Every once in a while I read a really good blog post about a company that I find particularly interesting. Most recently it was an article by Bill Gurley, a GP at Benchmark and board member at Uber. The article did a fantastic job of laying down what makes Uber such an exciting company, and attempts to explain why their $18bn valuation is not out of whack. Additionally, it's also a nice lesson on the kind of thinking that is necessary when investing in new companies operating with new business models. To hammer the point home he briefly discusses how in 1980 McKinsey & Co. had told AT&T that they expected the cellphone market to amount to only 900,000 subscriptions. Obviously that estimate was off by several billion users and to this day remains on of the biggest miscalculations by the worlds most prestigious consulting firms. I'm an optimist at heart, which probably leads me to overestimate what a young company like Uber can amount to. In this case however, I think they are a once in a decade company that will have a lasting impact on a huge portion of society.
A quick story to end this post. One of my dad's simple pieces of investing advice was to "just use common sense". He saw that my brothers and I as well as all of our friends had an unhealthy obsession with Chipotle so he decided to invest. A few years later their stock had skyrocketed, and he told me it was one of the best investments he's ever made. Using that logic it's easy to see why I find Uber so exciting. Anyone who uses it is immediately impressed with how much it improves on the existing taxi model.