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2014 ODE Report
The On-Demand Economy

Zach Noorani / Shervin Pishevar
OUTLINE
1
3
4
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 Effect
2
It sounds like the
beginning of a joke,
but it’s 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 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
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
COMMERCE HAD BEEN MOVING AWAY FROM THE
VILLAGE MODEL FOR YEARS 
Price and selection have increased while trust, service and
personal relationships have decreased

7
General Store
 Main Streets
 Big Box Store
Source: United Nations, Department of Economic and Social Affairs
•  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
8
Creating a foundation of trust that
enables sharing, face-to-face
transactions and customized service
21st Century
Village
Economy
Pervasive
Connectivity
Payments
Platforms
Reputation
Networks
9
AND SHIFTS IN TECHNOLOGY ARE BRINGING THE
VILLAGE ECONOMY BACK – AT SCALE
ODE CONNECTS OUR VILLAGE PAST TO OUR
ECONOMIC FUTURE
10
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
•  Efficiently mobilize
supply chains and
workforces
•  Enable
collaboration and
asset sharing
12
Mobile
Social
Transactional
DEFINING ODE
13
Instant, pervasive access to
goods and services without
the burden of ownership or
long-term 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
14
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
15
Marginalizing regulatory frameworks
TECHNOLOGY AND CULTURAL SHIFTS THAT LAID
THE GROUNDWORK FOR ODE
RiseofCultureof
Convenience:
1960s-80s
OnlineMarketplaces:
1990s
InstantVideoDelivery.
Virtualization&
Digitization:Early2000s
RiseofSocial
Networking:2007-12
PervasiveMobile
Connectivity:2013
VHS
VCR 
2013
1999
 2001
 2007
 2009
 2010
 2012
1970
 1995
 1998
4 MM
Foreclosures
filed
(2.2% of
U.S. 
Households)
Sharing
Economy:
Publication 
of What’s
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
Netflix
founded
TiVo 
Introduced
Netflix
Standalone
Streaming
iPad introduced
3.5 B
Connected
Internet 
Devices
Uber
AirBnB
Popularizationofthe
SharingEconomy:
2010
iPhone
introduced
iTunes hits
2B song
downloads
Carnegie Mellon
releases first study
of digital
loneliness
LonelinessCrisis:
2004-2013
16
INSTANT ACCESS TO DIGITIZED AND VIRTUAL
GOODS RESHAPED CONSUMER BEHAVIORS
Media
Software
Reservation
Booking
Financial
Transactions
Matchmaking
17
NOW ODE CREATES INSTANT ACCESS TO
PHYSICAL GOODS AND SERVICES AS WELL
Transportation
 Real Estate
Labor & Services
 Retail and Products
Now
Next
18
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
19
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)
20
REPRESENTING AN INCREASING SHARE OF VC
DOLLARS
ODE: Physical Share of US VC Market (By $’s)
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
21
LET'S TAKE A CLOSER LOOK AT 4 KEY ODE
SEGMENTS AND HOW THEY ARE SHAPING 

THE FUTURE
22
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
A CLOSER LOOK AT ODE NEXT: 

TRANSPORTATION DEMAND
23
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
TRANSPORTATION ON DEMAND: KEY AREAS
24

Car
Services
and Taxi
Hailing
Car
Sharing
Mass
Transit
Alternatives
Other
Vehicle
Sharing
TRANSPORTATION ON DEMAND: 

A CLOSER LOOK AT CAR SERVICES
25

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
26
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
LYFT: NEARLY $40M IN REVENUE IN 2013,
EXPECTED TO EASILY 5X THAT IN 2014 
*Note: Assumes 6.0% and 4.5% monthly growth throughout 2013 and 2014 respectively and a 20% txn fee
Also $100M+
Run-Rate
Revenue
$0 
 $1 
 $2 
 $4 
 $7 
$13 
 $21 
$39 
$2 
 $4 
 $9 
$22 
$36 
$64 
$107 
$195 
$0
$40
$80
$120
$160
$200
Q1 '13
 Q2 '13
 Q3 '13
 Q4 '13
 Q1 '14
 Q2 '14
 Q3 '14
 Q4 '14
Millions!
Net Revenue
Gross Revenue
2013 Revenue: $37M
 2014 Revenue: $400M
Estimated financials (SM)
27
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 officials, 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
•  Noorani/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
Billions!
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
$400
2010
 2011
 2012
 2013
Millions!
+8%
 (3%)
SF Taxi Industry Revenue ($M)
34
TNCS IN SF PRODUCED AN ESTIMATED 

~$140M IN REVENUE IN 2013
$48
$28
$9
$38
$19 
Uber
 Lyft
 SideCar
Source: Based on Noorani/Sherpa’s analysis of data sources discussed on slide 20 
2013 TNC Revenue Estimate ($M)
(SF Only)
SF Share of Co’s 
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
WHAT’S 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
insufficient 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
•  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 wouldn’t even have
considered taxis 
Limo Companies
Converting Fleets To UBER
 Un-Met Taxi Demand
Car Service Market Share
Theft + Expansion
THERE’S 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 payoff
•  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 firefighting
–  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 first 5 hours of a 10
hour shift paying off
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 fighting over
who gets to work
Saturday night
*SFCDA Report **Noorani/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 financing; 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 financing; 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: Noorani/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: Noorani/Sherpa TNC Survey
*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
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 UBER’S MODEL IS
POWERFUL
47
First order effect
Second order effect
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 flows)
•  Medallion values approach zero
Taxi Service
Medallion Owner
(Subset of Taxi Drivers)
Owners end up under-water
on medallion financing
Currently 10% APR à total
costs ~2X purchase price
Decline in driver quality
•  Increasing difficultly recruiting and
retaining drivers
•  Causing utilization (taxi shifts
covered / taxi shifts available) and
profitability 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
TNC ECOSYSTEM OVER NEXT 3-5 YEARS
•  North of $500M in SF
 •  Exact analog to taxi
companies
•  Alleviates significant
supply bottlenecks
•  Huge capex and logistical
complexity make them
unlikely venture
investments
Gross Sales Volume
Emergence of Leasing
Companies
•  Not a natural multi-player
market
•  Pinching driver earnings
•  Uber has vastly greater
ability to cross subsidize
Price War
50
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. 
51
TRANSPORTATION ON DEMAND: 

