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Airbnb Files to Raise $850M at $30B Valuation

• aerovistae 10y ago
  Not the first time this has been remarked here, but wow at these companies just continuing to raise more and more money over and over. When does it stop? I mean, I don't fault Tesla because I know exactly what they're doing: enormous capital expenditures like factories and stores. What does a website platform need $850 million more for?
  • golergka 10y ago
    When they take over entire industries world-wide.
  • williamscales 10y ago
    Lobbying, I would assume. Airbnb has met a lot of legal opposition lately. They are dealing with regulations in jurisdictions all over the world. I guess that takes a lot of cash.
    • ivanca 10y ago
      In many countries lobbing is illegal, so in those places they will need to send "gifts" instead, or well just bribes
      • DelaneyM 10y ago
        Not if they want to keep doing business in the US or Europe they won't.
        • patio11 10y ago
          Delaney is referring in the US to the Foreign Corrupt Practices Act. You can read more about it here: https://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf https://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf Suffice it to say that the realities of doing business internationally are complicated. One complication is that companies wanting to do business worldwide will, with probability 1, be asked to pay bribes. The US considers bribing officials to be anathema and will essentially exercise universal jurisdiction with respect to the act if committed by a US person or entity. There exist laws in the US which are utterly non-enforced, and there exist laws in the US which are enforced vigorously, with extreme prejudice. The Act is, like most, somewhere in the middle.
      • hk__2 10y ago
        > In many countries lobbing is illegal Can you name one of them? I can’t find any, and sending gifts or bribes is lobbying.
        • ivanca 10y ago
          I stand corrected.
    • prostoalex 10y ago
      One problem with that approach is that lobbying is not a one-time investment the way factories are. Every few years a new wave of politicians comes out, frequently building their platform around criticism of their predecessors and their corrupt, cozy deals with megacorps. Is AirBnB just a vehicle for moving cash from venture industry to lobbying industry the way music startups are vehicles for moving cash from VCs to labels?
      • hawkice 10y ago
        I think, from an accounting perspective, you could theoretically capitalize the expense over the term of office in the same way you capitalize the factory costs over the life of the machinery and facility. I cannot say I have ever met an accountant would would dare try it, but suffice it to say the field of accounting has a more nuanced view of "one time expenditures" than you might be imagining.
        • Naga 10y ago
          Accounting standards have pretty strict requirements when it comes to intangible assets. There is a whole list of criteria that development costs need to meet to be capitalized, and that is for actual products. The problem with lobbying as an asset would be valuation: its impossible to actually measure the fair value of it. As well, it probably would not meet the definition of an asset at all since economic benefits are not probable.
          • hawkice 10y ago
            I think that if the bribe has a contract attached, written or verbal, (which seems to be the current supreme court test for corruption here in America), then the valuation would be the fair market value, or, conversely, be a pre-payment for services not yet delivered so the income wouldn't be realized on the politician's end until time passes in their term of office. From the briber's perspective, they'd have the asset of debt on unrealized income for services not yet rendered, and like all debt, that has a simple value (and if the politician becomes honest, then the debt is written off like all other debts you'll be unlikely to collect).
    • zitterbewegung 10y ago
      Google in total spends $16M in the US for lobbyists in the US and they want self driving car litigation. This seems like it would be used for more than lobbying .
      • skrebbel 10y ago
        No, they'd like self driving car litigation. Airbnb needs liberal rent-out-your-home litigation
        • j1vms 10y ago
          I'd say Google at least wants self driving car legislation, and could later go as far as saying they might need it too. (...where "might need" > want >>> like). The company has very closely aligned its image with this technology, and indeed I'd say it currently is one of those moonshots that they are betting heavily on. Which of course factors into markets gauging their P/E where it currently sits.
        • artursapek 10y ago
          rent-out-your-apartment* litigation. Afaik the only case where people have issues with AirBNB is in buildings with shared entrances/hallways.
          • jgorn 10y ago
            Absolutely not the case. Here in Australia city and state hospitality organisations are very vocal in opposition to airbnb. The usual argument is why should they be paying to meet licensing/safety requirements when airbnb hosts can rent out their home without regulation. I'd guess 90%+ of these premises are standalone homes. In my city the local council just announced plans to limit a property to 42 nights of airbnb per year, or face significant fines. Not sure it'll stick.
