By the by Tim Fung the CEO of Airtasker talked on Equity Mates the other day.

Personally, I was impressed with his vision but I'd love to hear other thoughts.

Always worry about businesses seeking to make it in the US (which he alluded to) but then again, the sky's the limit if they can build a large base/awareness there...

https://shows.acast.com/equity-mates/episodes/ceo-tim-fung-airtasker

I like Frontier Digital Ventures a lot (and have been a long [suffering] shareholder but still a believer), basically taking mature classified style business models that work in the West and investing in comparable market leaders in emerging markets.

They don't try to reinvent the wheel, but rather take the wheel to places that haven't had them in the same way.

The thing to watch for with FDV is the capital management, and I think that the recent history has shown they are great at adding to good holdings and cutting loose underperformers.

Not a fan of airtasker or hipages - these businesses rely on being the go to for services, and there is too much competition from free/low cost providers to make them the market leaders in their segments, IMHO.

Do you think if they Airtasker or Hipages was able to get sufficient scale and become a household name 'task it' in place of 'google it' that they might have a moat?

Tim Fung emphasised the fact that you can put any kind of task on ART which might be a differentiator that gives them a larger followership.

@suttree @nerdag

@GazD, Airtasker is a labour hire business for the gig economy. Gig economy labour is low value, low margin and has buggerall of a moat if Facebook marketplace or Gumtree decide to host a labour hire section.

RealEstate.com.au, Domain and Carsales all dominate because the value of the asset traded is high, and when you are making a purchase of 30-50k for a car or 800k+ for a house, you go to where the quality is.

I prefer HiPages to Airtasker, but the issue here is the very high commission for tradies to take work via the service. Why bother when they get as much or more work via WOM in an environment where skilled labour is getting harder to find as skilled boomers start retiring?

Neither are for me as investments.

I suppose this may partially be a location thing? I’m aware that on the south coast NSW skilled builders are in such sort supply that friends/family or mine wait literally years to have work done

@GazD, location is part of it, but I think the macro trend is against you if your business clips the ticket on skilled labour (hipages and airtasker; arguably less skilled on airtasker). There is no moat if the labour can get work without going to your forum.

You then rely on waiting for the macro to suit you where there is more labour to go around than can easily find work.

In my opinion, this is not going to happen with the boomer retirement time bomb that is coming. Increased migration, by its political nature, won't be a forward thinking solution and will very much come as a late game response.

Anecdotally, I have property in three capital cities, and only one of the tradies I've needed and managed to find over the last 10 years have been via ServiceSeeking/Hipages or similar. Only a few hits, some quotes and only one confirmed booking, which was because the property manager recommended them as well. It's always been word of mouth that has been reliable for me. I can't imagine an online platform would be the preferred method of sourcing labour outside of a capital city.

The main reason (IMO) @suttree why some builders (companies) are going broke is more to do with input costs rising so much, including the wages being asked for by Tradies, who, as you say, can pick and choose who they work for. Any builder who agreed to build homes for a fixed price 12 months or even 6 months ago is now likely to lose money. Those who can jack up their prices should do OK, but those building companies who have signed fixed price contracts based on costs months ago are in trouble now. I have heard of some companies offering cash (thousands of dollars) to customers now just to rip up their contracts.

@suttree @Bear77

You are spot on Bear. I work as a project manager for a mid-tier construction company. And there is plenty of work on at the moment. But there is a large disconnect for subcontractors and head contractors (builders). The demand for building has caused subcontractors to be in extreme demand and thus hard to find. This allows them to raise prices, and charge builders prices even a year ago would be laughable. This is coupled with surging material costs mainly from shortages, freight and commodity inputs. Generally funders do not allow variable or cost plus contracts. They are even sceptical of rise and fall clauses in contracts. So builders are forced into fixed price contracts to win projects. With the rapidly changing and increasing cost of materials and labor ive just touched on, any profit margins for builders are disappearing with a lot of jobs actually costing builders to complete! This is the main reason some builders are trying to buy their way out of contracts. The problem is also tripled by the fact that a lot of projects are subject to a fixed programme which if the builder goes over time are charged liquidated damages (LDs). With shortages of labour and materials job timelines blow out and builders are being forced to pay developers and clients these damages. Not to mention the longer a project runs the more overheads and resources a builder has to allocate which adds to any cost. So even if the contract doesnt have LDs, the builder still loses out.

This is the ultimate perfect storm for the construction industry. It is just the tip of the iceberg and more builders will fall. The industry overall i feel is coming to a crunch point. With low interest rates and booming house prices, home building and development projects were still feasible despite construction costs rising. However, construction costs have continued to increase due to the above mentioned issues and yet interest rates are now beginning to increase and house prices easing. Development projects and home building will be unfeasible soon. News stories about builders going broke and blackmailing clients into extra money will deter anyone looking to build - why would you risk it. These factors will most likely cause a large downturn for the industry. This will affect both head contractors (builders) and subcontractors even though subbies are flying right now.

More money usually does the trick with tradies haha.

@nerdag As an aside, HiPages has moved away from commission (because tradies didn't like it) to be almost entirely subscription based now. I hold and still see potential, although thesis is based on them achieving and sustaining profitability within next year. I've listed a valuation on SM. For me the jury is still out if their model works. As others here have suggested, HiPages is less attractive to tradies when they already have a huge pipeline of work. And have to confess that my own personal experience trying to get a tradie via HiPages has been mixed. Successfully got an antenna problem solved. But wasn't successful getting internal doors built (only one tradie showed interest, he turned up, seemed interested, and took lots of measurements, but then was never heard from again despite follow ups). The blue sky is that HiPages is the clear market leader, so if a 2 way marketplace for tradies can work, HiPages will own the market.

@nerdag Another similar 2-way marketplace business of sorts is Felix Group Holdings ticker FLX. See here . They are a procurement management software that facilitate relationship between head contractors and vendors (subbies, consultants, suppliers etc.).

@DrPete, ServiceSeeking uses a similar subscription model, and it would seem to me that the model is neither sticky nor particularly good at entrenching a network effect where it's the go to place. Being the market leader isn't sufficient, you have to be the only place to be.