8 ms·

Airbnb CFO Departs Amid Tensions, Leaving IPO Timeline Unclear

104 points by dpiers 9y ago

matte_black 9y ago
When AirBnB finally does IPO, who will want to buy it? What more growth could possibly come out amidst the increasing regulation?
- wtvanhest 9y ago
  I guess we will wait to find out. If all they do is execute and get to slow growth, cash flow is still worth a lot of money, just at a lower multiple than fast growing cash flow. IMO, experiences, business travel and even hotel booking are all viable growth models going forward.
- vkou 9y ago
  If you are optimistic about AirBnB as a business, outside of its ability to exploit legal loopholes: The same kind of growth that any new, deep pocketed entrant in the hospitality industry might have - it would just have to come at the expense of incumbents. In 30 years, an investor like that may hope that AirBnB might look more like Hilton Worldwide, then what it is today.
  - brd 9y ago
    AirBnB is already worth more than Hilton. I think that's part of the point parent is trying to make.
    - vkou 9y ago
      Hilton owns ~800,000 suites across ~4,000 cities. This is great, but if travel were to drop by 20%, you'd now be paying for and maintaining empty rooms. The AirBnB network has ~3,000,000 suites across 60,000 cities. Even if they were to comply with all local laws, they would still have margins, and room to grow, and would weather downturns better then traditional hotel chains ('Sharing economy' means that they aren't stuck paying mortgages on rooms they can't rent during a recession.) They can also expand into the traditional hotel chain business, by building or buying properties.
      - ipsum2 9y ago
        > 'Sharing economy' means that they aren't stuck paying mortgages on rooms they can't rent during a recession. I'm not sure I understand, why is this not the case?
        Naritai 9y ago
        It's the hosts who are stuck paying mortgages on rooms they can't rent, not AirBNB. To AirBNB a recession just shows up as a decline in the number of transactions on the site.
      - refurb 9y ago
        My understanding is that Hilton doesn't own any of the properties, they simply manage them under the Hilton name for their owners.[1] The practice of franchising is popular within the hospitality industry among most major hotel chains, as the parent company does not have to pay for the maintenance and overhead costs of franchised properties. [1]https://en.wikipedia.org/wiki/Hilton_Worldwide#Franchising https://en.wikipedia.org/wiki/Hilton_Worldwide#Franchising
        dragonwriter 9y ago
        > My understanding is that Hilton doesn't own any of the properties Your own source says that 70% (by rooms) was franchised as of 2013, which suggests 30% is Hilton owned.
      - skinnymuch 9y ago
        Hilton definitely doesn’t own a lot of those hotels or suites.
- user5994461 9y ago
  Who cares? They're in one of the most profitable niche in the planet. They don't need IPO.
  - matte_black 9y ago
    > Who cares? People who want to cash out.
  - vthallam 9y ago
    Airbnb employers and Investors. Most funds have a 6 - 8 year timeline where they plan to cash out to certain extent, so there will be pressure from employees and investors alike.
    - matte_black 9y ago
      Yes, it looks like they are gradually working toward a narrative that allows them to keep pushing back the IPO as they continue along their "incredible journey".
    - ajmurmann 9y ago
      To make it worse, the fund gets dissolved after a while. So now instead of one VC firm you have to deal with dozens of investors.
- philfrasty 9y ago
  Isn't there much more for them to explore outside hosting guests? Their recent redesign focusing on „accomodations“ + „activities“ seems to indicate this. Companies like GetYourGuide raised $200 Mio. [1] just for activities alone. [1] https://www.crunchbase.com/organization/getyourguide https://www.crunchbase.com/organization/getyourguide
  - teej 9y ago
    I think the market will continue to anchor their value on the number of listings and number of stays. AirBnB may be quickly growing revenue per user but that might not be enough to move the top line if listings is dropping. They seem to be losing left and right vs municipalities that don’t want them.
- mbesto 9y ago
  > When AirBnB finally does IPO, who will want to buy it? This is how the stock market works for IPOs of AirBnb's size: 1. Big financial institution client: "Get me higher return, maybe buy more of those cool tech stocks everyone is raving about. Can you buy the next FB?" 2. Big financial institution: "Sure thing, we got this AirBnB company coming up and it's supposed to be big, we're talking 50% YoY growth. On the other hand, we've got these 100-year-old blue chip companies growing at 4.5% every year that we can park your money. we also have prospectus on a new diet pill company that should show 10% increase YoY based on our analsysis. what say you?" 3. client: "give me that AirBnB one, I don't want to miss out on the action!" 4. institution: "you're the boss, talking with AirBnb's underwriter as we speak"
- untog 9y ago
  Every time I use AirBnb now it shows me "Experiences" before letting me actually see accommodation listings. I suspect this is a growth area they're eager to push, no matter how much it might annoy me and others who want to just find a place to stay.
  - exclusiv 9y ago
    Yeah I think they've saturated the actual home stay sector for now. It's very hard and limited to create demand for anything, especially a rather new lodging offering. So they're pushing this experience stuff to try and differentiate and go for more growth as you mentioned along w restaurant bookings. It's annoying to me as well as a host and a renter. If they aren't careful they could cede market share to other competitors that allow and welcome host and renters to easily connect outside their system and remain focused on lodging. I don't understand their UX approach since it's easy enough to ask what the user is looking for and make it dynamic instead of blasting experiences everywhere. Or not be so pushy on experiences if I start a lodging search. Push it after.
- yeukhon 9y ago
  Isn't short-term investment an option here? Watch AirBnB stock price goes up in the first week of IPO, then cash out before AirBnB comes down? The hype and rise should make some happy. You don't have to believe in the business, you can just believe in the hype.
