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2014 ODE Report The On-Demand Economy @sherpa
2014 ODE Report The On-Demand Economy @sherpa
2014 ODE Report The On-Demand Economy @sherpa
2014 ODE Report The On-Demand Economy @sherpa

2014 ODE Report

The On-Demand Economy

@sherpa

OUTLINE

 

The Village 1 Economy

ODE Next

4 ODE Labor

1.

   

2.

ODE Retail

  ODE Labor 1.     2.   ODE Retail Introducing ODE 2 The On-Demand Economy

Introducing ODE

2 The On-Demand Economy

ODE Now

3 ODE Transportation

1.

2.

ODE Real Estate

2

Economy ODE Now 3   ODE Transportation 1. 2.   ODE Real Estate 2 Conclusion 5

Conclusion

5 The ODE E ect

Economy ODE Now 3   ODE Transportation 1. 2.   ODE Real Estate 2 Conclusion 5

TWO VENTURE CAPITALISTS WALK INTO A BAR…

3

It sounds like the beginning of a joke, but it’s the beginning of something much bigger


 WALK INTO A BAR… 3 It sounds like the beginning of a joke, but it’s
4 IN THIS PUB IN A REMOTE VILLAGE 
 IN IRELAND, WE NOTICED BUSINESS 


4

IN THIS PUB IN A REMOTE VILLAGE IN IRELAND, WE NOTICED BUSINESS CONDUCTED IN AN EXTRAORDINARY WAY

4 IN THIS PUB IN A REMOTE VILLAGE 
 IN IRELAND, WE NOTICED BUSINESS 
 CONDUCTED

5

No Twitter handles or Web addresses

Just someone’s name and phone number implicitly beckoning, “Call me and I’ll bring you what you need…”

This is the Village Economy: On-demand service, as you need it

“Call me and I’ll bring you what you need…” This is the Village Economy: On-demand service,

THE PERSONALIZED, EFFICIENT QUALITY OF THE VILLAGE ECONOMY HINGES ON THREE KEY CONDITIONS

6

Trust •  No need for brokers •  Buyers and sellers interact directly Collaboration Geographic 

Trust
•  No need for
brokers
•  Buyers and
sellers interact
directly
Collaboration
Geographic
•  Community
pools resources
•  Competition has
little relevance
proximity
•  All products
and providers
next door

The very nature of the village economy drives a more personalized, accessible, and valuable customer experience

door The very nature of the village economy drives a more personalized , accessible , and
door The very nature of the village economy drives a more personalized , accessible , and
door The very nature of the village economy drives a more personalized , accessible , and

AND SHIFTS IN TECHNOLOGY ARE BRINGING THE VILLAGE ECONOMY BACK – AT SCALE

Payments Platforms

Payments

Platforms

Pervasive Connectivity

Pervasive

Connectivity

Reputation Networks

Reputation

Networks

7

Creating a foundation of trust that enables sharing, face-to-face transactions and customized service

21 st Century Village Economy
21 st Century
Village
Economy
foundation of trust that enables sharing, face-to-face transactions and customized service 21 st Century Village Economy

COMMERCE HAD BEEN MOVING AWAY FROM THE VILLAGE MODEL FOR YEARS

HAD BEEN MOVING AWAY FROM THE VILLAGE MODEL FOR YEARS Price and selection have increased while

Price and selection have increased while trust, service and personal relationships have decreased

have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box

General Store

have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box
have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box

Main Streets

have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box
have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box

Big Box Store

8

have increased while trust, service and personal relationships have decreased General Store Main Streets Big Box

AT THE SAME TIME, WE ARE MOVING CLOSER AND CLOSER TOGETHER

1975

THE SAME TIME, WE ARE MOVING CLOSER AND CLOSER TOGETHER 1975 •   37% of the
THE SAME TIME, WE ARE MOVING CLOSER AND CLOSER TOGETHER 1975 •   37% of the

37% of the world population was urbanized 3 10M-person cities

9

2009

was urbanized •   3 10M-person cities 9 2009 •   50% of the world population
was urbanized •   3 10M-person cities 9 2009 •   50% of the world population

50% of the world population is urbanized 20 10M-person cities

Source: United Nations, Department of Economic and Social A airs

2025 Estimate

Department of Economic and Social A ff airs 2025 Estimate •   57% of the world

57% of the world population will be urbanized 29 10M-person cities

Social A ff airs 2025 Estimate •   57% of the world population will be urbanized

AT THE SAME TIME, WE ARE MOVING CLOSER AND CLOSER TOGETHER

1975

2009

2025 Estimate

MOVING CLOSER AND CLOSER TOGETHER 1975 2009 2025 Estimate 10 Source: United Nations, Department of Economic

10

Source: United Nations, Department of Economic and Social A airs

AND CLOSER TOGETHER 1975 2009 2025 Estimate 10 Source: United Nations, Department of Economic and Social

ODE CONNECTS OUR VILLAGE PAST TO OUR ECONOMIC FUTURE

Creating a new generation of entrants to the Fortune 500 and unlocking new levels of
Creating a new generation of
entrants to the Fortune 500 and
unlocking new levels of
economic productivity

11

FUTURE Creating a new generation of entrants to the Fortune 500 and unlocking new levels of

THIS IS THE ON-DEMAND ECONOMY (ODE)

THIS IS THE ON-DEMAND ECONOMY (ODE)

WHERE ATOMS MEET BITS

13

Cheaply reach the mass market Remove anonymity

+ establish trust

- reputation systems

Eciently mobilize supply chains and workforces Enable collaboration and asset sharing

Mobile
Mobile
Social
Social
Transactional
Transactional
mobilize supply chains and workforces •   Enable collaboration and asset sharing Mobile Social Transactional

OR: The pervasive, instant-access marketplace of goods and services tailored to individual needs, often facilitated by asset- sharing and distributed supply chains.

DEFINING ODE

Instant, pervasive access to goods and services, tailored to individual needs, often without the burden of long- term ownership or commitment

Combining the best of the village economy with the best of modern commerce

14

burden of long- term ownership or commitment Combining the best of the village economy with the

ODE BRINGS THE VILLAGE TO SCALE

15

Collaboration Shared Resources Networked Devices

Trust Reputation Networks

Choice Wide variety of selection

Price Operates at scale Eliminates middleman to bring cost- savings to the consumer

Geographic Accessibility Pervasive mobile connectivity unites people in urban areas

savings to the consumer Geographic Accessibility •   Pervasive mobile connectivity unites people in urban areas

ODE SELF-REGULATES

16

Algorithms determine value, trust and reputation

A system of distributed supply adjusts to demand

The marketplace turns individuals into entrepreneurs

Buyers and sellers can interact directly in relationships of trust

A “PeopleRank” algorithm determines the best suppliers and the best customers, based on reliability and reputation

Workers are liberated from bureaucracy as the best performers command the highest demand

Customers who behave badly have fewer choices

Marginalizing regulatory frameworks

command the highest demand –   Customers who behave badly have fewer choices Marginalizing regulatory frameworks

TECHNOLOGY AND CULTURAL SHIFTS THAT LAID THE GROUNDWORK FOR ODE

Netflix Netflix 3.5 B Ebay & founded Standalone Connected 1st DriveThru CraigsList Paypal TiVo iPod
Netflix
Netflix
3.5 B
Ebay &
founded
Standalone
Connected
1st DriveThru
CraigsList
Paypal
TiVo
iPod
Uber
Streaming
Internet
iPhone
McDonalds
Founded
Founded
Introduced
Introduced
introduced
AirBnB
iPad introduced
Devices
1970
1995
1998
1999
2001
2007
2009
2010
2012
2013
VHS
iTunes hits
4 MM
Sharing
Facebook
2B song
Foreclosures
Economy:
Reaches 1
VCR
Microwaves
in 25% of
U.S. Homes
Carnegie Mellon
releases first study
of digital
loneliness
downloads
filed
Publication
B Users
(2.2% of
of What’s
U.S.
Mine
Households)
Is Yours
Rise of Culture of
Convenience:
1960s-80s
Online Marketplaces:
1990s
Instant Video Delivery.
Virtualization &
Digitization: Early 2000s
Loneliness Crisis:
2004-2013
Rise of Social
Networking:2007-12
Popularization of the
Sharing Economy:
2010
Pervasive Mobile
Connectivity: 2013

17

Rise of Social Networking:2007-12 Popularization of the Sharing Economy: 2010 Pervasive Mobile Connectivity: 2013 17

INSTANT ACCESS TO DIGITIZED AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS

Media

Software

AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions
AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions
AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions
AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions

Reservation

Booking

Reservation Booking Financial Transactions

Financial

Transactions

GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18

Matchmaking

18

GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18
GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 18

NOW ODE CREATES INSTANT ACCESS TO PHYSICAL GOODS AND SERVICES AS WELL

19

Now

Next

Transportation

TO PHYSICAL GOODS AND SERVICES AS WELL 19 Now Next Transportation Labor & Services Real Estate
TO PHYSICAL GOODS AND SERVICES AS WELL 19 Now Next Transportation Labor & Services Real Estate

