2014 ODE Report

The On-Demand Economy

@sherpa
OUTLINE
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The Village
Economy
ODE Now
1. ODE Transportation
2. ODE Real Estate
ODE Next
1. ODE Labor
2. ODE Retail
2 5
Introducing ODE
The On-Demand
Economy
Conclusion
The ODE E"ect
2
It sounds like the
beginning of a joke,
but its the beginning
of something much
bigger
3
TWO VENTURE
CAPITALISTS
WALK INTO A BAR
4
IN THIS PUB IN A REMOTE VILLAGE
IN IRELAND, WE NOTICED BUSINESS
CONDUCTED IN AN EXTRAORDINARY WAY
No Twitter handles or
Web addresses
Just someones name and
phone number implicitly
beckoning, Call me and Ill
bring you what you need
This is the Village
Economy: On-demand
service, as you need it
5
THE PERSONALIZED, EFFICIENT QUALITY OF THE
VILLAGE ECONOMY HINGES ON THREE KEY
CONDITIONS
The very nature of the
village economy drives
a more personalized,
accessible, and
valuable customer
experience
Trust
# No need for
brokers
# Buyers and
sellers interact
directly
Geographic
proximity
# All products
and providers
next door
Collaboration
# Community
pools resources
# Competition has
little relevance
6
Creating a foundation of trust that
enables sharing, face-to-face
transactions and customized service
21
st
Century
Village
Economy
Pervasive
Connectivity
Payments
Platforms
Reputation
Networks
7
AND SHIFTS IN TECHNOLOGY ARE BRINGING THE
VILLAGE ECONOMY BACK AT SCALE
COMMERCE HAD BEEN MOVING AWAY FROM THE
VILLAGE MODEL FOR YEARS
Price and selection have increased while trust, service and
personal relationships have decreased

8
General Store Main Streets Big Box Store
Source: United Nations, Department of Economic and Social A"airs
# 37% of the world
population was
urbanized
# 3 10M-person
cities
1975 2009 2025 Estimate
# 50% of the world
population is
urbanized
# 20 10M-person
cities
# 57% of the world
population will be
urbanized
# 29 10M-person
cities
AT THE SAME TIME, WE ARE MOVING CLOSER AND
CLOSER TOGETHER
9
Source: United Nations, Department of Economic and Social A"airs
AT THE SAME TIME, WE ARE MOVING CLOSER AND
CLOSER TOGETHER
10
Alternative
slide 9:
Animated
build
1975 2009 2025 Estimate
ODE CONNECTS OUR VILLAGE PAST TO OUR
ECONOMIC FUTURE
11
Creating a new generation of
entrants to the Fortune 500 and
unlocking new levels of
economic productivity
THIS IS THE ON-DEMAND ECONOMY (ODE)
WHERE ATOMS MEET BITS
Cheaply reach the
mass market
Remove anonymity
+ establish trust
- reputation systems
E$ciently mobilize
supply chains and
workforces
Enable
collaboration and
asset sharing
13
Mobi l e
Soci al
Tr ansact i onal
DEFINING ODE
OR: The pervasive, instant-access
marketplace of goods and services tailored to
individual needs, often facilitated by asset-
sharing and distributed supply chains.
14
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
ODE BRINGS THE VILLAGE TO SCALE
Trust
# Reputation Networks
Geographic
Accessibility
# Pervasive mobile
connectivity unites
people in urban
areas
Collaboration
# Shared Resources
# Networked Devices
Choice
# Wide variety of
selection
Price
# Operates at
scale
# Eliminates
middleman to
bring cost-
savings to the
consumer
15
ODE SELF-REGULATES
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
16
Marginalizing regulatory frameworks
TECHNOLOGY AND CULTURAL SHIFTS THAT LAID
THE GROUNDWORK FOR ODE
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VHS

VCR
2013 1999 2001 2007 2009 2010 2012 1970 1995 1998
4 MM
Foreclosures
led
(2.2% of
U.S.
Households)
Sharing
Economy:
Publication
of Whats
Mine
Is Yours
Facebook
Reaches 1
B Users
iPod
Introduced
1st DriveThru
McDonalds
Microwaves
in 25% of
U.S. Homes
Ebay &
CraigsList
Founded
Paypal
Founded
Netix
founded
TiVo
Introduced
Netix
Standalone
Streaming
iPad introduced
3.5 B
Connected
Internet
Devices
Uber
AirBnB
P
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a
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i
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iPhone
introduced
iTunes hits
2B song
downloads
Carnegie Mellon
releases rst study
of digital
loneliness
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s
s

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17
INSTANT ACCESS TO DIGITIZED AND VIRTUAL
GOODS RESHAPED CONSUMER BEHAVIORS
Media
Software
Reservation
Booking
Financial
Transactions
Matchmaking
18
NOW ODE CREATES INSTANT ACCESS TO
PHYSICAL GOODS AND SERVICES AS WELL
Transportation Real Estate
Labor & Services Retail and Products
Now
Next
19
THE ODE EFFECT IS WIDE-REACHING
Consumers

New levels of convenience, value and
service to consumers
Markets

Expanding underlying markets
Employment

Entrepreneurize broad swaths of the
workforce
Cultural and Social
Impact
Change the landscape of how we live
today
Industries

Displacing incumbents
Middlemen and
Regulators
Killing value-leaching intermediaries
20
Growth
Contraction
EXPLOSION OF VC DOLLARS INVESTED IN ODE
Source: Crunchbase
$0.1
$0.4
$0.5
$0.5
$1.3
$0.1
$0.1
$0.2
$0.2
$0.3
2009 2010 2011 2012 2013
# of
Companies:
US-Based
Companies
Non-US
Based
17 30 55 78 117
VC Investment in ODE: Physical ($B)
21
REPRESENTING AN INCREASING SHARE OF VC
DOLLARS
VC Investment in ODE: Physical ($B)
0.5%
1.5%
1.7%
2.0%
4.6%
2009 2010 2011 2012 2013
% of dollars
Source: PWC Moneytree, Crunchbase
*Note: Moneytree data estimated for Q4 2013
22
LET'S TAKE A CLOSER LOOK AT 4 KEY ODE
SEGMENTS AND HOW THEY ARE SHAPING
THE FUTURE
23
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
A CLOSER LOOK AT ODE NEXT:
TRANSPORTATION DEMAND
24
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
TRANSPORTATION ON DEMAND: KEY AREAS
25