jdlyga 9y ago
AirBnb has recently been made illegal in my state (New York State) for stays under 30 days. Of course a lot of people don't know or don't care about the law, but they're giving out fines left and right. This is likely true with other states as well.
- matwood 9y ago
  AirBnb is illegal or short term rentals? I recently stayed in a short term apartment rental that I booked through booking.com. It was fully licensed, etc..., but was an apartment in a building of otherwise long term renters.
  - untog 9y ago
    If it's fully licensed then I imagine it is fine - I'm not sure how flexible the law is around licensing short term rentals in otherwise long term buildings though. It's short-term rentals in unlicensed properties that the state has specifically outlawed. IIRC it wasn't actually legal in the first place, they've just started enforcing it.
  - benatkin 9y ago
    With major cities that are in demand, long-term rentals on AirBnb can disturb housing equality and rent control programs. So we hear about long-term rentals being curtailed a lot. The states don't need to address what's already being addressed by the major cities, unless it's a big problem outside of the major cities because the housing demand isn't as high. The long-term rental issues aren't as bad outside of the major cities. The short-term rental issues, however, are a bigger issue, because those living in a less urban area have more expectation of knowing their neighbors.
    - subpixel 9y ago
      You say “can”, but I live in one of those cities and I assure you it’s not a possibility but a reality.
      - 9y ago
geverett 9y ago
'Tosi, who turns 50 next week, was focused more on cutting costs and pursuing businesses that were revenue-generating instead of world-changing, they said.' For now, Airbnb has the luxury to make these kinds of decisions, but they can't exist in the world of paper valuations forever. A lot of the 'world-changing' things they've been working on seem a lot more targeted at the luxury market than transforming the industry as a whole (luxury retreats, premium business products, experiences that cost $200+). Will be interesting to see how this plays out..
- cptaj 9y ago
  Yeah, I've never really had any luck getting stuff that is really cheaper than traditional options.
  - contingencies 9y ago
    Ditto. IMHO their business model isn't hard to replicate, they didn't invent it, and their biggest asset is inertia-eyeballs. Although they are a YC darling, the fact is they scaled with loads of marketing dollar versus established competition (eg. in Europe) and what this shows us is huge financial backing and aggressive media engagement can create a sector-specific behemoth. For all intents and purposes in the current world it has already plateaued, though. There's a school of thought that they are probably one of the last paper-valuation giants to climb out of the centralized marketplace world. In future, perhaps consumers won't use branded marketplace apps and will instead publish data independently, branded search engine apps will rank and return it and third party reputation services will assist with filtering. Why? Because nobody wants a damn middleman app demanding its own permissions/login/customer service loop for everything they do, and people are slowly ceding anonymity for promises of assurance as the resource-constrained, higher-density, more urban world moves toward the political right. A cryptocurrency AirBNB clone could take a serious chunk out of their market, since so many hosts are flying close to or beyond the legal or strata relations radar and would prefer not to declare earnings.
    - BlackjackCF 9y ago
whoisjuan 9y ago
They released this last week: https://press.atairbnb.com/brian-cheskys-open-letter-to-the-airbnb-community-about-building-a-21st-century-company/ https://press.atairbnb.com/brian-cheskys-open-letter-to-the-... ... The part that caught my attention was: "To begin measuring how well we are serving all stakeholders, in March, we’ll release Airbnb’s first Annual Stakeholder Report." ... You only come up with this crap when you don't want to go public. You know...because reporting to stakeholders is what public companies do.
ggm 9y ago
Tried to use it this next 2 day trip to Berlin. Had low trust in the quality of the matches against my budget and bedcount, and found better deals from hotel aggregator websites I've used before with some confidence on what they tell me TL;DR can't trust the model when it doesn't out perform alternates with better basis in search/price matching.
- konschubert 9y ago
  AirBnB is basically banned in Berlin.
  - rorykoehler 9y ago
    Not anymore. The ban had been successfully challenged on numerous occasions now. Seems unenforceable
whitepoplar 9y ago
After the absolutely horrible customer service experiences I've had with Airbnb, I hope they rot in IPO hell.
- derekdahmer 9y ago
  FWIW I've had the exact opposite experience. Called in late at night about a host in Barcelona blowing me off, and within a few minutes had a US-based support rep check the message log and immediately move me into another place along with an additional credit for the problem.
  - simonebrunozzi 9y ago
    I had one terrible experience too. And never an amazing one.
cryptozeus 9y ago
I am surprised with the comments again airbnb here. I have used nothing else but airbnb for last 3 years. They have amazing properties with prime locations for reasonable price. I normally dont care for hotel services i.e. gym,in-room food etc so its perfect. Usually the cost comes down to half than the hotels.
- teh_klev 9y ago
  I think a key issue with them is they've caused a harmful reduction of available affordable rented accommodation in many areas. All those "amazing properties with prime locations for reasonable price" are now no longer available to local residents to rent. It's a thing that's happened around my rural'ish village. There used to be a reasonable supply of rented properties but many have turned into AirBNB lets where, for half the year, they're practically unoccupied, and even during the holiday season (northern hemisphere summer) they're never fully occupied. I know this is just how market forces work, but in some localities AirBNB are a somewhat destructive force.
exBarrelSpoiler 9y ago
Tosi looks like Rand Paul.
acct1771 9y ago
Obligatory shoutout: https://www.cryptocribs.com https://www.cryptocribs.com

