by Brenon Daly
Being mature has never been a requirement for a tech vendor to go public. But that doesn’t mean a company should be childish, either. And yet, as Uber’s trip to Wall Street shows, a consumer tech startup can still get away with treating professional investors a bit like spoiled kids treat their parents: they don’t want anyone telling them what to do, even if they haven’t quite figured out what they will be when they grow up.
Uber, of course, is the extreme example of an indulged startup. Throughout much of its 10-year history, the company basically did what it wanted, expanding its services in some cases without concern about existing rules or practices. (There’s tech disruption and then there’s legal disregard. Too often, Uber claimed the former while practicing the latter, a point the company itself made in the now-obligatory ‘Letter from our CEO’ portion of its prospectus.) It could get away with that because it had billions of dollars of outsiders’ money to fall back on.
Now, after having piled up almost $8bn in accumulated deficit, Uber needs more money. Guided and supported by no fewer than 29 underwriters, the vendor will undoubtedly find new investors when it offers up shares to the public on Friday morning. The prevailing pricing in the IPO will likely see Uber pull in about $9bn, while the overall business will collect a valuation in the neighborhood of $90bn. Very much in character, Uber is going public like it ran a good portion of its business: on its own terms.
The arrogance that characterized Uber’s early days has certainly diminished quite a bit, but there’s still an unmistakable sense of adolescent self-assuredness at the company. As part of its self-described ‘bold mission,’ Uber sizes the current markets it serves not in the billions of dollars, but in the trillions. It amplifies that alluring vision by pointing out that it is only just starting with those opportunities, holding less than 1% share of any market in which it operates.
Uber continues that language of promise throughout the prospectus. While that vision sold early on – allowing the vendor to raise more funding than any other privately held US tech startup – the valuation inflation hasn’t left a lot of upside for it on Wall Street. (Or any at all, if it follows in the tire tracks of rival Lyft.) Private-market investors may have coddled Uber financially, but its pending IPO could serve as a tough-but-needed lesson in the painful process of growing up.