> in talks for funding that would value the startup at an astronomical $10bn
Sounds like they took the investors on the long route "to avoid the traffic"
San Francisco-startup and bane of taxi drivers Uber is in talks for funding that would value the startup at an astronomical $10bn. Despite its increasing trouble with regulators and cabbies, the upstart must still look like a pretty good bet to investors, since it’s hoping to raise a little less than $1bn from private equity …
Uber is one thing, but UberX is another - and their entire business model is predicated on ignoring the law. They are formalizing "gypsy cab" or unlicensed hacks and skimming money off the top. Additionally they are misleading their drivers (along with Lyft and Sidecar) by telling them they are insured, when in fact the opposite is true and the driver's insurance is invalidated by driving for hire.
Uber and AirBnB are nasty, opportunistic businesses that have chosen to ignore the law and have been rewarded by the financial markets for this - perhaps because because the crooks in the City and on Wall St see like-minded folk.
I know the narrative is that cab companies and unions are behind the objections to these undertakings, and in some cases that may be true - but in most cases it's just regular law enforcement telling companies they can't just ignore laws because they are inconvenient for their business models. Sure they provide a service, but so does home delivery of drugs, and that's not the darling of the investment community (yet)
These companies exist because regulators, cab companies and cabbies are nasty, opportunistic monopolies that have been screwing people over for years. They are getting what they deserve and I sincerely hope their rent-extracting monopolies die a slow, painful death.
In the end, it doesn't matter what the law says, public pressure (you know, the people who MAKE the law) has already changed regulations in a lot of places and will in many more. Just like mary jane legalization, the people, in the end, will get what they want.
Personally, I will never use a cab again if I can avoid it, and I've told them to their faces, in person, no need to hide behind anonymity.
@above AC, you're talking like a conservative. As with most things related to tech and the internet, it's not the app or the idea's fault, it's the "law" that is incompatible with today's landscape and values.
As a free thinking person, I don't realistically see why such restrictive transport regulations exists in the first place, to protect riders and driver's interests is one thing, but some of the "law" appears to do nothing much but to create a closed monopolistic environment or add completely unnecessary red tapes.
Fact is, if ideas like ride sharing takes off, it's good for the environment. Yeah sure, cabbies will be out of work, but that's evolution at work. Deal with it.
There are reasons why regulation of cabbies exist - it is not just a cabal to limit supply - and it is unclear that the business model of Uber et al go far enough to obviate the need for said regulation.
But no worries, as you said, its not Uber's fault, we just need to re-align our thinking to accept low/no background checks on our taxi drivers, and having 10 mobile phones on the dash is de rigueur these days and not at all distracting to the driver.
Cabby perks.... Who says cabbies don't have power...
In most cities, a large proportion of traffic lanes are only allowed to be used by buses....... and taxis.
We were told to use buses to save the environment, and avoid congestion on our roads. Bus lanes were said to be to promote this way of thinking.
A taxi ride from A to B, and back again uses more fuel than a car journey would. They are *worse* for congestion and polutions than cars, so why do they get to own such a large part of the roads that WE pay for?
-- Yes, I know buses are generally private companies, but there's the 'green' factor, and the fact bus cokpanies have to cover non-profitable routes.
-- Yes, taxi drivers pay tax too, but not enough to warrant their own roads!
Screw regular law enforcement because the laws and regulations that are being "violated" exist merely to protect unions, cabbies and the monopoly that feeds them (barely). If you think paying for college or seasons tickets is expensive, try to get a taxi medallion. Someone literally has to die first and then not only does the government need it's pound of flesh but so does a variety of mafia.
There is no other reason for claiming you can't legally transport a front seat passenger for hire than the monopoly behind the cab system. Any law or regulation preventing that was implemented soley because somebody took the graft. Insurance companies, law "enforcement", politicians, etc.
It should become a free for all now because ALL of these jobs will be superseded by the driverless vehicle. It's inevitable.
Pretty shocking to see how many people back unlicensed, unchecked, uninsured drivers in any old banger over trained, licenced professional drivers over the sake of a few quid. This makes unlicensed minicabs seem almost noble by comparison. Hailo for me, not uberx, I have standards. But that's just my thoughts.
As for $10bn valuation - it's worth 10 (already insanely overvalued) instagrams? Did we learn nothing from dotcomboomandbust 1.0? There will be a whole new round of shirts lost on this - sadly it's peoples pensions that will end up getting wiped out as a handful of 'financial wizards' fuck off to the Bahamas. Anyone remember Marconi who were profitable before their web investments last time round? Or how it nearly wiped out BT?
