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Funding Friday: Sweet Thing

A VC - May 3, 2019 - 5:38am

I backed this film project this morning. It looks great.

Categories: Blog articles

The Long Game

A VC - May 2, 2019 - 5:22am

Entrepreneurship and startup investing is a long game. It requires patience, resilience, capital, commitment, and much more.

But even so, the average life of a venture capital investment is seven to ten years. It is rare for it to go longer than that. But it can happen.

Yesterday marked the end of an almost twenty-year relationship between me and what was once a startup and is now a fairly large company called Return Path. We announced yesterday that Return Path is being acquired by Validity.

My former venture capital firm, Flatiron Partners, that has not been actively investing since 2000, made its final investment in Return Path in mid-2000. I joined the board shortly after that and have been working with the founder and CEO Matt Blumberg ever since.

In many ways, this company and this entrepreneur define my career more than any other. Matt and I stuck with this company and each other for almost twenty years and in the process built an incredibly trusting, supportive, and, ultimately, profitable relationship.

We had partners in this long game. Brad Feld and Greg Sands joined the board a year or two after I did and they are among my closest friends in the venture business now. And we have had incredible independent directors like Scott Petry, Jeff Epstein, and Scott Weiss. The management team has turned over something like a half dozen times in twenty years but a few leaders have stuck it out including Jack Sinclair, George Bilbrey, and Ken Takahashi. All of these people are responsible for an incredible journey that I have gone on for the last twenty years with this company.

Matt and I have been through a lot together. We had a least four or five near death experiences when we should have lost the company but did not. We had a deal to sell the company fall through the night before the closing. We sold lines of businesses, we bought lines of businesses, we did several large reductions in force, we did several big expansions. We hired and parted ways with many executives.

Through all of that, we celebrated with each other, yelled at each other, cried with each other, annoyed each other, frustrated each other, and supported each other. Matt has made me a much better investor. He has taught me so much about supporting entrepreneurs, building and leading a great board, and hanging in there against long odds for a very long time.

When you see me do something, say something, explain something, here or elsewhere, my approach and philosophy comes from my experiences and nowhere did I get more experience than my time working with Matt and Return Path. So if you are getting any benefit from me, you are getting that benefit from Matt too.

I hope to work again with Matt and his team on another company or two or three. Hopefully they won’t all take twenty years.

Categories: Blog articles

The Mobile Phone Generation

A VC - May 1, 2019 - 4:18am

When those words are spoken, we think about the millennials or gen-z, both of whom have grown up with phones in their pockets or purses and are native users of smart phones.

However, I think my parents’ generation, those who were born in the 20s and 30s and are now in their 80s and 90s, are the generation who may get the most utility out of smartphones.

The last time I visited my parents, my mom asked me to put Uber on her phone. Since then, she has used Uber to go to doctor’s appointments and other places that she did not want to drive to. At some point she and my dad will stop driving entirely and then Uber and Lyft and other ridesharing services will be even more valuable to her.

I was visiting my parents the last couple days and while I was there my mom asked me to put Lyft on her phone, so she had an alternative to Uber, and also Instagram so she could see what her extended family is up to.

But maybe the most amazing thing, to me anyway, is that my mom has pretty much stopped using her land line phone. She tells everyone to call her on her mobile phone. For a generation that arrived on planet earth around the same time as the rotary telephone to be abandoning the landline phone in favor of a mobile phone is really something to see.

If you think about it, though, it makes all the sense in the world. As you find it harder to do things that you used to take for granted, having your own personal computer on you or near you, that allows you to talk to your friends and family, via audio or text, see what everyone is up to, and get someone to come pick you up and take you to Church, the doctor, the store, or anywhere else, is really incredibly useful.

Maybe my dad will read this and decide he wants one too.

Categories: Blog articles

Kickstarter Turns Ten

A VC - April 30, 2019 - 8:47am

I noticed that the Kickstarter logo on my phone had confetti on this this morning.

So I clicked on it and the app loaded this message on startup:

I like that they ended that birthday message with “show me projects”. Even in celebrating ten years, 16 million backers, $4 billion in funding to 160,000 projects across 22 different countries, Kickstarter is reminding us that their mission is to help bring creative projects to life.

As Aziz Hasan, Kickstarter’s new CEO wrote in his blog post today;

We’ve accomplished a lot since 2009, but we also recognize that we still have a lot to do — creative work needs more support. At Kickstarter, that means we have a responsibility to evolve our service, strengthen our dedication, and increase our impact.

