A dog with a leash in his mouth peeks out from behind the door

Your author is just back from a much-needed vacation. For the second time this summer, he stayed in a stranger’s house. Little more than a decade ago, such a notion would have been inconceivable, yet now it is increasingly commonplace. Platforms such as Airbnb act as trusted intermediaries linking buyers and sellers, or in the case of holiday homes, hosts and guests. Little could be easier. Everything worked perfectly, from the booking of the venue to gaining access to the property. The amenities were as billed and our host was on hand (electronically) to answer any outstanding issues.

People, of course, have shared things for thousands of years. However, the inexorable push of technology has rendered the process increasingly easy. Fast and easily accessible broadband, cheap cloud storage and the power of social media mean that almost anything can now be shared. Think of it as an efficient allocation of scarce resource. Your author has been a user of Airbnb for over five years. Meanwhile, as a recent pet owner, Borrow My Doggy has become an invaluable service, allowing verified strangers to – as the company’s name suggests – borrow pooches, giving them the pleasure of walking a dog and the owner some often-needed downtime.

The growth potential of the sharing economy is significant, for almost anything – from lawnmowers to surfboards – can conceivably be shared. One recent report suggested that while the then-nascent sharing economy was worth $15bn in 2014, by 2025, it could be worth $335bn. We have been following the topic since early 2016 and have been impressed by growth trends. Take Airbnb as a case study. Back then, 72.4m nights and experiences were booked over the course of a year (2015). Pre-pandemic, this figure had grown over fourfold, to 326.9m (for 2019). On its most recent earnings call, Airbnb highlighted that it had enjoyed its record-ever day of guest stays. Some 4m people used the service on one night in July, equivalent to the population of Los Angeles.

Is there anything not to like about the sharing experience? Trust remains paramount, in our view. However, the cost of failing to adhere properly to standards is significant. Reputations, once damaged, may be impossible to repair. A dodgy Airbnb host or Uber driver may struggle to gain future business. Regulation may be a bigger challenge as larger operators within the sharing economy need to remain mindful of how their stakeholders are treated and taxed. Working with local authorities is also key. Most feedback your author receives is highly positive about shared experiences. Long may the trend continue. 

31 August 2021

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Airbnb. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital LLP believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital LLP, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital LLP is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital LLP disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

The document is protected by copyright. The use of any trademarks and logos displayed in the document without Heptagon Capital LLP’s prior written consent is strictly prohibited. Information in the document must not be published or redistributed without Heptagon Capital LLP’s prior written consent. 

Heptagon Capital LLP, 63 Brook Street, Mayfair, London W1K 4HS
tel +44 20 7070 1800
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Heptagon Capital Limited is licenced to conduct investment services by the Malta Financial Services Authority.

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