Listened as I always do to the Baby Giants pod released by @Strawman and friends last week. I noted with interest the discussion of Airtasker and Hipages as I own a small real life allocation in both.

https://www.babygiants.com.au/1870616/15549529-127-yen-carry-trade-whole-brain-investing-airtasker-hipages

The discussion centered around the quality of Airtasker and Hipages as marketplace businesses in comparison to the more traditional and well regarded marketplace businesses such as REA and CAR. When compared the observation made was that Airpages and Hipages (to a lesser extent) are relatively low quality businesses because:

• They are subject to leakage due to the relatively frequent low value and local neigbourhood nature of the 'tasks'.
• They are yet to achieve any real network effect.
• Claude and @Strawman also discussed the funding mechanism for advertising and what this says about management's view of valuation, the future etc.

I share some of the views voiced there but also thought I would say a few words in defence (of my probably crappy investment).

• The leakage is not necessarily the problem it's painted to be (in my view). Consider Uber. Leakage is pretty close to 100% ie you go with a different provider each time for a relatively low value commodity type job (but if course it stays within the one business). This may end up being the same for Airtasker. Ie this week it's setting up the kids trampoline (there's a guy doing this professionally on Airtasker), next week it might be 'build a tv unit' (live task), 'put a flyer together'. The point is if Airtasker is able to create a brand in people's conciousness it will be less about repeat orders for a specific job and more about repeat orders for any 'task'.
• As Andrew and Scott of MFM might say 'IF' the biggest small word in the english language. And this to the second point. Airtasker has not created a big network effect. Yet. As to how long you let that run before you make a judgement it's anyone's guess/choice but I feel like the gig economy is just getting started and happy to give them some rope. Given their currently low valuation I also think the deferral of a cash cost/avoidance of a dilutive cap raise to fund advertising and help build the network effect makes sense so the advertising deals make sense to me...

I suppose with Airtasker, Hipages and any other aspiring marketplace businesses they are a bit of a lottery ticket until they reach some kind of network effect threshold. What I would say of Airtasker at least is that they are 'known' in Australia and profitable in Australia (though they're redeploying any cash flows to UK and USA). If they're able to own the 'small task' space then they are a huge long term winner.

Keen for everyone's thoughts.

Gaz