Labor & Services

Real Estate

TO PHYSICAL GOODS AND SERVICES AS WELL 19 Now Next Transportation Labor & Services Real Estate
TO PHYSICAL GOODS AND SERVICES AS WELL 19 Now Next Transportation Labor & Services Real Estate

Retail and Products

TO PHYSICAL GOODS AND SERVICES AS WELL 19 Now Next Transportation Labor & Services Real Estate

THE ODE EFFECT IS WIDE-REACHING

GrowthTHE ODE EFFECT IS WIDE-REACHING Contraction Consumers New levels of convenience, value and service to consumers

ContractionTHE ODE EFFECT IS WIDE-REACHING Growth Consumers New levels of convenience, value and service to consumers

Consumers

Consumers New levels of convenience, value and service to consumers

New levels of convenience, value and service to consumers

Industries

Displacing incumbents

Employment

Employment Entrepreneurize broad swaths of the workforce

Entrepreneurize broad swaths of the workforce

Markets

Markets

Expanding underlying markets

Middlemen and Regulators

Middlemen and Regulators

Killing value-leaching intermediaries

Cultural and Social Impact

Change the landscape of how we live today

20

Killing value-leaching intermediaries Cultural and Social Impact Change the landscape of how we live today 20

EXPLOSION OF VC DOLLARS INVESTED IN ODE

VC Investment in ODE: Physical ($B)

Non-US $0.3 Based US-Based $0.2 $1.3 $0.2 Companies $0.1 $0.5 $0.5 $0.4 $0.1 $0.1 2009
Non-US
$0.3
Based
US-Based
$0.2
$1.3
$0.2
Companies
$0.1
$0.5
$0.5
$0.4
$0.1
$0.1
2009
2010
2011
2012
2013
17
30
55
78
117

# of Companies:

21

Source: Crunchbase

$0.5 $0.5 $0.4 $0.1 $0.1 2009 2010 2011 2012 2013 17 30 55 78 117 #

REPRESENTING AN INCREASING SHARE OF VC DOLLARS

VC Investment in ODE: Physical ($B)

4.6% 2.0% 1.7% 1.5% 0.5% 2009 2010 2011 2012 2013 % of dollars
4.6%
2.0%
1.7%
1.5%
0.5%
2009
2010
2011
2012
2013
% of dollars

*Note: Moneytree data estimated for Q4 2013

22

Source: PWC Moneytree, Crunchbase

2010 2011 2012 2013 % of dollars *Note: Moneytree data estimated for Q4 2013 22 Source:

LET'S TAKE A CLOSER LOOK AT 4 KEY ODE SEGMENTS AND HOW THEY ARE SHAPING THE FUTURE

23

1
1
2 3
2
3
4
4

Transportation Real Estate Labor Retail & Products

AND HOW THEY ARE SHAPING 
 THE FUTURE 23 1 2 3 4 T ransportation R

A CLOSER LOOK AT ODE NEXT: TRANSPORTATION DEMAND

24

1
1
2 3
2
3
4
4

Transportation Real Estate Labor Retail & Products

LOOK AT ODE NEXT: 
 TRANSPORTATION DEMAND 24 1 2 3 4 T ransportation R eal

TRANSPORTATION ON DEMAND: KEY AREAS

Car Services and Taxi Hailing

Car Services and Taxi Hailing

Car

Sharing

Car Sharing

25

Other

Vehicle

Sharing

Other Vehicle Sharing

Mass

Transit

Alternatives

Mass Transit Alternatives
DEMAND: KEY AREAS Car Services and Taxi Hailing Car Sharing 25 Other Vehicle Sharing Mass Transit

TRANSPORTATION ON DEMAND: A CLOSER LOOK AT CAR SERVICES

Car Services and Taxi Hailing

Car Services and Taxi Hailing

Car

Sharing

Car Sharing

26

Other

Vehicle

Sharing

Other Vehicle Sharing

Mass

Transit

Alternatives

Mass Transit Alternatives
AT CAR SERVICES Car Services and Taxi Hailing Car Sharing 26 Other Vehicle Sharing Mass Transit

CAR SERVICES STARTUPS: OVER $1B RAISED GLOBALLY FROM 2009-2013

US Competitors


 OVER $1B RAISED GLOBALLY FROM 2009-2013 US Competitors $308M $83M $20M $51M $23M $42M YC

$308M

$83MOVER $1B RAISED GLOBALLY FROM 2009-2013 US Competitors $308M $20M $51M $23M $42M YC Seed N/A

$20M$1B RAISED GLOBALLY FROM 2009-2013 US Competitors $308M $83M $51M $23M $42M YC Seed N/A 27

$51MGLOBALLY FROM 2009-2013 US Competitors $308M $83M $20M $23M $42M YC Seed N/A 27 Source: Crunchbase

GLOBALLY FROM 2009-2013 US Competitors $308M $83M $20M $51M $23M $42M YC Seed N/A 27 Source:

$23M

$42MFROM 2009-2013 US Competitors $308M $83M $20M $51M $23M YC Seed N/A 27 Source: Crunchbase Capital

FROM 2009-2013 US Competitors $308M $83M $20M $51M $23M $42M YC Seed N/A 27 Source: Crunchbase

YC Seed

N/AUS Competitors $308M $83M $20M $51M $23M $42M YC Seed 27 Source: Crunchbase Capital raised International

27

Source: Crunchbase

Capital

raised

International

Seed N/A 27 Source: Crunchbase Capital raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A
Seed N/A 27 Source: Crunchbase Capital raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A

Didi Dache

Kuaidi DacheSource: Crunchbase Capital raised International Didi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M

YaoyaozhaocheCapital raised International Didi Dache Kuaidi Dache $265M $115M N/A N/A $37M $14M $11M $9M $6M

raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M
raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M
raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M
raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M
raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M
raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M

$265M

$115M

N/A

N/A

$37M

$14M

$11M

$9M

$6M

$4M

Capital

raised

raised International Didi Dache Kuaidi Dache Yaoyaozhaoche $265M $115M N/A N/A $37M $14M $11M $9M $6M

THIS COMES AS NO SURPRISE TO EARLY INVESTORS IN ON-DEMAND CAR SERVICES

Better Passenger Experience

IN ON-DEMAND CAR SERVICES Better Passenger Experience Better Driver Experience Transportation Network Companies
IN ON-DEMAND CAR SERVICES Better Passenger Experience Better Driver Experience Transportation Network Companies

Better Driver Experience

Better Passenger Experience Better Driver Experience Transportation Network Companies (TNCs) like Uber have

Transportation Network Companies (TNCs) like Uber have already established a foothold in key markets and are now taking share from traditional car services options

28

Uber have already established a foothold in key markets and are now taking share from traditional

TNCS TURN ANYONE WITH A CAR INTO A CHAUFFEUR AND ANYONE WITH CELL PHONE INTO A POTENTIAL FARE

TNCS TURN ANYONE WITH A CAR INTO A CHAUFFEUR AND ANYONE WITH CELL PHONE INTO A

29

TNCS TURN ANYONE WITH A CAR INTO A CHAUFFEUR AND ANYONE WITH CELL PHONE INTO A

HOW IS THIS IMPACTING THE TRADITIONAL TRANSPORTATION MARKET?

A proprietary deep dive in San Francisco

Why San Francisco?

A proprietary deep dive in San Francisco Why San Francisco? •   The 3 leading US

The 3 leading US Transportation Network Companies (TNCs) – Uber, Lyft, Sidecar – all began in SF Each city is a self-contained marketplace TNCs have had to most time in SF to reach a scale of supply (drivers), demand (passengers), and liquidity (rides) that might be measurably impacting incumbent providers.

Unprecedented Data Discovery

impacting incumbent providers. Unprecedented Data Discovery 30 •   Dozens of interviews with SFMTA o ffi
impacting incumbent providers. Unprecedented Data Discovery 30 •   Dozens of interviews with SFMTA o ffi
impacting incumbent providers. Unprecedented Data Discovery 30 •   Dozens of interviews with SFMTA o ffi
impacting incumbent providers. Unprecedented Data Discovery 30 •   Dozens of interviews with SFMTA o ffi

30

Dozens of interviews with SFMTA o cials, taxi company executives, industry consultants, and service providers Raw taxicab fare data

Approximately 10% of the city’s taxi fleet

Every transaction that runs through the taxi meter

August, September, and October 2010 through 2013

In total, millions of trips representing tens of millions of dollars in fares

Database of TNC Drivers

Collected by the SFCDA

Sherpa TNC Survey

Over 100 TNC and taxi driver interviews and test trips

  Collected by the SFCDA •   Sherpa TNC Survey –   Over 100 TNC and

LEGAL US CAR SERVICES MARKET ESTIMATED TO BE ~$50B ANNUALLY

Annual US Car Services Revenue ($B)

$50 $45 $10 Limo $40 Services $35 $30 $16 Remainder of Urban US $25 $20
$50
$45
$10
Limo
$40
Services
$35
$30
$16
Remainder
of Urban US
$25
$20
$15
Taxi &
300 Most
$10
Limousine
$21
Populated
Service
Cities
$5
$10
Industry
$0
!

