From London To Madrid To Berlin: Europe's Cab Drivers Stage Uber Protest States

Tyler Durden's picture

Perhaps the 'disruptive' taxi company's name refers to its valuation more than its 'worth' as Uber's dramatic expansion plans to take over the world are hitting a rather large snag in Europe. As WSJ reports, taxi drivers planned to turn a handful of European city centers into giant parking lots Wednesday, protesting the mobile car-hailing service. Uber has been subjected to scrutiny elsewhere, including the U.S. and Canada. But the hurdles have been higher in Europe, where taxi drivers tend to be well organized. The industry is often more heavily regulated, and governments are more willing to actively protect sectors under threat of job losses. Across Europe, as the map below shows, Uber is facing a series of legal challenges; which makes, as NYU valuation guru Aswath Damodaran confirms means the $18 billion number "is likely wishful thinking."

 

As The Wall Street Journal reports,

The demonstrations highlight some challenges facing Uber and its peers as they race to increase revenue and woo investors.

 

But the scale of the planned protests across Europe also underscores the extent to which the technology has upended one of the world's most regulated industries.

 

Uber is facing a series of legal challenges, including a potential decision by a London court about whether the company's app constitutes a cab meter. A U.K. regulator has deemed Uber legal, but the service could be hampered if a court rules otherwise. In Brussels and Berlin, Uber is facing court rulings that have effectively barred the service.

 

...

 

Uber executives have embraced the protests as a chance to show how useful the service is. "If anything, it's going to make Uber even more visible, and make a lot of people realize that they now have choices that they didn't have before," said Pierre-Dimitri Gore-Coty, Uber's general manager of Western and Northern Europe.

And here is Damodaran explaining his $6 billion valuation... (via qz)

Damodaran starts with three key assumptions: That the global taxi market is roughly a $100 billion a year business, that Uber can gain 10% of that market, and that it will be able to continue keeping 20% of customer payments, as it does now (the rest goes to the driver). But he helpfully gives us this matrix to see what would happen if you kept that 20% of gross receipts constant but increased the market size, or Uber’s share of it:

Basically, to get to $17 billion or more (the yellow boxes above), you need to believe either that the market for car services is much bigger than Damodaran’s estimate, or that Uber will be able to capture far more than 10% of it, or a mix of both. These are tricky propositions, especially considering the wealth of competition (both old-school taxis and newer competitors like Lyft). And assuming that Uber can hold on to 20% of gross receipts may be generous, too, since regulation could increase its costs, or competition could oblige it to pay its drivers a bigger cut.

What could go wrong?

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Pladizow's picture

“While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit from such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting the case. And it will finally either convince the general public that the case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.” – Henry Hazlitt, Economics In One Lesson - Page one, 1946.

Vampyroteuthis infernalis's picture

When they are out in the streets, I hope the middle eastern drivers shower ahead of time. Who are we kidding, they won't and that will make a smelly scene!

Haus-Targaryen's picture

I hate the cabbies here in FFM. 

When you are in their way, they have no problem lighting up the horn, their middle finger, flashing their highbeams, or driving ,33 meters behind you at 110 kph.  If they are in your way, they either ignore you, or give you a look like "tough shit, its my job, deal with it." 

This in conjunction with them driving like assclowns constantly, I would be quite happy for Über to wipe them out.  Assholes.

Gavrikon's picture

Also the drivers from Offenbach.  And Mosbach.  Complete assholes!

Haus-Targaryen's picture

lol @ the Offenbach comment. 

You have one of three drivers from there;

1) Slightly used 80.000€ car with red license plates (aka I am too poor to buy one myself, but I work for a dealer somewhere and am driving around a lease trade-in.  Look how rich I am everyone, now GET THE FUCK OUT OF MY WAY). 

2) 12 year old Opel Corsica.  Its completely rusted out, white smoke when stopping, blue smoke when accelerating, likely has 400000 kms on the tach, and never sees north of 60 kph, even on the Autobahn.  Likely keeps passing the TüV due to payment in sex favors, cocaine, booze, or a combination of the above.  Expect the person driving this not to speak any German.   

3) 2000 BMW 316i.  Sure its the slowest BMW BMW has built since the Isetta, but that won't stop them from putting M wheels, M stickers, and fake M bumpers on the car.  These people likely drive cabbies for the day job, as their antics are the same.  Normally owned by ... erhm .... low class immigrants from around the Med, and love to slow down, honk, and shot out the women I am dating as we walk around.  I would glady deport these assclowns naked to the Taliban if given the opportunity.