104 points by dpiers 9y ago

When AirBnB finally does IPO, who will want to buy it? What more growth could possibly come out amidst the increasing regulation?

wtvanhest 9y ago
I guess we will wait to find out. If all they do is execute and get to slow growth, cash flow is still worth a lot of money, just at a lower multiple than fast growing cash flow. IMO, experiences, business travel and even hotel booking are all viable growth models going forward.
vkou 9y ago
If you are optimistic about AirBnB as a business, outside of its ability to exploit legal loopholes: The same kind of growth that any new, deep pocketed entrant in the hospitality industry might have - it would just have to come at the expense of incumbents. In 30 years, an investor like that may hope that AirBnB might look more like Hilton Worldwide, then what it is today.
- brd 9y ago
  AirBnB is already worth more than Hilton. I think that's part of the point parent is trying to make.
  - vkou 9y ago
    Hilton owns ~800,000 suites across ~4,000 cities. This is great, but if travel were to drop by 20%, you'd now be paying for and maintaining empty rooms. The AirBnB network has ~3,000,000 suites across 60,000 cities. Even if they were to comply with all local laws, they would still have margins, and room to grow, and would weather downturns better then traditional hotel chains ('Sharing economy' means that they aren't stuck paying mortgages on rooms they can't rent during a recession.) They can also expand into the traditional hotel chain business, by building or buying properties.
    - ipsum2 9y ago
      > 'Sharing economy' means that they aren't stuck paying mortgages on rooms they can't rent during a recession. I'm not sure I understand, why is this not the case?
      - Naritai 9y ago
        It's the hosts who are stuck paying mortgages on rooms they can't rent, not AirBNB. To AirBNB a recession just shows up as a decline in the number of transactions on the site.
    - refurb 9y ago
      My understanding is that Hilton doesn't own any of the properties, they simply manage them under the Hilton name for their owners.[1] The practice of franchising is popular within the hospitality industry among most major hotel chains, as the parent company does not have to pay for the maintenance and overhead costs of franchised properties. [1]https://en.wikipedia.org/wiki/Hilton_Worldwide#Franchising https://en.wikipedia.org/wiki/Hilton_Worldwide#Franchising
      - dragonwriter 9y ago
        > My understanding is that Hilton doesn't own any of the properties Your own source says that 70% (by rooms) was franchised as of 2013, which suggests 30% is Hilton owned.
    - skinnymuch 9y ago
      Hilton definitely doesn’t own a lot of those hotels or suites.
user5994461 9y ago
Who cares? They're in one of the most profitable niche in the planet. They don't need IPO.
- matte_black 9y ago
  > Who cares? People who want to cash out.
- vthallam 9y ago
  Airbnb employers and Investors. Most funds have a 6 - 8 year timeline where they plan to cash out to certain extent, so there will be pressure from employees and investors alike.
  - matte_black 9y ago
    Yes, it looks like they are gradually working toward a narrative that allows them to keep pushing back the IPO as they continue along their "incredible journey".
  - ajmurmann 9y ago
    To make it worse, the fund gets dissolved after a while. So now instead of one VC firm you have to deal with dozens of investors.
philfrasty 9y ago
Isn't there much more for them to explore outside hosting guests? Their recent redesign focusing on „accomodations“ + „activities“ seems to indicate this. Companies like GetYourGuide raised $200 Mio. [1] just for activities alone. [1] https://www.crunchbase.com/organization/getyourguide https://www.crunchbase.com/organization/getyourguide
- teej 9y ago