IBIS World

Sherpa Estimate

Estimate is based on our analysis of 2M taxi trips and other nonpublic data sources

31

Source: SFMTA Taxi and Accessible Services Division; “Managing Taxi Supply” and “Taxi User Survey” Hara Associates

Source: SFMTA Taxi and Accessible Services Division; “Managing Taxi Supply” and “Taxi User Survey” Hara Associates

BEFORE TNCS, SAN FRANCISCO HAD THREE CAR SERVICE OPTIONS

Taxicabs

SAN FRANCISCO HAD 
 THREE CAR SERVICE OPTIONS Taxicabs •   Charge by the minute/ mile

Charge by the minute/ mile Prices + supply set by SFMTA Notoriously unreliable

43% of calls to taxi dispatcher result in a car showing up*

32

Bandits (Gypsy cabs)

result in a car showing up* 32 Bandits (Gypsy cabs) •   Illegal taxicabs •  

Illegal taxicabs Charge premium to legal taxis Patronize at your own risk

Limo Service

taxis •   Patronize at your own risk Limo Service •   >$60 per hour +

>$60 per hour + tip + gas Require advanced booking Often require multi-hour minimums

advanced booking •   Often require multi-hour minimums Source: San Francisco Public Convenience and Necessity

Source: San Francisco Public Convenience and Necessity Report (February, 2006)

THE COMBINATION OF CONSISTENT PATROLS AND TNC ALTERNATIVES HAVE NEARLY ERADICATED BANDITS

Estimated # of Active Bandits 160 140 Q3 ‘11: SFMTA Begins Enforcement Q2 ‘13: Regular
Estimated # of Active Bandits
160
140
Q3 ‘11: SFMTA
Begins
Enforcement
Q2 ‘13: Regular
Patrols
Implemented
120
100
80
High
60
Estimate
40
Low
20
Estimate
0
Jun-11
Dec-12
Dec-13
Citations
13
40
54

Issued:

33

Source: SFMTA Taxi and Accessible Services Division

Estimate 0 Jun-11 Dec-12 Dec-13 Citations 13 40 54 Issued: 33 Source: SFMTA Taxi and Accessible

SF TAXI REVENUE WAS RELATIVELY FLAT IN 2013, AFTER A DRAMATIC RISE FROM 2010 TO 2012

SF Taxi Industry Revenue ($M)

(3%) $400 $368 $358 $340 $350 $300 $270 $250 $200 +8% $150 $100 $50 $0
(3%)
$400
$368
$358
$340
$350
$300
$270
$250
$200
+8%
$150
$100
$50
$0
2010
2011
2012
2013
!

34

$200 +8% $150 $100 $50 $0 2010 2011 2012 2013 ! 34 Source: SFMTA Taxi and

Source: SFMTA Taxi and Accessible Services Division; “Taxi User Surveys” Hara Associates

TNCS IN SF PRODUCED AN ESTIMATED ~$140M IN REVENUE IN 2013

2013 TNC Revenue Estimate ($M) (SF Only)

$106

$19

UberSUV

 

$38

UberBLACK

 
   

$28

$48

uberx

 

$9

Uber

Lyft

SideCar

15%

76%

SF Share of Cos Overall Revenue:

35

1 5 % 7 6 % SF Share of Co ’ s Overall Revenue: 35 Source:

WHILE THE TAXI MARKET WAS ESSENTIALLY FLAT, TNCS GREW NEARLY 450%

SF Taxi vs. TNC Revenue ($M)

$368

$358

Taxi

$75

$143

Limo

$100

$32

TNC

2012

2013

Note: 2% weekly growth rate assumed for all TNCs throughout 2012

36

weekly growth rate assumed for all TNCs throughout 2012 36 Source: SFMTA Taxi and Accessible Services

Source: SFMTA Taxi and Accessible Services Division; “Taxi User Surveys” Hara Associates

WHATS DRIVING THIS TNC GROWTH?

Limo Companies Converting Fleets To UBER

Commonly use lead generation services to source customers Uber is a lead gen tool that enables real-time booking

Limos now able to charge by the minute rather than only by the hour or several hours

37

Un-Met Taxi Demand

SF has always had an insu cient number of taxis Any fixed supply system = woefully inadequate during peak demand periods Typical wait times for taxis >20 minute; system breaks during demand spikes

Passengers starving for any reliable, real-time car service TNCs’ dynamic supply model capable of matching passenger demand patterns

Car Service Market Share Theft + Expansion

Avg. wait times for Uber are 4-6 minutes As of Jan. ‘14, uberX costs over 40% less than taxis

People using TNCs even when they could have taken taxis People using TNCs when they wouldn’t even have considered taxis

TNCs even when they could have taken taxis •   People using TNCs when they wouldn’t

THERES ANOTHER SIDE TO THIS STORY

38

THERE ’ S ANOTHER SIDE TO THIS STORY 38

SEVERAL INTERMEDIARIES COME BETWEEN A DRIVER AND A TAXICAB

39

Gov. Regulators Medallion Owner (Senior Taxi Drivers) Taxi Company •  •  Own + Maintain Fleet
Gov.
Regulators
Medallion Owner
(Senior Taxi Drivers)
Taxi Company
• 
• 
Own + Maintain
Fleet of Taxis
• 
•  
Drivers Purchase
Medallion From
SFMTA For $250K
Lease To Taxi
Company
• 
• 
• 
Set Medallion
Supply + Purchase
Price
Set Gate Fees
Set Fare Prices
• 
Run Dispatching
System
Charge Drivers
–   Multi-year
contracts
Per Shift
–   $104 Gate Fee
–   Current lease rate
is $2.6K per
month
–   $7-$15 Tip
–   5-10 year payo ff

Net Result: Drivers pay ~$115 plus gas for each shift whether they end up making that much or not

Driver
Driver
Taxicab
Taxicab
payo ff Net Result: Drivers pay ~$115 plus gas for each shift whether they end up

TNCS ARE AN ATTRACTIVE ALTERNATIVE FOR DRIVERS

Pricing Model

Schedule

Safety

Taxi

Median driver spends the first 5 hours of a 10 hour shift paying o Gate fees and tips before he earns a cent

Weekly schedule of 10- hour shifts Seniority, tips determine access to the best shifts + vehicles

Taxi + Limo driving more dangerous than firefighting

21.3 fatalities per 100K vs. 17.4

Primarily assaults + car crashes

respectively

60% of fares paid in cash

Median driver has >$200 in cash at the end of a shift Street hails = anonymous passengers

TNCs

Flat percentage fee

80 cents of every dollar goes into the drivers pocket

Wherever, whenever

driver wants to work

No more fighting over who gets to work Saturday night

Carry no cash Every passenger “known”

In last 12 months, one-third of SF taxi drivers moved to TNCs* 20% of TNC drivers are former taxi drivers**

40

*SFCDA Report **Sherpa TNC Driver Survey

drivers moved to TNCs* •   20% of TNC drivers are former taxi drivers** 40 *SFCDA

WHILE MANY TAXI DRIVERS STILL MAKE GOOD MONEY, NEARLY 40% FAIL TO EARN $20 PER HOUR

2013 Driver Hourly Earnings* By Decile

$36 $31 $27 $25 $22 $20 $17 $14 $10 90% 80% 70% 60% 50% 40%
$36
$31
$27
$25
$22
$20
$17
$14
$10
90%
80%
70%
60%
50%
40%
30%
20%
10%

*Note: Excludes fuel cost, assumes 10 hour shift; $117 for Gate Fees, Payment Processing, and Tips

41

Source: SFMTA Taxi and Accessible Services Division

10 hour shift; $117 for Gate Fees, Payment Processing, and Tips 41 Source: SFMTA Taxi and

TNC DRIVERS EARN VIRTUALLY THE SAME AMOUNT AS THEIR TAXI COUNTERPARTS

2013 Estimated Driver Earnings Per Hour* $90 $80 Median Taxi Driver $70 $60 Max $50
2013 Estimated Driver Earnings Per Hour*
$90
$80
Median Taxi Driver
$70
$60
Max
$50
$40
$35
Weighted 

Avg.
Min
$30
$20
$10
$0
UberBlack
uberX
Lyft
Sidecar

*Note: Excludes cost of fuel, insurance, vehicle maintenance and financing; assumes 20% marketplace fee from all TNC services except for uberX which was 15% in 2013 (currently 5%)

42

and financing; assumes 20% marketplace fee from all TNC services except for uberX which was 15%

THE TAXI DRIVER SHORTAGE HAS BEGUN

Change in SF Taxi Revenue, $M

+$45

-$14

-$41

$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358

$368

$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358
 
 

12%

More

Taxis

$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358

4%

Lower

Driver

Earnings

$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358
$368   12% More Taxis 4% Lower Driver Earnings $358

$358

11%

Fewer

Drivers

2012

2013

*Note: Excludes cost of fuel, insurance, vehicle maintenance and financing; assumes 20% marketplace fee from all TNC services except for uberX which was 15% in 2013 (currently 5%)

43

Source: SFMTA Taxi and Accessible Services Division

TNC services except for uberX which was 15% in 2013 (currently 5%) 43 Source: SFMTA Taxi