In the midst of all of that serious work, Kickstarter is also having some fun with their tenth anniversary. If you go to the Kickstarter 10 landing page you will find amazing project stories as well as some fun things to do there. Click on the Kickstarter 10 logo to get started on the fun.

So to help Kickstarter celebrate it’s tenth anniversary this week, go visit them, have some fun with the “easter eggs” and find a fun project to back too.

I plan to go do that now myself.

Categories: Blog articles

Paid Posts, Guest Posts, Etc, Etc

A VC - April 29, 2019 - 8:56am

I get five to ten emails a week from people, companies, agencies, brokers, etc asking to post content here at AVC.

If you are one of the folks who send me those emails from time to time, you can stop doing that because there has not been a guest post here at AVC for over five years and I don’t have any current plans to do them.

Beyond that, the only guest posts that I ever ran here were from friends, colleagues, and AVC community regulars. I may do that again, but have not felt the urge to in a long time.

I do post a crowdfunding project most Fridays and a video or audio embed on Saturdays. But those are chosen by me based on what I am interested in or what I think you all would be interested in.

I have never been compensated for a guest post and would never accept compensation for a guest post. All the content that is published here, since the start in 2003, has been created by me or by people I know that I thought you should hear from.

I am not opposed to paying for promotion and I understand that influencer marketing is a big marketing channel now. Some of USV’s portfolio companies spend real money doing that.

But this space is not for sale, to anyone or any message. And it never will be.

Categories: Blog articles

Followership

A VC - April 28, 2019 - 4:58am

In evaluating leaders, at the top of a company, or in the ranks of company leadership, an important quality that I look for is followership. Specifically, will the team line up behind this person?

Of course, leaders have to have other qualities. They need to have domain expertise if they are leading a specific function, they need to understand the needs of the business and the sector that it is operating in, and many other things too.

But what I have learned is that followership is super important. If the team doesn’t line up behind a leader, it is extremely hard for them to be effective.

For internal promotions, it is relatively easy to see followership and promote people who have it. You can also help people develop the management skills (listening, communicating, etc) that lead to strong followership.

When hiring someone from the outside, determining if they will have followership is harder. You can reference for this quality. But to some extent followership is a function of the culture of the organization. Someone who had strong followership in one kind of organization may not find it in another one.

It can take a leader some time to develop followership, particularly if they are hired from the outside. The team will need some time to figure out this new person, how they operate, and how they feel about them. But if a new leader has not developed the followership they need to lead the organization, or a part of the organization, within six to nine months after joining, then it is likely that a change will need to be made.

When developing your own organization and internal leaders, you should be very specific about followership and the need to develop it on your team. You should help mentor and coach younger managers on how to develop it and you should move quickly on leaders who don’t have it and won’t develop it on their teams.

It is always so impressive to me to see what leaders with strong followership can accomplish, when everyone is lined up behind them and delivering on what they ask of the organization. That is what I would wish for every organization, but sadly many don’t have it and they underperform as a result.

Categories: Blog articles

Audio Of The Week: Reg A+ Token Filings

A VC - April 27, 2019 - 4:00pm

In this podcast, Laura Shin and Zach Fallon, of Blakemore Fallon, talk about how to use the SEC’s Reg A regulations to do a token offering.

Categories: Blog articles

Funding Friday: Redacted Clothing

A VC - April 26, 2019 - 4:17am

Our friend Saarim is funding an apparel line based on the redaction meme that has been front and center since the Attorney General took his pen to the Mueller Report. You can back it here.

Here are some images of the products he will be making if this project is successful.

I have closed comments today since I don’t want to host a discussion here of the Mueller Report today or any day.

Categories: Blog articles

Do The Right Thing

A VC - April 25, 2019 - 5:49am

Airbnb has been operating in NYC and NY State for about ten years now and yet we still don’t have comprehensive home sharing legislation on the books in NY State. The reason is that the enemies of Airbnb, mostly the hotel employee unions, have been fighting Airbnb’s existence in NY State very effectively in Albany.

Many of the largest cities in the US and around the world now have comprehensive home sharing legislation on the books. It makes sense. It allows homeowners to share their homes legally and earn extra income but it also protects neighbors and neighborhoods from bad actors who abuse the system.

It is time for the folks in Albany to join that group and put fair and balanced and serious home sharing legislation on the books.