            • artursapek 10y ago
              Thanks, didn't know that. Speaking from my own experience living in cities like Philly and NYC.
    • ryanSrich 10y ago
      Lobbying really isn't that expensive. This isn't the answer.
    • deleted 10y ago
      [deleted]
    • bogomipz 10y ago
      A US Presidential election costs costs ~ 4.5 billion dollars, how would AirBnb possibly spend close to a billion on lobbying?
  • kartD 10y ago
    Well, depending on when and if the bubble bursts, we'll figure out who was swimming naked figuratively.... IMHO I agree with you, but if the market will bear it can you blame them? Cheap capital is always appreciated.
  • tn13 10y ago
    You are underestimating the value generated by purely bypassing government regulations. Anyone can create an Uber like app. Stopping government is an entirely different ball game. If you want to know which country or the city is worst and corrupt see who have banned Uber or surge pricing. Same goes with AirBnB.
    • geomark 10y ago
      Knowing who is corrupt needs to be more narrowly defined. You will know who is worse when it comes to rent seeking, but not necessarily other types of corruption.
  • o0-0o 10y ago
    I know what you mean. Could you imagine if 850 companies out there each got a cool million bucks, instead? What a world we live in.
    • Waterluvian 10y ago
      A million bucks doesn't get you very far. I've worked at a start-up that builds robots for 3 years now and I underappreciated just how much money it takes to run a company. That cool million would pay for what.. maybe 5 or 6 engineers for a year when you account for the cost of salary, a building to work at, resources to work with, benefits, etc. Not that $850m isn't kind of wild for a pure software company. But a million isn't a lot of cash.
      • eanzenberg 10y ago
        A million may get you 5-6 interns for the year if you include cost of rent and upkeep, along with all other business related costs. Doesn't get you far at all.
        • forgetsusername 10y ago
          If you're running a company that requires 5-6 interns, at what point do you decide to, I don't know, make money? The fallacy that you have to build to enormous proportions before you make a penny in profit seems only to exist in SV. That's why people question it. The vast majority of business elsewhere try to make money ASAP. Some of them even grow quite large.
          • Waterluvian 10y ago
            Yup. The company I'm was was self sufficient after its first few years. Grew slowly and organically. Funding has only been to speed up that growth once our products were proven.
          • Hydraulix989 10y ago
            The idea is that some business models are more capital intensive than others to implement (like establishing a two-sided market place or building something tangible like electric cars).
  • lvs 10y ago
    3.2 billion total. Where the hell is the money going?
  • BurningFrog 10y ago
    Could it have something to do with the negative interest rates popping up across the world?
    • mooreds 10y ago
      Great point. People (and organizations) are seeking return/yield and low/negative interest rates push them to riskier and riskier options. Of course, that's kind of the point -- to get the money out there flowing through the economy's veins.
  • codezero 10y ago
    Sounds like this is the problem: you don't know exactly what they are doing. That doesn't mean it's not justified, and of course it doesn't mean it is :)
    • aerovistae 10y ago
      I mean, there's really no possible way Airbnb could possibly need that much money. That's more than half what Tesla recently raised, with the goal of building 500,000 cars annually within 24 months. How could Airbnb possibly justify needing 56% of the same amount?
      • codezero 10y ago
        Managing an infrastructure of peer to peer rental for >500,000 units worldwide seems like a reasonably hard task. You're comparing apples to oranges here. Arguably the value of the property Airbnb is a defacto manager for is higher than 500,000 cars, but they also need to expand. Trust me, I'm totally on board with the unicorn hate here, this seems ludicrous, but I also don't know what is going on at Airbnb, so I try to think about why this might be a good investment, rather than why it might appear ludicrous :)
      • dsacco 10y ago
        Unless you have considerable expertise in Airbnb's core and peripheral markets, I don't think it's fair for you to say what is and is not possible for a company to need (putting aside the fact that "need" is used in the normative sense here).