Car
Services
and Taxi
Hailing
Car
Sharing
Mass
Transit
Alternatives
Other
Vehicle
Sharing
TRANSPORTATION ON DEMAND:
A CLOSER LOOK AT CAR SERVICES
26

Car
Services
and Taxi
Hailing
Car
Sharing
Mass
Transit
Alternatives
Other
Vehicle
Sharing
CAR SERVICES STARTUPS:
OVER $1B RAISED GLOBALLY FROM 2009-2013
Source: Crunchbase
27
US Competitors International
$265M
$37M
$115M
N/A
N/A
$14M
$11M
$9M
$6M
$4M
$308M
$23M
$83M
$20M
$51M
$42M
YC Seed
N/A
Capital
raised
Capital
raised
Didi Dache
Kuaidi Dache
Yaoyaozhaoche
THIS COMES AS NO SURPRISE TO EARLY
INVESTORS IN ON-DEMAND CAR SERVICES
Better Driver
Experience
Better Passenger
Experience
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
TNCS TURN ANYONE WITH A CAR INTO A
CHAUFFEUR AND ANYONE WITH CELL PHONE
INTO A POTENTIAL FARE
29
HOW IS THIS IMPACTING THE TRADITIONAL
TRANSPORTATION MARKET?
30
# 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.
Why San Francisco?
# Dozens of interviews with SFMTA o#cials, taxi company executives, industry
consultants, and service providers
# Raw taxicab fare data
Approximately 10% of the citys taxi eet
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
Unprecedented Data Discovery
A proprietary deep dive in San Francisco
LEGAL US CAR SERVICES MARKET ESTIMATED
TO BE ~$50B ANNUALLY
Source: SFMTA Taxi and Accessible Services Division;
Managing Taxi Supply and Taxi User Survey Hara Associates
Estimate is based on our analysis of 2M taxi trips and other nonpublic data sources
Annual US Car Services Revenue ($B)
$10
$21
$16
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
IBIS World Sherpa Estimate
B
i
l
l
i
o
n
s

300 Most
Populated
Cities
Remainder
of Urban US
Taxi &
Limousine
Service
Industry
Limo
Services
$10
31
BEFORE TNCS, SAN FRANCISCO HAD
THREE CAR SERVICE OPTIONS
32
Source: San Francisco Public Convenience and Necessity Report (February, 2006)
Bandits (Gypsy cabs) Limo Service
# Charge by the minute/
mile
# Prices + supply set by
SFMTA
# Notoriously unreliable
43% of calls to taxi
dispatcher result in a
car showing up*
# Illegal taxicabs
# Charge premium to
legal taxis
# Patronize at your own
risk
# >$60 per hour + tip +
gas
# Require advanced
booking
# Often require multi-hour
minimums
Taxicabs
THE COMBINATION OF CONSISTENT PATROLS AND
TNC ALTERNATIVES HAVE NEARLY ERADICATED
BANDITS
Source: SFMTA Taxi and Accessible Services Division
Estimated # of Active Bandits
0
20
40
60
80
100
120
140
160
Jun-11 Dec-12 Dec-13
Low
Estimate
High
Estimate
Citations
Issued:
13 40 54
Q2 13: Regular
Patrols
Implemented
Q3 11: SFMTA
Begins
Enforcement
33
SF TAXI REVENUE WAS RELATIVELY FLAT IN 2013,
AFTER A DRAMATIC RISE FROM 2010 TO 2012
Source: SFMTA Taxi and Accessible Services Division; Taxi User Surveys Hara Associates
$270
$340
$368
$358
$0
$50
$100
$150
$200
$250
$300
$350
$400
2010 2011 2012 2013
M
i
l
l
i
o
n
s