IN FACT, A TAXI DRIVER SHORTAGE HAS BEEN BREWING SINCE 2011

% = YoY Change

2011

2011

2012

2012

2013

2013
# of taxis Earnings/shift Shifts worked 15% 12% 7% 7% 4% 1% 0% -4% -11%
# of taxis
Earnings/shift
Shifts worked
15%
12%
7%
7%
4%
1%
0%
-4%
-11%

44

Source: Sherpa TNC Survey

2013 # of taxis Earnings/shift Shifts worked 15% 12% 7% 7% 4% 1% 0% -4% -11%

UBERX FARES WILL CONTINUE FALLING AND COULD EASILY REACH 70% BELOW THE COST OF A TAXI

2013 Driver Earnings / Hour*

Car Service Ride Cost

(Normalized to $20 Taxi Trip**)

$25

$22

Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22
Ride Cost (Normalized to $20 Taxi Trip**) $ 2 5 $22 uberX Estimate Taxi Actual 22

uberX Estimate

Taxi Actual

22 Minutes of Fares / Hour
22 Minutes of
Fares / Hour
$20.0 $13.4 $6.7 Taxi uberX
$20.0
$13.4
$6.7
Taxi
uberX
Assumes 44 Minutes of Fares / Hour – Holding Driver Income Constant
Assumes 44 Minutes of
Fares / Hour – Holding
Driver Income Constant

*Note: Excludes cost of fuel, insurance, vehicle maintenance and financing; assumes 20% marketplace fee from all TNC services except for uberX which was 15% in 2013 (currently 5%) **Note: Assumes 15% tip per taxi fare

*Source: Sherpa TNC Survey

except for uberX which was 15% in 2013 (currently 5%) **Note: Assumes 15% tip per taxi

UBER AGGRESSIVELY DROPPING PRICES AS FARE DEMAND INCREASES

UBER AGGRESSIVELY DROPPING PRICES AS FARE DEMAND INCREASES Actual results for trial period reveal 1% increase
UBER AGGRESSIVELY DROPPING PRICES AS FARE DEMAND INCREASES Actual results for trial period reveal 1% increase

Actual results for trial period reveal 1% increase to driver income

46

DROPPING PRICES AS FARE DEMAND INCREASES Actual results for trial period reveal 1% increase to driver

THE NETWORK EFFECT OF UBERS MODEL IS POWERFUL

47

First order e ff ect More passengers More drivers
First order e ff ect
More
passengers
More
drivers
Second order e ff ect Driver Passengers Fares Join / Hour Rise Uber Lowers Prices
Second order e ff ect
Driver
Passengers
Fares
Join
/ Hour
Rise
Uber
Lowers
Prices
passengers More drivers Second order e ff ect Driver Passengers Fares Join / Hour Rise Uber

WHAT HAPPENS TO EVERYONE ELSE?

Taxi Service

500 more taxis added by 2017 (25% increase) Fare + Gate Fees remain static Cannot compete with TNCs

Market-based prices

Dynamic supply

Accruing reputation system

– Market-based prices – Dynamic supply – Accruing reputation system Decline in driver quality 48

Decline in driver quality

48

Taxi Company

Increasing di cultly recruiting and retaining drivers Causing utilization (taxi shifts covered / taxi shifts available) and profitability to plummet

/ taxi shifts available) and profitability to plummet Companies saddled with expensive medallion leases will fail

Companies saddled with expensive medallion leases will fail

Medallion Owner (Subset of Taxi Drivers)

As utilization falls, so do future lease rates (medallion cash flows) Medallion values approach zero

cash flows) •   Medallion values approach zero Owners end up under-water on medallion financing Currently

Owners end up under-water on medallion financing Currently 10% APR à total costs ~2X purchase price

approach zero Owners end up under-water on medallion financing Currently 10% APR à total costs ~2X

SF TAXI MEDALLION LEASE RATES ARE FALLING PRECIPITOUSLY

SF Taxi Medallions Issued Vs. Monthly Lease Rates (‘000)

2,000

1,800

1,600

1,400

1,200

1,000

49

800

600

400

200

0

Medallions

issued

Monthly Lease Rates

$6

$5

$4

$3

$2

$1

$0

$5.2 $4.6
$5.2
$4.6

$1.6

2000

2002

2004

2006

2008

2010 2012
2010
2012

Source: SFMTA Taxi and Accessible Services

SUMMARY

The personalized, on-demand nature of TNCs have virtually eliminated the car services gray market in San Francisco and is now driving a fundamental shift in the underlying economics of the market for car services, with the total market expanding, while taxis themselves are losing ground.

50

of the market for car services, with the total market expanding , while taxis themselves are

TRANSPORTATION ON DEMAND: A CLOSER LOOK AT CAR SHARING

Car Services and Taxi Hailing

Car Services and Taxi Hailing

Car

Sharing

Car Sharing

51

Other

Vehicle

Sharing

Other Vehicle Sharing

Mass

Transit

Alternatives

Mass Transit Alternatives
LOOK AT CAR SHARING Car Services and Taxi Hailing Car Sharing 51 Other Vehicle Sharing Mass

AS WITH TAXIS, WE HAVE A TOLERATE / HATE RELATIONSHIP WITH RENTAL CAR AGENCIES

52

AS WITH TAXIS, WE HAVE A TOLERATE / HATE RELATIONSHIP WITH RENTAL CAR AGENCIES 52

ZIPCAR WAS AN IMPORTANT INNOVATION IN ON- DEMAND DELIVERY OF RENTAL CARS

IMPORTANT INNOVATION IN ON- DEMAND DELIVERY OF RENTAL CARS Rental Increment By the day By the
IMPORTANT INNOVATION IN ON- DEMAND DELIVERY OF RENTAL CARS Rental Increment By the day By the
IMPORTANT INNOVATION IN ON- DEMAND DELIVERY OF RENTAL CARS Rental Increment By the day By the

Rental Increment

By the day

By the half hour

Vehicle Locations

Increment By the day By the half hour Vehicle Locations 20 locations run by 7 di

20 locations run by 7 dierent companies

the half hour Vehicle Locations 20 locations run by 7 di ff erent companies 140 locations

140 locations via Zipcar

Pickup Process

53

the half hour Vehicle Locations 20 locations run by 7 di ff erent companies 140 locations
the half hour Vehicle Locations 20 locations run by 7 di ff erent companies 140 locations
the half hour Vehicle Locations 20 locations run by 7 di ff erent companies 140 locations

LEVERAGING A PEER-TO-PEER SUPPLY STRATEGY, GETAROUND HAS BECOME A STRONGER ZIPCAR

SUPPLY STRATEGY, GETAROUND HAS BECOME A STRONGER ZIPCAR Rental Increment As low as $8.25/hour + Annual
SUPPLY STRATEGY, GETAROUND HAS BECOME A STRONGER ZIPCAR Rental Increment As low as $8.25/hour + Annual

Rental Increment

As low as $8.25/hour + Annual Membership Fee

As low as $5.50/hour

Vehicle Locations

Annual Membership Fee As low as $5.50/hour Vehicle Locations 140 locations, ~300 vehicles* ~100 locations +

140 locations, ~300 vehicles*

$5.50/hour Vehicle Locations 140 locations, ~300 vehicles* ~100 locations + vehicles* Pickup Process 54 10-15 vehicle

~100 locations + vehicles*

Pickup Process

54

10-15 vehicle types

*Note: Cars available in early January 2014 as of mid-December

Dozens of di erent models

54 10-15 vehicle types *Note: Cars available in early January 2014 as of mid-December Dozens of

AND TOMORROW GETAROUND WILL SUPERSEDE ITS CAPITAL INTENSIVE ELDER

55

GETAROUND WILL SUPERSEDE ITS CAPITAL INTENSIVE ELDER 55 Meaningful owner earnings driving rapid supply growth value
GETAROUND WILL SUPERSEDE ITS CAPITAL INTENSIVE ELDER 55 Meaningful owner earnings driving rapid supply growth value

Meaningful owner earnings driving rapid supply growth value

Growth improving customer access and value

INTENSIVE ELDER 55 Meaningful owner earnings driving rapid supply growth value Growth improving customer access and
INTENSIVE ELDER 55 Meaningful owner earnings driving rapid supply growth value Growth improving customer access and

ADVANCEMENTS IN ON-DEMAND TRANSPORTATION WILL CHANGE THE LANDSCAPE OF URBAN LIFE

56

Outlying Neighborhoods Gain Accessibility

Fewer People Will Buy Cars

WILL CHANGE THE LANDSCAPE OF URBAN LIFE 56 Outlying Neighborhoods Gain Accessibility Fewer People Will Buy

NEW VARIETIES OF URBAN TRANSIT ARE ALSO REDUCING THE NECESSITY OF CAR OWNERSHIP

Gov-sponsored Bike-Sharing

OF URBAN TRANSIT ARE ALSO REDUCING THE NECESSITY OF CAR OWNERSHIP Gov-sponsored Bike-Sharing 57 Private Company

57

Private Company Busing

OF URBAN TRANSIT ARE ALSO REDUCING THE NECESSITY OF CAR OWNERSHIP Gov-sponsored Bike-Sharing 57 Private Company
OF URBAN TRANSIT ARE ALSO REDUCING THE NECESSITY OF CAR OWNERSHIP Gov-sponsored Bike-Sharing 57 Private Company

WHAT IF OUR CITIES WERE NO LONG CLUTTERED WITH PLACES TO STORE CARS?