      • cylinder 10y ago
        I'm going to bet they will be opening local offices / retail points around the world. Help less tech savvy folks list on Airbnb as well as serve as a "check in desk" to pickup keys
        • Erwin 10y ago
          Cheaper, a simple locker system (nicely AirBnb theme). When renting, you get a code via text, enter it and a small locker opens up with the key. When done, you can deposit the keys in there. You could even put up a computer next to it where you can search for immediately free rooms, pay and get the key right away, or just one friendly local guide standing around ready to answer tourist question about the city. Put it in a convenient central location that's safe (airport, central train station).
  • walrus01 10y ago
    Hookers and blow?
  • adventured 10y ago
    Priceline.com -- $70 billion market cap, $9.5 billion sales, $2.6 billion net income, $3.4 billion in cash Expedia -- $17 billion market cap, $7.7 billion sales, $2.3 billion cash That's just two competitors that Airbnb is squaring off against, and you're wondering why they'd want more capital? Priceline.com just keeps expanding, getting bigger and bigger, making more and more money, accumulating more and more cash, when will it stop? What exactly does a web site like Priceline.com need $3.4 billion in cash and $2.6 billion in net income for? Those questions make as much sense as wondering why Airbnb would want to raise $850 million. How about if Airbnb wants to acquire the next Homeaway for $3.9 billion in cash + equity? Or they want to buy the next Kayak for $1.8 billion in cash? Or if they want to buy Zillow? Why not? Those are perfectly valid business expansion opportunities and they're expensive.
    • Hinrik 10y ago
      > What exactly does a web site like Priceline.com need $3.4 billion in cash and $2.6 billion in net income for? It doesn't. Priceline.com is a very small part of PCLN. It's mostly Booking.com.
    • forgetsusername 10y ago
      >What exactly does a web site like Priceline.com need $3.4 billion in cash and $2.6 billion in net income for? They're publicly owned companies that make a profit for shareholders.
  • nwenzel 10y ago
    With dilution being .85/30, does it matter? If you could raise $850M with ~3% dilution, who would turn it down? Also, you have to figure some of that money is going to early employees and investors who are looking to take a little off the table.
  • gooserock 10y ago
    > What does a website platform need $850 million more for? Like others have commented, at least some of this money will be used to pay off initial investors with a nice profit. It's a kind of pyramid scheme, really, that ends with an IPO.
    • dineshp2 10y ago
      > at least some of this money will be used to pay off initial investors with a nice profit. To clarify, do you mean some of the money will be used to buy back shares from early investors giving them a nice profit?
      • atiffany 10y ago
        The money being invested by new investors is being exchanged for shares of the company. Rather than creating new shares, at least some of these shares are likely coming from existing investors who bought them at a lower price at an earlier time.
        • williamscales 10y ago
          Why would you assume that? Typically the company would just issue a new series of preferred stock.
          • mikeryan 10y ago
            I'm not sure thats entirely true typically a late round of funding will be some combination of folks taking money off the table and new stock. There's nothing very "typical" about a 850M raise at 30B. But Groupon infamously raised "Like, A Billion Dollars" of which only about 15% went into the company.
    • JumpCrisscross 10y ago
      > at least some of this money will be used to pay off initial investors This is almost certainly NOT happening. No sane company sells prefs with 1x liquidation preferences to pay back investors at, relatively speaking, 0.05x. When companies want to help early investors out they facilitate a secondary transaction. These $850MM are, in all likelihood, going straight to the balance sheet.
  • rahulgulati 10y ago
    In my view, valuations and fundraise are based on what the company is going to do and growth trajectory it is on. It'd be a mistake to assume (as I see a lot of commentators here wondering why a software company needs $850M) that Airbnb will forever be a booking platform for shared rooms or continue to do what it does today. Of course, there is no disclosure yet about what they wish to do with this capital and it may become clearer in next few months. The reach Airbnb has today could get it into growth areas such as Airline tickets, B2B, advertising or possible acquisitions. Also, being a full stack company, cost of operations, support, lobbying etc. would also be a factor for more capital.