+
8
%

(3%
)
SF Taxi Industry Revenue ($M)
34
TNCS IN SF PRODUCED AN ESTIMATED
~$140M IN REVENUE IN 2013
$48
$28
$9
$38
$19
Uber Lyft SideCar
Source: Based on Sherpas analysis of data sources discussed on slide 20
2013 TNC Revenue Estimate ($M)
(SF Only)
SF Share of Cos
Overall Revenue:
15% 76%
UberSUV
UberBLACK
uberx
$106
35
WHILE THE TAXI MARKET WAS ESSENTIALLY FLAT,
TNCS GREW NEARLY 450%
Source: SFMTA Taxi and Accessible Services Division; Taxi User Surveys Hara Associates
SF Taxi vs. TNC Revenue ($M)
$368 $358
$32
$143
2012 2013
$100
Taxi
TNC
36
Note: 2% weekly growth rate assumed for all TNCs throughout 2012
$75
Limo
WHATS DRIVING THIS TNC GROWTH?
37
# Commonly use lead
generation services to source
customers
# Uber is a lead gen tool that
enables real-time booking
# SF has always had an
insu$cient number of taxis
# Any xed supply system =
woefully inadequate during
peak demand periods
# Typical wait times for taxis >20
minute; system breaks during
demand spikes
# Avg. wait times for Uber are
4-6 minutes
# As of Jan. 14, uberX costs
over 40% less than taxis
# Limos now able to
charge by the minute
rather than only by the
hour or several hours
# Passengers starving for
any reliable, real-time car
service
# TNCs dynamic supply
model capable of
matching passenger
demand patterns
# People using TNCs even
when they could have
taken taxis
# People using TNCs when
they wouldnt even have
considered taxis
Limo Companies
Converting Fleets To UBER Un-Met Taxi Demand
Car Service Market Share
Theft + Expansion
THERES ANOTHER SIDE TO THIS STORY
38
SEVERAL INTERMEDIARIES COME BETWEEN A
DRIVER AND A TAXICAB
Medallion Owner
(Senior Taxi Drivers)
Taxi Company
# Drivers Purchase
Medallion From
SFMTA For $250K
# Lease To Taxi
Company
Multi-year
contracts
Current lease rate
is $2.6K per
month
5-10 year payo"
# Own + Maintain
Fleet of Taxis
# Run Dispatching
System
# Charge Drivers
Per Shift
$104 Gate Fee
$7-$15 Tip
Driver Taxicab
Gov.
Regulators
# Set Medallion
Supply + Purchase
Price
# Set Gate Fees
# Set Fare Prices
Net Result: Drivers pay ~$115 plus gas for each shift
whether they end up making that much or not
39
TNCS ARE AN ATTRACTIVE ALTERNATIVE FOR
DRIVERS
Taxi
TNCs
Safety
# Carry no cash
# Every passenger known
# Taxi + Limo driving more dangerous
than reghting
21.3 fatalities per 100K vs. 17.4
respectively
Primarily assaults + car crashes
# 60% of fares paid in cash
Median driver has >$200 in cash at
the end of a shift
# Street hails = anonymous passengers
# Median driver spends
the rst 5 hours of a 10
hour shift paying o$
Gate fees and tips
before he earns a cent
Pricing Model
# Flat percentage fee
80 cents of every
dollar goes into the
drivers pocket
# Weekly schedule of 10-
hour shifts
# Seniority, tips determine
access to the best shifts
+ vehicles
Schedule
# Wherever, whenever
driver wants to work
No more ghting over
who gets to work
Saturday night
*SFCDA Report **Sherpa TNC Driver Survey
# In last 12 months, one-third of SF taxi drivers moved to TNCs*
# 20% of TNC drivers are former taxi drivers**
40
WHILE MANY TAXI DRIVERS STILL MAKE GOOD
MONEY, NEARLY 40% FAIL TO EARN $20 PER HOUR
Source: SFMTA Taxi and Accessible Services Division
41
*Note: Excludes fuel cost, assumes 10 hour shift; $117 for Gate Fees, Payment Processing, and Tips
$36
$31
$27
$25
$22
$20
$17
$14
$10
90% 80% 70% 60% 50% 40% 30% 20% 10%
2013 Driver Hourly Earnings* By Decile
TNC DRIVERS EARN VIRTUALLY THE SAME
AMOUNT AS THEIR TAXI COUNTERPARTS
*Note: Excludes cost of fuel, insurance, vehicle maintenance and nancing; assumes 20%
marketplace fee from all TNC services except for uberX which was 15% in 2013 (currently 5%)
42
2013 Estimated Driver Earnings Per Hour*
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
UberBlack uberX Lyft Sidecar
Max
Weighted &
Avg.
Min
Median Taxi Driver
$18
$19
$25
$35
THE TAXI DRIVER SHORTAGE HAS BEGUN
$368
$358
+$45
Source: SFMTA Taxi and Accessible Services Division
*Note: Excludes cost of fuel, insurance, vehicle maintenance and nancing; assumes 20%
marketplace fee from all TNC services except for uberX which was 15% in 2013 (currently 5%)
43
Change in SF Taxi Revenue, $M
-$14
-$41
12%
More
Taxis
4%
Lower
Driver
Earnings
11%
Fewer
Drivers
2012 2013
% = YoY Change
IN FACT, A TAXI DRIVER SHORTAGE HAS BEEN
BREWING SINCE 2011
4%
15%
7%
7%
1%
0%
12%
-4%
-11%
2011
2012
2013
Source: Sherpa TNC Survey
44
# of taxis Earnings/shift Shifts worked
UBERX FARES WILL CONTINUE FALLING AND
COULD EASILY REACH 70% BELOW THE COST OF
A TAXI
*Source: Sherpa TNC Survey
*Note: Excludes cost of fuel, insurance, vehicle maintenance and nancing; 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
2013 Driver Earnings / Hour* Car Service Ride Cost (Normalized to $20 Taxi Trip**)
$25
$22
uberX Estimate Taxi Actual
$20.0
$6.7
Taxi uberX
22 Minutes of
Fares / Hour
$13.4
Assumes 44 Minutes of
Fares / Hour Holding
Driver Income Constant
UBER AGGRESSIVELY DROPPING PRICES AS FARE
DEMAND INCREASES
Actual results for trial period reveal 1% increase to driver income
46
THE NETWORK EFFECT OF UBERS MODEL IS
POWERFUL
47
First order e$ect
Second order e$ect
Driver
Fares
/ Hour
Rise
Uber
Lowers
Prices
Passengers
Join
More
passengers
More
drivers
WHAT HAPPENS TO EVERYONE ELSE?
# 500 more taxis added by 2017
(25% increase)
# Fare + Gate Fees remain static
# Cannot compete with TNCs
Market-based prices
Dynamic supply
Accruing reputation system
# As utilization falls, so do future
lease rates (medallion cash ows)
# Medallion values approach zero
Taxi Service
Medallion Owner
(Subset of Taxi Drivers)
Owners end up under-water
on medallion nancing
Currently 10% APR ! total
costs ~2X purchase price
Decline in driver quality
# Increasing di$cultly recruiting and
retaining drivers
# Causing utilization (taxi shifts
covered / taxi shifts available) and
protability to plummet
Taxi Company
Companies saddled with
expensive medallion leases
will fail
48
SF TAXI MEDALLION LEASE RATES ARE
FALLING PRECIPITOUSLY
Source: SFMTA Taxi and Accessible Services
SF Taxi Medallions Issued Vs. Monthly Lease Rates (000)
$1.6
$1.6
$1.7
$1.7
$2.0
$2.4
$2.7
$3.1
$3.4
$4.0
$4.6
$5.2
$3.9
$2.6
$0
$1
$2
$3
$4
$5
$6
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2002 2004 2006 2008 2010 2012
Monthly
Lease Rates
Medallions
issued
49
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
TRANSPORTATION ON DEMAND:
A CLOSER LOOK AT CAR SHARING
51