A CLOSER LOOK AT CAR SHARING
52

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
53
ZIPCAR WAS AN IMPORTANT INNOVATION IN ON-
DEMAND DELIVERY OF RENTAL CARS
20 locations run by 7
different companies
140 locations via
Zipcar
Vehicle Locations
Pickup Process
Rental Increment
 By the day
 By the half hour
54
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
55
10-15 vehicle types
 Dozens of different
models
*Note: Cars available in early January 2014 as of mid-December
AND TOMORROW GETAROUND WILL SUPERSEDE
ITS CAPITAL INTENSIVE ELDER
56
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
57
NEW VARIETIES OF URBAN TRANSIT ARE ALSO
REDUCING THE NECESSITY OF CAR OWNERSHIP 
Private Company Busing
Gov-sponsored Bike-Sharing
58
59
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?
60
MORE EFFICIENT USE OF ASSETS, FEWER
PARKING HASSLES, MORE ECO-FRIENDLY 
61
TRANSPORTATION ON DEMAND: IMPACT
Winners
•  Cheap + reliable car
service
•  Cheap + ubiquitous
car rental
End User:
Passengers
•  Safer + more flexible
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 Manu-
facturers +
Dealers
Societal Impact
•  Development + gentrification of outlying neighborhoods
•  No more garages à repurposing of space
•  Less + greener consumption
62
A CLOSER LOOK AT ODE NEXT: 

REAL ESTATE ON DEMAND
63
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
REAL ESTATE ON DEMAND: KEY AREAS
64

New
Hospitality
Products
Parking &
Storage on
Demand
Metered
Business
Rentals
REAL ESTATE ON DEMAND: A CLOSER LOOK

AT NEW HOSPITALITY PRODUCTS
65

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
66
ONLINE MARKETPLACES ARE NOW CHANGING THAT
PARADIGM BY FACILITATING PEER-TO-PEER RENTALS
67
HOMEAWAY HAS BUILT SIGNIFICANT SCALE IN 

VACATION HOME RENTAL
Source: Company filings
1 Note: Assumes HomeAway paid listings generate $13K in sales
2 Note: Estimated Q4 listings growth by annualizing Q3 2013 results
68
$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
19% CAGR
20% CAGR
Sales Estimate1 (B)
Only ~13% of US Vacation homes Listed On HomeAway
2
Paid Listings Globally, 000’s
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
69
OF THESE, AIRBNB IS THE CLEAR LEADER
550
300
 290
111
Airbnb
 Wimdu
 HouseTrip
 9Flats
Total Listings Globally (As of January 2014; ‘000)
70
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 Above1:
54%
 43%
 10%
71
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 Revenue2
Airbnb # of Listings (‘000)
 Airbnb # of Stays (M)
1
 2
72
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
73
AIRBNB: VASTLY BETTER CUSTOMER EXPERIENCE 

THAN CRAIGSLIST
74
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
•  Offline ID verification
•  Credit Card
Acceptance/
Collections
•  Customer service
hotline
•  3% Host Fee
•  6-12% Guest Fee
75
VS.
HOW ARE THESE SHORT-TERM RENTAL MARKET-
PLACES IMPACTING THE HOSPITALITY INDUSTRY?
76
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 $180 (inclusive of fees)
Source: American Hotel and Lodging Association, Company filings
US Sales ($B)
 NYC ($B)
2
1
95.0%
 3.8%
 1.4%
77
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 insignificantly affected
78
STILL, THE STORY IS BROADER THAN SHARE
THEFT. AIRBNB IS A FUNDAMENTALLY NEW
HOSPITALITY PRODUCT
Hotel Establishment
 The Gray Market
79
STAY ANYWHERE, NOT JUST THE COMMERCIAL
DISTRICTS AND SAY GOODBYE TO 2-STAR
ACCOMMODATIONS
Hotels Noted In Orange
80
AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST
MIDTOWN WHERE THE HOTELS ARE
CONCENTRATED 
81
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. Price1
Source: Noorani/Sherpa proprietary research; ScrapingHub
Wimdu Rome
(Jan. ’14 Run Rate; $M)
82
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/
Night1
83
FACILITATES FAMILY/GROUP TRAVEL LIKE
NOTHING THAT’S 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
84
AIRBNB ALSO REMOVES TRADITIONAL HOSPITALITY’S
POTENTIAL FOR MORAL HAZARD
85
Guests behave
more
responsibly 

! Hosts more
willing to offer
residences 

! Guests
more willing to
rent them
Don’t break anything, but
otherwise behave as badly

as you want
Anonymous Transaction
Treat my stuff 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
86
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
87
PROFESSIONAL HOSTS PROVIDE A LARGE
PORTION OF INVENTORY
71%
15%
 16%
 19%
 20%
13%
9%
 9%
 7%
 8%
5%
8%
 6%
 6%
9%
6%
33%
17%
 17%
16%
5%
31%
25%
 23%
 14%
3%
26%
 28%
34%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Airbnb SF
Istanbul
Barcelona
 London
 Rome
1 Listing
2 Listings
3 Listings
4-9 Listings
10-49
Listings
>50 Listings
Professional
Property
Managers 
Listings by Host Size (# of Listings Managed) (Jan. ‘14)
Source: Noorani/Sherpa proprietary research; ScrapingHub
88
 Wimdu
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
89
THIS IS ONLY THE BEGINNING OF THE PEER-TO-
PEER RESIDENCE RENTAL WAVE
90
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
91
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: Noorani/Sherpa proprietary research
Total Listings / Housing Units
(Sum of Airbnb, Wimdu, HouseTrip, and 9Flats Listings)
2X Arbitrage Consistent Across All Cities*
92
*Note: Defined as delta between monthly and daily rent assuming 80% occupancy for daily rentals
ECOSYSTEM DEVELOPMENT:

