76 ms·

Subject: Airbnb (2011)

161 points by tinderliker 8y ago

dsl 8y ago
Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by cities. None of the players were able to grow large enough to have a say in the reforming of the laws that regulate them (SF learned its lesson from Uber and moved quickly, limiting their participation to asking for proposals). This is framed to present a VC as "missing out" in the financial sense. Ultimately a VC is liable to its capital partners in far more ways. If Airbnb had all of its assets seized by the federal government as an illegal enterprise (just as an example), we would be applauding their foresight and brilliance in avoiding this otherwise lucrative opportunity.
- zimablue 8y ago
  I think there's some truth that these guys dodge/ignore/lobby down regulations, but there's this narrative now that that's all they do. Being able to flag a taxi through an app is amazing, so is being able to rent a flat from a stranger with confidence that it will be give and work out. Regulation arbitrage is only a fraction of their value, and the regulations are often just rent seeking by those with power. Insane taxi Union/medallions, ban on flat renting to preserve property values etc.
  - justtopost 8y ago
    Its not all they do. But it is the bedrock on which their whole profit model is based. So critisism seems apt. I find corprate overrule of law for 'benefit' of the consumer facinating, but dont have a dog in the fight. But I can't help feeling its like shooting the moon in a card game. It only works when unexpected, and already on a roll.
  - lexs 8y ago
    At least in Europe there were apps to call a taxi and sites to book vacation homes before either Uber or AirBnB came over. But sure ruthlessly minimising personnel responsibilities and costs can be another "value".
    - vasilipupkin 8y ago
      Not like Airbnb. We had sites like VRBO before Airbnb. The big difference was that you deal with Airbnb, you aren’t signing contract with the host.
    - the_clarence 8y ago
      Come on. These apps were not reliable AT ALL. There is no comparison here.
    - meowface 8y ago
      As someone currently living in a German area with almost no Uber service, mytaxi (the equivalent Uber-like taxi app) is inferior to and much less reliable and functional than Uber and Lyft.
      - timmy-turner 8y ago
        I tried mytaxi during a vacation in Italy. Went through the whole onboarding, including checking the trips expected fare and entering CC details only to get told after pressing the 'call taxi now' button by a popup that the service is not available in this area. WTF? Also the whole app looked very cheap and felt fragile. In my hometown I'm just calling taxis off the street or via plain old phone.
    - presscast 8y ago
      >At least in Europe there were apps to call a taxi Where? In France the taxis never accepted debit cards (= tax evasion), and generally provided piss-poor service. They've stepped their game up massively since Uber arrived. In the UK I never saw a taxi app that wasn't an utter heap of garbage. Sweeping generalizations about EU countries are almost always wrong or meaningless.
- cft 8y ago
  Also you might want to notice that the last email from Fred is at 4:26am. In France that would be illegal in itself, sending a work email outside of the working hours. /s
  - bpizzi 8y ago
    What do you mean exactly by illegal? Nobody's going to jail for sending an email outside of working hours, even in France. Edit: actually, for anyone wondering, the law is that a >50 employee's company should document it's own recommendation about how not to harass your colleagues during out-of-work hours. When fully applied, the worst case scenario would be that, as an employee, you can officially (ie. under a legal base, not legal right, but IANAL) ask your employer to have workaholic colleagues to step down on their out-of-hours emails. Nothing more, nothing less, very very far from "in France it's illegal to send a work email outside of the working hours".
    - deleted 8y ago
      [deleted]
  - sctb 8y ago
    > Avoid unrelated controversies and generic tangents. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- vasilipupkin 8y ago
  Seems to me people often confuse something being illegal with something being an actual crime. They had the insight that these minor regulations can be easily broken to deliver value with very few repercussions
  - collyw 8y ago
    Could you explain the difference to me, as I am clearly in the minority in thinking that the two are synonymous.
    - vasilipupkin 8y ago