Car
Services
and Taxi
Hailing
Car
Sharing
Mass
Transit
Alternatives
Other
Vehicle
Sharing
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
20 locations run by 7
di$erent companies
140 locations via
Zipcar
Vehicle Locations
Pickup Process
Rental Increment By the day By the half hour
53
LEVERAGING A PEER-TO-PEER SUPPLY STRATEGY,
GETAROUND HAS BECOME A STRONGER ZIPCAR
140 locations, ~300
vehicles*
~100 locations +
vehicles*
Vehicle Locations
Pickup Process
Rental Increment
As low as $8.25/hour +
Annual Membership Fee
As low as $5.50/hour
54
10-15 vehicle types Dozens of di$erent
models
*Note: Cars available in early January 2014 as of mid-December
AND TOMORROW GETAROUND WILL SUPERSEDE
ITS CAPITAL INTENSIVE ELDER
55
Growth improving
customer access and
value
Meaningful owner earnings
driving rapid supply growth
value
ADVANCEMENTS IN ON-DEMAND
TRANSPORTATION WILL CHANGE THE LANDSCAPE
OF URBAN LIFE
Outlying
Neighborhoods
Gain Accessibility
Fewer People Will
Buy Cars
56
NEW VARIETIES OF URBAN TRANSIT ARE ALSO
REDUCING THE NECESSITY OF CAR OWNERSHIP
Private Company Busing Gov-sponsored Bike-Sharing
57
58
WHAT IF OUR CITIES WERE NO LONG CLUTTERED
WITH PLACES TO STORE CARS?
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
TRANSPORTATION ON DEMAND: IMPACT
Winners
# Cheap + reliable car
service
# Cheap + ubiquitous
car rental
End User:
Passengers
# Safer + more exible
employment
# Keep more of what
they earn
# Enormous job growth
End User:
Drivers
Losers
# Medallion values
approach zero
Medallion
Owners
# Passengers shift auto
spend from ownership
to services + rental
Taxi
Companies
Commercial Garage Owners
Car Manufacturers + Dealers
Societal Impact
# Development + gentrication of outlying neighborhoods
# No more garages ! repurposing of space
# Less + greener consumption
61
A CLOSER LOOK AT ODE NEXT:
REAL ESTATE ON DEMAND
62
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
REAL ESTATE ON DEMAND: KEY AREAS
63

New
Hospitality
Products
Parking &
Storage on
Demand
Metered
Business
Rentals
REAL ESTATE ON DEMAND: A CLOSER LOOK
AT NEW HOSPITALITY PRODUCTS
64

New
Hospitality
Products
Parking &
Storage on
Demand
Metered
Business
Rentals
THE HOSPITALITY INDUSTRY HAS LONG HAD AN
ESTABLISHED SET OF PRODUCT OFFERINGS
Motels Hotels Resorts
# Development takes years and enormous capital, requiring high leverage ratios
# Supply managed to 80%+ occupancy
# Multi-decade replacement cycles
65
ONLINE MARKETPLACES ARE NOW CHANGING THAT
PARADIGM BY FACILITATING PEER-TO-PEER RENTALS
66
HOMEAWAY HAS BUILT SIGNIFICANT SCALE IN
VACATION HOME RENTAL
Source: Company lings
1 Note: Assumes HomeAway paid listings generate $13K in sales
2 Note: Estimated Q4 listings growth by annualizing Q3 2013 results
67
$4.4
$5.6
$6.7
$8.3
$9.3
$10.3
$0
$2
$4
$6
$8
$10
$12
2008 2009 2010 2011 2012 2013
1
9
%
C
A
G
R

2
0
%
C
A
G
R

Sales Estimate
1
(B)
Only ~13% of US Vacation homes Listed On HomeAway
2
Paid Listings Globally, 000s
338
433
517
640
712
773
0
100
200
300
400
500
600
700
800
900
LONG A STAPLE OF CRAIGSLIST, NEW PLATFORMS ARE
MAKING SHORT-TERM RESIDENCE RENTALS
MAINSTREAM
$284M
$140M
$25M
$60M
$23M
$16M
$2M
$2M
VC Funding
68
OF THESE, AIRBNB IS THE CLEAR LEADER
550
300
290
111
Airbnb Wimdu HouseTrip 9Flats
Total Listings Globally (As of January 2014; 000)
69
AIRBNB: PULLING AWAY FROM THE PACK
33.9
20.5
9.6
7.3
6.7
6.2
2.9
4.7
3.7 3.6
5.1
0.4
1.4
5.4
1.3
2.7 4.1
0.8
1.0
1.9
1.1 1.5
NYC Paris Berlin London Rome SF
Note: Annualized Nov. 13 Jan. 14 listings growth rate
Total Listings By City (As of January 2014; 000)
Annualized Growth Rate
Across 6 Cities Above
1
:
54% 43% 10%
70
AIRBNB: SIGNIFICANT GLOBAL SCALE
1 Note: InterContinental rooms + stays for 2012; assumes guests stay average of 3 nights per check in
2 Stays last 6.4 nights at nightly cost of $180 (inclusive of fees)
1
3
6
2008-2011 2012 2013 Inter-Cont
120
300
550
676
2008-2011 2012 2013 Inter-Cont
Airbnb
Listings
By Region
53
Implies ~$7B
in Revenue
2
Airbnb # of Listings (000) Airbnb # of Stays (M)
1 2
71
AIRBNB HAS QUICKLY DWARFED CRAIGSLIST
1 Note: Assumes 1/3 of Airbnb stays in US, stays last 6.4 nights at nightly cost of $150
US Sales ($B)
$1.9
$0.6
2013 Airbnb Sales 2013 Craigslist Supply
Annualized Esti-
mate of Sublets/
Temporary Supply
(Dec. 13)
Avg. Stay: ~1 week ~6 weeks
1
72
AIRBNB: VASTLY BETTER CUSTOMER EXPERIENCE
THAN CRAIGSLIST
73
Craigslist
# Transparent listing availability and
location
# Professionally photographed listings
# Comprehensive listing descriptions
# Instant booking
# Credit card acceptance