HOSTING AUTOMATION
Tech-Enabled
Cleaning Services
Full-Service
Hosting
Outsourcer +
Concierge
Partnered with dozens of
property management
companies
93
IT’S ONLY A MATTER OF TIME BEFORE THESE
BECOME ENDANGERED SPECIES
94
SUMMARY
A burgeoning new market in short-
term, peer-to-peer rentals is creating
a new kind of travel offering 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. 
95
REAL ESTATE ON DEMAND: A CLOSER LOOK

AT BUSINESS RENTALS & CO-WORKING
96

New
Hospitality
Products
Parking &
Storage on
Demand
Metered
Business
Rentals
LAPTOPS AND ALWAYS-ON CONNECTIVITY FREE
US TO WORK ANYWHERE
97
WORK IS NO LONGER A PLACE
EXPENSIVE OFFICES ARE NO LONGER NECESSARY,
NOR ARE THEY A MARKER

OF SUCCESS
98
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
99
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 
100
A CLOSER LOOK AT ODE NEXT: 

LABOR ON DEMAND
101
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
LABOR ON DEMAND: KEY AREAS
102
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
•  Difficult to source quality talent
•  Long lead time
•  Time-consuming to source independent labor
•  Same quality challenges as full-time talent
•  Staffing Firms + Temp Agencies deliver on demand but
command significant markups
•  Free of ongoing obligation
•  On-demand delivery
•  High quality of work
•  Exorbitant per hour fees
Freelancers, Contractors + Temps
ODE
Source: US Census, Staffing Industry Analysts, “Online Staffing”– January 2, 2014; SelectUSA 
$5T US Labor Market
103
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 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. 
Nonemployer1 Firms vs. US Labor Force
$38K
 $43K
 $44K
 $46K
 $44K
104
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
105
PERPETUAL, HOURLY EMPLOYMENT IS OFTEN
DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED
106
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 different
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 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 staff
Source: Tower Lane “Surveying the New World of Work” 2013
107
THE INDEPENDENCE AND PRODUCTIVITY THAT
COME WITH FREELANCING MAKE WORKERS
HAPPIER
Source: Elance “The State of the Freelance Market,” September 2012
108
40% OF TNC DRIVERS USE THEIR EARNINGS TO
FUND THE PURSUIT OF “PASSION CAREERS” 
Source: Noorani/Sherpa TNC Survey
TNC Drivers
23%
38%
40%
Reason For Becoming a TNC Driver
•  Professional Drivers 
–  Former Taxi, Chauffeur, and Shuttle drivers
•  Supplemental Income For People w/ Few Alternatives
–  Low-paying full-time jobs
–  Slow earnings seasons
–  Unemployed
•  Subsidizing Passion Careers or Benefiting Beyond Income
–  Students and homemakers
–  Actors, artists, photographers, etc. that can’t live off sparse
earnings
–  African soccer agent trying to improve his English
–  Retiree that likes having an activity and the conversation
109
ACCESS TO AFFORDABLE HEALTHCARE AND
RETIREMENT PROGRAMS CREATES MORE
OPTIONS FOR WORKERS
ACA and a variety of independent savings
programs offer key benefits once
available only through full-time
employment with a large firm
110
NEW SERVICES PROVIDE SUPPORT AND
EXPERTISE FOR SMALL BUSINESS AND
FREELANCERS
111
•  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
112
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 + Staffing Agencies
 Outsourcing Companies
•  Workers are commoditized
•  Paid 20%-30% of billing rates
•  Freelancers are fully-empowered
entrepreneurs
•  Receive 80%-90% of billing rates
*Note: Staffing Industry Analysts, “Online Staffing”– January 2, 2014 
113
FREELANCE MARKETPLACES BRING
CONVENIENCE AND TRUST TO HIRING

REMOTE WORKERS
Craigslist
114
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: Staffing Industry Analysts, “Online Staffing”– January 2, 2014; Excludes Craigslist 
$226
$360
$437
$156 
$215 
$314 
$0
$100
$200
$300
$400
$500
$600
$700
$800
2011
 2012
 2013
Millions!
$383
$575
$750
50% of Online Staffing
Market Globally1
Elance / oDesk Billings ($M)
115
BUT ONLINE STAFFING IS STILL A TINY PORTION
OF THE INDUSTRY OVERALL
$0
$5
$10
$15
$20
$25
Online Staffing
 All Staffing
Billions!
Local Gigs
Online Staffing
In-Person Staffing
$2T
All Other Players
Elance /oDesk
$3.0B
$3.0B
Craigslist
Short-Term
Labor Supply
1 Note: Staffing Industry Analysts, “Online Staffing”– January 2, 2014; Noorani/Sherpa proprietary Craigslist study
Global Staffing Industry ($B)
116
OUTSIDE OF IT, ELANCE / ODESK IS ESSENTIALLY
THE SAME SIZE AS CRAIGSLIST GIGS
Source: Noorani/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
Billions!
Local Gigs
$1.5B
 $1.5B
2013 US Supply of Freelance Labor ($B)
Ops
Creative
Marketing
IT
Other
117
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)
118
Total US Companies1
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
119
LABOR ON DEMAND: A CLOSER LOOK AT 

MANAGED SERVICES
120
Freelance
Market-
places
Local
Providers
Managed
Services
AGENCIES MAKE UP AN ENORMOUS PORTION OF
THE MODERN WORKFORCE
Source: US Census, Staffing Industry Analysts, “Online Staffing”– 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
121
THE AGENCY MODEL IS VULNERABLE TO CLASSIC
DISRUPTIVE INNOVATION
122
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 à decrease cost of
goods sold à higher margins/lower prices à
more market share
MANAGED-SERVICES COMPANIES HAVE 

BEGUN TO DEVOUR THE MOST PRESTIGIOUS
PROFESSIONS
Lawyers
 Investment Bankers
Management
Consultants
123
Software Developers
 Graphic Designers
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
124
LABOR ON DEMAND: A CLOSER LOOK AT 

