Project update

Hi everyone, it's been a while since my last post, so I thought I'd drop you a line to let you know what we've been up to. In the last month we've made considerable progress in building the Sherpa home based lodging marketplace. Designing and developing a complex product like this is challenging when you consider that we're building it for mass market adoption. During the last month we found a great software engineer, nearly completed the front-end design of the site and have been hard at work at programming the interface. We also participated in a VC competition that gave us many more ideas to enhance Sherpa's product ease of use and competitive advantage.

Simultaneously, we are ramping up our sales and marketing activities to line up key partnerships that will be important participants in our launch. We are also hard at work building an inventory of great homestays, B&Bs, vacation rentals and home exchange properties.

The early 2010 launch of Sherpa couldn't come at a better time. People around the world are struggling through this difficult recession and are in need of a life- line. Sherpa will extend a life-line to millions of people by providing them with a way to market their extra living space to travelers in search of a more authentic and personal travel experience. Homeowners and tenants around the world possess an unbelievable amount of unused space that can be monetized by accommodating travelers. With real unemployement hovering around 17.5% in the U.S., many people are looking for new and innovative ways to make some extra cash as they seek their next full-time job or work their way through an educational program that will help them change careers.

Over 50 million trips were booked this year in the U.S. alone where the accommodation type was someone else's home... and not a hotel. That includes vacation rentals, B&Bs, homestays and home exchanges. We're building a product, and a company, that is going to help millions of homeowners get into this market and compete for these paying guests. We welcome your feedback and questions.



Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102

415-997-9925 Google Voice
russ.hearl@staysherpa.com
www.sherpatravelexchange.com

Stay Smart. Stay Sherpa.


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Home based lodging: A recession proof business

The last couple weeks I've been presenting and pitching Sherpa Travel Exchange to investors, potential vendors and just about anyone that will listen to me. Sometimes people have an instinctive reaction to the concept of home based lodging (housing paying guests in your primary or secondary home). The home based lodging market is a lot more than just 22 year olds backpacking around and crashing on each other's couches (ala Couchsurfing.org). This market consists of any type of lodging services provided in one's own home as opposed to a hotel, including: B&Bs, Homestays and Home Exchanges.

The market is actually a $5B+ market in the U.S. alone. With respect to B&Bs, the Professional Association of Innkeepers International cites more than 17,000 B&Bs in the U.S. generating more than $3.4B in revenue. Millions of people each year stay at B&Bs, while the owners sleep in a room nearby. Many consider B&Bs to offer a more authentic local experience than hotels. We agree. Which is why B&Bs will be a major component Sherpa - not only existing B&Bs, but enabling ordinary homeowners to create a make-shift B&B in their own homes to earn some extra cash. The B&B market niche as a whole has proven to be recession proof as money conscious travelers seek more affordable alternatives to boring, sterile and expensive hotel rooms.

I did a quick scan of Craiglist yesterday and found more than 500 new listings posted that were advertising rooms for rent by the day in someones home. Yes, there are lots of people that want to earn a few extra bucks by taking in paying guests. For many of these people it's a better alternative to getting a full-time roommate. But, for all the great things you can do on Craigslist, it lacks important peer to peer reviews of hosts and guests, online booking, background records and other critical pieces of information most people would require to feel comfortable running a make-shift home based hotel/B&B. We are creating some exciting innovations in this regard. Stay tuned...


Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102

415-997-9925 Google Voice
russ.hearl@staysherpa.com

Stay Smart. Stay Sherpa.

Follow Lucky the Sherpa on Twitter: sherpatravelx

Check out our Facebook page: www.facebook.com/home.php?#/pages/Sherpa-Travel-Exchange/123269124279?ref=ts

Ponzis and Pyramids

Congress is set to pass another extension to the Federal unemployment benefits program. Now that the nation is approaching 10% unemployment, our government believes its a good idea to continue to extend the safety net. The news of the unemployment benefits extension got me thinking about what people do to make ends meet when they are unemployed or under-employed. So, I looked at the Bureau of Labor Statistics site (www.bls.gov) and found that for everyone one person that's unemployed in the U.S., there's at least one person that considers themselves "under-employed". That translates to more than 33 million working adults that aren't able to work as much as they'd like to.

One only needs to look at eBay to see the fallout of prolonged unemployment. In August, 2008 there were 15 million average daily auctions on eBay. In August, 2009 there were 30 million average daily auctions on eBay. People are selling their stuff to generate cash to survive.