Airbnb
VS.
AND MORE TRUSTWORTHY
# Social connections
visibility
# Prior guest reviews
and references
# O'ine ID verication
# Credit Card
Acceptance/
Collections
# Customer service
hotline
# 3% Host Fee
# 6-12% Guest Fee
74
VS.
HOW ARE THESE SHORT-TERM RENTAL MARKET-
PLACES IMPACTING THE HOSPITALITY INDUSTRY?
75
STILL TOO NASCENT TO NOTICEABLY IMPACT
HOTEL REVENUE
$6.2
$2.3
$0
$20
$40
$60
$80
$100
$120
$140
$160
2012 US
Lodging
Industy
2013
HomeAway
Estimate
2013 Airbnb
Estimate
Overall Share:
$21.7
$0.4
$0
$5
$10
$15
$20
$25
2012 Hotels Aug. '12 - July
'13 Airbnb
$156
NYC
$18B Growth In 2012
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 $180 (inclusive of fees)
Source: American Hotel and Lodging Association, Company lings
US Sales ($B) NYC ($B)
2
1
95.0% 3.8% 1.4%
76
BUT A RECENT STUDY ARGUES THAT AIRBNB LISTINGS
NEGATIVELY IMPACT LOCAL HOTEL REVENUE
# 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:
Budget hotels -2.1%
Economy hotels -2.6%
Mid-price hotels -0.9%
Upscale properties are insignicantly a"ected
77
STILL, THE STORY IS BROADER THAN SHARE
THEFT. AIRBNB IS A FUNDAMENTALLY NEW
HOSPITALITY PRODUCT
Hotel Establishment The Gray Market
78
STAY ANYWHERE, NOT JUST THE COMMERCIAL
DISTRICTS AND SAY GOODBYE TO 2-STAR
ACCOMMODATIONS
Hotels Noted In Orange
79
AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST
MIDTOWN WHERE THE HOTELS ARE
CONCENTRATED
80
WHAT ARE GUESTS BOOKING ON SHORT-TERM
RENTAL MARKETPLACES?
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
$182
$28
$40
$0
$50
$100
$150
$200
$250
Total Supply Bookings
$234
$33
Apartment $190
Private Room $115
Vacation Home $259
Total Nights: 1.4M 205K
85% of
bookings are
for
apartments,
with an
average price
of $190 per
night
Avg. Price
1
Source: Sherpa proprietary research; ScrapingHub
Wimdu Rome
(Jan. 14 Run Rate; $M)
81
Note: Inclusive of Wimdu booking fee
RESIDENCE RENTALS OFFER A MORE HUMAN
EXPERIENCE AT VASTLY BETTER VALUE
THAN HOTELS
260 sq ft Queen - $165/night
915 sq ft 3 Bed, 1 Bath - $164/night
# Accommodates 7 (3.5X bigger than Hilton)
# Full kitchen
# Washer/Dryer
# Wi-Fi
Rome, Italy
540 sq ft Studio - $164/night
# Accommodates 3 (2X bigger than Hilton)
# Full kitchen
# Washer/Dryer
# Wi-Fi
1,400 sq ft 3 Bed, 2 Bath - $164/night
# Accommodates 6 (5.4X bigger than Hilton)
# Full kitchen
# Washer/Dryer
# Wi-Fi
Median Price for
Wimdu Rome
Apartment: $164/
Night
1
82
FACILITATES FAMILY/GROUP TRAVEL LIKE
NOTHING THATS EXISTED BEFORE
# 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
83
AIRBNB ALSO REMOVES TRADITIONAL HOSPITALITYS
POTENTIAL FOR MORAL HAZARD
84
Guests behave
more
responsibly

! Hosts more
willing to o$er
residences

! Guests
more willing to
rent them
Dont break anything, but
otherwise behave as badly&
as you want
Anonymous Transaction
Treat my stu" as you would
your own or face ostracism
Village-Based Commerce
FLEXIBLE SUPPLY CREATES ENORMOUS VALUE
DURING LARGE EVENTS
Airbnb adds 2,400 units of
supply
Austin Hotel Availability 1 Week Before SXSW
85
Fully
Booked
Huge
Premium
FOR HOSTS, SHORT-TERM RENTALS CAN BE AN
ECONOMIC LIFE LINE
# 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
86
Need new photo
PROFESSIONAL HOSTS PROVIDE A LARGE
PORTION OF INVENTORY
15%
16%
19% 20%
9%
9%
7%
8%
8% 6% 6%
9%
33%
17% 17%
16%
31%
25%
23%
14%
26%
28%
34%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Istanbul Barcelona London Rome
1 Listing
2 Listings
3 Listings
4-9 Listings
10-49
Listings
>50 Listings
Professional
Property
Managers
Wimdu Listings by Host Size (# of Listings Managed) (Jan. 14)
Source: Sherpa proprietary research; ScrapingHub
87
THESE HOSTS ARE SMALL BUSINESSES
# 15 Wimdu listings
# 25 Wimdu reviews over 2 years
# 126 TripAdvisor reviews
# 1,557 Facebook Likes
# 67 Airbnb listings
# Run by former HomeAway
executives
88
THIS IS ONLY THE BEGINNING OF THE PEER-TO-
PEER RESIDENCE RENTAL WAVE
89
Could you send
a new image for
this
Rent for $164 / night
Break even w/ 14 nights booked
per month
$1,500 gross margin w/ 24 nights
booked per month
PROFESSIONAL HOSTING IS SIMPLE AND LUCRATIVE
1 Note: Median price for central Rome apartments; Inclusive of Wimdu booking fee
Central Rome (italy) location
800 sq ft 1 Bed, 1 Bath
Furnished
$2,000/month
+ $100/month utilities
90
3.1%
1.8%
1.3%
1.1%
1.0%
0.4%
Paris SF Rome Berlin NYC London
EVEN IN THE MOST MATURE CITIES, PENETRATION
IS STILL VERY LOW
Source: Sherpa proprietary research
Total Listings / Housing Units
(Sum of Airbnb, Wimdu, HouseTrip, and 9Flats Listings)
Hosting is equally lucrative across all cities
91
ECOSYSTEM DEVELOPMENT:
HOSTING AUTOMATION
Tech-Enabled
Cleaning Services
Full-Service
Hosting
Outsourcer +
Concierge
Partnered with dozens of
property management
companies
92
ITS 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 exible, more personal and
better priced than traditional
hospitality options. At the same time,
this marketplace is creating a new
breed of hospitality entrepreneurs.
94
REAL ESTATE ON DEMAND: A CLOSER LOOK
AT BUSINESS RENTALS & CO-WORKING
95

