Remember Uber's past several weeks? They were ugly. A senior executive was caught discussing plans to conduct opposition research on journalists. Uber's top manager in New York was investigated and disciplined for privacy violations. Almost overnight, all of its data-privacy policies were questioned. With its vast collection of ride logs and team of apparently hapless executives, Uber is seeming less like a sleek taxi alternative and more like a hot target for a disastrous data breach. On top of all that, its marketing claims about the great money drivers earn are looking thin.
But forget all that. Uber's investors just gave it another $1.2 billion.
Uber is now valued at an astonishing $40 billion after closing a funding round that brings its total financing to about $2.7 billion. In a post on Uber's blog, chief executive Travis Kalanick said the new funds will help fuel Uber's expansion in the Asia Pacific region. Uber, a five-year-old startup, currently operates in more than 250 cities and 50 countries and has grown six-fold in the past year alone. "This kind of continued growth requires investment," Kalanick wrote. The company has also authorized a sale of $600 million more in stock, according to a Thursday filing.
The latest $1.2 billion round comes just six months after Uber said it had raised $1.2 billion from investors including BlackRock, Fidelity, and Google Ventures that valued it at $17 billion. At the time, Will Oremus spelled out in Slate the various cases for why Uber may or may not have been worth that staggering sum. While Uber's new valuation is more than double the old, the basic points are the same:
1. The optimistic analysis: Uber is not just replacing the taxi industry. It's going after the different—and much, much bigger—market for public transportation. In the vague and distant future, Uber rides could become so cheap that they replace car ownership entirely. And if the self-driving car ever becomes a reality, Uber could be positioned to serve as the dominant or exclusive provider of those trips.
2. The skeptical analysis: Uber so far has made its fortune by barging into markets heedless of local laws and regulations. Should it ever come under serious scrutiny from regulators, its operations could take a devastating hit. Uber also has plenty of competitors, and the barriers to entry for the ride-sharing business are low. Neither Uber's drivers nor its riders have any particular loyalty to the company. If a better service comes along, they won't hesitate to switch.
Based on the past few weeks, Uber's management issues would also seem to be a strike against it. As I outlined in late November, Uber's sprawling, largely decentralized structure has at times helped to empower rash and immature actors. Until very recently, Uber has also failed to scale its communications team along with its rapidly expanding business. A good portion of its missteps in the past year can be traced to that disconnect, and many have called for the company to grow up.
On the other hand, Uber just weathered arguably its worst PR disaster ever—and came out $1.2 billion richer! Emil Michael, the executive who made the "oppo research" comments, is still in his job, as is New York City's Josh Mohrer, the subject of Uber's internal investigation into privacy violations.
In his blog post, Kalanick nodded to the company's latest blunders. "The events of the recent weeks have shown us that we also need to invest in internal growth and change," he wrote. "Fortunately, taking swift action is where Uber shines, and we will be making changes in the months ahead. Done right, it will lead to a smarter and more humble company that sets new standards in data privacy, gives back more to the cities we serve, and defines and refines our company culture effectively."
It would be fascinating to know just how many of those changes Uber had to detail for investors before they forked over an additional $1.2 billion. The optimistic answer to that is a lot. The pessimistic one is none at all. Blunders and privacy violations and controversies aside, Silicon Valley might just think that Uber is a shining investment opportunity with a tremendous amount of upside (if also a serious amount of risk). And good luck letting ethics find a place in that discussion.