 

45Condor's picture

Everyone likes to take a taxi that is in good condition. Here in France - well, my little part of it - I step with trepidation into the gleaming BMWs or Mercedes that are most frequently used to run a taxi business; for my first thought is: 'How in the world can this driver - often pleading poverty - afford such a car... especially when the license fee to drive a taxi is in the upper 10's of thousands of Euros.

Of course, if one combines these two thoughts together, and it's no wonder that I pay one of the highest fees in Europe to use a bloody taxi.

Sure, I don't want to be sat in rust-bucket that comes with a complimentary clear-bottom view that shows me the passing tarmac, but fares would be far more acceptable if the monopoly on taxi licenses was crushed here in France. (Does anyone remember the sulks from the taxi drivers the last time the French Government tried to open up the racket to fair competition?)

And I don't need a luxury car to get me from A to B. A standard Renault or Peugeot will suffice. (If a taxi driver wants to go on holiday in a 60k vehicle, they can buy themselves a family car for such a task... without writing off the VAT on a business expense!)

Stackers's picture

Dont mess with my government enforced monoply !

XitSam's picture

"Save the buggy whip makers from the foul stench of gasoline automobiles!"

"Protect the steam engine firemen from the scourge of diesel electric behemoths!"

MeelionDollerBogus's picture

Although to be honest we've lost a ton of energy efficiency from heat recycling from no longer using what we learned about engineering steam-engines.

LetThemEatRand's picture

Not invested in Uber, but I do see some potential for expanded market.  I suspect it appeals mostly to young people who may not be traditional cab customers in smaller cities, meaning Uber may create its own market.

NoPantsSpongeBob's picture

Good luck getting customers in those driverless cars.

WhyDoesItHurtWhen iPee's picture

I'm thinking that someone will create a free app and the driver will keep all the money.  A kind of crypto-taxi.

zaphod's picture

Exactly, the reason for Uber's high valuation is they are receiving a very large reward (20%) for doing what is really very little work (basic website and rating/comment tracking). It is possible to implement Uber's funcationality for much much less than it's current valuation, which means many others will come along and drop that 20% down. 

Of course that is until Uber turns and plays the regulatory capture game as well to block the next set of little guys. 

Der Wille Zur Macht's picture

I mean, I've always wanted to bang in the back of a taxicab. No driver makes it THAT much more realizable! 

MeelionDollerBogus's picture

Ya. Can't see why I'd want a driverless car when I could have a train or bus.

the_cannibal_animal's picture

We're at least ten years out from driverless tech really being viable.  That's ten years of expensive legal challenges, competition from Lyft and other competitors, PR blowback, and then the enormous cost of rolling out an entirely new fleet of cars.  There will be a company that rolls out a really fantastic driverless car network and makes a fortune off of it, but that company will not be Uber.

WhyDoesItHurtWhen iPee's picture

You think they will take SNAP or EBT ?

the_cannibal_animal's picture

They're in alpha stage at best.  We'll be waiting on a legal and insurance apparatus as well as a social acceptance for years.  Besides, hundreds of millions of non-autonomous cars will have to be pulled from circulation.  It will be a slower process than SV thinks it will be.  Shit, do you know that this country's adult population only has a 60% smartphone adoption rate?  We still use freaking incandescents in this country when LEDs are superior in every way.  Ten years before widespread adoption is extraordinarily optimistic.

MeelionDollerBogus's picture

Actually LED's are dangerous & inferior for enclosed fixtures, a severe fire hazard, and for being as hot as they are I prefer not to use them. I also prefer a soft light not bright & harsh except for a flash light.
I use incandescents because they are the best, cheapest & easiest to recycle. LED's & CFL's are near impossible to recycle.

I also don't use a smartphone. They're not smart, they're garbage.

I don't like touch screens. I don't want everything made teeny-tiny on my screen. I don't need / use apps. When I need computer power I use an actual computer. When I'm using a phone I'm good with text, dialing & calendar/alarms. That's it.

Give it SD card or USB cable to toss in however many GB of storage one can fit into the casing, that's good with me too, but again it's for a computer, not interfacing on the phone itself.