New
Hospitality
Products
Parking &
Storage on
Demand
Metered
Business
Rentals
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
CO-WORKING SPACES ARE PROLIFERATING RAPIDLY
Source: deskmag Global CoWorking Survey
1,160
853
245
141
600
1,320
2,072
0
500
1,000
1,500
2,000
2,500
October-10 February-12 October-12 February-13
2,490
European
Union
North America
Asia
South America
Australia
Africa
Implies $750M - $1.5B in
Gross Sales Globally
(Assumes: 41 desks/
space, 55% utilization,
and rental fees of $50-
$100/day)
Global CoWorking Spaces
98
REAL ESTATE ON DEMAND: IMPACT
# Travelers no longer solely
reliant on hotels for travel
accommodations
Motel
Owners
End User:
Guests
# Broader choice and better
value in hospitality
End User:
Hosts
# Birth of a new profession w/
excellent hourly wage
# Ideal for enabling passion
career pursuit
Cities # Increased tourism
# Able to host bigger destination
events
# Moderate tax revenue growth
End User:
Start-ups &
solo-
preneurs
# Access to professional space
to start-up businesses, meet
clients
Losers Winners
Non-Business Hotels
Generic Resorts
Societal Impact
# More transient population
# New way to mix cultures/communities
# Facilitating entrepreneurship spurs economic growth
99
A CLOSER LOOK AT ODE NEXT:
LABOR ON DEMAND
100
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4

LABOR ON DEMAND: KEY AREAS
101
Freelance
Market-
places
Local
Providers
Managed
Services
NEARLY HALF OF THE U.S. WORKFORCE IS
COMPRISED OF SOME FORM OF
ON-DEMAND LABOR
52%
10%
38%
Full-Time Employees
Consulting Firms + Professional Services Agencies
# Unclear or no long-term need
# Di$cult to source quality talent
# Long lead time
# Time-consuming to source independent labor
# Same quality challenges as full-time talent
# Sta$ng Firms + Temp Agencies deliver on demand but
command signicant markups
# Free of ongoing obligation
# On-demand delivery
# High quality of work
# Exorbitant per hour fees
Freelancers, Contractors + Temps
ODE
Source: US Census, Sta$ng Industry Analysts, Online Sta$ng January 2, 2014; SelectUSA
$5T US Labor Market
102
THE SELF-EMPLOYED US WORKFORCE HAS BEEN
GROWING ONLY MODERATELY
12.5%
13.1%
12.9%
14.9%
16.1%
3.8%
3.4%
3.2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1994 1997 2002 2007 2011
Nonemployers /
Total US Workers
Nonemployer Sales /
Total US Firm Sales
Avg. Income Per
Nonemployer:
15.4M
17.0M 17.7M
21.7M
22.5M
Source: Bureau of Labor Statistics, US Census
1 Nonemployer rms 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.
Nonemployer
1
Firms vs. US Labor Force
$38K $43K $44K $46K $44K
103
BUT THE TYPES OF ACTIVITY INDEPENDENT
WORKERS ARE ENGAGED IN SEEM TO BE
SHIFTING
Biggest Losers
Biggest Gainers
More white-collar and locally-sourced categories
104
PERPETUAL, HOURLY EMPLOYMENT IS OFTEN
DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED
105
New
image
needed
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 our in-house resources. With
freelancers, we can augment our
workforce and tap specialized
knowledge for 3 di"erent
departments: IT, operations, and
nance.
Hiring manager from leading
printing software company
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 signicantly increase their
freelance sta"
Source: Tower Lane Surveying the New World of Work 2013
106
THE INDEPENDENCE AND PRODUCTIVITY THAT
COME WITH FREELANCING MAKE WORKERS
HAPPIER
Source: Elance The State of the Freelance Market, September 2012
107
40% OF TNC DRIVERS USE THEIR EARNINGS TO
FUND THE PURSUIT OF PASSION CAREERS
Source: Sherpa TNC Survey

TNC Drivers
23%
38%
40%
Reason For Becoming a TNC Driver
# Professional Drivers
Former Taxi, Chau"eur, and Shuttle drivers
# Supplemental Income For People w/ Few Alternatives
Low-paying full-time jobs
Slow earnings seasons
Unemployed
# Subsidizing Passion Careers or Beneting Beyond Income
Students and homemakers
Actors, artists, photographers, etc. that cant live o" sparse
earnings
African soccer agent trying to improve his English
Retiree that likes having an activity and the conversation
108
ACCESS TO AFFORDABLE HEALTHCARE AND
RETIREMENT PROGRAMS CREATES MORE
OPTIONS FOR WORKERS
ACA and a variety of independent savings
programs o"er key benets once
available only through full-time
employment with a large rm
109
NEW SERVICES PROVIDE SUPPORT AND
EXPERTISE FOR SMALL BUSINESS AND
FREELANCERS
110
# Freshbooks
# Square
# Apptivo
# QuickBooks
# Google AdWords
# SquareSpace
# Facebook
# Yelp
# BaseCamp
# Google Docs
# Skype
# Dropbox
In lieu of dedicated IT, Finance and Marketing Departments,
independent workers can now leverage:
Finance Marketing Collaboration Tools

LABOR ON DEMAND: A CLOSER LOOK AT
FREELANCE MARKETPLACES
111
Freelance
Market-
places
Local
Providers
Managed
Services
IN AN ERA OF VIRTUAL WORK, ONLINE
MARKETPLACES PROMISE TO EMPOWER A
FREELANCE REVOLUTION
Individual Freelancers, Consultants + Contractors
Businesses with Immediate But Non-Permanent Hiring Needs
Online Freelance
Marketplaces
Temp + Sta#ng Agencies Outsourcing Companies
# Workers are commoditized
# Paid 20%-30% of billing rates
# Freelancers are fully-empowered
entrepreneurs
# Receive 80%-90% of billing rates
*Note: Sta$ng Industry Analysts, Online Sta$ng January 2, 2014
112
FREELANCE MARKETPLACES BRING
CONVENIENCE AND TRUST TO HIRING
REMOTE WORKERS
Craigslist
113
VS.
Freelance Marketplace