58

WHAT IF OUR CITIES WERE NO LONG CLUTTERED WITH PLACES TO STORE CARS? 58

AND THE GROUND FLOOR OF EVERY TOWNHOUSE NO LONGER HAD TO BE A GARAGE?

59

AND THE GROUND FLOOR OF EVERY TOWNHOUSE NO LONGER HAD TO BE A GARAGE? 59

AND THE GROUND FLOOR OF EVERY TOWNHOUSE NO LONGER HAD TO BE A GARAGE?

60

AND THE GROUND FLOOR OF EVERY TOWNHOUSE NO LONGER HAD TO BE A GARAGE? 60

TRANSPORTATION ON DEMAND: IMPACT

Winners

 
 

End User:

Cheap + reliable car service Cheap + ubiquitous car rental

Passengers

End User:

Safer + more flexible employment Keep more of what they earn Enormous job growth

Drivers

Societal Impact

Losers

Medallion

Medallion values approach zero

Owners

Taxi

Passengers shift auto spend from ownership to services + rental

Companies

Commercial Garage Owners

Car Manufacturers + Dealers

Development + gentrification of outlying neighborhoods No more garages à repurposing of space Less + greener consumption

61

of outlying neighborhoods •   No more garages à repurposing of space •   Less +

A CLOSER LOOK AT ODE NEXT: REAL ESTATE ON DEMAND

62

1
1
2 3
2
3
4
4

Transportation Real Estate Labor Retail & Products

LOOK AT ODE NEXT: 
 REAL ESTATE ON DEMAND 62 1 2 3 4 T ransportation

REAL ESTATE ON DEMAND: KEY AREAS

New

Hospitality

Products

New Hospitality Products

Parking & Storage on Demand

Parking & Storage on Demand

63

Metered

Business

Rentals

Metered Business Rentals
ESTATE ON DEMAND: KEY AREAS New Hospitality Products Parking & Storage on Demand 63 Metered Business

REAL ESTATE ON DEMAND: A CLOSER LOOK AT NEW HOSPITALITY PRODUCTS

New

Hospitality

Products

New Hospitality Products

Parking & Storage on Demand

Parking & Storage on Demand

64

Metered

Business

Rentals

Metered Business Rentals
AT NEW HOSPITALITY PRODUCTS New Hospitality Products Parking & Storage on Demand 64 Metered Business Rentals

THE HOSPITALITY INDUSTRY HAS LONG HAD AN ESTABLISHED SET OF PRODUCT OFFERINGS

Motels

HAS LONG HAD AN ESTABLISHED SET OF PRODUCT OFFERINGS Motels Hotels Resorts •   Development takes

Hotels

HAD AN ESTABLISHED SET OF PRODUCT OFFERINGS Motels Hotels Resorts •   Development takes years and

Resorts

ESTABLISHED SET OF PRODUCT OFFERINGS Motels Hotels Resorts •   Development takes years and enormous capital,

Development takes years and enormous capital, requiring high leverage ratios Supply managed to 80%+ occupancy Multi-decade replacement cycles

65

requiring high leverage ratios •   Supply managed to 80%+ occupancy •   Multi-decade replacement cycles

ONLINE MARKETPLACES ARE NOW CHANGING THAT PARADIGM BY FACILITATING PEER-TO-PEER RENTALS

ONLINE MARKETPLACES ARE NOW CHANGING THAT PARADIGM BY FACILITATING PEER-TO-PEER RENTALS 66

66

ONLINE MARKETPLACES ARE NOW CHANGING THAT PARADIGM BY FACILITATING PEER-TO-PEER RENTALS 66

HOMEAWAY HAS BUILT SIGNIFICANT SCALE IN VACATION HOME RENTAL

Paid Listings Globally, 000’s 900 773 800 712 640 700 600 517 433 500 338
Paid Listings Globally, 000’s
900
773
800
712
640
700
600
517
433
500
338
400
20% CAGR
300
200
100
0
600 517 433 500 338 400 20% CAGR 300 200 100 0 Sales Estimate 1 (B)
Sales Estimate 1 (B) $12 $10.3 $9.3 $10 $8.3 $8 $6.7 $5.6 $6 $4.4 $4
Sales Estimate 1 (B)
$12
$10.3
$9.3
$10
$8.3
$8
$6.7
$5.6
$6
$4.4
$4
$2
$0
2
2008
2009
2010
2011
2012
2013
19% CAGR

Only ~13% of US Vacation homes Listed On HomeAway

1 Note: Assumes HomeAway paid listings generate $13K in sales

2 Note: Estimated Q4 listings growth by annualizing Q3 2013 results

67

Source: Company filings

generate $13K in sales 2 Note: Estimated Q4 listings growth by annualizing Q3 2013 results 67

LONG A STAPLE OF CRAIGSLIST, NEW PLATFORMS ARE MAKING SHORT-TERM RESIDENCE RENTALS MAINSTREAM

68

ARE MAKING SHORT-TERM RESIDENCE RENTALS MAINSTREAM 68 VC Funding   $284M $140M $25M $60M $23M

VC Funding

MAKING SHORT-TERM RESIDENCE RENTALS MAINSTREAM 68 VC Funding   $284M $140M $25M $60M $23M $16M
 

$284M

$140M

$140M

$25M

$25M

$60M

$60M

$23M

$23M

$16M

$16M

$2M

$2M

$2M

$2M

RESIDENCE RENTALS MAINSTREAM 68 VC Funding   $284M $140M $25M $60M $23M $16M $2M $2M

OF THESE, AIRBNB IS THE CLEAR LEADER

Total Listings Globally (As of January 2014; ‘000)

550

300 290 111 Airbnb Wimdu HouseTrip 9Flats
300
290
111
Airbnb
Wimdu
HouseTrip
9Flats

69

CLEAR LEADER Total Listings Globally (As of January 2014; ‘000) 550 300 290 111 Airbnb Wimdu

AIRBNB: PULLING AWAY FROM THE PACK

Total Listings By City (As of January 2014; ‘000)

33.9 20.5 9.6 7.3 6.7 6.2 5.4 4.7 5.1 3.7 3.6 2.7 4.1 2.9 1.9
33.9
20.5
9.6
7.3
6.7
6.2
5.4
4.7
5.1
3.7
3.6
2.7
4.1
2.9
1.9
1.0
1.3
1.4 0.8
1.1
1.5
0.4
NYC
Paris
Berlin
London
Rome
SF

Annualized Growth Rate Across 6 Cities Above 1 :

Annualized Growth Rate Across 6 Cities Above 1 : 54% 43% 10%
54%
54%
Annualized Growth Rate Across 6 Cities Above 1 : 54% 43% 10%
43%
43%
Annualized Growth Rate Across 6 Cities Above 1 : 54% 43% 10%

10%Annualized Growth Rate Across 6 Cities Above 1 : 54% 43%

70

Note: Annualized Nov. ’13 – Jan. ’14 listings growth rate

Across 6 Cities Above 1 : 54% 43% 10% 70 Note: Annualized Nov. ’13 – Jan.

AIRBNB: SIGNIFICANT GLOBAL SCALE

Airbnb # of Listings (‘000)

Airbnb # of Stays (M)

676 550 300 120 2008-2011 2012 2013 Inter-Cont Airbnb Listings By Region
676
550
300
120
2008-2011
2012
2013
Inter-Cont
Airbnb
Listings
By Region
53 6 3 1 1 2 2008-2011 2012 2013 Inter-Cont
53
6
3
1
1
2
2008-2011
2012
2013
Inter-Cont
Implies ~$7B in Revenue 2
Implies ~$7B
in Revenue 2

71

1 Note: InterContinental rooms + stays for 2012; assumes guests stay average of 3 nights per check in

2012; assumes guests stay average of 3 nights per check in 2 Stays last 6.4 nights

AIRBNB HAS QUICKLY DWARFED CRAIGSLIST

US Sales ($B)

$1.9 Annualized Esti- mate of Sublets/ Temporary Supply (Dec. ’13) $0.6
$1.9
Annualized Esti-
mate of Sublets/
Temporary Supply
(Dec. ’13)
$0.6

Avg. Stay:

72

2013 Airbnb Sales

~1 week

1

2013 Craigslist Supply

~6 weeks

2013 Airbnb Sales ~1 week 1 2013 Craigslist Supply ~6 weeks 1 Note: Assumes 1/3 of

1 Note: Assumes 1/3 of Airbnb stays in US, stays last 6.4 nights at nightly cost of $150

AIRBNB: VASTLY BETTER CUSTOMER EXPERIENCE THAN CRAIGSLIST

Craigslist

BETTER CUSTOMER EXPERIENCE 
 THAN CRAIGSLIST Craigslist 73 VS. Airbnb •   Transparent listing availability and

73

VS.
VS.