  I think the market will continue to anchor their value on the number of listings and number of stays. AirBnB may be quickly growing revenue per user but that might not be enough to move the top line if listings is dropping. They seem to be losing left and right vs municipalities that don’t want them.
mbesto 9y ago
> When AirBnB finally does IPO, who will want to buy it? This is how the stock market works for IPOs of AirBnb's size: 1. Big financial institution client: "Get me higher return, maybe buy more of those cool tech stocks everyone is raving about. Can you buy the next FB?" 2. Big financial institution: "Sure thing, we got this AirBnB company coming up and it's supposed to be big, we're talking 50% YoY growth. On the other hand, we've got these 100-year-old blue chip companies growing at 4.5% every year that we can park your money. we also have prospectus on a new diet pill company that should show 10% increase YoY based on our analsysis. what say you?" 3. client: "give me that AirBnB one, I don't want to miss out on the action!" 4. institution: "you're the boss, talking with AirBnb's underwriter as we speak"
untog 9y ago
Every time I use AirBnb now it shows me "Experiences" before letting me actually see accommodation listings. I suspect this is a growth area they're eager to push, no matter how much it might annoy me and others who want to just find a place to stay.
- exclusiv 9y ago
  Yeah I think they've saturated the actual home stay sector for now. It's very hard and limited to create demand for anything, especially a rather new lodging offering. So they're pushing this experience stuff to try and differentiate and go for more growth as you mentioned along w restaurant bookings. It's annoying to me as well as a host and a renter. If they aren't careful they could cede market share to other competitors that allow and welcome host and renters to easily connect outside their system and remain focused on lodging. I don't understand their UX approach since it's easy enough to ask what the user is looking for and make it dynamic instead of blasting experiences everywhere. Or not be so pushy on experiences if I start a lodging search. Push it after.
yeukhon 9y ago
Isn't short-term investment an option here? Watch AirBnB stock price goes up in the first week of IPO, then cash out before AirBnB comes down? The hype and rise should make some happy. You don't have to believe in the business, you can just believe in the hype.

jdlyga 9y ago

AirBnb has recently been made illegal in my state (New York State) for stays under 30 days. Of course a lot of people don't know or don't care about the law, but they're giving out fines left and right. This is likely true with other states as well.

matwood 9y ago
AirBnb is illegal or short term rentals? I recently stayed in a short term apartment rental that I booked through booking.com. It was fully licensed, etc..., but was an apartment in a building of otherwise long term renters.
- untog 9y ago
  If it's fully licensed then I imagine it is fine - I'm not sure how flexible the law is around licensing short term rentals in otherwise long term buildings though. It's short-term rentals in unlicensed properties that the state has specifically outlawed. IIRC it wasn't actually legal in the first place, they've just started enforcing it.
- benatkin 9y ago
  With major cities that are in demand, long-term rentals on AirBnb can disturb housing equality and rent control programs. So we hear about long-term rentals being curtailed a lot. The states don't need to address what's already being addressed by the major cities, unless it's a big problem outside of the major cities because the housing demand isn't as high. The long-term rental issues aren't as bad outside of the major cities. The short-term rental issues, however, are a bigger issue, because those living in a less urban area have more expectation of knowing their neighbors.
  - subpixel 9y ago
    You say “can”, but I live in one of those cities and I assure you it’s not a possibility but a reality.
    - 9y ago