Employer Track Record Employee Work History
Lead
Generation
Reputation
Building
Payment
Collection
WITH $750M IN BILLINGS & 50% SHARE, ELANCE/
ODESK DOMINATES ONLINE FREELANCE
MARKETPLACE
1 Note: Sta$ng Industry Analysts, Online Sta$ng January 2, 2014; Excludes Craigslist
$226
$360
$437
$156
$215
$314
$0
$100
$200
$300
$400
$500
$600
$700
$800
2011 2012 2013
M
i
l
l
i
o
n
s

$383
$575
$750
50% of Online Sta$ng
Market Globally
1
Elance / oDesk Billings ($M)
114
BUT ONLINE STAFFING IS STILL A TINY PORTION
OF THE INDUSTRY OVERALL
$0
$5
$10
$15
$20
$25
Online Sta$ng All Sta$ng
B
i
l
l
i
o
n
s

Local Gigs
Online Sta$ng
In-Person Sta$ng $2T
All Other Players
Elance /oDesk
$3.0B
$3.0B
Craigslist
Short-Term
Labor Supply
1 Note: Sta$ng Industry Analysts, Online Sta$ng January 2, 2014; Sherpa proprietary Craigslist study
Global Sta#ng Industry ($B)
115
OUTSIDE OF IT, ELANCE / ODESK IS ESSENTIALLY
THE SAME SIZE AS CRAIGSLIST GIGS
Source: Sherpa proprietary Craigslist study, company reports
$0.3
$0.1
$0.2
$0.3
$0.1
$0.1
$0.1
$0.9
$0.1
$0.1
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
Craigslist Elance / oDesk
B
i
l
l
i
o
n
s

Local Gigs
$1.5B $1.5B
2013 US Supply of Freelance Labor ($B)
Ops
Creative
Marketing
IT
Other
116
ELANCE / ODESK: CONNECTING FIRST WORLD
SMALL BUSINESS TO TALENT IN DEVELOPING
COUNTRIES
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jobs Posted Earnings
US
US
India
Australia
>100 Others
Pakistan
Ukraine
UK
Canada
UK
Canada
>100 Others
Australia
90% of Employers have
<10 Employees
2012 Avg. oDesk Wage:
$10/hour
Elance Jobs Posted vs. Earnings by Country (Lifetime Results)
117
Total US Companies
1
SMALL BUSINESS IS SIGNIFICANT, BUT THE BIG
OPPORTUNITY IS IN PENETRATING
THE ENTERPRISE
$2.6
$5.2
$5.0
$6.3
$10.7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Firms* Sales
4.8M
1.2M
6M $30T
Elance / oDesk
Users
700K
Source: 2007 US Census
*Note: Excluding sole proprietorships
1-9 Employees
10-99
Employees
100-999
Employees
1,000-9,000
Employees
10,000+
Employees
# Enterprise sales
and client
development
# Project
management
Require
118

LABOR ON DEMAND: A CLOSER LOOK AT
MANAGED SERVICES
119
Freelance
Market-
places
Local
Providers
Managed
Services
AGENCIES MAKE UP AN ENORMOUS PORTION OF
THE MODERN WORKFORCE
Source: US Census, Sta$ng Industry Analysts, Online Sta$ng January 2, 2014; SelectUSA
$5T US Labor Market
Full-Time Employees
Consulting Firms + Professional Services Agencies
Freelancers, Contractors + Temps
52%
10%
38%
# On-demand delivery
# High quality of work
# Exorbitant per hour fees
120
CHECK SLIDE -
where is the
data?
THE AGENCY MODEL IS VULNERABLE TO CLASSIC
DISRUPTIVE INNOVATION
121
Pricing
Core
Assets
Business
Strategy
Agency Model Managed-Services Model
VS.
Prestigious brands enable exorbitant
billing rates
Staff paid 10%-25%, work extreme
hours to make a partner
Partners enjoy significant cash flow

# Clients pay ~50% agency rates, company
recognizes ~50% gross margins
Agency-level talent
Abundant over-supply
Competitive compensation
Salaried employee, off billable hours treadmill
(vacations)
Partners own client relationships
personally
Easily become fat and happy
Struggle to retain across generations

Business as usual for the last 100
years
No equity analysts hounding
management for growth and new
efficiencies
Company owns client relationships
Relentless + hungry sales engine
Quality-controlled client management


Build business processes + software to
maximize efficiency
Increase labor leverage ! decrease cost of
goods sold ! higher margins/lower prices !
more market share
MANAGED-SERVICES COMPANIES HAVE
BEGUN TO DEVOUR THE MOST PRESTIGIOUS
PROFESSIONS
Lawyers Investment Bankers
Management
Consultants
122
NEW MODELS OF LEGAL SERVICES ARE
DRAMATICALLY REDUCING PRICING
Cost Breakdown
Cost of Goods
Sold
Managed
Services
(AxiomLaw)
$400
/Hour
Gross Margin
Legal Talent
Market-
place
Fee
Open
Marketplace
(UpCounsel)
$270
/Hour
Partnership Pool
Typical
Corporate
Law Firm
Associate Pay
$600
/Hour
Overhead Costs
123

LABOR ON DEMAND: A CLOSER LOOK AT
MANAGED SERVICES
124
Freelance
Market-
places
Local
Providers
Managed
Services
WE TAKE FOR GRANTED HOW LITTLE ABOUT
THESE SERVICES HAS CHANGED IN THE LAST
50 YEARS
FINDING THEM HAS INDEED CHANGED QUITE A BIT
A Long List of
Names
User-Generated
Reviews
Vertical
Specialization
126
THE NEXT LEAP FORWARD IN ODE FOR LOCAL
LABOR IS HAPPENING NOW:
Key Attributes
# Centrally vetted
supply
# Geo-location
specic
# Embedded
payment
processing
Cleaning
Laundry
Car Repair
Hair + Makeup
Any Task/Errand
Florist
Doctor
Pet Care
Massage
Home Improvement
Snow Plow
Shipping Storage
Mobile Device Repair
127
Available at the
touch of a button
OTHER COMPONENTS OF ODE LOCAL LABOR
HAVE BEEN DIGITIZED AND ARE NOW FULLY
ON DEMAND
Critical Platforms:
Doctors
Tech Support
Teaching
Administrative
Assistants
Personal Training
128
SUMMARY
Employers seeking a more exible
workforce that can quickly scale
up or down are tapping into a
growing market of independent
workers, either directly through
online marketplaces or indirectly
via managed services.
129
LABOR ON DEMAND: IMPACT
Winners
# Gain exibility and
e$ciency " better able
to pursue interests,
happiness
End User:
Worker w/
Di$erentiated
Skill
# Scale workforces as
needed
# Pay far lower billing
rates
End User:
Employer
Losers
# Talent and labor pools
increasingly global and
transparent
No-show,
wage workers
Workers without di$erentiated skills
Sta#ng Companies
2nd Tier Professional Services
Agencies
Societal Impact
# Work is no longer a place
# Lavish o$ces lose relevance
# Population must learn intrinsic motivation + entrepreneurial instinct
# Lifelong learning becomes a key factor in work success
130
A CLOSER LOOK AT ODE NEXT:
PRODUCTS ON DEMAND
131
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4

