Flatbook: Exploiting the AirBnB Arbitrage Opportunity

In the first half of the article I begin with an introduction to AirBnB and an explanation of the arbitrage opportunity. The second half of the article goes on to talk about Flatbook, a Canadian startup out of Montreal that is quickly exploiting this opportunity and taking it to the next level.

AirBnB is considered one of the greatest internet success stories of today. What started out as a crazy idea in 2008 (offering your home to a complete stranger?!) has turned into a global phenomenon.  Over 25 million guests have used AirBnB as an alternative to booking a hotel; turning unused capacity into a new source of revenue has caught hospitality groups by surprise as AirBnB has quickly become the 3rd largest hospitality company by valuation.

AirBnB vs Traditional Hotel Companies

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A 2014 Report on Venture Capital in Canada

Relative to our neighbors south of the border, Canada is a small market in the world of venture capital (VC). According to Ernst & Young, it is estimated that in 2013, the United States attracted $33B in venture capital while Canada attracted only a fraction of that at $1.0B, or 3% of the U.S. market.

Global Annual VC Investments 2006 - 2013

Some of this can be attributed to our smaller population size (35M vs. 320M), but that would mean that Canadian VC should be 11% of the United States, not 3%. If we use venture capital/population as a comparable metric, that’s $29/person in Canada versus $103/person in the United States. This points to the fact that Canada is a much younger market for VC and one that is likely to grow over time as the startup ecosystem matures and investors look outside of the US for their next opportunity. 

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Analytics: Leveling the Playing Field for Brick and Motors

For the last two years, brick and motor stores have been targeted by a new, customer led shopping strategy called showrooming. The idea is as follows: customers browse through merchandise at a store to touch and feel the products, go home empty-handed, and then head online to find the products they like at a cheaper price. As in-store sales slumped, large chains like BestBuy responded to the challenge with price match guarantees. If consumers could find products at a cheaper price online, BestBuy would match the price and sell you the product right then and there. This of course lead to some headaches, one such example occurred recently where customers were using fake third-party Amazon listings to get Playstation 4 bundles at $90, $310 off the normal listing of $400.

Price matching only addresses one pain-point in the battle against eCommerce. Giants like Amazon are able to use data analytics to track their customers and create personalized marketing strategies that drive sales. With their “item-to-item collaborative filtering”, Amzaon can track what products customers viewed, what they purchased, and the reviews they left. This allows Amazon to create user profiles that then allow them to make highly targeted email and advertising campaigns. Amazon also has a powerful recommendation engine that refers new products based on past purchases. These powerful algorithms gave eCommerce platforms a large advantage over their brick and motor counter-parts. To fight back, physical stores are rising up to the challenge with their own in-store analytic platforms that seek to be just as powerful and effective in driving personalized in-store experiences.

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What’s Next for Pebble and The Future of Wearables

Pebble, a hardware technology company based out of Palo Alto, California, is one of the first firms to bring smartwatches to the masses. I must admit that I have a sweet spot for Pebble, since the founder and CEO Eric Migicovsky is a Canadian like myself. To start, let me give you some quick history on Eric. He grew up in Vancouver and moved to Southern Ontario to attend the University of Waterloo in Systems Design Engineering. His first smartwatch prototype was made years ago when he was on exchange at the Netherlands’ Delft industrial school. Since then, Eric made a number of iterations until he launched a Kickstarter campaign in 2012 for Pebble. Pebble, a smartwatch that pushed notifications from your phone onto your wrist, asked for a modest $100,000 in fundraising to help bring the new product to life. By the end of the fundraising campaign on May 18th 2012,  Pebble secured $10.2M – 100 times the ask, with an estimated 85,000 preorders. Pebble went on to hold the title for the most successful fundraising campaign on Kickstarter, until the Coolest Cooler, a modern, updated cooler for the 21st century, beat it last August. So Pebble is super successful now, right? Well yeah, kind of:

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Uber and Lyft: Ruthless Competition or Playful Partnership?

It has been a big year for Uber and Lyft as both companies broke into new cities, raised new capital, and continued to attract media attention for disrupting the black car and taxi market. The year also brought about large price drops for both companies. Between January and February of this year, Uber rolled out a 15-34% price drop for its UberX service in cities across the United States and Canada. Lyft responded in April with a 20% price cut after raising a new $250M fund. Such significant drops have sent the media into a frenzy – they can’t stop reporting about this “intense war”.

I’m going to argue the opposite: Uber and Lyft are more likely working in unison rather than against one another. The “price war” is an illusion to fool one into thinking that the competition is hot, when in fact, Uber and Lyft are working hard to create their own ideal market. To better understand why this is the case, we need to look at basic game theory models.

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Market Size: How large is the market for consumer 3D Printers?

Introduction: 286% Growth, but did you even know?

Consumer-oriented 3D printers (printers priced at less than $5,000) have been averaging 286% growth between 2007 and 2012, but unless you were at Wohlers Associates you probably didn’t know exactly how quickly this market is growing. 3D printers targeting hobbyists, schools, and everyday consumers is a booming market that began seven years ago, but with manufactures keeping their lips tight, only industry insiders understand the true value behind this market.

For outsiders there are two approaches to estimating the size of the market. One way is to purchase Wohlers Associates‘ annual report on additive manufacturing (3D printing) which is by far the most comprehensive report available. However, unless you are able to fork out $495 for the report, then until recently you were on your own to figure out the size of this market.

The second method which I have attempted involves aggregating all the information freely available online into one report that will reveal three questions people have been longing to know:

  1. How many printers have been sold thus far?
  2. How many printers can we expect to sell into the near future?
  3. What is the current market share breakdown?

This report will string together a trail of information made freely available by Wohlers Associates, 3D manufactures, and bloggers writing about the market. Alone these pieces of information only give you a single snapshot in time, but strung together we can get a larger picture of the market and where it is going. It is important to note both historical and forecast numbers are estimates I have calculated as no official industry  numbers are available online hence the reason behind constructing this report. With that in mind, let’s get started.

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