MANAGED SERVICES
125
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
127
THE NEXT LEAP FORWARD IN ODE FOR LOCAL
LABOR IS HAPPENING NOW: 
Key Attributes
•  Centrally vetted
supply
•  Geo-location
specific
•  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
128
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
129
SUMMARY
Employers seeking a more flexible
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. 
130
LABOR ON DEMAND: IMPACT
Winners
•  Gain flexibility and
efficiency è better able
to pursue interests,
happiness
End User:
Worker w/
Differentiated
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 w/o
differentiated
skill
•  …
Staffing
Companies
•  …
2nd Tier
Professional
Services
Agencies
Societal Impact
•  Work is no longer a place
•  Lavish offices lose relevance
•  Population must learn intrinsic motivation + entrepreneurial instinct
•  Lifelong learning becomes a key factor in work success
131
A CLOSER LOOK AT ODE NEXT: 

PRODUCTS ON DEMAND
132
Transportation
Real Estate
Labor
Retail & Products
1
2
3
4
PRODUCTS ON DEMAND: KEY AREAS
133
Real-Time
Access
Pop-Up
Shopping
Asset
Sharing
POP UP RETAIL IS MEETING CUSTOMERS WHERE
EVER THEY GO
134
Old
 New
AND IS BECOMING ANOTHER FACET OF ODE REAL
ESTATE
100+ Manhattan locations rentable by the day
135
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 Jeff 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
136
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 Jeff Jordan
Anticipated Need
 Urgent Need
Certain
Uncertain
Under Siege
In The
Crosshairs
Cockroaches of
Retail
137
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
138
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 offer
curated, partially prepared
food delivery that take the
headaches out of meal
planning and prep
139
AND AS GROCERY GOES SO GOES PHARMACY
AND A LOT MORE
140
FOR URGENT NEEDS, NEW TECHNOLOGY WILL
MEET US PART OF THE WAY THERE
Better logistics
platforms will mine
new efficiencies
from traditional
delivery channels 
Entirely new
delivery
channels are on
the horizon
141
EVENTUALLY, 3D PRINTING WILL CHANGE
EVERYTHING
142
RETAIL LOCATIONS WILL COME TO RESEMBLE
SHOW-ROOMS, FREEING UP MORE INNER-CITY
REAL ESTATE
143
10M OF THE COUNTRY’S 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
144
PRODUCTS ON DEMAND: IMPACT
Losers
•  …
Grocery
stores
•  …
Brick &
Mortar retail
staff
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
è profitability
Amazon
145
5
Conclusion: 
The ODE Effect
CONCLUSIONS: TECHNOLOGIES OF TRUST ARE AT
THE FOUNDATION OF THE NEW ODE VILLAGE
147
Pervasive
Connectivity
Payments
Platforms
Reputation
Networks
PROXIMITY
COLLABORATION
TRUST
CONCLUSIONS: THE ODE EFFECT
148
TRUST
BUYERS &
SELERS
REGUL-
ATORS &
GOVERN-
MENT
INDUS-
TRIES
SOCIETY &
ENVIRON-
MENT
CONCLUSIONS: RESHAPING INDUSTRIES
149
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
150
CONCLUSIONS: SHAPING THE CITY OF THE
FUTURE
151
Mobile population
 Fewer cars
Big Office Buildings
replaced by home offices
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
On-Demand Economy Report