PRODUCTS ON DEMAND: KEY AREAS
132
Real-Time
Access
Pop-Up
Shopping
Asset
Sharing
POP UP RETAIL IS MEETING CUSTOMERS WHERE
EVER THEY GO
133
Old New
AND IS BECOMING ANOTHER FACET OF ODE REAL
ESTATE
100+ Manhattan locations rentable by the day
134
ECOMMERCE IS GOBBLING UP MANY CATEGORIES
BUT MAKING LITTLE TRACTION IN GROCERY/
PHARMACY
Source: US Census, Annual Retail Trade Survey; The Tipping Point (E-Commerce Version) by Je$ Jordan
Online Share of US Retail Sales
Total
Clothing + Accessories
Furniture + Home Furnishings
Electronic + Appliance Sales
Media, Sporting + Hobby Goods
2011 Total Sales
$112B
$128B
$125B
$263B
135
Food + Beverage
Health + Personal Care $358B
$618B
URGENCY PLUS UNCERTAINTY ABOUT EXACTLY
WHAT PRODUCTS WE WANT INHIBIT ECOMMERCE
EXPANSION
Source: US Census, Annual Retail Trade Survey; The Tipping Point (E-Commerce Version) by Je$ Jordan
Anticipated Need Urgent Need
Certain
Uncertain
Under Siege
In The
Crosshairs
Cockroaches of
Retail
136
IN HYPER-DENSE, DEVELOPING ECONOMIES
GROCERY DELIVERY IS TAKING HOLD
Mexico City
Worst commuter city in the world
2010 IBM Global Commuter Pain
Survey
# Walmart subsidiary grocery chain
# 20% of grocery orders made
remotely
# $3 delivery fee per order, 50% of
which goes to freelance driver
Huge Income disparity
137
NEW MODELS OF FOOD DELIVERY WILL THREATEN
TRADITIONAL GROCERY AND RESTAURANT
PROVIDERS
While not necessarily real-
time, scheduled delivery for
an anticipated need
accomplishes the same
goal
Services like Blue Apron
and The Munchery o"er
curated, partially prepared
food delivery that take the
headaches out of meal
planning and prep
138
AND AS GROCERY GOES SO GOES PHARMACY
AND A LOT MORE
139
FOR URGENT NEEDS, NEW TECHNOLOGY WILL
MEET US PART OF THE WAY THERE
Better logistics
platforms will mine
new e#ciencies
from traditional
delivery channels
Entirely new
delivery
channels are on
the horizon
140
EVENTUALLY, 3D PRINTING WILL CHANGE
EVERYTHING
141
RETAIL LOCATIONS WILL COME TO RESEMBLE
SHOW-ROOMS, FREEING UP MORE INNER-CITY
REAL ESTATE
142
10M OF THE COUNTRYS LOWEST-PAYING JOBS
WILL BE LOST IN THE PROCESS
Average Hourly Wage
$24.6
$23.2
$22.0
$21.3
$19.7
$18.2
$16.6
$15.9
$15.1
$12.2
$11.8
$10.7
$10.5
$10.5
$9.8
$9.1
$9.0
$0 $5 $10 $15 $20 $25 $30
Postal Service Workers
Electricians
US Overall
Social Workers
Supervisors of Retail Sales Workers
Secretaries and Admins
Construction Laborers
Customer Service Reps
Bus Drivers
Retail Salespersons
Stock Clerks and Order Fillers
Cooks
Home Health Aides
Maids + Housekeepers
Cashiers
Dishwashers
Fast Food + Counter Workers
3.3M
1.8M
4.3M
1.2M
1303M
10M Retail Jobs
Source: Bureau of Labor Statistics
143
PRODUCTS ON DEMAND: IMPACT
Losers
Grocery stores
Brick & Mortar retail sta$
Societal Impact
# Bricks and mortar retail becomes increasingly about the experience
# What happens to the 10M $10/hour workforce?
# What takes the place of all that prime retail space?
Winners
# Huge time savings
# Improved value/access
to durable goods
through sharing
End User:
Consumers
# Huge demand for
custom delivery
providers
Delivery
Providers
# Sales growth, cross sell
" protability
Amazon
144
CONCLUSIONS: TECHNOLOGIES OF TRUST ARE AT
THE FOUNDATION OF THE NEW ODE VILLAGE
145
Pervasive
Connectivity
Payments
Platforms
Reputation
Networks
PROXIMITY
COLLABORATION
TRUST
CONCLUSIONS: THE ODE EFFECT
146
TRUST
BUYERS &
SELERS
REGUL-
ATORS &
GOVERN-
MENT
INDUS-
TRIES
SOCIETY &
ENVIRON-
MENT
CONCLUSIONS: RESHAPING INDUSTRIES
147
ODE will kill middlemen
and incumbents and
marginalize regulators
unable or unwilling to
adapt to changing
consumer expectations
Major participants in ODE Companies created by ODE
CONCLUSIONS: SPAWNING THE NEXT-
GENERATION OF FORTUNE 100 COMPANIES
148
CONCLUSIONS: SHAPING THE CITY OF THE
FUTURE
149
Mobile population Fewer cars
Big O$ce Buildings
replaced by home o$ces
and collaborative space
End of destination retail;
replaced by showrooms
and experiences where
people are
Housing and material
consumption become
more streamlined
Workforce becomes more
entrepreneurial
More people
pursuing passions
@sherpa