The good news is that we have good comprehensive bills before both houses of the state legislature right now.

Assemblyman Joseph Lentol and Senator James Skoufis have recently proposed comprehensive regulations for short term rentals in NY State.

An increasing number of New Yorkers rely on home sharing services not only when they travel, but also for the additional income they generate by opening up their homes here in New York.

The bills proposed by Lentol and Skoufis will create fair and restrictive rules to govern short-term home rentals in New York. Existing NYC legislation has unfairly penalized everyday New Yorkers for sharing their homes and left many confused about the law.

The proposed legislation bans short-term rentals in all affordable housing and also limits NYC residents to listing only one home. The bills also mandate data-sharing with New York City to boost transparency and enable NYC agents to target and take action against bad actors abusing the system.

The proposed legislation also allows Airbnb to collect and remit taxes on behalf of its users. Currently, NY State is missing out on badly needed tax revenue.

It is time for the NY State Legislature and Governor to pass clear and commonsense legislation to safely and responsibly regulate the home sharing industry. I would like to acknowledge Assemblyman Lentol and Senator Skoufis who have the common sense and courage to lead the way.

Categories: Blog articles

Concrete Vs Wood

A VC - April 24, 2019 - 7:06am

Our friend Eric sent us an article in the Globe and Mail yesterday about plans to build a 35 to 40 story tower in Vancouver out of wood. Here’s the link to that story but you can’t read it without a subscription.

Contrast that to the dominant way we build tall buildings in NYC which is out of concrete, steel, and glass.

The reason that a move back to wood based structures is so important is that the concrete structures are huge contributors to greenhouse gases. According to the Globe and Mail article, “concrete construction is responsible for an estimated eight per cent of all carbon emissions worldwide.”

The Gotham Gal and I are in the process of making two passive house apartment buildings in Brooklyn based on cross-laminated timber structures with only a small amount of concrete in them.

This is a photo of one of them back in December when the CLT structure had just been completed:

Our buildings are five or six stories high. The idea that you can make a building of 35 or 40 stories out of CLT and dowel laminated timbers (DLT) is very exciting to me.

I believe we can innovate our way out of the climate change mess we are in right now and changing the way we make our homes and offices is a big part of that.

Categories: Blog articles

Opting Out Of The Legacy Model

A VC - April 23, 2019 - 9:30am

When you look at industries that continue to operate on old, outdated, and highly regulated models (education, health care, banking, brokerage, etc, etc), it is interesting to look at the numbers of consumers who are opting out of the legacy model.

In K12 education, many people think of charter schools as the disruptive model and there are something like 3.5mm to 4mm students attending charter schools in the US now (out of roughly 55mm K12 students in the US: 50mm public, 5mm private).

But if you really want to look at where the disruptive models exist, you need to look at consumers who are completely opting out and in K12 education, that is the homeschooling movement.

My partner Andy sent around this tweet this morning and it is quite interesting:

I’m trying to understand which are the fastest growing trends in education. Homeschooling seems to be one of them. Technology is only getting into the space, that's why I assume the growth will be accelerated. #homeschooling #edtech pic.twitter.com/cr8RfOMBGW

— Vlad Stan
Categories: Blog articles

I was right about “quantitative tightening”

Beyond Money - April 22, 2019 - 10:51am

I was right about “quantitative tightening”
by Thomas H. Greco, Jr.

Just about two years ago, someone sent me a link to an article titled, Why America’s Federal Reserve might make money disappear, that appeared in The Economist on April 17, 2017. The gist of the article was the predicted move by the Fed to unwind quantitative easing, that is, to sell off some of the securities that it bought in the wake of the 2008 financial crisis. The expansion of Fed holdings from the $850 billion it held just prior to the crisis, to the $4.5 trillion it held at the time the Economist article was written, was a desperate move that was taken to keep a flawed financial system from crashing down.

After I read that article, this is what I wrote to my correspondent on April 25, 2017:

Dear…,
Thanks for alerting me to that article in the Economist. Interesting.
The sub-head reads, “The Fed has signalled that it will soon reduce the size of its balance-sheet,” yet the article says nothing about how it signalled that move. It seems to be the author’s own speculation based on the Fed’s recent small interest rate increase. To wit, “Today, however, the Fed, now led by Janet Yellen (pictured), is raising short-term rates, as it tries to keep a lid on inflation. So—the logic goes—it should also shrink its balance-sheet, to push up long-term rates.”