Desperate times call for desperate measures for millions of people.

We've been hearing a lot about Ponzi schemes lately and it got me thinking about how people get involved in both illegal Ponzi schemes and borderline illegal multi-level marketing pyramid companies like Amway. People are trying to make an extra buck or two, which is why MLM companies like Amway exist where the members recruit other agents, who recruit more agents with everyone making a cut of the sales by their recruits - all the way down the pyramid.

In case you're curious about the origins of the term "Ponzi" scheme, it actually has nothing to do with my hero, Fonzi. Of course, Fonzi was the the always cool ladies man who I so desperately want to be . Charles Ponzi was an Italian immigrant to the U.S. who's likeness is associated with the get rich quick scams that he is so infamously associated with. Investors seeking abnormally high returns make investments in a fund that oddly generates a much higher rate of return than typical funds. Eventually, the fund manager running the Ponzi scheme can no longer afford to pay out the returns and the fraud becomes apparent. If you're trying to augment your income, try and stay away from anything that sounds too good to be true. It might turn out to be a Ponzi scheme.

Some people turn to other get rich schemes they find on the internet like the ones that promise you can earn thousands of dollars per week from the comfort of your own home. All you have to do is make a small investment - which is often where you get fleeced. Some people sell Tupperware, Longaberger Baskets, or Pre-Paid Legal services
to try and make ends meet. All of these involve making a pretty significant investment in time and/or money to actually make a decent income.

Sherpa has an idea that we think will prove to be the best way to earn some extra cash. There are 67 million homeowners in the U.S. with over 90 million unused rooms. Sherpa is going to help homeowners monetize those unused rooms by listing these rooms as Homestays. SmithTravel Research reports there are 4.8 million hotel rooms in the U.S. If only 5% of the unused rooms inside American homes become monetized on Sherpa, the lodging supply in the U.S. will more than double. This dramatic increase in supply will provide millions of homeowners with additional income and will make travel more affordable for so many more people. In doing so, Sherpa will address the growing demand for travel and empower millions of people to augment their income and earn a decent living.

Russ


Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102

415-997-9925 Google Voice
russ.hearl@staysherpa.com

Stay Smart. Stay Sherpa.

Follow Lucky the Sherpa on Twitter: sherpatravelx

Check out our Facebook page: www.facebook.com/home.php?#/pages/Sherpa-Travel-Exchange/123269124279?ref=ts

Timeshares - Do The Math

If I knew then what I know now…

When my wife and I got married 14 years ago, we took off to Hawaii to spend a week in Kona and a week in Kauai. Our accommodations were in a timeshare owned by my wife’s parents. Staying in a timeshare vs. a hotel made sense; we had multiple rooms, a kitchen for cooking and a BBQ outside. What more could you want? Well, staying in a timeshare does mean one thing for sure; sometime during your trip, you will be pitched on buying a timeshare also. We were no exception.

During our 2 hour timeshare presentation, we were told of the wonders of ownership, and how much money it could save vs. spending thousands every year on accommodations. We were also sold on how we could either sell it if needed, or pass it on to our children, like a summer home. We were also told that we could use our place to trade to hundreds of additional locations if we chose to. Needless to say, my wife and I, like thousands of other people, thought it sounded good. We figured we would start small and buy into 1 week every other year on a 1 bedroom place. Hey, as a bonus, they threw in an extra week for the first 10 years to make it a no-brainer.

It was not until later that we discovered the error of our ways. Doing the math and looking at the reality of the timeshare market really opened our eyes:

1. $7,500 buy in for 1 week every other year

2. Add $2,500 if you finance the transaction

3. $300 per year for maintenance fees

After 10 years, we had spent $13,000 to own a vacation that we had barely used. To top it off, our investment was worth about $3,000 on the open market. Hmmm, not the best use of our hard earned money.

The things that we did not think about were total cost of ownership, our future travel plans and alternatives to the timeshare. Total cost of ownership includes the cost of getting to a far away location for your vacation, and those darn maintenance fees, which really add up. As for future travel plans, what if we did not want to go to that condo on that island? Well, then, we were given the option to trade our place in, bank the days and use them elsewhere. Sounds easy, right? Wrong. There is actually a $300 fee associated with banking your place with the management company. Add to that, a $150 fee for each banking and switching transaction you do. Like something wrapped in aluminum foil and lost in the back of the refrigerator, this is starting to smell bad.

