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

146. 5 Conclusion: The ODE Eﬀect

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