Strangely, *all* drivers must be able to drive, hold a valid license, insurance, and have a safe and roadworthy vehicle.
If not, they are breaking the law, so there is already regulation to deal with that.
It seems that the taxi PR firms pulled a blinder when people keep assuming the opposite to a licensed taxi driver is automatically a mad psychotic maniac driving a death trap.
I regularly take my mum out shopping, and my young nieces and nephews out in the car, but... shock horror! I'm not a licensed cabbie! Oh, the (in)humanity!
Where can you get rape and murder insurance? I've got insurance for an engineering failure causing a civil disaster. Insurance if my plane crashes into someone's house. Insurance if the security companies insurance doesn't completely cover the slaughter of a village or something (I'm not really sure what the security gap liability insurance is for). I've got insurance in case my hounds are released on the wrong people. Insurance if any of the weird experiments the guys in the lab do go bad and insurance if my boat sinks with a bunch of wealthy people onboard.
But I've got fuck all insurance if I decide to go on a raping and killing spree. It's highly unlikely I would need such a thing, but some of the aforementioned lab experiments are pretty weird and have lasers and radioisotopes and shit flying around, like in all the supervillain origin stories, so you never know I guess. Put me in touch with your rape and murder insurance guy and I'll make sure you get a referral fee. I'll probably just get coverage for everybody that works here, just to be safe you know.
Cabs are unreliable, untrustworthy - drivers lie, try to take longer routes to increase fares, don't show up etc. And the regulators restrict license, effectively making them monopolies.
After screwing over the public for years, the public is now getting it's revenge by massively switching their business to Uber, Lyft, SideCar, etc. Your sad propaganda is just not working as in contradicts people's personal experience.
Karma's a bitch, you know. Good riddance, I said - you couldn't pay me enough to EVER use a cab - I've just been screwed over too many times. Between not showing up, taking the longest routes and redlining black & poor neighborhoods, cabs deserve a painful death.
Cabs in every city on Earth just suck. It's always a good indicator that something is terribly bad wrong when governments are involved in every detail of something and there's no money for anybody except the governments.
I just asked, via IRC (Intern Remedial Chore), the 58 people in this facility, and zero have ever called to complain about a cabbie or even looked at the picture on the license and compared it to the person driving the cab. You're riding with a total stranger any way you go. Hell, the guy who robbed me in Greece was nicer than the fucking cab driver who took me to the place it happened. Hilariously, the cab driver also got more money than the robber did.
Arguments about 'quality of service' between licensed cabs and individuals driving people for a fee are absolutely no different than the obstructionist bullshit arguments that new car dealers use to oppose Tesla selling cars online. The arguments of those who benefit from the gigantic slush fund that licensed cabs (and new car dealerships) create.
I've got sympathy for both sides. Cabbies work long hours have to drive to some nasty neighborhoods, and can't refuse service to anyone. They are at high risk of being robbed when they pick up some of their fares.
On the other hand I've had to pay the $75 fare on occasion when I wasn't able to use mass transit to return home, or split it with a couple of others (which bumped us into a higher fare rate) when mass transit was suddenly unavailable for the return trip home.*
At the end of the day, I have to find for Uber. If people are willing to use the service recognizing its potential issues why not make same trip for $20 instead of $75?
*Usually because some loser has attempted or succeeded at suicide by train.
I guess in the same way that Google was 'just' another search engine back in the day. Marketing and users can create a critical mass which, regardless of actual quality, means they become the defacto - more people using equates to more drivers and therefore more options/faster response/more 'invention' due to more money and on..just market forces at work (albeit in these cases, ridiculously sized VC investment creating market forces...)
i mean, if these were actual amounts of money surely we'd have more crazy billionaires building moon bases or reanimating corpses of dead pop stars or sitting on beaches ordering the sea to stay back, right? you know, the kind of crazy shit actual ultra wealthy people do.
If you took all the shares in Uber, or FB or any of the other internet "bubble" companies and said "right, who'll give me $10 billion?" you'd get exactly no takers. These ludicrous valuations are based upon someone, or some consortium somewhere bunging the company maybe 8 or 9 digits and taking a percentage slice in return. The media then say "oooh, if 1% was sold for $100mil, then the whole company MUST be worth .... carry the 1 ... $10 billion!!!" Until the next round of financing when someone else takes another 1% and only pays $50mil - then the headlines read: "Uber loses $5 Bn off its valuation".
p.s. Maybe the cabbies have all clubbed together to buy it?
I don't know what course the author is playing on, but huge valuations like this sure as hell aren't normal. Sure, these big deals get lots of press, but the bulk of investment in startups and small companies never gets into the general news. Rarely does a week go by where some unheard of company doesn't get 'big' investment or is acquired and the founders and staff become rich overnight.
