Articles by Bill Gurley
- How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size
Bill argues that Professor Damodaran's assumptions of Uber's total available market and maximum market share are too conservative. Uber provides a radically different experience compared to taxis through faster pick-up times, wider coverage, easier payment, and greater safety. Lower prices enabled by higher utilization could also significantly expand demand. Uber could potentially replace car ownership for some users if it becomes cheaper and more convenient than owning a vehicle, especially among younger demographics. Bill estimates that Uber's total available market could be up to 25 times larger than Damodaran's estimate, which would require a maximum market share as low as 20% to justify Uber's current valuation.
- A Rake Too Far: Optimal Platform Pricing Strategy
Bill Gurley discusses optimal pricing strategies for online marketplaces, arguing that a lower "rake" or commission rate is often better than a high rake. A high rake can create friction, make suppliers unhappy, and allow competitors to disrupt the marketplace. Examples of marketplaces with low rakes like Booking.com and oDesk show how they were able to dominate their industries by charging suppliers less. However, some companies like Facebook and Apple charge a high 30% rake, which has alienated potential partners and even launched competitors like Amazon's Kindle Fire. An optimal rake balances what a marketplace can extract from suppliers with what it should extract to maintain a healthy ecosystem.