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On-Demand Economy Report

  • 1. 2014 ODE Report The On-Demand Economy
 Zach Noorani / Shervin Pishevar
  • 2. OUTLINE 1 3 4 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 Effect 2
  • 3. It sounds like the beginning of a joke, but it’s the beginning of something much bigger 3 TWO VENTURE 
 CAPITALISTS
 WALK INTO A BAR…
  • 4. 4 IN THIS PUB IN A REMOTE VILLAGE
 IN IRELAND, WE NOTICED BUSINESS 
 CONDUCTED IN AN EXTRAORDINARY WAY
  • 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 5
  • 6. 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
  • 7. COMMERCE HAD BEEN MOVING AWAY FROM THE VILLAGE MODEL FOR YEARS Price and selection have increased while trust, service and personal relationships have decreased 7 General Store Main Streets Big Box Store
  • 8. Source: United Nations, Department of Economic and Social Affairs •  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 8
  • 9. Creating a foundation of trust that enables sharing, face-to-face transactions and customized service 21st Century Village Economy Pervasive Connectivity Payments Platforms Reputation Networks 9 AND SHIFTS IN TECHNOLOGY ARE BRINGING THE VILLAGE ECONOMY BACK – AT SCALE
  • 10. ODE CONNECTS OUR VILLAGE PAST TO OUR ECONOMIC FUTURE 10 Creating a new generation of entrants to the Fortune 500 and unlocking new levels of economic productivity
  • 11. THIS IS THE ON-DEMAND ECONOMY (ODE)
  • 12. WHERE ATOMS MEET BITS •  Cheaply reach the mass market •  Remove anonymity + establish trust - reputation systems •  Efficiently mobilize supply chains and workforces •  Enable collaboration and asset sharing 12 Mobile Social Transactional
  • 13. DEFINING ODE 13 Instant, pervasive access to goods and services without the burden of ownership or long-term commitment Combining the best of the village economy with the best of modern commerce
  • 14. 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 14
  • 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 15 Marginalizing regulatory frameworks
  • 16. TECHNOLOGY AND CULTURAL SHIFTS THAT LAID THE GROUNDWORK FOR ODE RiseofCultureof Convenience: 1960s-80s OnlineMarketplaces: 1990s InstantVideoDelivery. Virtualization& Digitization:Early2000s RiseofSocial Networking:2007-12 PervasiveMobile Connectivity:2013 VHS VCR 2013 1999 2001 2007 2009 2010 2012 1970 1995 1998 4 MM Foreclosures filed (2.2% of U.S. Households) Sharing Economy: Publication of What’s 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 Netflix founded TiVo Introduced Netflix Standalone Streaming iPad introduced 3.5 B Connected Internet Devices Uber AirBnB Popularizationofthe SharingEconomy: 2010 iPhone introduced iTunes hits 2B song downloads Carnegie Mellon releases first study of digital loneliness LonelinessCrisis: 2004-2013 16
  • 17. INSTANT ACCESS TO DIGITIZED AND VIRTUAL GOODS RESHAPED CONSUMER BEHAVIORS Media Software Reservation Booking Financial Transactions Matchmaking 17
  • 18. NOW ODE CREATES INSTANT ACCESS TO PHYSICAL GOODS AND SERVICES AS WELL Transportation Real Estate Labor & Services Retail and Products Now Next 18
  • 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 19 Growth Contraction
  • 20. 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) 20
  • 21. REPRESENTING AN INCREASING SHARE OF VC DOLLARS ODE: Physical Share of US VC Market (By $’s) 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 21
  • 22. LET'S TAKE A CLOSER LOOK AT 4 KEY ODE SEGMENTS AND HOW THEY ARE SHAPING 
 THE FUTURE 22 Transportation Real Estate Labor Retail & Products 1 2 3 4
  • 23. A CLOSER LOOK AT ODE NEXT: 
 TRANSPORTATION DEMAND 23 Transportation Real Estate Labor Retail & Products 1 2 3 4
  • 24. TRANSPORTATION ON DEMAND: KEY AREAS 24 Car Services and Taxi Hailing Car Sharing Mass Transit Alternatives Other Vehicle Sharing
  • 25. TRANSPORTATION ON DEMAND: 
 A CLOSER LOOK AT CAR SERVICES 25 Car Services and Taxi Hailing Car Sharing Mass Transit Alternatives Other Vehicle Sharing
  • 26. CAR SERVICES STARTUPS: 
 OVER $1B RAISED GLOBALLY FROM 2009-2013 Source: Crunchbase 26 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
  • 27. LYFT: NEARLY $40M IN REVENUE IN 2013, EXPECTED TO EASILY 5X THAT IN 2014 *Note: Assumes 6.0% and 4.5% monthly growth throughout 2013 and 2014 respectively and a 20% txn fee Also $100M+ Run-Rate Revenue $0 $1 $2 $4 $7 $13 $21 $39 $2 $4 $9 $22 $36 $64 $107 $195 $0 $40 $80 $120 $160 $200 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Millions! Net Revenue Gross Revenue 2013 Revenue: $37M 2014 Revenue: $400M Estimated financials (SM) 27
  • 28. 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
  • 29. TNCS TURN ANYONE WITH A CAR INTO A CHAUFFEUR AND ANYONE WITH CELL PHONE INTO A POTENTIAL FARE 29
  • 30. 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 officials, 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 •  Noorani/Sherpa TNC Survey –  Over 100 TNC and taxi driver interviews and test trips   Unprecedented Data Discovery A proprietary deep dive in San Francisco
  • 31. 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 Billions! 300 Most Populated Cities Remainder of Urban US Taxi & Limousine Service Industry Limo Services $10 31
  • 32. 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
  • 33. 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
  • 34. 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 $400 2010 2011 2012 2013 Millions! +8% (3%) SF Taxi Industry Revenue ($M) 34
  • 35. TNCS IN SF PRODUCED AN ESTIMATED 
 ~$140M IN REVENUE IN 2013 $48 $28 $9 $38 $19 Uber Lyft SideCar Source: Based on Noorani/Sherpa’s analysis of data sources discussed on slide 20 2013 TNC Revenue Estimate ($M) (SF Only) SF Share of Co’s Overall Revenue: 15% 76% UberSUV UberBLACK uberx $106 35
  • 36. WHILE THE TAXI MARKET WAS ESSENTIALLY FLAT, TNCS GREW NEARLY 450% Source: SFMTA Taxi and Accessible Services Division; “Taxi User Surveys” Hara Associates SF Taxi vs. TNC Revenue ($M) $368 $358 $32 $143 2012 2013 $100 Taxi TNC 36 Note: 2% weekly growth rate assumed for all TNCs throughout 2012 $75 Limo
  • 37. WHAT’S 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 insufficient 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 •  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 wouldn’t even have considered taxis Limo Companies Converting Fleets To UBER Un-Met Taxi Demand Car Service Market Share Theft + Expansion