You need to ask, why did the Fed load up on government bonds to begin with?

I am reminded of a story about a man who wanted to invest in the stock market. He opened an account with a broker who immediately steered him into some penny stock.

The dialog went something like this:
Broker: Welcome aboard. I can get you in on the ground floor of this new company. Their stock is really hot right now and it’s only four dollars a share.
Customer: Fine, buy me 1000 shares.

The next day the broker calls and says,
Broker: Hey, that stock is now up to eight dollars a share.
Customer: Wow, that’s great, buy me 2000 more shares.

A couple days later, the broker calls again and says,
Broker: Amazing, that stock is now up to 12 dollars a share.
Customer: Fantastic, sell all my shares.
Broker: To whom??

In other words, the Fed is locked in to their position, it’s a one way street and there’s no going back.

The answer is that there was not nearly enough available capital in private hands to fund the government budget deficits, at least not at interest rates that would not make the deficits even more gigantic than they have been.

As I’ve written in my books, there is a collusive arrangement between bankers and politicians that goes back more than 300 years. Governments get to spend more than their revenues, while banks get to lend money into circulation by making interest bearing loans. Yes, open market operations by the central banks do distort financial markets as QE critics claim, but that is the fundamental role of central banks, to manipulate financial markets. It’s the biggest scam in history. The central bank is the lender of last resort, and the government is the borrower of last resort to keep the money supply pumped up as bankers suck interest earnings into their capital account.

The Fed will be lucky to get away with small interest rate increases, but unloading their holdings of government bonds will not happen.

The entire article seems disingenuous, suggesting the possibility of actions that cannot be taken without severely unbalancing government budgets and contracting the money supply which will send the economy back into recession.

Real inflation rates are much greater than government figures indicate.  See the Chapwood index, http://www.chapwoodindex.com/, and Shadow Stats, http://www.shadowstats.com/alternate_data/inflation-charts.

Also, follow Chris Martenson, https://www.peakprosperity.com/.
This interview is particularly pertinent, Oil, Gold, & The Collapse of Central Banking ~ Interview with Chris Martenson.

Regards,
Thomas

Now, on March 20, 2019, this Bloomberg article, Powell Signals Prolonged Fed Pause as Inflation Lags, Risks Loom, acknowledged that the Fed has thrown in the towel on tightening, saying, “Federal Reserve Chairman Jerome Powell said interest rates could be on hold for “some time” as global risks weigh on the economic outlook and inflation remains muted. … Officials also decided to slow the drawdown of the U.S. central bank’s bond holdings starting in May, then end them in September. Together, the moves complete the Fed’s 2019 pivot away from policy tightening and toward a markedly cautious stance.”

Surprise, surprise!

#     #     #

Categories: Blog articles

The Upside And The Downside

A VC - April 22, 2019 - 4:39am

As I wrote in yesterday’s post, there are good and bad things that come from new technology and new innovations.

The challenge for many of us is that the promoters of the technology only want to talk about the upside. And often the media responds by focusing on the downside. It is hard to find a balanced take on things.

Let’s take this Bloomberg article on ISAs in which students trade a percentage of future earnings to fund tuition. The headline is “College Grads Sell Stakes in Themselves to Wall Street.” Which of course, is the negative narrative on this innovation in financing education.

As my colleague Nick pointed out to me this morning, “the stories often seem to ignore the reverse: how hard it can be to carry a large amount of debt, which is the situation that the vast majority of student loan holders find themselves in.”

The whole ISA movement is a reaction to the student debt crisis that many in this country have found themselves in.

Certainly there are questions that need to be asked about ISAs and the model will evolve and adjust over time.

But to throw ISAs under the bus by suggesting that “students are selling themselves to wall street” is the kind of negative narrative that doesn’t help anyone.

Categories: Blog articles

Facial Recognition

A VC - April 21, 2019 - 9:13am

I would like to start this post with a disclosure. USV portfolio company Clarifai has one of the best facial recognition models on the market and is very active in the facial recognition market. Now that I have disclosed that, we can move on.

Facial recognition has come of age. Machines can figure out who we are and more.

One of the most popular booths with students at The Annual CS Fair this year was the Microsoft booth where they were showing some of their facial recognition technology.

The delight and amazement on the students’ faces was infectious.

