Investor Presentaiton

Marketplaces Are Like Self-Regulating Ecosystems Imagine you are building a new city from scratch (think Abu Dhabi). How would you attract inhabitants & visitors to develop a robust economy? Starting a marketplace is very similar. It requires a large initial investment (subway systems vs. IT systems; tax breaks to encourage businesses to relocate there vs. free shipping for buyers to visit, etc), to hopefully create a self-sustaining economy in the future. In a marketplace, the company is like a King, determining the laws / rules of conduct, while also adding features that make it attractive to inhabitants vs. other ecosystems (free shipping, ease of listing, buyer data, etc). • . The sellers on the platform are inhabitants, interacting with each other and to maximize their own well-being, while staying within these rules. Buyers are like tourists, looking for the most diverse, dynamic, cheapest, and easiest cities to visit and spend their money. Once the ecosystem is self-sustaining, the company monetizes by "taxing" all transactions. The inhabitants stay, because despite the new taxes, the living standards are still better than elsewhere (it's better to collect $1,000 of tourist dollars and pay 10% tax, vs paying 0% tax elsewhere, but only selling $10). Better yet, the "taxes” (i.e. take-rate) increases, as sellers to compete against each other to collect an even bigger share of "tourist dollars". • The more that seller pay for services like Advertising, Logistics, etc, the more likely they'll be at the front of the line. More sellers = more competition to be at the front = higher revenues for the company. Note: Similar to evolution, the larger an ecosystem, the more diversity of inhabitants (in this case SKUs). This is important for categories like fashion, where browsing is a fun experience, and variety is a main selling point of a platform. Imagine how boring it'd be going to a mall with just 5 stores, vs. one with 1,000's of stores. HAYDEN CAPITAL Fred Liu, CFA | [email protected] 8

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