  • 38. THERE’S ANOTHER SIDE TO THIS STORY 38
  • 39. 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 payoff •  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
  • 40. TNCS ARE AN ATTRACTIVE ALTERNATIVE FOR DRIVERS Taxi TNCs Safety •  Carry no cash •  Every passenger “known” •  Taxi + Limo driving more dangerous than firefighting –  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 first 5 hours of a 10 hour shift paying off 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 fighting over who gets to work Saturday night *SFCDA Report **Noorani/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
  • 41. 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
  • 42. TNC DRIVERS EARN VIRTUALLY THE SAME AMOUNT AS THEIR TAXI COUNTERPARTS *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 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
  • 43. 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 financing; 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
  • 44. % = 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: Noorani/Sherpa TNC Survey 44 # of taxis Earnings/shift Shifts worked
  • 45. UBERX FARES WILL CONTINUE FALLING AND COULD EASILY REACH 70% BELOW THE COST OF A TAXI *Source: Noorani/Sherpa TNC Survey *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 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
  • 46. UBER AGGRESSIVELY DROPPING PRICES AS FARE DEMAND INCREASES Actual results for trial period reveal 1% increase to driver income 46
  • 47. THE NETWORK EFFECT OF UBER’S MODEL IS POWERFUL 47 First order effect Second order effect Driver Fares / Hour Rise Uber Lowers Prices Passengers Join More passengers More drivers
  • 48. 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 flows) •  Medallion values approach zero Taxi Service Medallion Owner (Subset of Taxi Drivers) Owners end up under-water on medallion financing Currently 10% APR à total costs ~2X purchase price Decline in driver quality •  Increasing difficultly recruiting and retaining drivers •  Causing utilization (taxi shifts covered / taxi shifts available) and profitability to plummet Taxi Company Companies saddled with expensive medallion leases will fail 48
  • 49. 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
  • 50. TNC ECOSYSTEM OVER NEXT 3-5 YEARS •  North of $500M in SF •  Exact analog to taxi companies •  Alleviates significant supply bottlenecks •  Huge capex and logistical complexity make them unlikely venture investments Gross Sales Volume Emergence of Leasing Companies •  Not a natural multi-player market •  Pinching driver earnings •  Uber has vastly greater ability to cross subsidize Price War 50
  • 51. 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. 51
  • 52. TRANSPORTATION ON DEMAND: 
 A CLOSER LOOK AT CAR SHARING 52 Car Services and Taxi Hailing Car Sharing Mass Transit Alternatives Other Vehicle Sharing
  • 53. AS WITH TAXIS, WE HAVE A TOLERATE / HATE RELATIONSHIP WITH RENTAL CAR AGENCIES 53
  • 54. ZIPCAR WAS AN IMPORTANT INNOVATION IN ON- DEMAND DELIVERY OF RENTAL CARS 20 locations run by 7 different companies 140 locations via Zipcar Vehicle Locations Pickup Process Rental Increment By the day By the half hour 54
  • 55. 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 55 10-15 vehicle types Dozens of different models *Note: Cars available in early January 2014 as of mid-December
  • 56. AND TOMORROW GETAROUND WILL SUPERSEDE ITS CAPITAL INTENSIVE ELDER 56 Growth improving customer access and value Meaningful owner earnings driving rapid supply growth value
  • 57. ADVANCEMENTS IN ON-DEMAND TRANSPORTATION WILL CHANGE THE LANDSCAPE OF URBAN LIFE Outlying Neighborhoods Gain Accessibility Fewer People Will Buy Cars 57
  • 58. NEW VARIETIES OF URBAN TRANSIT ARE ALSO REDUCING THE NECESSITY OF CAR OWNERSHIP Private Company Busing Gov-sponsored Bike-Sharing 58
  • 59. 59 WHAT IF OUR CITIES WERE NO LONG CLUTTERED WITH PLACES TO STORE CARS?
  • 60. AND THE GROUND FLOOR OF EVERY TOWNHOUSE NO LONGER HAD TO BE A GARAGE? 60
  • 61. MORE EFFICIENT USE OF ASSETS, FEWER PARKING HASSLES, MORE ECO-FRIENDLY 61
  • 62. TRANSPORTATION ON DEMAND: IMPACT Winners •  Cheap + reliable car service •  Cheap + ubiquitous car rental End User: Passengers •  Safer + more flexible 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 Manu- facturers + Dealers Societal Impact •  Development + gentrification of outlying neighborhoods •  No more garages à repurposing of space •  Less + greener consumption 62
  • 63. A CLOSER LOOK AT ODE NEXT: 
 REAL ESTATE ON DEMAND 63 Transportation Real Estate Labor Retail & Products 1 2 3 4
  • 64. REAL ESTATE ON DEMAND: KEY AREAS 64 New Hospitality Products Parking & Storage on Demand Metered Business Rentals
  • 65. REAL ESTATE ON DEMAND: A CLOSER LOOK
 AT NEW HOSPITALITY PRODUCTS 65 New Hospitality Products Parking & Storage on Demand Metered Business Rentals
  • 66. 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 66
  • 67. ONLINE MARKETPLACES ARE NOW CHANGING THAT PARADIGM BY FACILITATING PEER-TO-PEER RENTALS 67
  • 68. HOMEAWAY HAS BUILT SIGNIFICANT SCALE IN 
 VACATION HOME RENTAL Source: Company filings 1 Note: Assumes HomeAway paid listings generate $13K in sales 2 Note: Estimated Q4 listings growth by annualizing Q3 2013 results 68 $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 19% CAGR 20% CAGR Sales Estimate1 (B) Only ~13% of US Vacation homes Listed On HomeAway 2 Paid Listings Globally, 000’s 338 433 517 640 712 773 0 100 200 300 400 500 600 700 800 900
  • 69. LONG A STAPLE OF CRAIGSLIST, NEW PLATFORMS ARE MAKING SHORT-TERM RESIDENCE RENTALS MAINSTREAM $284M $140M $25M $60M $23M $16M $2M $2M VC Funding 69
  • 70. OF THESE, AIRBNB IS THE CLEAR LEADER 550 300 290 111 Airbnb Wimdu HouseTrip 9Flats Total Listings Globally (As of January 2014; ‘000) 70
  • 71. 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 Above1: 54% 43% 10% 71
  • 72. 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 Revenue2 Airbnb # of Listings (‘000) Airbnb # of Stays (M) 1 2 72
  • 73. 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 73
  • 74. AIRBNB: VASTLY BETTER CUSTOMER EXPERIENCE 
 THAN CRAIGSLIST 74 Craigslist •  Transparent listing availability and location •  Professionally photographed listings •  Comprehensive listing descriptions •  Instant booking •  Credit card acceptance Airbnb VS.