But of course, not everyone is excited about facial recognition technology being deployed in the market.

woooooow pic.twitter.com/qWvGQeSjLb

— Laurie Charles (@TheStuffOfMemes) April 20, 2019

I particularly like that question in the embedded image in that tweet:

How does Jet Blue know what I look like?

The answer turns out that there are many ways to know what we look like and you can start with the federal government and go from there.

Like all technologies, facial recognition can be used for good and bad. And it will be.

I like what my partner Albert wrote on this topic recently:

And then some things are incredibly hard. Such as face and object recognition. There are tons of amazing positive applications for such technology. And yet they could also be used to bring about a dystopian future of autonomous killer weapons chasing citizens in the streets. Does that mean we should not develop these capabilities? Should we restrict who has access to them? Is it OK for corporations to have them but not the military? What about the police? What about citizens themselves? Those are hard questions and anyone who thinks they have obvious answers I submit hasn’t thought long enough about them.
So what is to be done? A good start is personal responsibility. 

We used to have to stop at toll booths and wait in long lines to get across bridges and tunnels. Now we drive past the tolls at 60mph and the machines detect our license plates and debit our accounts.

The same is going to happen with our faces and that will be great for many things. But, of course, it will also freak us out on a regular basis and add to the “technology is turning everything into a surveillance state” narrative that has more truth than we would like to admit.

So what is my point? Well for one, the technology is here and we had better get used to finding it deployed in the wild. And second, that it will bring a lot of good. So we should not over react. But we should be mindful of the downsides and those of us who are working on this technology, those of us who are financing the development of it, and those of us who are deploying it, need to take great care with it.

Categories: Blog articles

Video Of The Week: John von Neumann on K12 CS Education

A VC - April 20, 2019 - 6:43am

As many of you know, I have spent a fair bit of my time over the last ten years on increasing the amount of CS Education in our K12 system in NYC and around the US.

My friend Rob sent me this short (2 1/2 min) clip of John von Neumann in the early 50s talking about how important CS Education and in particular K12 CS Education would be.

We largely ignored his advice for the last sixty years but I am optimistic that we are finally heeding it.

Categories: Blog articles

Funding Friday: Chili Peppers

A VC - April 19, 2019 - 5:20am

This project is hot!

I backed it this morning

Categories: Blog articles

A Hackathon At NYC’s City Hall

A VC - April 18, 2019 - 4:40am

I like going to hackathons. A number of USV portfolio companies have emerged out of hackathons, like our portfolio company Dapper which created its hit crypto-collectible game CryptoKitties at a Hackathon in late 2017.

So yesterday I headed down to NYC’s City Hall which was hosting the finals of a citywide hackathon competition (called The Hack League) among NYC schools to create the best software applications to make the city better.

The final projects were judged by people like the Chief Policy and Data Office (Comptroller’s office); the Chief Analytics Officer (City of NY); the Chief Technology Officer (Mayor’s office); the Executive Director of NYC311 (City of NY) and other folks in city government tasked with a similar mandate.

There were 28 finalist teams at City Hall yesterday competing to win the trophy. They were from all five boroughs, representing schools from all kinds of neighborhoods. It was as diverse as the city is and that is a wonderful thing.

I gave them a pep talk at the start of the day and encouraged them to “instrument their applications” so that they and others can determine how their users are getting value from them.

This is a photo I took of the students as I was about to address them:

The winning teams came from these schools with these applications:

Middle school Winners:
1st: Queens TWYLS – “Trash Go” game that incentivizes proper disposal of trash

2nd: Staten Island IS63 – “Oh Deer” app for residents to report on deer sightings and upload photos so the Dep’t of Environmental Conservation can track the deer

3rd: Brooklyn Parkside Prep – “Hero Foods” app that delivers nutritious lunches to students with special needs (financial or health)  

High school Winners:
1st: Brooklyn International HS at Lafayette – “Busted” app for students to report real-time data about buses (such as too full, never arrived)

2nd: Manhattan Bridges High School – “Heat track” app that tracks temperatures inside and outside of homes and communicates to landlords about issues.

3rd: Bronx Millennium Art Academy – “Safety 1st” bi-lingual alert system to keep students informed when they are without their phones during the school day.

I was super impressed by how focused and committed the students were on making their applications better yesterday:

Here is a photo of all of the students who competed yesterday in the City Hall Rotunda.

These are the employees of the future for NYC startups, larger tech companies, and, frankly, every company in NYC. And let me tell you something. They are going to be really good.