What could we have done? Well, one thing we could have done is saved our $13,000 plus, and swapped our home when we wanted to vacation. What? Swap your home? Yes, you heard me right. To our credit, the internet was not all that large and fast 14 years ago. Getting information was tough, and looking for a house swapping partner was a tough and inefficient process. Today, however, things are different. Companies like Sherpa Travel Exchange (http://www.sherpatravelexchange.com/) are putting together solutions to help travelers see the world for far less than was possible before. Don’t get me wrong, people have been exchanging their homes for years. The problem came from the lack of communication and ease of process needed to make it mainstream. This era of high speed and wide spread internet, along with the surge in social networking is changing the landscape. Finding a home exchange, a homestay, or a vacation rental is now easier than ever, and it will only get better. To top it off, imagine staying anywhere you want for as many nights as you want for the price you spend on a tank of gas. It is possible, see below and Lucky the Sherpa will show you how.

My wife and I have since sold our timeshare. This has freed up some cash, and opened our travel possibilities far wider than we could have had we stayed locked in to the very controlled world of the timeshare. My advice to you is, if you do not own a timeshare, keep it that way. If you do own one, then see my next piece titled “I Feel Stuck - What should I do with my timeshare?”

Darrin Underwood

Contributor

Sherpa Travel Exchange

Follow Lucky the Sherpa on Twitter: sherpatravelx
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A new age of frugality

A couple years ago I conducted an extensive research study that examined consumer behavior. Specifically, I studied the link between a consumer's overall level of happiness and their penchant for frugality, stinginess, or overly economical behavior. I surmised that people make themselves less happy by certain choices they make as consumers. Based on the visceral reactions from friends and family members, I was about to embark on a highly contentious study.

Prior to this study, I would casually observe how it seemed like the people that were constantly chasing bargains never seemed to be satisfied. However anecdotal this may seem to most people, I suspected the people that would drive across town to get gas at Costco (where it might be 20 to 30 cents cheaper per gallon), were actually chasing their tails because they weren't really saving any money when you considered the extra gas to get to the Costco across town or the lost time they could have applied to more productive uses.

Anyways, I hypothesized that people make themselves less happy (and, dare I say, miserable) by being overly frugal. To test this hypothesis I surveyed a panel of more than 15,000 consumers and assembled a small research subject group of 45 people to measure their epinephrine level response to a variety of images and phrases. Hooking people up to a biometric machine helped me determine how they would respond and see if people generally get excited by finding bargains. In sake of brevity, I found a direct correlation between frugality and negative associations with a person's well being and satisfaction. Frugal people were generally less happy than self-described non-frugal people. My hypothesis was supported.

Fast forward to today and I think something has really changed in the psyche of the American consumer (perhaps permanently). Citigroup released the results of a survey on Friday that showed that 63 percent of Americans polled said the way they spend and save has "forever changed" due to the economic downturn. Eighty percent of consumers making less than $50k said they would most likely cut back on everyday expenses while 68 percent of those earning between $75k and $150k said they would make such cuts. Thirty-four percent said they were saving or investing more money, while 60 percent said they would invest or save more going forward.

This is an earth moving change from where our consumer driven economy was just two years ago when I conducted my research into consumer behavior.

Despite the dramatic shift in spending habits, Smith Travel Research has reported that they expect leisure travel to begin growing again next year. My take away from the convergence of both research reports is that people will begin to travel more, but many people will be seeking new alternatives that are more cost effective. In short, this new era of frugality will drive consumer behavior in the direction of bargains, discounts and deals.

These seemingly disparate trends are actually highly correlated and this is exactly why we are building the a fully functioning market niche for Home Exchanges. Given the rise of social networking and the propensity for all age groups to network with friends, family and strangers online, we believe that the next big revolution in travel will be driven by this new era of frugality and social networking. This is exactly where house trading (aka home exchanges) comes into the picture.

Greater desire to travel combined with higher levels of social networking & increased frugality = Latent need for home trading as opposed to booking expensive hotels. Sherpa will make the latent need manifest.

We are creating a secure social networking driven marketplace for people to find other like minded people around the world who want to travel to each other's cities and avoid expensive hotels. Sherpa's home based lodging platform will feature proprietary matching technology that will connect you with other homeowners that want to swap homes for a few days, a few weeks or even a month or more.

Would you swap homes with someone for your travel lodging if you knew it was safe and secure?