  • lancewiggs 10y ago
    Classic reasons are 1: They are spending more than they are earning (to keep growing) 2: They want to spend more than they are earning (to grow faster) 3: Existing investors want to sell some or all of their shares 4: They don't need the money but the deal is too good to turn down 5: The investor can make a real difference to the company 6: They want to acquire something I'm guessing 1 with a bit of 2, 3 and, absolutely, 4. If the business is fundamentally unprofitable then they will keep needing to raise money to survive. If the market prices for companies like this drop then they will struggle to raise again and the business will need to be restructured (or growth slowed) to be cash flow positive. I'm guessing they are still in land grab phase and spending as fast as they can to extend globally and within existing markets. $850 million is a lot of money, but it's easy to spend when you have the world to spend it on, and the battle is not won, not at all.
    • Jugurtha 10y ago
      >absolutely, 4. Maybe a step towards frictionless travel from the moment a person thinks about going to place X to the moment the person is at place X. Frictions exist in transportation (maybe buying an airline), booking (many countries don't have electronic payment and catering to the underbanked might turn out to be profitable), or downright hosting (buying a hotel chain). The last option might seem counterintuitive as Airbnb is competing with hotel chains but, technically, hotel chains are businesses still generating revenues which are not going to Airbnb. These revenues are thus up for grabs by Airbnb increasing its market share either by winning it as Airbnb or buying it and making profits owning a hotel chain and slowly chipping at it. In other words if the goal of Airbnb is to kill hotels, it might as well make a profit off of them -by owning them- while it does. Anti "synergy" stuff, but I think it can also be looked at from another perspective: maybe Airbnb doesn't have the cachet Marriott/Starwood/Hilton/Accor/Ibis hotels have in some countries. It can make money off of these hotels as Marriott/x/y/z in these countries, and as Airbnb in countries where the Airbnb brand is widely accepted. I'm just guessing; I don't know anything about how any of this stuff works.
  • gaius 10y ago
    Their business model is dodging zoning laws, tenancy agreements, income tax... They need to do a lot of bribing sorry I mean lobbying.
  • AJ007 10y ago
    Settling previous discrimination issues along which modifications for the platform going forward are going to be very expensive.
  • rsp1984 10y ago
    What does a website platform need $850 million more for? 1. I'm sure their staff costs are massive. They have offices around the world, yet the one they hire most for is in SF, one of the most expensive places in the world. 2. I'm also sure there's a fair amount of pet projects going on which are not essential or even important to the business. If you look at their departments page [1], you see they have a whole lot of departments, some of questionable impact on the business. I also heard they also have their own machine learning group that they are looking to grow. This and a whole lot of other things that you'd expect in cash-printing tech giants like Google or Apple but not startups like Airbnb. 3. They even recently launched their own in-house design studio [2] So yea, $850m is a lot of money but given their expenses I'm sure it'll be gone in no time. And since you made the comparison with Tesla: Look at Twitter. Where is their money going? They compare to AirBnb as AirBnb compares to Tesla. Their product is a glorified website that displays 140 character messages. They have raised about $750m in VC, 2.1b in their IPO and their quarterly revenue is about 600m. As Peter Thiel said, there must be "a lot of pot smoking going on"... [1] https://www.airbnb.com/careers/departments https://www.airbnb.com/careers/departments [2] http://www.dezeen.com/2016/08/05/airbnb-launches-internal-design-studio-samara-future-house-prototype-yoshino-cedar-house/ http://www.dezeen.com/2016/08/05/airbnb-launches-internal-de...
  • uptown 10y ago
    1) Lobbying. Uber has it easier because politicians are more apt to use their service since it's convenient, but a politician is frequently charging his or her stay to the taxpayer so who cares what a nice hotel costs. They may not be as strong an advocate for Airbnb so they'll need to be bought. 2) Buying up competition. Look at what HomeAway did before their IPO.
• rch 10y ago
  Maybe they'll buy a stake in Tentrr. https://en.wikipedia.org/wiki/Glamping https://en.wikipedia.org/wiki/Glamping
  • yolesaber 10y ago
    The Sharing Economy finally pimps out natural splendor herself
• cft 10y ago
  Correct me if I am wrong, but the infusions of cash into startups of this scale are probably historically unprecedented. If this is true, then nobody really knows what the outcome of this is going to be for the companies that appear sound: AirBnB, Uber, as well as for the whole Silicon Valley startup ecosystem. It may well destroy it for good.
