Uber Isn’t Worth $17 Billion By Aswath Damodaran Earlier this month, investors poured $1.2 billion into Uber , a tech company whose smartphone app connects taxi drivers to passengers. The share of the business these investors received suggests that Uber is worth $17 billion, a mind-boggling sum for a young company with only a few hundred million dollars in revenue. That said, Uber isn’t the only highly valued tech company these days, with others like Airbnb and Dropbox each valued at about $10 billion by investors. For all these companies, the key selling point is “ disruption ,” one of the tech industry’s worst buzzwords. The companies argue that they’re upending existing ways of doing business — hailing a taxi, with Uber, or finding lodging, with Airbnb — and given the sizes of the businesses they’re supposedly disrupting, the sky’s the limit when it comes their value. But is Uber, which was founded five years ago, really worth $17 billion? My answer, as

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening. Since the Industrial Revolution, the world has developed complex supply chains, from designers to manufacturers, from distributors to importers, wholesalers and retailers, it’s what allowed billions of products to be made, shipped, bought and enjoyed in all corners of the world. In recent times  the power of the Internet, especially the mobile phone, has unleashed a movement that’s rapidly destroying these layers and moving power to new places. The Internet is the most powerful mechanism we can imagine to match perfectly individuals that need something, and people with something to offer. The moment started slowly by reducing complexity and removing the middle layer in the late 1990