Airbnb

EXPERIENCE 
 THAN CRAIGSLIST Craigslist 73 VS. Airbnb •   Transparent listing availability and location •

Transparent listing availability and location Professionally photographed listings Comprehensive listing descriptions Instant booking Credit card acceptance

listings •   Comprehensive listing descriptions •   Instant booking •   Credit card acceptance

AND MORE TRUSTWORTHY

AND MORE TRUSTWORTHY 74 VS. •   Social connections visibility •   Prior guest reviews and

74

VS.
VS.
AND MORE TRUSTWORTHY 74 VS. •   Social connections visibility •   Prior guest reviews and

Social connections visibility Prior guest reviews and references O ine ID verification Credit Card Acceptance/ Collections Customer service hotline

  Credit Card Acceptance/ Collections •   Customer service hotline •   3% Host Fee •

3% Host Fee 6-12% Guest Fee

  Credit Card Acceptance/ Collections •   Customer service hotline •   3% Host Fee •

HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY?

75

HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75
HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 75

STILL TOO NASCENT TO NOTICEABLY IMPACT HOTEL REVENUE

$156 $18B Growth In 2012 $6.2 NYC $2.3 2012 US 2013 2013 Airbnb Lodging HomeAway
$156
$18B Growth In 2012
$6.2
NYC
$2.3
2012 US
2013 2013 Airbnb
Lodging
HomeAway
Estimate
2
Industy
Estimate
1
95.0%
3.8%
1.4%

US Sales ($B)

$160

$140

$120

$100

$80

$60

$40

$20

$0

Overall Share:

NYC ($B) $25 $21.7 $20 $15 $10 $5 $0.4 $0
NYC ($B)
$25
$21.7
$20
$15
$10
$5
$0.4
$0

2012 Hotels Aug. '12 - July '13 Airbnb

1 Note: Assumes HomeAway paid listings generate $13K in sales and 60% in US, annualized Q3 listings growth from Q3 2013

2 Note: Assumes 1/3 of Airbnb stays in US, stays last 6.4 nights at nightly cost of $180 (inclusive of fees)

76

Source: American Hotel and Lodging Association, Company filings

6.4 nights at nightly cost of $180 (inclusive of fees) 76 Source: American Hotel and Lodging

BUT A RECENT STUDY ARGUES THAT AIRBNB LISTINGS NEGATIVELY IMPACT LOCAL HOTEL REVENUE

THAT AIRBNB LISTINGS NEGATIVELY IMPACT LOCAL HOTEL REVENUE •   Based on the number of Airbnb
THAT AIRBNB LISTINGS NEGATIVELY IMPACT LOCAL HOTEL REVENUE •   Based on the number of Airbnb

Based on the number of Airbnb listings in Texas 1% increase in Airbnb listings results in a 0.05% decrease in hotel revenue 1% increase in hotel supply results in a 0.29% decrease in hotel revenue Doubling of Airbnb produces the following revenue shortfalls:

77

Budget hotels -2.1%

Economy hotels -2.6%

Mid-price hotels -0.9%

Upscale properties are insignificantly a ected

Economy hotels -2.6% – Mid-price hotels -0.9% – Upscale properties are insignificantly a ff ected

STILL, THE STORY IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT

Hotel Establishment

IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT Hotel Establishment 78 The

78

IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT Hotel Establishment 78 The

The Gray Market

IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT Hotel Establishment 78 The
IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT Hotel Establishment 78 The

STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS

STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS 79 Hotels Noted
STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS 79 Hotels Noted
STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS 79 Hotels Noted

79

Hotels Noted In Orange

STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS 79 Hotels Noted
STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS 79 Hotels Noted

AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST MIDTOWN WHERE THE HOTELS ARE CONCENTRATED

AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST MIDTOWN WHERE THE HOTELS ARE CONCENTRATED 80

80

AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST MIDTOWN WHERE THE HOTELS ARE CONCENTRATED 80

WHAT ARE GUESTS BOOKING ON SHORT-TERM RENTAL MARKETPLACES?

Wimdu Rome (Jan. 14 Run Rate; $M)

$250!

$200!

$150!

$100!

$50!

$0!

$234 $40 ! $182 ! $33 $28 !
$234
$40 !
$182
!
$33
$28 !

Total Supply!

Bookings !

Total Nights:

1.4M 205K
1.4M
205K

Avg. Price 1

Vacation Home

$259

Private Room

$115

Apartment

$190

85% of bookings are for apartments, with an average price of $190 per night

1 Includes Wimdu 9.5% fee; Supply and bookings estimates exclude Wimdu fee Note: Assumes listing unavailability due to new booking through Wimdu, assumes methodology captures 100% of bookings

81

Source: Sherpa proprietary research; ScrapingHub

booking through Wimdu, assumes methodology captures 100% of bookings 81 Source: Sherpa proprietary research; ScrapingHub

RESIDENCE RENTALS OFFER A MORE HUMAN EXPERIENCE AT VASTLY BETTER VALUE THAN HOTELS

1,400 sq ft 3 Bed, 2 Bath - $164/night Rome, Italy 260 sq ft Queen
1,400 sq ft 3 Bed, 2 Bath - $164/night
Rome, Italy
260 sq ft Queen - $165/night
Accommodates 6 (5.4X bigger than Hilton)
Full kitchen
•  Washer/Dryer
• 
• 
• 
Wi-Fi
540 sq ft Studio - $164/night
915 sq ft 3 Bed, 1 Bath - $164/night
Accommodates 3 (2X bigger than Hilton)
Full kitchen
•  Washer/Dryer
• 
• 
• 
• 
Accommodates 7 (3.5X bigger than Hilton)
Full kitchen
•  Washer/Dryer
• 
Wi-Fi
• 
Wi-Fi

Note: Inclusive of Wimdu booking fee

Median Price for Wimdu Rome Apartment: $164/ Night 1

82

•  Wi-Fi •  Wi-Fi Note: Inclusive of Wimdu booking fee Median Price for Wimdu Rome Apartment:

FACILITATES FAMILY/GROUP TRAVEL LIKE NOTHING THAT’S EXISTED BEFORE

83

Larger residence as opposed to multiple hotel rooms – 50% savings

Private kitchens to prepare meals – 50% savings over restaurant restaurant patronage

No additional fees for internet, entertainment access

Living rooms enable congregating outside of hotel lobbies

On premises washer/dryer enable lighter packing

Rentals outside of hotel districts where consumer staples more accessible + less expensive

enable lighter packing •   Rentals outside of hotel districts where consumer staples more accessible +

AIRBNB ALSO REMOVES TRADITIONAL HOSPITALITY’S POTENTIAL FOR MORAL HAZARD

Anonymous Transaction

POTENTIAL FOR MORAL HAZARD Anonymous Transaction Don’t break anything, but otherwise behave as badly 

POTENTIAL FOR MORAL HAZARD Anonymous Transaction Don’t break anything, but otherwise behave as badly 

POTENTIAL FOR MORAL HAZARD Anonymous Transaction Don’t break anything, but otherwise behave as badly 


Don’t break anything, but otherwise behave as badly as you want

84

Village-Based Commerce

behave as badly 
 as you want 84 Village-Based Commerce Treat my stu ff as you

Treat my stu as you would your own or face ostracism

Guests behave more responsibly

à Hosts more

willing to o er residences

à Guests

more willing to

rent them

behave more responsibly à Hosts more willing to o ff er residences à Guests more willing

FLEXIBLE SUPPLY CREATES ENORMOUS VALUE DURING LARGE EVENTS

FLEXIBLE SUPPLY CREATES ENORMOUS VALUE DURING LARGE EVENTS Airbnb adds 2,400 units of supply 85 Austin

Airbnb adds 2,400 units of supply

85

Austin Hotel Availability 1 Week Before SXSW

LARGE EVENTS Airbnb adds 2,400 units of supply 85 Austin Hotel Availability 1 Week Before SXSW

Huge

Premium

Fully

Booked

LARGE EVENTS Airbnb adds 2,400 units of supply 85 Austin Hotel Availability 1 Week Before SXSW

FOR HOSTS, SHORT-TERM RENTALS CAN BE AN ECONOMIC LIFE LINE

FOR HOSTS, SHORT-TERM RENTALS CAN BE AN ECONOMIC LIFE LINE 86 •   Substantial earnings power

86

Substantial earnings power

1 stay per month (6.4 nights, $165/night) = $13K per year

Entirely incremental revenue (under-utilized space)

In major markets, 2/3 of Airbnb hosts do not work full time

Airbnb UK Study:

Typical hosts earns $4,627 on Airbnb renting some or all of their residence 33 nights/ year

63% of hosts report using Airbnb income to pay bills they would otherwise struggle to have paid

33 nights/ year –   63% of hosts report using Airbnb income to pay bills they

PROFESSIONAL HOSTS PROVIDE A LARGE PORTION OF INVENTORY

Wimdu Listings by Host Size (# of Listings Managed) (Jan. ‘14)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

