Uber has a huge market and there is a dynamic like a technology company, which means it can take a large share of this market, but profit margins are still important.
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Editor’s note: Uber and WeWork have great goals, but there are also many bumps in the development process, especially WeWork, which has recently ushered in a headwind. The founder was forced to resign – this is quite similar to Uber. And more similar is that both have received a large investment in Sunsoft’s vision of Softbank.
So, how do you evaluate companies like Uber and WeWork? How to treat the investment strategy of the Vision Fund? Recently, the famous analyst Ben Thompson wrote an answer to these questions.
He believes that Uber, WeWork and other companies that have been heavily invested by the Vision Fund have the same characteristics – neither traditional companies nor technology companies, but a new category of companies, and their investments The Vision Fund also has corresponding characteristics.
Originally published on Stratechery’s blog, entitled “Neither, and New: Lessons from Uber and Vision Fund“.
The full text is divided into two parts, this article is the first part. Compiled by the Translation Bureau, I hope to bring you inspiration.
The first time I wrote about Uber was in June 2014.
At the time, the Wall Street Journal published a column entitled “Uber’s $18.2B Valuation is aHead Scratcher”. This leads to my rebuttal article “Why Uber is Worth $18.2 Billion”.
Considering that Uber’s current market value in the open market is $53.2 billion, this number is quite good.
A month later, legendary venture capitalist Bill Gurley wrote an article refuting Uber skeptics, which made me feel better about my article.
Gree’s criticism of the New York University Stern School of Business (NYU Stern) professor Aswath Damodaran (Aswath Damodaran) is very gentle, he is in the foreword Wrote:
My purpose is not to let anyone believe how high Uber’s valuation should be. The idea of Professor Damodaran, or the idea of anyone who is not a buyer or seller of stocks, is quite irrelevant.
I don’t want to prove that he is wrong. I am more interested in critical reasoning and prediction, and how certain assumptions lead to severely different outcomes.
Therefore, my goal is to come up with a reasonable argument – perhaps 25 times or more than the core assumptions in Damodaran’s analysis. And, I also hope that everyone can judge my analysis through whether my argument is reasonable and feasible.
Greg’s comments are focused on Damodaran’s assumptions about Uber’s overall target market ($100 billion, the same as the taxi market) and end market share (10%), which is clearly correct: Uber The total booking volume has reached more than 50 billion US dollars, accounting for about 70% of the market. The assumption that Damoda Langen is planted in the simulated world is completely wrong.
At the same time, although Greg did not make any specific assertions on Uber’s valuation, he must have expected Uber to grow by more than 192% over the next five years.
Despite some fairly significant events during this period, especially Uber’s catastrophic 2017, the company experienced a seemingly endless scandal and lost its CEO.
The worst thing was that it gave its most important competitor, Lyft, an opportunity to develop, and at the beginning of the year, Lyft was still on the verge of bankruptcy.
We can fairly say that Uber, without a large competitor, is a more valuable company.
Despite this, the phrase in the Gurley article impressed me more than ever today:
I am more interested in critical reasoning and prediction, and how certain assumptions lead to severely different outcomes.
Just because Uber’s critics mistakenly believe that this service is similar to a taxi does not mean that the assumptions of those of us on the other side are completely correct. The opposite of Old World companies is not necessarily a technology company.
This is something we have never seen before, whether it is the rules of the old world or the rules of science and technology are wrong.
AB 5 and workers classification
In Uber’s context, this old classification method doesn’t make much sense. It needs to consider something new and should make people feel familiar – around the Uber driver’s problem.
Earlier last month, California passed Act No. 5, which enacted a resolution of the California Supreme Court, which proposed a three-part test to determine a Whether the worker is an independent contractor or an employee and has all the regulations and taxes associated with it. The bill states:
According to this test, a worker can be considered an independent contractor only if the hiring entity proves the following three conditions:
(A) According to the contract and actual circumstances of the work, the worker is not subject to the control and guidance of the employing entity in the work;
(B) The work performed by the worker is not part of the normal business scope of the employing entity;
(C) The worker usually engages in an independently established industry, occupation or business of the same nature as the work performed for the hiring entity.
The question of whether the new law applies is more worthy of attention than everyone thinks:
On the one hand, drivers of companies such as Uber do use their own equipment and have flexibility during working hours; although there are rules to follow, the former is usually the more important standard.
In addition, it is well known that drivers drive for a number of companies. To attract them to their platforms is one of the main reasons why Uber is not profitable.
This means that (B) is a problem: if Uber is engaged in transportation, then the driver is the worker. However, Uber claims that its business “is a technology platform for several different types of digital markets.” As I wrote in the daily update:
This is not a completely unreasonable argument. For example, consider the rate: Uber’s focus is not on setting rates, but on rates being the market clearing price that maximizes driver revenue.
The idea is if the driverThe price can be set by itself, and negotiations between the customer and the driver will be made until a price is agreed; this price will be balanced between the driver and the passenger over time.
Uber’s argument is that it greatly speeds up the process and makes the market possible. If you don’t, it is impossible to achieve the level of coordination necessary for a large-scale market clearing price.
At the same time, from the perspective of economic models, this argument is technically correct. But like most economic models, they have the same flaws: there is no explanation for human factors.
However, in this case, the effect is not the result of the model, but the form of expression: Uber allows passengers, especially passengers, to experience the way that “the driver is Uber’s spokesperson for consumers” (by the way, This sentence comes from Uber’s S-1).
The driver is also indispensable for Uber’s true income generation: Of course, drivers can come and go and work for Uber’s competitors, but suggesting that they are not part of Uber’s main business seems a bit outrageous.
This is why the best solution to the employment classification problem is to realize that these two old classification methods are not appropriate: Uber drivers are neither employees nor contract workers. They are neither, and they are new things.
Better laws should define this category in a new way, providing protection and taxation mechanisms that California deems necessary, while still retaining flexibility and market-driven scalability, and making these consumers A platform for welfare is possible.
What is Uber?
So what about Uber itself? As mentioned above, it is not a taxi company, but is it a technology company? A few weeks ago, I analyzed it in the article “What Is a Tech Company?: < /span>
Uber has a software-based driver and passenger ecosystem.
Like Airbnb, when Uber reports its income, it also means that the marginal cost is very low, but from a holistic point of view, the company pays drivers about 80% of the total income; this is not a margin A company with zero cost.
Uber’s platform will continue to improve over time.