In his book “Here Comes Everybody”, Clay Shirky, an Associate Arts Professor at New York University, argues that online communication tools are transforming everything from airlines to the Catholic Church. Shirky explores the intersection of technological innovation and social change and writes: “Revolution doesn’t happen when society adopts new technologies – it happens when society adopts new behaviors” (Shirky, 2008). Uber may very well be revolutionizing our society with its innovative concept. By seamlessly connecting riders to drivers through their apps, Uber is “evolving the way the world moves” (uber.com). Like with every new wave of digital innovation, Uber is facing criticisms and opposition from older models that are reticent – and…show more content… For years, the New York City Taxi and Limousine Commission (TLC) has regulated taxis in New York City. Then, Uber arrives and disrupts this regulated environment by letting riders use their mobile phones to order cars via the Uber app (Crovitz, 2014). It would be an understatement to say that taxi drivers and regulators are not fans of Uber; they are fiercely opposing the presence of the Internet-based car service and want to make Uber illegal because it is threatening their business.
But Uber has every right to be there. Prior to Uber, the supply didn’t match the demand when it came to someone wanting to get a taxi. Now, riders are more in control with the Uber app.
Uber’s popularity attracted new competitors such as Lyft, the friendly taxi with the pink mustache. The two are fiercely competing against each other, but like a WSJ article mentions, “this is more than two tech darlings duking it out. It’s a battle for a key role in the future of urban transportation” (MacMillan,…show more content… It is “a bet by some of the world’s top investors that the car-hailing smartphone app can grow by expanding world-wide and branching into new arenas, like logistics” (Rusli & MacMillan, 2014). When we see that Snapchat fetched a $10 billion valuation, I think Uber’s valuation is fairly priced. To valuate a company, investors project the company’s cash flows for the next five years and then discount these cash flows using the free cash flow system (FCF) by the appropriate discount rate. Looking at Uber’s valuation, investors must have projected robust cash flows for the next five years. Also, the personality of Uber’s CEO, Travis Kalanick, must have given them confidence in the company’s ability to grow and generate these cash flows: “Kalanick’s personality – described by those who know him as reckless and arrogant, at times – has been the reason Uber has found so much success” (Kosoff,