26% 28% 34% 31% 25% 23% 14% 10-49 Listings 33% 16% 17% 17% 9% 3
26%
28%
34%
31%
25%
23%
14%
10-49
Listings
33%
16%
17%
17%
9%
3
Listings
8%
6%
6%
8%
7%
2
Listings
9%
9%
19%
20%
1
Listing
15%
16%
Istanbul
Barcelona
London
Rome

>50 Listings

4-9 Listings

Professional

Property

Managers

87

Source: Sherpa proprietary research; ScrapingHub

Rome >50 Listings 4-9 Listings Professional Property Managers 87 Source: Sherpa proprietary research; ScrapingHub

THESE HOSTS ARE SMALL BUSINESSES

THESE HOSTS ARE SMALL BUSINESSES •   15 Wimdu listings •   25 Wimdu reviews over
THESE HOSTS ARE SMALL BUSINESSES •   15 Wimdu listings •   25 Wimdu reviews over
THESE HOSTS ARE SMALL BUSINESSES •   15 Wimdu listings •   25 Wimdu reviews over
THESE HOSTS ARE SMALL BUSINESSES •   15 Wimdu listings •   25 Wimdu reviews over

15 Wimdu listings 25 Wimdu reviews over 2 years 126 TripAdvisor reviews 1,557 Facebook Likes

88

126 TripAdvisor reviews •   1,557 Facebook Likes 88 •   67 Airbnb listings •  
126 TripAdvisor reviews •   1,557 Facebook Likes 88 •   67 Airbnb listings •  
126 TripAdvisor reviews •   1,557 Facebook Likes 88 •   67 Airbnb listings •  

67 Airbnb listings Run by former HomeAway executives

reviews •   1,557 Facebook Likes 88 •   67 Airbnb listings •   Run by

THIS IS ONLY THE BEGINNING OF THE PEER-TO- PEER RESIDENCE RENTAL WAVE

89

THIS IS ONLY THE BEGINNING OF THE PEER-TO- PEER RESIDENCE RENTAL WAVE 89

PROFESSIONAL HOSTING IS SIMPLE AND LUCRATIVE

Rent for $164 / night Break even w/ 14 nights booked per month $1,500 gross
Rent for $164 / night
Break even w/ 14 nights booked
per month
$1,500 gross margin w/ 24 nights
booked per month
Central Rome (italy) location 800 sq ft 1 Bed, 1 Bath Furnished $2,000/month + $100/month

Central Rome (italy) location 800 sq ft 1 Bed, 1 Bath Furnished

$2,000/month

+ $100/month utilities

1 Note: Median price for central Rome apartments; Inclusive of Wimdu booking fee

90

$2,000/month + $100/month utilities 1 Note: Median price for central Rome apartments; Inclusive of Wimdu booking

EVEN IN THE MOST MATURE CITIES, PENETRATION IS STILL VERY LOW

Total Listings / Housing Units (Sum of Airbnb, Wimdu, HouseTrip, and 9Flats Listings)

3.1% 1.8% 1.3% 1.1% 1.0% 0.4% Paris SF Rome Berlin NYC London
3.1%
1.8%
1.3%
1.1%
1.0%
0.4%
Paris
SF
Rome
Berlin
NYC
London

Hosting is equally lucrative across all cities

91

Source: Sherpa proprietary research

Paris SF Rome Berlin NYC London Hosting is equally lucrative across all cities 91 Source: Sherpa

ECOSYSTEM DEVELOPMENT: HOSTING AUTOMATION

ECOSYSTEM DEVELOPMENT: 
 HOSTING AUTOMATION Partnered with dozens of property management companies 92 Tech-Enabled
ECOSYSTEM DEVELOPMENT: 
 HOSTING AUTOMATION Partnered with dozens of property management companies 92 Tech-Enabled

Partnered with dozens of property management companies

92

Partnered with dozens of property management companies 92 Tech-Enabled Cleaning Services Full-Service Hosting
Partnered with dozens of property management companies 92 Tech-Enabled Cleaning Services Full-Service Hosting
Partnered with dozens of property management companies 92 Tech-Enabled Cleaning Services Full-Service Hosting

Tech-Enabled Cleaning Services

Full-Service Hosting Outsourcer + Concierge

with dozens of property management companies 92 Tech-Enabled Cleaning Services Full-Service Hosting Outsourcer + Concierge

IT’S ONLY A MATTER OF TIME BEFORE THESE BECOME ENDANGERED SPECIES

93

IT’S ONLY A MATTER OF TIME BEFORE THESE BECOME ENDANGERED SPECIES 93

SUMMARY

A burgeoning new market in short- term, peer-to-peer rentals is creating a new kind of travel o ering that is more flexible, more personal and better priced than traditional hospitality options. At the same time, this marketplace is creating a new breed of hospitality entrepreneurs.

94

hospitality options. At the same time, this marketplace is creating a new breed of hospitality entrepreneurs

REAL ESTATE ON DEMAND: A CLOSER LOOK AT BUSINESS RENTALS & CO-WORKING

New

Hospitality

Products

New Hospitality Products

Parking & Storage on Demand

Parking & Storage on Demand

95

Metered

Business

Rentals

Metered Business Rentals
RENTALS & CO-WORKING New Hospitality Products Parking & Storage on Demand 95 Metered Business Rentals

LAPTOPS AND ALWAYS-ON CONNECTIVITY FREE US TO WORK ANYWHERE

96

WORK IS NO LONGER A PLACE

LAPTOPS AND ALWAYS-ON CONNECTIVITY FREE US TO WORK ANYWHERE 96 WORK IS NO LONGER A PLACE

EXPENSIVE OFFICES ARE NO LONGER NECESSARY, NOR ARE THEY A MARKER OF SUCCESS

97

EXPENSIVE OFFICES ARE NO LONGER NECESSARY, NOR ARE THEY A MARKER 
 OF SUCCESS 97

CO-WORKING SPACES ARE PROLIFERATING RAPIDLY

Global CoWorking Spaces 2,490 2,500 141 Africa Australia South America 245 Asia 2,000 2,072 North
Global CoWorking Spaces
2,490
2,500
141
Africa
Australia
South America
245
Asia
2,000
2,072
North America
853
1,500
1,320
1,000
European
1,160
Union
500
600
0

October-10 February-12 October-12 February-13

Implies $750M - $1.5B in Gross Sales Globally (Assumes: 41 desks/ space, 55% utilization, and rental fees of $50-

$100/day)

98

Source: deskmag Global CoWorking Survey

(Assumes: 41 desks/ space, 55% utilization, and rental fees of $50- $100/day) 98 Source: deskmag Global

REAL ESTATE ON DEMAND: IMPACT

Winners

 

Losers

 
 

End User:

Broader choice and better value in hospitality

 

Motel

Travelers no longer solely reliant on hotels for travel accommodations

Guests

Owners

End User:

Birth of a new profession w/ excellent hourly wage Ideal for enabling “passion career” pursuit

 

Hosts

 

Non-Business Hotels

End User:

Access to professional space to start-up businesses, meet

 

Start-ups &

 

Generic Resorts

solo-

clients

 

preneurs

Cities

Increased tourism Able to host bigger destination events Moderate tax revenue growth

Societal Impact

More transient population New way to mix cultures/communities Facilitating entrepreneurship spurs economic growth

99

population •   New way to mix cultures/communities •   Facilitating entrepreneurship spurs economic growth 99

A CLOSER LOOK AT ODE NEXT: LABOR ON DEMAND

100

1
1
2 3
2
3
4
4

Transportation Real Estate Labor Retail & Products

A CLOSER LOOK AT ODE NEXT: 
 LABOR ON DEMAND 100 1 2 3 4 T

LABOR ON DEMAND: KEY AREAS

Freelance

Market-

places

Freelance Market- places

Local

Providers

Local Providers

101

Managed

Services

Managed Services
LABOR ON DEMAND: KEY AREAS Freelance Market- places Local Providers 101 Managed Services

NEARLY HALF OF THE U.S. WORKFORCE IS COMPRISED OF SOME FORM OF ON-DEMAND LABOR

$5T US Labor Market

102

52%

10%

38%

Full-Time Employees

Unclear or no long-term need Di cult to source quality talent Long lead time

Freelancers, Contractors + Temps

Time-consuming to source independent labor Same quality challenges as full-time talent Sta ng Firms + Temp Agencies deliver on demand but command significant markups Free of ongoing obligation

Consulting Firms + Professional Services Agencies

On-demand delivery High quality of work Exorbitant per hour fees

ODE

High quality of work •   Exorbitant per hour fees ODE Source: US Census, Sta ffi

Source: US Census, Sta ng Industry Analysts, “Online Stang”– January 2, 2014; SelectUSA

THE SELF-EMPLOYED US WORKFORCE HAS BEEN GROWING ONLY MODERATELY

Nonemployer 1 Firms vs. US Labor Force

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

16.1% 14.9% Nonemployers / Total US Workers 13.1% 22.5M 12.9% 12.5% 21.7M 17.0M 17.7M 15.4M
16.1%
14.9%
Nonemployers /
Total US Workers
13.1%
22.5M
12.9%
12.5%
21.7M
17.0M
17.7M
15.4M
3.8%
3.4%
3.2%
Nonemployer Sales /
Total US Firm Sales
1994
1997
2002
2007
2011

Avg. Income Per Nonemployer:

$38K
$38K
$43K
$43K
$44K
$44K
$46K
$46K
$44K
$44K

1 Nonemployer firms have no employees and may be organized as a sole proprietorship, partnership, or corporation. A sole proprietorship is an unincorporated business owned by an individual. A sole proprietorship has no existence apart from its owner. Business debts are personal debts of the owner.