I'm interested in hearing your thoughts.

Russ


Russ Hearl
Head Sherpa & Co-Founder
Sherpa Travel Exchange, LLC
601 Van Ness Ave, Suite E-208
San Francisco, CA 94102
415-601-6244 mobile
russ.hearl@staysherpa.com
Stay Smart. Stay Sherpa.

Follow Lucky the Sherpa on Twitter: sherpatravelx
Check out our Facebook page: www.facebook.com/home.php?#/pages/Sherpa-Travel-Exchange/123269124279?ref=ts

Creepy roommate stories

Renting the typical one bedroom apartment in San Francisco will put you back about $2k a month, so it’s no wonder so many people opt for a two-bedroom pad and a roommate. After having lived in London, New Haven, Tucson, Dallas, El Paso and Cleveland, I can tell you that I’d gladly pay $2k a month for a place in San Francisco. I’ve got nothing against those cities, but there’s just nothing like a balmy climate where you’d be hard pressed to find more than a few days a year when you break a sweat and you don’t freeze your ears off. In any case, living in San Francisco does have some disadvantages, not the least of which is the cost of housing.

So, many people deal with the high cost of living finding a roommate – often by posting a roommate wanted ad on classified sites like Craigslist. I always thought there was something a bit strange about a site where you had roommate wanted ads near casual encounter ads. You just hope that your possible new roommate is not also an active user of the casual encounter section as well. Eeew, weird.

The so-called Great Recession is driving more people to cohabitate. According to the U.S. Census Bureau’s American Community Survey, over 228,000 “family households” in California cohabitate with a non-family member as a roommate. Moreover, the Census Bureau reports that 674,000 “non-family households” cohabitate with a roommate in California. Clearly, lots of people in California and our country live with people to which they are not directly related. The Great Recession has contributed to a 9.7% rise in the number of American households that cohabitate. When facing the need to augment your income and offset your expenses with a roommate, millions of Americans are already comfortable living with relative strangers. For a proof point, just look at http://www.couchsurfing.org/. Couchsurfing touts more than 1.2 million members who crash on the couches of other members to avoid hotel costs.

A few years ago I was in search of an extra 500 bucks a month to help defray the cost of my rent and I entered into a short stint with a roommate who was probably a super user of Craiglist’s casual encounters section. Needless to say, after a nearly two months of constant strange women visiting my house at all hours of the night, I asked the guy to move out. As a follow-up to that movie-of-the-week special presentation, there was this roommate who thought it was great to have fondue parties at my house every weekend with 10 of his closest friends. Oh, and I can’t forget the roommate who drilled a hole in my bedroom wall, presumably for ventilation. Yeah right.

Not all roommates are sociopathic or party-animals, but there’s one thing you can say about at least 90% of roommates, it’s a full-time invasion of privacy. Sure, some people really like sharing their living space for social reasons, but if given the option, most people would rather live on their own.

This is why we came up with the idea to establish a viable homestay market in the U.S. A homestay is a pretty simple concept that involves an ordinary homeowner or tenant entering the hotel business by taking in lodgers on a part-time basis rather than taking in a full-time roommate. The homestay business has been around for centuries. America is full of people that augment their primary income with part-time jobs. Just look at the ongoing (if not utterly surprising) growth of direct selling/multi-level marketing companies like Amway or Avon as a microcosm of our entrepreneurial spirit here in the good ole US of A.

We think that many people, if given a properly functioning and safe marketplace, will opt to earn extra cash by taking in lodgers instead of a full-time roommate… especially if you can make more money in less time than sharing your home every day of the month. We're creating the first efficient online marketplace that provides homeowners with the tools that will enable them to compete with hotels by offering lodging services to travelers.

It may not be a solution for everyone, but it sure beats trying to recruit your cousin to become an Amway rep, and it certainly beats selling all your stuff on eBay or Craigslist to make ends meet.

What do you think??

Russ

Russ Hearl

Head Sherpa & Co-Founder

Sherpa Travel Exchange, LLC

601 Van Ness Ave, Suite E-208

San Francisco, CA 94102

415-601-6244 mobile

russ.hearl@staysherpa.com

Stay Smart. Stay Sherpa.

Follow Lucky the Sherpa on Twitter: sherpatravelx
Check out our Facebook page: www.facebook.com/home.php?#/pages/Sherpa-Travel-Exchange/123269124279?ref=ts