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Investors think Uber is worth $17 billion. Why that’s not entirely crazy.

A user scans for an available vehicle using Uber Technologies's app on a smartphone in London. (Photo illustration: Chris Ratcliffe/Bloomberg News)

Since it first launched in 2010, facilitating black town car rides through a mobile app, Silicon Valley start-up Uber has been surrounded by debate over what exactly the company is. Cities want to treat it -- and regulate it -- like a modern alternative to taxicab service. Uber itself dodges the comparison on a fine distinction: It's a "platform," chief executive Travis Kalanick says, not a "transportation provider."

Lacking language to identify this new thing -- whatever you do, don't call it "ridesharing" -- regulators have meanwhile invented new euphemisms: Uber is a "transportation network company" in California. It's a "transportation network provider" in Chicago. In other circles, it often gets lumped in with the "sharing economy," but sharing is not quite what's going on here, either.

[Read: Uber mobilizes its users to fight ban in Virginia]

Today, though, it's clear that all of this wordsmithing misses the point: Uber is going to be a very big company. It will facilitate a lot more than rides to the airport. And we may not even think of it in the future as primarily a transportation company at all.

Uber announced Friday that had just raised $1.2 billion in new funding from investors who valued the four-year-old company at $17 billion. When the current fund-raising round is done, Uber says it expects to total $1.4 billion in new funds, effectively quadrupling its valuation from what it was just last summer. Among tech start-ups, only Facebook has raised capital at a more impressive clip. Before it went public, Facebook was valued at $50 billion by Goldman Sachs. At $17 billion, Uber is now valued at more than traditional car-service competitors Avis and Hertz.

All of this money is an indication that investors believe Uber is poised to become something much larger than a service provider or platform for people taking rides in each other's cars (although that activity alone has appeared to be pretty lucrative). Already, there are signs that Uber is evolving into a much more ambitious logistics company. Soon, it will be moving stuff, not just people. And all of the data it collects in the process will be used to design systems, not simply apps.

Uber could, in other words, become as central to mobility for many people as Facebook has become to communication. At least, that's the promise that's pushing the company's perceived value to such heights.

Today, anyone who talks about Uber as a niche service for rich urbanites is missing the fact that the company has its sights on so much more.

"We wouldn’t have a viable business if cellphone penetration wasn’t approaching 100 percent in the United States," Corey Owens, Uber's head of global public policy, recently told me in response to criticism that the company can only serve those with a credit card and a smartphone. "And credit cards – that’s an arc-of-history problem, where eventually we will get to a place where, regardless of payment method, anyone can use the service. You’ll have more and more people who are banked, and Uber will figure out other payment options."

Now why would Uber bother to do that if it merely aspired to ferry investment bankers around Manhattan?

(Disclosure: Washington Post owner Jeffrey P. Bezos is an Uber investor.)

Emily Badger is a reporter for Wonkblog covering urban policy. She was previously a staff writer at The Atlantic Cities.



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Dina ElBoghdady · June 6, 2014

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