The conclusion:

As you can see, the market would have to be three times my estimate — about $300 billion — or Uber’s market share would have to be more than double my base case estimate — more than 20 percent — to justify a $17 billion valuation. The former may hold if you see Uber’s market more expansively than I do, and the latter may come to fruition if you believe Uber will have an easier time overcoming the competition and the regulatory constraints on its growth.

I also examined how the value would change if Uber’s slice of gross receipts were to drop from my base case estimate of 20 percent, again allowing for different potential market sizes.

Not only does this table point to devastating effects on its value should competition force Uber to cut its 20 percent take, but it also reveals a danger for Uber (and its investors) in focusing too much on growth in gross receipts. Uber may be able to expand its market by charging less, but the effect on value of doing so will be negative.

This framework lends itself easily to other narratives. For instance,one of the more optimistic takes says that Uber is in the logistics market, i.e. it’s a player in any business that involves moving people or things from one point to another. That would lead you to define Uber’s market more broadly and come up with a much higher valuation. As you consider these possibilities, though, it’s worth keeping in mind that investing is not a game of possibilities but one of probabilities.

The list of Uber’s investors includes some of the biggest names in venture capital, and you may be tempted to conclude that given their pedigree, they must know something we don’t. You may be right, but I wouldn’t be that quick to conclude that smart investors always make smart investment judgments.

Hm, what was the market size for an online book store called amazon?

Amazon always wanted to be compared with Walmart, not bookstores.