Uber Lands $1.2 Billion So You Can Get Rid of Your Car

Uber’s Travis Kalanick. Photo: Jon Snyder/WIRED

Uber just became one of the most valuable tech startups in history.

Co-founder and CEO Travis Kalanick announced today that investors are pouring another $1.2 billion into Uber in a funding round that values the five-year-old company at $17 billion. Though nine and 10-figure deals have become common enough in Silicon Valley to seem almost normal, the news may leave many people out in the real world scratching their heads. Does Uber–an app-ified version of the cab business–really need that much money?

Given the scope of Uber’s ambition, it just might.

Kalanick doesn’t just want to give you a ride when you don’t have your car. He wants you to give up your car, period. “Our vision is to offer a way for people to get around cities without having to drive a car,” Kalanick told Bloomberg Businessweek . “If you can make it economical for people to get out of their cars, or sell their cars, and turn transportation into a service, it’s a pretty big deal.”

To get to the point where it can offer enough affordable rides in enough places to make owning a car redundant, Uber needs lots of people on the ground. And that costs lots of money. Unlike most tech startups, which can spread their products around the globe with the tap of a return key, Uber needs teams in every city where it operates to manage all the non-digital aspects of moving people around. To manage everything from recruiting drivers to battling regulators, it needs a very physical human presence across the globe–a concept that sounds almost quaint at a time when other startups like WhatsApp can become hugely valuable without anyone ever really leaving the office.

This is not to say Uber won’t also put some of its cash toward expanding the definition of what it does. Kalanick has taken to calling Uber a “logistics platform,” and when the company received its last big capital injection–a $250 million led by Google Ventures–many wondered whether self-driving cars delivering packages was Uber’s endgame. But the economics of moving stuff are different than the economics of moving people, and Kalanick told WIRED at the time that the company was focused much more on simply expanding what Uber already does and does well.

He sounded much the same note this time around, saying that package delivery was something Uber is playing with, but that growth is really what the billion dollars is all about. “The business as it is, the current growth, that is what was funded,” he told Businessweek. “The logistics, or moving things as well as people, is icing on the cake.”

Right now, Uber operates in more than 120 cities in nearly 40 countries. And that’s only the start, if Kalanick has his way. Uber truly wants to be everywhere, and that won’t come cheap. If, for example, Uber wants to expand into 1,000 more cities, the current round of funding provides just a little more than $1 million per location. If you think of every Uber operation in every city like its own little startup, that’s not so much in the grand scheme of tech funding. If Uber truly wants to convince you to forget your car, it’s still going to need every dollar it can get.