  • 75. AND MORE TRUSTWORTHY •  Social connections visibility •  Prior guest reviews and references •  Offline ID verification •  Credit Card Acceptance/ Collections •  Customer service hotline •  3% Host Fee •  6-12% Guest Fee 75 VS.
  • 76. HOW ARE THESE SHORT-TERM RENTAL MARKET- PLACES IMPACTING THE HOSPITALITY INDUSTRY? 76
  • 77. 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 $180 (inclusive of fees) Source: American Hotel and Lodging Association, Company filings US Sales ($B) NYC ($B) 2 1 95.0% 3.8% 1.4% 77
  • 78. 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 insignificantly affected 78
  • 79. STILL, THE STORY IS BROADER THAN SHARE THEFT. AIRBNB IS A FUNDAMENTALLY NEW HOSPITALITY PRODUCT Hotel Establishment The Gray Market 79
  • 80. STAY ANYWHERE, NOT JUST THE COMMERCIAL DISTRICTS AND SAY GOODBYE TO 2-STAR ACCOMMODATIONS Hotels Noted In Orange 80
  • 81. AIRBNB GUESTS STAY ALL OVER NYC, NOT JUST MIDTOWN WHERE THE HOTELS ARE CONCENTRATED 81
  • 82. 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. Price1 Source: Noorani/Sherpa proprietary research; ScrapingHub Wimdu Rome (Jan. ’14 Run Rate; $M) 82
  • 83. 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/ Night1 83
  • 84. FACILITATES FAMILY/GROUP TRAVEL LIKE NOTHING THAT’S 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 84
  • 85. AIRBNB ALSO REMOVES TRADITIONAL HOSPITALITY’S POTENTIAL FOR MORAL HAZARD 85 Guests behave more responsibly ! Hosts more willing to offer residences ! Guests more willing to rent them Don’t break anything, but otherwise behave as badly
 as you want Anonymous Transaction Treat my stuff as you would your own or face ostracism Village-Based Commerce
  • 86. FLEXIBLE SUPPLY CREATES ENORMOUS VALUE DURING LARGE EVENTS Airbnb adds 2,400 units of supply Austin Hotel Availability 1 Week Before SXSW 86 Fully Booked Huge Premium
  • 87. 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 87
  • 88. PROFESSIONAL HOSTS PROVIDE A LARGE PORTION OF INVENTORY 71% 15% 16% 19% 20% 13% 9% 9% 7% 8% 5% 8% 6% 6% 9% 6% 33% 17% 17% 16% 5% 31% 25% 23% 14% 3% 26% 28% 34% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Airbnb SF Istanbul Barcelona London Rome 1 Listing 2 Listings 3 Listings 4-9 Listings 10-49 Listings >50 Listings Professional Property Managers Listings by Host Size (# of Listings Managed) (Jan. ‘14) Source: Noorani/Sherpa proprietary research; ScrapingHub 88 Wimdu
  • 89. 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 89
  • 90. THIS IS ONLY THE BEGINNING OF THE PEER-TO- PEER RESIDENCE RENTAL WAVE 90
  • 91. 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 91
  • 92. 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: Noorani/Sherpa proprietary research Total Listings / Housing Units (Sum of Airbnb, Wimdu, HouseTrip, and 9Flats Listings) 2X Arbitrage Consistent Across All Cities* 92 *Note: Defined as delta between monthly and daily rent assuming 80% occupancy for daily rentals
  • 93. ECOSYSTEM DEVELOPMENT:
 HOSTING AUTOMATION Tech-Enabled Cleaning Services Full-Service Hosting Outsourcer + Concierge Partnered with dozens of property management companies 93
  • 94. IT’S ONLY A MATTER OF TIME BEFORE THESE BECOME ENDANGERED SPECIES 94
  • 95. SUMMARY A burgeoning new market in short- term, peer-to-peer rentals is creating a new kind of travel offering 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. 95
  • 96. REAL ESTATE ON DEMAND: A CLOSER LOOK
 AT BUSINESS RENTALS & CO-WORKING 96 New Hospitality Products Parking & Storage on Demand Metered Business Rentals
  • 97. LAPTOPS AND ALWAYS-ON CONNECTIVITY FREE US TO WORK ANYWHERE 97 WORK IS NO LONGER A PLACE
  • 98. EXPENSIVE OFFICES ARE NO LONGER NECESSARY, NOR ARE THEY A MARKER
 OF SUCCESS 98
  • 99. 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 99
  • 100. 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 100
  • 101. A CLOSER LOOK AT ODE NEXT: 
 LABOR ON DEMAND 101 Transportation Real Estate Labor Retail & Products 1 2 3 4
  • 102. LABOR ON DEMAND: KEY AREAS 102 Freelance Market- places Local Providers Managed Services
  • 103. 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 •  Difficult to source quality talent •  Long lead time •  Time-consuming to source independent labor •  Same quality challenges as full-time talent •  Staffing Firms + Temp Agencies deliver on demand but command significant markups •  Free of ongoing obligation •  On-demand delivery •  High quality of work •  Exorbitant per hour fees Freelancers, Contractors + Temps ODE Source: US Census, Staffing Industry Analysts, “Online Staffing”– January 2, 2014; SelectUSA $5T US Labor Market 103
  • 104. 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 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. Nonemployer1 Firms vs. US Labor Force $38K $43K $44K $46K $44K 104
  • 105. 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 105
  • 106. PERPETUAL, HOURLY EMPLOYMENT IS OFTEN DEEPLY INEFFICIENT FOR ALL PARTIES INVOLVED 106
  • 107. 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 different 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 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 staff Source: Tower Lane “Surveying the New World of Work” 2013 107
  • 108. THE INDEPENDENCE AND PRODUCTIVITY THAT COME WITH FREELANCING MAKE WORKERS HAPPIER Source: Elance “The State of the Freelance Market,” September 2012 108
  • 109. 40% OF TNC DRIVERS USE THEIR EARNINGS TO FUND THE PURSUIT OF “PASSION CAREERS” Source: Noorani/Sherpa TNC Survey TNC Drivers 23% 38% 40% Reason For Becoming a TNC Driver •  Professional Drivers –  Former Taxi, Chauffeur, and Shuttle drivers •  Supplemental Income For People w/ Few Alternatives –  Low-paying full-time jobs –  Slow earnings seasons –  Unemployed •  Subsidizing Passion Careers or Benefiting Beyond Income –  Students and homemakers –  Actors, artists, photographers, etc. that can’t live off sparse earnings –  African soccer agent trying to improve his English –  Retiree that likes having an activity and the conversation 109
  • 110. ACCESS TO AFFORDABLE HEALTHCARE AND RETIREMENT PROGRAMS CREATES MORE OPTIONS FOR WORKERS ACA and a variety of independent savings programs offer key benefits once available only through full-time employment with a large firm 110
  • 111. NEW SERVICES PROVIDE SUPPORT AND EXPERTISE FOR SMALL BUSINESS AND FREELANCERS 111 •  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