  • prostoalex 10y ago
    Late-stage investors have become proficient at extracting various ratchets and preferences (e.g., BOX). Even if the worse comes to worst, that $850 mil is probably recoverable at 1x liquidation preference. In a low-rate environment we have today it seems like a reasonable allocation of cash compared to buying something like German bonds at negative rates.
  • deleted 10y ago
    [deleted]
  • ryporter 10y ago
    Investors are not blindly giving these companies cash (insert tired Theranos joke here). They see far more information we do, and they do more due diligence than most investors do in publicly traded companies, including (and especially) during the first dot-com bubble. That ended rather catastrophically, and Silicon Valley was never in danger of being "destroyed for good."
    • cft 10y ago
      Fundamentally, the underlying inspiration for these huge infusions is debt. On the microeconomic scale, it will take a long time for Airbnb to generate $3.5bn in profit, that has already been put into it. On the macro scale, tens of trillions of US debt make zero interest rates possible, which in turn creates a lot of fake money looking for returns on investment.
      • ryporter 10y ago
        Fundamentally, the underlying inspiration is the growth of these companies. The fact that interest rates are so low, and that investors are chasing yield elsewhere, helps to enable it. However, these deals would still happen even if debt were more expensive. On the other hand, if the company weren't showing promising growth, then the deals would not happen.
• sna1l 10y ago
  I like that the article says that Airbnb has showed restraint by ONLY raising $3.2 billion dollars.
• meritt 10y ago
  It's not that they need the money so much as investors want a piece of the pie, so why not? Going public just introduces a lot of paperwork and red tape. Uber is following the same path.
  • mooreds 10y ago
    Ah, the IPO standoff: http://avc.com/2016/04/the-ipo-standoff/ http://avc.com/2016/04/the-ipo-standoff/
• neom 10y ago
  Hunkering down for those fines, I suppose.
• jtchang 10y ago
  Airbnb might be trying to take on the entire travel industry. It's not that insane to raise this much capital if they wanted to try their hand at EXPE or HST's market.
  • ArtDev 10y ago
    In my area their main competitor is VRBO/Homeaway. They suck (for a host anyway). However, they were recently bought by Expedia. Airbnb needs to stay ahead of Expedia. Luckily Airbnb is way ahead.
  • notahacker 10y ago
    It does seem insane to invest at a notional valuation of double Expedia's market cap (or nearly four times Sabre's) to try to build a business that can compete with them though...
• jmspring 10y ago
  Raise anticipating a downturn ... @pmarca and @bhorowitz have advocated for such. So, this plan makes sense.
• jcoffland 10y ago
  Maybe they can use some of this money to find the negative review I just posted. After many successful airbnb experiences my wife and I recently had a bad one. I wondered why the host had all great reviews. Then I found out why. Although my negative review shows up on my personal page it does not show up on the host's page or the house's. Even after waiting several days. Maybe this was a fluke but it appears Airbnb is suppressing negative reviews. Anyone else experience this?
  • coderdude 10y ago
    Did you try looking at the page from a network that you haven't viewed the site from while logged in? (I'm making some assumptions here about how you access the service.) They might not show your review to you while you're logged in or if they detect the network you posted it from. Not sure what the exact motivation would be behind that but it's something to try if you haven't already.
    • jcoffland 10y ago
      Yes I tried from multiple computers and networks. The review does not show up.
  • lifeisstillgood 10y ago
    Tell us the house and we can confirm the below "not seen from your own login" idea
    • jcoffland 10y ago
      https://www.airbnb.com/rooms/3878082?s=H07Rw2s1 https://www.airbnb.com/rooms/3878082?s=H07Rw2s1 Notice all 4 and 5 star reviews. My wife and I posted a 2 star review from her account.
