3 ms·

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: Exist

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.

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.