Could Uber grow by $100B?
The taxi and limo market is just the start for this rising star.
Uber recently announced a $258M strategic investment from Google intended to fuel their continued rapid growth. With an addressable taxi and limo market of $10B, they’ve got quite a bit of runway left to expand. But Uber’s opportunity could be larger — 10X larger. And that’s just the start.
I recently moved to San Francisco. As many of you know, parking here is pretty pricey. This inspired me to conduct a simple analysis. To own, or to Uber? I ran some quick numbers comparing buying an Audi A4 vs. using Uber X. My findings were surprising.
The total cost of ownership per month is roughly $1480, or $370 per week. My average Uber X ride is roughly $12. I live pretty centrally, San Francisco is 7mi by 7 mi, and each ride is about 1-3 miles. That means I can ride Uber roughly 4-5 times a day for the price of owning a car. Suffice to say, I don’t need to drive that often for personal use. Online ordering through services like Amazon, Instacart, Seamless and more have cut out many of my shopping trips. Moreover, public transportation and walking are real alternatives for many of my short jaunts out.
While I’m admittedly a geeky early adopter, this trade-off will eventually be made by other city-dwellers. AngelList founder and Uber investor Naval Ravikant certainly seems to agree. And the population of city-dwellers is on the rise. The Guardian estimates that over 80% of the US population lives in cities. This number is expected to grow to 87% by 2030. This is not a US-only phenomenon. In China for example, it’s estimated that 60% of the population, or 840M people, will live in cities by that time.
The implications are massive. The size of the automotive market is $2 trillion worldwide. Let’s assume that the shift from ownership to rental impacts even 5% of the global market. That’s nearly $100B more for Uber to go after. To put it in context, that’s roughly the size of the global online advertising market underlying Google’s $344B market capitalization and the vast majority of their margin today.
Couple the opportunity with the fact that Uber can use their platform (users, credit cards, car net) to tap new markets such as food delivery, groceries, etc and it’s easy to start to imagine how the company could grow into a global powerhouse. To paraphrase Walter White, “Uber is not in the taxi business, they’re in the empire business.”