  • 112. LABOR ON DEMAND: A CLOSER LOOK AT 
 FREELANCE MARKETPLACES 112 Freelance Market- places Local Providers Managed Services
  • 113. 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 + Staffing Agencies Outsourcing Companies •  Workers are commoditized •  Paid 20%-30% of billing rates •  Freelancers are fully-empowered entrepreneurs •  Receive 80%-90% of billing rates *Note: Staffing Industry Analysts, “Online Staffing”– January 2, 2014 113
  • 114. FREELANCE MARKETPLACES BRING CONVENIENCE AND TRUST TO HIRING
 REMOTE WORKERS Craigslist 114 VS. Freelance Marketplace Employer Track Record Employee Work History Lead Generation Reputation Building Payment Collection
  • 115. WITH $750M IN BILLINGS & 50% SHARE, ELANCE/ ODESK DOMINATES ONLINE FREELANCE MARKETPLACE 1 Note: Staffing Industry Analysts, “Online Staffing”– January 2, 2014; Excludes Craigslist $226 $360 $437 $156 $215 $314 $0 $100 $200 $300 $400 $500 $600 $700 $800 2011 2012 2013 Millions! $383 $575 $750 50% of Online Staffing Market Globally1 Elance / oDesk Billings ($M) 115
  • 116. BUT ONLINE STAFFING IS STILL A TINY PORTION OF THE INDUSTRY OVERALL $0 $5 $10 $15 $20 $25 Online Staffing All Staffing Billions! Local Gigs Online Staffing In-Person Staffing $2T All Other Players Elance /oDesk $3.0B $3.0B Craigslist Short-Term Labor Supply 1 Note: Staffing Industry Analysts, “Online Staffing”– January 2, 2014; Noorani/Sherpa proprietary Craigslist study Global Staffing Industry ($B) 116
  • 117. OUTSIDE OF IT, ELANCE / ODESK IS ESSENTIALLY THE SAME SIZE AS CRAIGSLIST GIGS Source: Noorani/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 Billions! Local Gigs $1.5B $1.5B 2013 US Supply of Freelance Labor ($B) Ops Creative Marketing IT Other 117
  • 118. 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) 118
  • 119. Total US Companies1 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 119
  • 120. LABOR ON DEMAND: A CLOSER LOOK AT 
 MANAGED SERVICES 120 Freelance Market- places Local Providers Managed Services
  • 121. AGENCIES MAKE UP AN ENORMOUS PORTION OF THE MODERN WORKFORCE Source: US Census, Staffing Industry Analysts, “Online Staffing”– 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 121
  • 122. THE AGENCY MODEL IS VULNERABLE TO CLASSIC DISRUPTIVE INNOVATION 122 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 à decrease cost of goods sold à higher margins/lower prices à more market share
  • 123. MANAGED-SERVICES COMPANIES HAVE 
 BEGUN TO DEVOUR THE MOST PRESTIGIOUS PROFESSIONS Lawyers Investment Bankers Management Consultants 123 Software Developers Graphic Designers
  • 124. 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 124
  • 125. LABOR ON DEMAND: A CLOSER LOOK AT 
 MANAGED SERVICES 125 Freelance Market- places Local Providers Managed Services
  • 126. WE TAKE FOR GRANTED HOW LITTLE ABOUT THESE SERVICES HAS CHANGED IN THE LAST 
 50 YEARS
  • 127. FINDING THEM HAS INDEED CHANGED QUITE A BIT A Long List of Names User-Generated Reviews Vertical Specialization 127
  • 128. THE NEXT LEAP FORWARD IN ODE FOR LOCAL LABOR IS HAPPENING NOW: Key Attributes •  Centrally vetted supply •  Geo-location specific •  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 128 Available at the touch of a button
  • 129. 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 129
  • 130. SUMMARY Employers seeking a more flexible 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. 130
  • 131. LABOR ON DEMAND: IMPACT Winners •  Gain flexibility and efficiency è better able to pursue interests, happiness End User: Worker w/ Differentiated 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 w/o differentiated skill •  … Staffing Companies •  … 2nd Tier Professional Services Agencies Societal Impact •  Work is no longer a place •  Lavish offices lose relevance •  Population must learn intrinsic motivation + entrepreneurial instinct •  Lifelong learning becomes a key factor in work success 131
  • 132. A CLOSER LOOK AT ODE NEXT: 
 PRODUCTS ON DEMAND 132 Transportation Real Estate Labor Retail & Products 1 2 3 4
  • 133. PRODUCTS ON DEMAND: KEY AREAS 133 Real-Time Access Pop-Up Shopping Asset Sharing
  • 134. POP UP RETAIL IS MEETING CUSTOMERS WHERE EVER THEY GO 134 Old New
  • 135. AND IS BECOMING ANOTHER FACET OF ODE REAL ESTATE 100+ Manhattan locations rentable by the day 135
  • 136. 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 Jeff 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 136 Food + Beverage Health + Personal Care $358B $618B
  • 137. 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 Jeff Jordan Anticipated Need Urgent Need Certain Uncertain Under Siege In The Crosshairs Cockroaches of Retail 137
  • 138. 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 138
  • 139. 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 offer curated, partially prepared food delivery that take the headaches out of meal planning and prep 139
  • 140. AND AS GROCERY GOES SO GOES PHARMACY AND A LOT MORE 140
  • 141. FOR URGENT NEEDS, NEW TECHNOLOGY WILL MEET US PART OF THE WAY THERE Better logistics platforms will mine new efficiencies from traditional delivery channels Entirely new delivery channels are on the horizon 141
  • 142. EVENTUALLY, 3D PRINTING WILL CHANGE EVERYTHING 142
  • 143. RETAIL LOCATIONS WILL COME TO RESEMBLE SHOW-ROOMS, FREEING UP MORE INNER-CITY REAL ESTATE 143
  • 144. 10M OF THE COUNTRY’S 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 144
  • 145. PRODUCTS ON DEMAND: IMPACT Losers •  … Grocery stores •  … Brick & Mortar retail staff 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 è profitability Amazon 145
  • 147. CONCLUSIONS: TECHNOLOGIES OF TRUST ARE AT THE FOUNDATION OF THE NEW ODE VILLAGE 147 Pervasive Connectivity Payments Platforms Reputation Networks PROXIMITY COLLABORATION TRUST
  • 148. CONCLUSIONS: THE ODE EFFECT 148 TRUST BUYERS & SELERS REGUL- ATORS & GOVERN- MENT INDUS- TRIES SOCIETY & ENVIRON- MENT
  • 149. CONCLUSIONS: RESHAPING INDUSTRIES 149 ODE will kill middlemen and incumbents and marginalize regulators unable or unwilling to adapt to changing consumer expectations
  • 150. Major participants in ODE Companies created by ODE CONCLUSIONS: SPAWNING THE NEXT- GENERATION OF FORTUNE 100 COMPANIES 150
  • 151. CONCLUSIONS: SHAPING THE CITY OF THE FUTURE 151 Mobile population Fewer cars Big Office Buildings replaced by home offices 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