Aaron Levie had a good tweet about this: "Sizing the market for a disruptor based on an incumbent's market is like sizing the car industry off how many horses there were in 1910."
Then what we have is Uber/Lyft/whatever trying to avoid any regulation, while everyone else with the same thing are actually doing it. So disruptive!
People drank coffee before starbucks.
http://en.m.wikipedia.org/wiki/List_of_countries_by_coffee_c...
"When we got this company started (in 2009) we were pitching the seed round and we pulled a bunch of research from this report that showed that San Francisco total spend on taxi and limo was like 120 million bucks. But we’re a very healthy multiple bigger than that right now, just Uber in SF. So it’s not about the market that exists, it’s about the market we’re creating." - Travis Kalanick
[1] http://blogs.wsj.com/digits/2014/06/06/uber-ceo-travis-kalan...
An investor is trying to think through a fair valuation. If we can't value off of the horse & buggy market, then what are we going to? Henry Ford's H&D (hopes & dreams)?
I think for any company, especially those attacking an established industry, that those markets that have a higher probability of being attacked should be valued higher.
So yes I would say the horse & buggy market, at that time, SHOULD comprise the majority of the valuation for Henry Ford. There are other use cases that could be imagined, but I'd discount heavily.
Then as time goes on, and people start figuring out NEW uses for cars that were not even possible with horses and/or expanding the market, then we can begin weighting those components more heavily. Eventually, the horse & buggy portion will be a minority part of the valuation.
"Uber’s growth potential rests not only on being able to claim a larger share of the car-service market but also on expanding this market by attracting those who use public transportation or drive their own cars." He even mentions that his base case is assuming uber remains in the car-service related business.
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