      • lifeisstillgood 10y ago
        Yeah that's weird. I am unable to sort of view all reviews, I am sure Indid not page through 65 reviews, I saw the same people turn up twice, (and what is with having your gravatar image with your partner in it?) It seems odd - but it is my first ever time looking at Airbnb so I may have missed something
• pifon 10y ago
  Why do they need 1.6B + 850M?! Its literally just an app.
  • ArtDev 10y ago
    No. There is a lot going on behind the scenes. I didn't know that they have their own photographers until one came to my house.
• brador 10y ago
  They'll be hitting severe scaling issues soon as they run out of good clients. Hipsters and millenials are great customers, they're honest, trustworthy, logical, reasonable, friendly, loose with their cash, and easily verified. Everyone else not so much.
  • deleted 10y ago
    [deleted]
  • argonaut 10y ago
    My 50-something year-old parents use Airbnb. So no.
    • user5994461 10y ago
      Same thing here from the seller side. Got a friend running some Bed and Breakfast hosting in the French countryside. The typical 50 year old that I'd hardly imagine selling on AirBnB (can he even use a computer ?). It turns out that he puts his listing on AirBnb and it's actually bringing in customers.
      • ghaff 10y ago
        The thing is that people have been running small inns/B&B's (and renting vacation homes) forever as something between a formal business and some money on the side. There were online listing services before AirBnB and paper listings in various tourist catalogs before that. AirBnB is just another listing service in that context. Today, if you run any sort of bed and breakfast and can't deal with computer listings, online reservations, etc. you're at an enormous disadvantage compared to your competition. I know that if I can't immediately check availability online and have to email--or heaven forbid call--I'm much less likely to book your property. What's mostly different about AirBnB is a lot of the quasi-legal rental of properties that aren't really B&Bs or vacation properties.
        • user5994461 10y ago
          It's not just yet another listing. Nor it is about quasi-legal rental. For the user, it allows to find room by location, enter in contact, book and prepay in a convenient way that is unprecedented. For the hosting, it allows to easily rent, accept the money and reply to people. There were simply no service that allowed to neither buy nor sell that easily before. It had the side effect of attracting a lot of "black market" operations onto it but that doesn't make it about black market (even though it did play a role in the growth). AirBnB is about providing a great service to both buyer and seller. (Anyway, there's always been a HUGE black market for property rental. The incentive to declare are not worth it. AirBnB barely make the issue more visible.)
• genmon 10y ago
  Airbnb recently announced they have a hardware and software design lab... Maybe they're planning to introduce new strands to the business and that's what this money is for? http://www.fastcodesign.com/3062246/an-exclusive-look-at-airbnbs-first-foray-into-urban-planning http://www.fastcodesign.com/3062246/an-exclusive-look-at-air...
• return0 10y ago
  That sounds reasonable, although, shouldnt at this stage airbnb be earning a profit?
  • cLeEOGPw 10y ago
    You don't want to earn a profit. You want to lose as much money as possible. The more money you lose the better. Earning profit implies that you already matured and stopped growing and the amount of profit will always be disappointing, lowering the value of the company.
• simplemath 10y ago
  So AirBnB is worth 4x WYN? That doesn't make sense to me
  • jonathankoren 10y ago
    Larger than Hilton https://www.nyse.com/quote/XNYS:HLT https://www.nyse.com/quote/XNYS:HLT
• jokoon 10y ago
  I'm curious, what are the costs of running a company like airbnb? I'm still curious about what they need money for. Are they just hiring every programmer they can find? Are there a lot of customer service hotline calls? It seems like it's a golden egg goose.
• Tarrosion 10y ago
  For a company to be worth $30B* it must either be making a lot of money or have extremely high probability of extremely high future earnings. Given that, if they need cash, why not just take a loan? Both lenders and investors suffer risk of default/company blows up, but only investors suffer a risk of "company is worth a lot, just not as much as we thought." Given that, investors should demand higher returns. So a company worth $30B should surely prefer to take loans rather than issuing equity, right? Apparently not - what am I missing? * I'm not convinced, but for the sake of argument...
  • Mahn 10y ago
    You should consider that: a) The company can always go tits up at any moment without prior warning, however unlikely it appears to be now. A loan will always be riskier for the founders (personal liability) even if they are printing money right now. b) Investors want a shot at making 10x or 100x, even if that means a lot more risk. Handing a loan is safer, but you only get to make 1.4x at best; that's not the game they want to play.