geverett 9y ago

'Tosi, who turns 50 next week, was focused more on cutting costs and pursuing businesses that were revenue-generating instead of world-changing, they said.' For now, Airbnb has the luxury to make these kinds of decisions, but they can't exist in the world of paper valuations forever. A lot of the 'world-changing' things they've been working on seem a lot more targeted at the luxury market than transforming the industry as a whole (luxury retreats, premium business products, experiences that cost $200+). Will be interesting to see how this plays out..

cptaj 9y ago
Yeah, I've never really had any luck getting stuff that is really cheaper than traditional options.
- contingencies 9y ago
  Ditto. IMHO their business model isn't hard to replicate, they didn't invent it, and their biggest asset is inertia-eyeballs. Although they are a YC darling, the fact is they scaled with loads of marketing dollar versus established competition (eg. in Europe) and what this shows us is huge financial backing and aggressive media engagement can create a sector-specific behemoth. For all intents and purposes in the current world it has already plateaued, though. There's a school of thought that they are probably one of the last paper-valuation giants to climb out of the centralized marketplace world. In future, perhaps consumers won't use branded marketplace apps and will instead publish data independently, branded search engine apps will rank and return it and third party reputation services will assist with filtering. Why? Because nobody wants a damn middleman app demanding its own permissions/login/customer service loop for everything they do, and people are slowly ceding anonymity for promises of assurance as the resource-constrained, higher-density, more urban world moves toward the political right. A cryptocurrency AirBNB clone could take a serious chunk out of their market, since so many hosts are flying close to or beyond the legal or strata relations radar and would prefer not to declare earnings.
  - BlackjackCF 9y ago

whoisjuan 9y ago

They released this last week: https://press.atairbnb.com/brian-cheskys-open-letter-to-the-airbnb-community-about-building-a-21st-century-company/ https://press.atairbnb.com/brian-cheskys-open-letter-to-the-... ... The part that caught my attention was: "To begin measuring how well we are serving all stakeholders, in March, we’ll release Airbnb’s first Annual Stakeholder Report." ... You only come up with this crap when you don't want to go public. You know...because reporting to stakeholders is what public companies do.

ggm 9y ago

Tried to use it this next 2 day trip to Berlin. Had low trust in the quality of the matches against my budget and bedcount, and found better deals from hotel aggregator websites I've used before with some confidence on what they tell me TL;DR can't trust the model when it doesn't out perform alternates with better basis in search/price matching.

konschubert 9y ago
AirBnB is basically banned in Berlin.
- rorykoehler 9y ago
  Not anymore. The ban had been successfully challenged on numerous occasions now. Seems unenforceable

whitepoplar 9y ago

After the absolutely horrible customer service experiences I've had with Airbnb, I hope they rot in IPO hell.

derekdahmer 9y ago
FWIW I've had the exact opposite experience. Called in late at night about a host in Barcelona blowing me off, and within a few minutes had a US-based support rep check the message log and immediately move me into another place along with an additional credit for the problem.
- simonebrunozzi 9y ago
  I had one terrible experience too. And never an amazing one.

cryptozeus 9y ago

I am surprised with the comments again airbnb here. I have used nothing else but airbnb for last 3 years. They have amazing properties with prime locations for reasonable price. I normally dont care for hotel services i.e. gym,in-room food etc so its perfect. Usually the cost comes down to half than the hotels.

teh_klev 9y ago
I think a key issue with them is they've caused a harmful reduction of available affordable rented accommodation in many areas. All those "amazing properties with prime locations for reasonable price" are now no longer available to local residents to rent. It's a thing that's happened around my rural'ish village. There used to be a reasonable supply of rented properties but many have turned into AirBNB lets where, for half the year, they're practically unoccupied, and even during the holiday season (northern hemisphere summer) they're never fully occupied. I know this is just how market forces work, but in some localities AirBNB are a somewhat destructive force.

exBarrelSpoiler 9y ago

Tosi looks like Rand Paul.

acct1771 9y ago

Obligatory shoutout: https://www.cryptocribs.com https://www.cryptocribs.com