Granted, most of those people won't be rich in the billions, or even hundreds of millions, but 'just' a few million dollars is still a fuckton of money. Hell, a windfall of a few hundred thousand is enough to eliminate housing worries for your life and ensure your kids can go to whatever schools they want (if you aren't a complete idiot).
Those are the sorts of companies our VC group invests in. Those little companies that get bought up and become important parts of bigger companies. Smart, driven people with great ideas and a surplus of common sense that's sorely missing in Silicon Valley. People whose lives are changed overnight without any of the fuckery that surrounds giant deals. I think those sorts of stories are far more interesting and informative than the exception cases, mud slinging and trolling that inevitably arise with giant deals. I really wish The Register covered more of those type of stories. There are a lot of them, and 'normal' businesses sure could use the coverage more than the Über-gramtrests of the world.
Agreed. However some of these things actually have business models, actual revenue and a complete lack of Underpants Ecognomics.
I'm not saying the valuations are reasonable, but compared to the complete lack of revenue, obscenely out of control expenses, absolutely no idea of what the 'business' part of business plan means, and ridiculous egos of dotcom v1 this is all a huge improvement.
...and they want their bubble back.
I seriously didn't think, even with all the available capital out there now, that we would do a complete rehash of the dotcom bubble, but here we are. All that's missing are the sock puppets.
I understand this is just the investment banks, VCs and startup founders trying to not be the last one holding the bag, just like last time, but stuff like this is pretty crazy.
It isn't the old dotcom bubble. It's like all the patents the USPTO have been handing out lately. It's dotcom bubble on a cloudy mobile device which makes it completely different and novel so there's nothing to worry about. Welcome to the new, new economy based on people mobilizing their heads to the cloud.
Hmm, need a tongue in cheek icon.
You forgot to mention social, Internet of Things and Big Data. All on a Hadoop cluster.
(And yes, I'm well aware that there are plenty of actual uses for "Big Data" outside of marketing buzzword land, but it just used to be called Data Analytics or something boring like that.)
This time it's different.
Its worse. What's driving the stock market is pretty much zero interest rate which means there's hardly anywhere else for money to go - better a slim hope than no hope of return. At least this way, if you get out early enough you make some cash.
This time around, the economy is already completely shot with governments keeping interest rates down and printing money like its 1929.
San Francisco’s favorite baby, Twitter – so favorite that the city’s taxpayers were shanghaied into granting it tens of millions of dollars’ worth of payroll tax exemptions so that it would move from one building to another a few blocks away, rather than move to another city whose taxpayers might have been shanghaied into an even worse deal. Well, Twitter is the locally best known among these momentum fiascos, down 56% from its high in less than five months. Hope has wheezed out of it.
The Bay Area is full of these companies that are part of the big money transfer machine that is screeching to a halt. Take FireEye, in Milpitas, next to San Jose. It sells network and cloud security products, one of those formerly white-hot sectors. These outfits follow the same pattern: immensely hyped pre-IPO funding rounds with ever sillier valuations, an even more hyped IPO (last September), a Wall-Street instigated run-up into the stratosphere, and then a giant hissing sound. It’s down 72% from its high in March and trades well below its IPO price. Like Twitter and most of the others, it’s still way overvalued. In this manner, spread over hundreds of companies, many billions in fake wealth have evaporated in just a few months.
That brutally bursting stock bubble is wreaking havoc on IPO and momentum-stock hype, and on the necessary flow of money from all over the world to the Bay Area. The whole construct begins to teeter. And it’s already taking down housing in San Francisco.
That magnificent February, when the median home sold for $945,000, something terrible was already under way: sales were stalling. Turns out, only a few wealthy people could afford to buy a median home at this price, but wealthy people – even those freshly minted millionaires – don’t like to live in median homes, which is a two-bedroom apartment in San Francisco. And so in March, the price of the median home dropped to $937,500, according to DataQuick. The hot air had begun hissing out of the San Francisco housing bubble. And in April, the price dropped again to $922,500. While that is still up 13.2% from prior year, it’s down 2.4% from just two months ago.
That this drop came in March and April is particularly nasty. This is the time when home prices rise. Even during the down-years of 2008, 2009, 2010, and 2011 when the housing bubble in San Francisco was imploding, home prices religiously rose in March and April! So this downdraft is very special; and an early indication that this fabulous boom is once again turning, as it always and inevitably does, into a bust.
Well, if we finagle World War III for August, in time for the WWI centenary, all of that could be reinflated, right? KEYNESIANS ALWAYS WIN!
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