Those phones can't churn through spreadsheets fast enough to be useful for me.

morph's picture

How is 20% of 10% of of a $100BN market $5BN?

Vampyroteuthis infernalis's picture

How is 20% of 10% of of a $100BN market $5BN?

Federal Reserve math?

philipat's picture

Using a regular London Taxi from Heathrow to a Central London Hotel now costs about GBP 100, USD 170. What could possibly go wrong with that model???

 

Ghordius's picture

the fastest way to go from Heathrow to Central London is by train. the cheapest, by tube. by taxi is neither. just saying

philipat's picture

You seem to miss the point? I know that there are are alternative modes of transport, however, if I CHOOSE to sit in a PRIVATE vehicle all the way from the airport to the hotel, in a free market, I should also have choices??

And, incidentally, those alternative choices are also very expensive in The UK compared to ALL other countries in the world? I wonder why that would be?

RyeWhiskey's picture

Yeah but uber is more expensive. Not to mention lacking commercial passenger insurance.

Calculus99's picture

Wait till the masses start to learn about P2P Lending/borrowing.

I have $10,000 in savings, getting say 1%

You need a loan of $10,000, your credit rating is good.Your bank might charge 10%+

Let's do a deal at say 6%. The P2P company takes say 50-100 BP

What actually happens is that the saver doesn't lend to one person, he actually lends to 20+ so as to reduce the risk ($500 each). Plus, the P2P lending company holds a reserve for bad debts.

Would you lend to a bunch of pepole with excellent credit scores? I would, and am already doing it via www.ratesetter.co.uk

Folks, this is the way to fuck the too-big-to-fail banks, people power!

 

philipat's picture

And Bitcoin. Which has other advantages also...

MeelionDollerBogus's picture

What good will that do the masses when they realize p2p relies on a grid that will go down and the loans are in dollars that aren't real money, and won't even be legal tender for much longer?
Hyperinflation's a bitch.

I've got .9999 fine gold & silver, not dollars in a savings account. If you don't hold it, you don't own it & IOU notes from a central bank are only a promise to pay.

NoPantsSpongeBob's picture

Uber is like a less expensive alternative to limo/town-car service which annual revenues at least in the US are much lower, I don't believe that the revenues would be any higher in other countries.

Darkman17's picture

Uber is awesome and one of many companies which are figuring out how to better use existing resources. I don't get this ZH anti uber crap given that this is a site where people discuss the need for a more distributed economy. Each uber driver is a independent small business which leverages a service for matching people. It's almost impossible to corrupt uber since people would easily move to Lift, sidecar, etc... I think it's a big step in the right direction and government/airports and taxi companies which stand to lose will do everything to protect themselves in a desperate attempt to lose all their significance. Most taxi drivers have switched to uber in SF and will probably do so in other cities.

Sure may be overvalued like every other tech company but since it's not public it's really just marketing which seems to be working since there are ZH articles written about it.

philipat's picture

"Sure may be overvalued like every other tech company but since it's not public"

Um.........

the_cannibal_animal's picture

It's because Uber is run by a frat star mega-douche that criticizes regular taxi drivers for not being competitive when one of the highlights of Uber's strategy is to break the laws that other taxi drivers have to follow.  When you win a fight against a guy with one hand tied behind his back and then do your victory dance after the fact and insult your opponent, you end up looking like a douche.  Shocker, I know.

Darkman17's picture

And how much is it for me as an individual to get a medallion and DOT permit so I can service SFO? How much is a lease for a taxi per day? Breaking which laws? The same laws that protect the taxi companies by making it hard to enter the industry... Very surprised to see this one on ZH, it's like the desire to see the world fail is the main reason people don't like uber, or tesla, or airbnb etc... It's like seeing an article that Lending Club is bad because they break the laws by allowing non rich people to be bankers and are hurting poor Wells Fargo and BOFA. Or that organic farms are bad because they hurt monsantos profits by using seeds which are not patented. Come on guys don't tell me a douche CEO is the difference between good and bad economics.

gjp's picture

Well argued Darkman, the taxis are an entrenched monopoly and an overpriced one, and the airports are worst of all.  Breaking this up is not a bad thing.  Of course, Uber, and so many other Internet models (airbnb too) are trying to become network effect de facto monoplolies too, and Sandhill Road / Wall Street are valuing everything based on their potential to extract a massive monopoly middleman pound of flesh.  This reality in combination with their sanctimonious douchiness about the old model is what is hard to swallow I think.

