation paradigm. How can GM, a company that is often described as bureaucratic, succeed in a future that is often described as disruptive?” analysts wrote in a recent Deutsche Bank report on the auto industry. Uber has earmarked at least $1 billion toward its growth efforts in China, and continues to spend heavily to establish itself against its Asian competitors.
Uber’s fearless founder/CEO Travis Kalanick (a dropout of UCLA Comp. Science back in 1998) has shown immense courage and creativity in introducing an alternative model in transportation. Investor’s are betting on the long term growth potential rather than the short term revenue/profit picture.