Jan 30, 2015 · 2 minutes

One of the biggest arguments critics make when calling into question Uber's sky-high $40 billion valuation is that the company can't possibly be worth that much -- because that's bigger than the entire existing taxi industry it's disrupting.

But if you believe Travis Kalanick, the gremlin in a sport coat who runs Uber, his company is already bigger than the taxi market in its home market of San Francisco.

Speaking at the DLD Conference in Munich earlier this month, Kalanick claimed that San Francisco's taxi market only brings in about $140 million a year, whereas Uber makes $500 million a year in the city. That prompted observers like Henry Blodget, who's never one to shy away from sky-high valuations, to conclude that Uber's valuation is far from "nuts," as many have argued.

But not everyone is buying Kalanick's math. Flywheel, a competitor of Uber in San Francisco, did its own calculations using data from its taxi fleet partners -- which make up 85 percent of the city's taxis -- and found that annual revenues for the cab industry amounted to $400 million. That's still behind Uber's stated revenue numbers but it's a far cry from Kalanick's $140 million figure.

Without official numbers from the city of San Francisco, it's difficult to know who to trust here. That said, this wouldn't be the first time Uber has trotted out questionable statistics. Pando's Michael Carney recently found numerous holes in Uber's claim that it would create 50,000 new jobs in Europe, arguing that it would come at the expense of up to 280,000 auto industry jobs. Journalists have also struggled to substantiate the company's claim that the median Uber driver in New York City makes over $90,000 a year.

Granted, even if Kalanick grossly underestimated annual taxi revenues, that doesn't necessarily mean that Uber's valuation is too high. As Carney wrote last summer, Uber wants to tackle not just the taxi industry but the global transportation industry at large. That means delivering groceries and packages as well as people. Furthermore, Uber's thesis implies that as the convenience of hailing a ride continues to improve, customers will increasingly replace their own driving routines with services like Uber, to the point where many will opt out of owning a car completely.

So the most important takeaway here, assuming Flywheel's statistics bear some resemblance to reality, is not that Uber's valuation is too high. It's that, as always, companies chasing growth and investment dollars will say anything -- even outright lies -- to bolster their position with investors.

[illustration by Brad Jonas]