    • mattkrause 10y ago
      > A loan will always be riskier for the founders (personal liability) Can you explain? I thought that a major advantage of incorporation (rather than a sole proprietorship or parternship) was that corporate debts are separated from personal debts, so the investors (including founders) would only be liable for money actually invested in the company.
      • Mahn 10y ago
        That's typically the case, but if you take a business loan from an old school bank, the bank will usually ask the founders to sign with personal liability on top, regardless the company status. It's a different kind of deal because with a loan the bank doesn't get to own a share of the company, so their profits depend exclusively on the company not going out of business until the loan + interest are paid out.
• spaceflunky 10y ago
  I'm late to the party, but here's what bothers me about Airbnb: It's being treated like a technology company and not what it is, a retail company. Which is bad because wall street hates retail, but not as much as venture capital hates retail. And when people are delusion thats when mistakes are made. Look at this way, Airbnb is a broker for rental inventory that they never own or control. Since they don't actually control the inventory, the owner of the inventory is free to take it anywhere they want. Airbnb has no secret sauce. This leaves Airbnb's business totally unprotected and vulnerable to an unlimited number of competitors coming up. Eventually Airbnb will make a mistake, maybe they'll push hosts too far, maybe some catastrophic thing will happen to a guest, the point is something will happen that will shift favor to a competitor. Maybe not tomorrow or next year, but someday. But it gets worse, Airbnb is going to spend a lot of their vc funds fighting lawsuits, lobbying, and paving the way for their competitors. If I were to compete with Airbnb, I'd spend my time building a better platform and marketing strategy. Then wait for Airbnb to solve short-term rental legislation, then slip into those markets with a far lower cost to entry than Airbnb paid. But what about technology you say? They've built a great platform that will take time for a competitor to replicate you say. Well if your business defense is solely based on having a complicated website, you're going to have a bad time. They've hit on a great idea: home sharing. But they don't own the idea, they don't own the homes and those homes are free to list anywhere they want.
  • vidar 10y ago
    They do own the accumulated trust
  • bernardlunn 10y ago
    @spaceflunky they said that about Facebook as well. Tech matters a lot less than network effects.
    • jonknee 10y ago
      It's not similar to Facebook at all, Craigslist would be a more apt comparison.
• bernardlunn 10y ago
  During the hypergrowth years, frugality is not rewarded, the only KPI that matters is growth, i am sure there is a lot of growth but - for now - who cares?
• erdevs 10y ago
  Interesting that this $30B valuation is only 25% higher than last year's reported valuation of $24B, whereas the year before their valuation leaped up from $10B. http://www.wsj.com/articles/the-secret-math-of-airbnbs-24-billion-valuation-1434568517 http://www.wsj.com/articles/the-secret-math-of-airbnbs-24-bi... I wonder how revenue growth has been this year. Perhaps it has slowed down further, given the relatively modest increase in valuation.
• dawhizkid 10y ago
  Can anyone explain why Airbnb's iOS app is 158mb? That's the same size as Pokemon Go.
• Tiktaalik 10y ago
  Airbnb is currently under intense scrutiny in Vancouver as the city is struggling with a 0.6% (!!) vacancy rate. Some studies have suggested that around 70% of Airbnb Vancouver revenue comes from commercial operators that permanently rent out their condo units as a sort of hotel[1]. The city is studying the issue and seems in my opinion quite keen and ready to take action to end these sort of wholly commercially Airbnb operations. Airbnb would likely only be allowed for casual, infrequent renting. Cities love to copy one another. Going forward it seems likely that if Vancouver is able to end extensive commercial renting on Airbnb, other cities would adopt the same approach. If commercial operations are as important to Airbnb's revenue as these studies suggest, this would be a very significant change for the company. They'd have to grow quite a bit to make up for this. [1] http://www.theglobeandmail.com/news/british-columbia/vancouvers-top-airbnb-earners-are-commercial-hosts-research/article30324477/ http://www.theglobeandmail.com/news/british-columbia/vancouv...