The report examines 4 sectors of ODE: Transportation, Real Estate, Labor, and Products. For each sector we’ve analyzed the potential to build huge businesses that leverage technology to reimagine how physical goods and services are delivered and how they will transform the way we live our lives and conduct business.
Created by Zach Noorani and Shervin Pishevar with significant contributions from Jennie Baird.
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
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
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
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
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
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
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
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
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
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
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
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