Categories: Blog articles

Healthcare At USV

A VC - April 17, 2019 - 6:05am

Over the last five years, we have stepped up our investing in and around healthcare. About 15-20% of the early stage companies we have invested in over our last two fund cycles are working in this sector.

If you look at our current investment thesis at USV, you will see that wellness is one of the key areas of interest for us:

USV backs trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.

So where in the healthcare sector are we focused?

Rebecca tweeted this out yesterday and I think it is a good articulation of what we find most interesting in healthcare:

What excites us about whats happening in healthcare:
1) tech + humans: data powered humans=better decisions than either data or humans alone
2) broaden access by increasing value & decreasing cost of care
3) outcome orientation: not just care, better delivered, but better care

— Rebecca Kaden (@rebeccak46) April 17, 2019

Making affordable healthcare more available to everyone seems like the winning formula in this sector.

Take our portfolio company Nurx for example. They make birth control and other important prescriptions and home testing kits available to millions of people who have found them difficult to obtain through traditional channels.

I hope and expect that we will increase our investment in the health and wellness space in the coming years. It is an important sector that has immense challenges, but also immense opportunities.

Categories: Blog articles

Underground Infrastructure

A VC - April 16, 2019 - 7:23am

One evening last week my daughter and I spent an hour with a team from our portfolio company Pilot Fiber who were pulling a new fiber cable from Sixth Avenue to Fifth Avenue along a cross street in lower Manhattan.

My daughter is doing a project and wanted to understand how this all worked and I was curious myself. It was fascinating.

We met them at a manhole near Sixth Avenue where they had pulled a fiber cable into a building where one of their large customers is based.

The team uses a thin line of “mule tape” that is placed in the conduit between the manhole and the building to pull the fiber cable from the manhole to the building. Ideally the mule tape stays in the conduit so that the next team that needs to run fiber from one manhole to another or into a building can use it again.

Pilot had a couple of their trucks on the street that have huge fiber spools on the back of them.

The team runs fiber using the mule tape in the conduits that exist from manhole to manhole. This was the next manhole they worked in that evening.

You can see that there are a lot of fiber cables in these manholes. The big clunky plastic things are splice enclosures that protect the splices that join fibers to each other.

You can see a line of mule tape on the lower right of the photo above that the team was using to pull the fiber cable from one manhole to the other.

When we got to Fifth Avenue, the manhole was cavernous. One of the team members was comfortably working down in the hole which would not have been so easy in the manholes on the cross streets.

I learned quite a bit that evening about how all of this infrastructure is laid and managed. But mostly I was so interested in how this modern infrastructure (fiber) has overwhelmed the prior kind (copper and coax) under the streets of NYC.

If you want high speed/reliable/reasonably priced fiber Internet in Manhattan for your company, you can get that from Pilot Fiber who is out on and under the streets of NYC most nights laying the cables to make it happen.

Categories: Blog articles

More S1 Fun

A VC - April 15, 2019 - 5:05am

I am continuing my mini series on reading S1s (IPO documents). We are enjoying an IPO bonanza this year, so we might as well use it for some good and learn something.

When a company files for an IPO, I like to think if there is a publicly traded company that looks a lot like that company and if so, I lik to run some numbers comparing the two.

Well we have that exact situation with Uber filing to go public last week. Here is Uber’s S1.

We can compare Uber’s numbers to recently public Lyft, which I blogged about earlier in this S1 Fun series.

Here are Uber’s profit and loss numbers from their S1:

We can compare this to Lyft’s profit and loss from my prior blog post:

I put all of these numbers into a spreadsheet and added some estimates for 2019 that are nothing more than back of envelope guesstimates.

What you can see from this is that Uber is 4-5x larger than Lyft, growing a lot more slowly, has slightly better gross margins, and both are still losing a lot of money but both are moving towards getting profitable on operations in a few years.

Finally lets look at market valuations. Lyft is currently trading at a market cap of $17bn. If you say that Uber is 4-5x larger than Lyft, then Uber ought to be worth in the range of $70bn to $85bn.

There are other factors that will be in play when Uber eventually prices their IPO and trades. Uber owns minority interests in a number of other ridesharing businesses that could be worth as much as $10bn of additional value. On the other hand, Lyft is growing more quickly than Uber.

Ultimately we will see how the market values Uber. But from this analysis, and the public market comparables from Lyft, we can see that Uber should be worth quite a bit when it goes public.

Categories: Blog articles
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