Zerozen's picture

I wouldn't bash the concept of creating a new taxi paradigm per se, but to me Uber is still questionable:

1. The competition is not just Lyft and other apps. It's me picking up my phone and calling the local cab company. Seriously, what is Uber's value proposition vs. calling a cab? That I have a little app that lets me watch my ride getting closer? This is worth $18 billion? Where I live cabs are pretty cheap and Uber/Uber-X isn't really any cheaper so what's the point here? Maybe there are more cities where taxis are overpriced than I thought.

2. Speaking of Uber-X...how is this really any different than hitchhiking, in principle? It's hitchhiking with an app, and you can pay with cash rather than ass or grass ("ass, grass, or cash, nobody rides for free"). There are drunk chicks calling strangers for rides home on UberX at 2 in the morning after partying all night...this doesn't strike anyone as trouble waiting to happen?

3. Uber limo service...again, I don't get it. Pay too much money for the privilege of having a guy in an SUV drive you from A to B.

As someone above said, Uber is making money by breaking laws that the competition has to comply with.

MeelionDollerBogus's picture

I think the point is if you see the cab for you isn't arriving you know you can call someone else.
Given that's all the incentive they need to keep on time & stresses other cabbies who fuck around and don't show up and make you call 3 at a time to get ONE, maybe in 25 minutes - that will freak them the fuck out.

That's what I want.

RyeWhiskey's picture

Believing mass media paid Uber propaganda much, I see.

Who's the oligarchy here - thousands of taxicab small business corporations or an offshore-based private corporation with $17 billion valuation?

Look who is behind this offshore law-breaking entity.

And you will understand why it's pumped the way it is.

NOT unlike Enron pre-IPO.  

Yet hundreds of other apps and websites that operate legally

and offer better technologies are not even mentined .

 

stacking12321's picture

whether it's "pumped" or not is irrelevant.

in a free society, people can make their own choices, instead of choices forced on them by cabbies who don't want competition, and are willing to harrass and annoy others and block traffic illegally in order to get their way. it's like a parent that gives in to a child throwing a temper-tantrum.

Orps's picture

I think you are missing the point of the article.  I believe the intention of the article was to highlight continuing marketplace irrational exuberance and potential over-valuation of yet another tech company.  To be honest, Uber is a great business idea.  I hope it succeeds massively and hope the taxi drivers lose their battles. 

Orps's picture

I think the point of the article is to question the valuation of the company, not their methods or marketplace rules.

Seize Mars's picture

...must...bail out...buggy whip manufacturers...!!!!
Sons of bitches! Don't they know how many families depend on this buggy whip factories? Think of the children!!!!

DogOfSinope's picture

Taxi syndicate should STFU. This is just a payback for depriving children of horseshoe makers.

Justice is slow - but certain! ;-)

RyeWhiskey's picture

Funny how offshore-based tax-evading Uber is considered a savoir.  It will plunder municipal revnue. Sorry - it will "save" all that $$$$ that regulated taxicabs were bringing in to municipal coffers. "Save" it in offshore bank accounts.  Oligarchy rules. Now with an Iphone app.

Tinky's picture

Next up: mass protests by traditional hotels as airbnb (an excellent service, btw) further impacts their businesses, with politicians jumping on board due to thinly veiled fears of tax evasion.

Fuck 'em.

RyeWhiskey's picture

"Excellent service"? You mean "excellent" like in your condo neighbour next door "gone" AirBnB and now you have a brothel operating 24/7 right on your floor?

http://nypost.com/2014/04/14/hookers-using-airbnb-to-use-apartments-for-sex-sessions/

 

 

Tinky's picture

Is the NY Post your usual, reliable source?

More to the point, it is ludicrous to point to small anomalies.

MeelionDollerBogus's picture

I would call that very excellent. If you don't, there's something wrong with you.

damicol's picture

New app comimg soon..

 and car  any driver,  "pick up a mate",

about 50 cents charged to driver, uses same software as glympse and kailo and charges the driver through his cellphne by txt.

 

 Not 20 %.

 

 and anyone can be a taxi  and fees calcuated by  average fees charged in the area during same periods so a tendency to drive prices down.

 What value will that Uber shit be worth then