103

Source: Bureau of Labor Statistics, US Census

apart from its owner. Business debts are personal debts of the owner. 103 Source: Bureau of

BUT THE TYPES OF ACTIVITY INDEPENDENT WORKERS ARE ENGAGED IN SEEM TO BE SHIFTING

Biggest Losers

SEEM TO BE SHIFTING B i g g e s t L o s e r

Biggest Gainers

BE SHIFTING B i g g e s t L o s e r s Biggest

More white-collar and locally-sourced categories

104

BE SHIFTING B i g g e s t L o s e r s Biggest

PERPETUAL, HOURLY EMPLOYMENT IS OFTEN DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED

PERPETUAL, HOURLY EMPLOYMENT IS OFTEN DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED 105

105

PERPETUAL, HOURLY EMPLOYMENT IS OFTEN DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED 105

THE COST SAVINGS AND FLEXIBILITY OF CONTINGENT LABOR APPEALS TO EMPLOYERS

We've had a never-ending stream 
 of projects of the last 5 years, which strains
We've had a never-ending stream 

of projects of the last 5 years, which
strains our in-house resources. With
freelancers, we can augment our
workforce and tap specialized
knowledge for 3 di ff erent
departments: IT, operations, and
finance.
– Hiring manager from leading
printing software company
To hire a full-time employee, you have to have a long-term need. But a lot
To hire a full-time employee,
you have to have a long-term
need. But a lot of the time, we
only have immediate need. It's
much easier to budget for a
contractor.
– Representative from a
leading biotech company

60% of companies expect to hire more freelancers in 2014

20% of companies expect to significantly increase their freelance sta

106

Source: Tower Lane “Surveying the New World of Work” 2013

to significantly increase their freelance sta ff 106 Source: Tower Lane “Surveying the New World of

THE INDEPENDENCE AND PRODUCTIVITY THAT COME WITH FREELANCING MAKE WORKERS HAPPIER

PRODUCTIVITY THAT COME WITH FREELANCING MAKE WORKERS HAPPIER 107 Source: Elance “The State of the Freelance

107

Source: Elance “The State of the Freelance Market,” September 2012

THAT COME WITH FREELANCING MAKE WORKERS HAPPIER 107 Source: Elance “The State of the Freelance Market,”

40% OF TNC DRIVERS USE THEIR EARNINGS TO FUND THE PURSUIT OF “PASSION CAREERS”

Reason For Becoming a TNC Driver

 

Subsidizing Passion Careers or Benefiting Beyond Income

 

Students and homemakers

40%

Actors, artists, photographers, etc. that can’t live osparse earnings

African soccer agent trying to improve his English

Retiree that likes having an activity and the conversation

 

Supplemental Income For People w/ Few Alternatives

38%

Low-paying full-time jobs

Slow earnings seasons

Unemployed

23%

Professional Drivers

 

Former Taxi, Chau eur, and Shuttle drivers

TNC Drivers

108

Source: Sherpa TNC Survey

Drivers   –   Former Taxi, Chau ff eur, and Shuttle drivers TNC Drivers 108 Source:

ACCESS TO AFFORDABLE HEALTHCARE AND RETIREMENT PROGRAMS CREATES MORE OPTIONS FOR WORKERS

AND RETIREMENT PROGRAMS CREATES MORE OPTIONS FOR WORKERS ACA and a variety of independent savings programs
AND RETIREMENT PROGRAMS CREATES MORE OPTIONS FOR WORKERS ACA and a variety of independent savings programs

ACA and a variety of independent savings programs o er key benefits once available only through full-time employment with a large firm

109

savings programs o ff er key benefits once available only through full-time employment with a large
savings programs o ff er key benefits once available only through full-time employment with a large

NEW SERVICES PROVIDE SUPPORT AND EXPERTISE FOR SMALL BUSINESS AND FREELANCERS

In lieu of dedicated IT, Finance and Marketing Departments, independent workers can now leverage:

Finance

Marketing

Collaboration Tools

Freshbooks

Google AdWords

BaseCamp

Square

SquareSpace

Google Docs

Apptivo

Facebook

Skype

QuickBooks

Yelp

Dropbox

110

•   Apptivo •   Facebook •   Skype •   QuickBooks •   Yelp •

LABOR ON DEMAND: A CLOSER LOOK AT FREELANCE MARKETPLACES

Freelance

Market-

places

Freelance Market- places

Local

Providers

Local Providers

111

Managed

Services

Managed Services
A CLOSER LOOK AT 
 FREELANCE MARKETPLACES Freelance Market- places Local Providers 111 Managed Services

IN AN ERA OF VIRTUAL WORK, ONLINE MARKETPLACES PROMISE TO EMPOWER A FREELANCE REVOLUTION

Individual Freelancers, Consultants + Contractors

Online Freelance Marketplaces

Consultants + Contractors Online Freelance Marketplaces •   Freelancers are fully-empowered entrepreneurs •

Freelancers are fully-empowered entrepreneurs Receive 80%-90% of billing rates

entrepreneurs •   Receive 80%-90% of billing rates Temp + Sta ffi ng Agencies Outsourcing Companies

Temp + Sta ng Agencies

Outsourcing Companies

rates Temp + Sta ffi ng Agencies Outsourcing Companies •   Workers are commoditized •  

Workers are commoditized Paid 20%-30% of billing rates

are commoditized •   Paid 20%-30% of billing rates Businesses with Immediate But Non-Permanent Hiring Needs

Businesses with Immediate But Non-Permanent Hiring Needs

*Note: Sta ng Industry Analysts, “Online Sta ng”– January 2, 2014

112

But Non-Permanent Hiring Needs *Note: Sta ffi ng Industry Analysts, “Online Sta ffi ng”– January 2,

FREELANCE MARKETPLACES BRING CONVENIENCE AND TRUST TO HIRING REMOTE WORKERS

Craigslist

AND TRUST TO HIRING 
 REMOTE WORKERS Craigslist 113 VS. Freelance Marketplace Employer Track Record Employee
AND TRUST TO HIRING 
 REMOTE WORKERS Craigslist 113 VS. Freelance Marketplace Employer Track Record Employee

113

VS.
VS.

Freelance Marketplace

Employer Track Record
Employer Track Record
Employee Work History
Employee Work History

Lead

Reputation

Payment

Generation

Building

Collection

Employer Track Record Employee Work History Lead Reputation Payment Generation Building Collection

WITH $750M IN BILLINGS & 50% SHARE, ELANCE/ ODESK DOMINATES ONLINE FREELANCE MARKETPLACE

Elance / oDesk Billings ($M)

$800 $750 $700 $575 $600 $314 $500 $215 $383 $400 $300 $156 $437 $200 $360
$800
$750
$700
$575
$600
$314
$500
$215
$383
$400
$300
$156
$437
$200
$360
$226
$100
$0
2011
2012
2013
!
50% of Online Sta ffi ng Market Globally 1
50% of Online Sta ffi ng
Market Globally 1

1 Note: Sta ng Industry Analysts, “Online Sta ng”– January 2, 2014; Excludes Craigslist

114

Globally 1 1 Note: Sta ffi ng Industry Analysts, “Online Sta ffi ng”– January 2, 2014;

!

BUT ONLINE STAFFING IS STILL A TINY PORTION OF THE INDUSTRY OVERALL

Global Sta ng Industry ($B)

$25 $20 Local Gigs $15 In-Person Sta ffi ng $10 Craigslist Short-Term Labor Supply $5
$25
$20
Local Gigs
$15
In-Person Sta ffi ng
$10
Craigslist
Short-Term
Labor Supply
$5
$3.0B
Online Sta ffi ng
$0
All Other Players
Elance /oDesk

Online Sta ng

All Sta ng

1 Note: Sta ng Industry Analysts, “Online Sta ng”– January 2, 2014; Sherpa proprietary Craigslist study

115

Note: Sta ffi ng Industry Analysts, “Online Sta ffi ng”– January 2, 2014; Sherpa proprietary Craigslist

OUTSIDE OF IT, ELANCE / ODESK IS ESSENTIALLY THE SAME SIZE AS CRAIGSLIST GIGS

2013 US Supply of Freelance Labor ($B)

$1.5B $1.5B $1.6 Other $1.4 $1.2 Local Gigs $1.0 IT $0.8 $0.1 $0.1 $0.6 $0.1
$1.5B
$1.5B
$1.6
Other
$1.4
$1.2
Local Gigs
$1.0
IT
$0.8
$0.1
$0.1
$0.6
$0.1
Marketing
$0.2
$0.4
Creative
$0.2
$0.3
Ops
$0.0
!