      sure. My town has a paid beach with lifeguard and a free beach without. It is illegal to swim on the free beach. It is not a crime. Worst case that happens is they kick you off the beach.
      - otterley 8y ago
        Lawyer here! Crime is the general term, and describes any offense against the people or the sovereign. Offenses are divided into severities, ranging from felony (worst) to infraction (least), with penalties to suit. In this case, swimming on the free beach is probably an infraction, much like failing to use your turn signal. The worst penalty you’ll face in the usual case is a fine. But if you swim on the free beach, get yourself in trouble, and a rescue party has to come save you, the fact that it’s a “crime” now gives the state the ability to recover their costs from you afterwards.
      - collyw 8y ago
        Not sure that actually makes things any clearer to me. Is it actually illegal, or is it just "not allowed"? (Is the free beach public?) What would make it "a crime" as opposed to just being "illegal"?
        vasilipupkin 8y ago
        Illegal means against the law or against the rules. A crime is a function of how severe your illegal action is. Put it another way, people think if something is illegal, punishment for that must be a felony or something. But often times, it’s just an infraction so punishment is at most a fine or a minor action like getting kicked off the free beach
- throwawaymath 8y ago
  Great observation. > The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by cities. I live in NYC, and I’m frequently in Westchester (the county immediately north of NYC, for those not familiar with New York). There’s been a large influx of Lime bikes in the past several months. My opinion on Lime - the bike/scooter company - has quickly evolved from idle curiosity, to weak dislike, to outright disdain. That evolution started happening when I saw Lime bikes being parked in arbitrary places that blocked pedestrian foot traffic, but I think the straw that broke the camel’s back was when someone parked a Lime bike directly in the spot I usually place my garbage. Sometimes the hustle of skirting regulation seems to be a net positive. Company culture notwithstanding, I’m happy overall that Uber exists as a concept. I don’t have a savvy opinion about their future, but I enjoy Uber rides significantly more than yellow cabs. Likewise I’ve stayed in Airbnbs before and enjoyed the experience, though I wouldn’t say it’s changed my day to day life as much. But other times it seems like companies are being actively negligent in their awareness of the legislations they’re flippantly ignoring and the consequences of doing so. I don’t have a lot of sympathy for a system being disrupted which depends on the artificial scarcity of taxi medallions. On the other hand I find it very frustrating when my sidewalk or park is “disrupted” by a random bright green bike that yells at you if you try to move it without paying. I wish there were a way to easily categorize the behavior of companies - between those whose cavalier approach to disruption mostly impacts existing incumbents, and those whose approach is actually a pain to end users. Sometimes the laws are legitimately outdated or very inefficient, and disregarding them vastly improves the user experience. But other times - like with Lime - it feels as though companies are pointing to those examples so they can get away with a “product” that automatically opts you into a “new normal” just because a subset of people use it.
  - zaphod12 8y ago
    I agree with almost everything you've said, but have to mention that Lime bike was entirely endorsed by White Plains - https://www.lohud.com/story/news/local/westchester/white-plains/2018/06/04/bike-sharing-pedals-into-white-plains/668856002/ https://www.lohud.com/story/news/local/westchester/white-pla... Not sure if they're winding up in other towns nearby (inevitable, I guess), but in this case the city was totally on board with them showing up!
- spectrum1234 8y ago
  Its not just regulatory efficiencies. Its more market efficient than using craigslist as many on the sell side previously were.
- mbesto 8y ago
  > quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. It also makes sense to do this in areas where no one is watching. For example Monkey Parking got shut down almost immediately during the same time SF was probably at it's height of negotiating what it was going to do with Airbnb rentals in SF. https://www.wired.com/2014/06/app-that-lets-users-sell-public-parking-spots-is-ordered-to-shut-down/ https://www.wired.com/2014/06/app-that-lets-users-sell-publi... Also, Airbnb, like many other companies who tout "growth hacking", illegally (in the eyes of the craigslist ToS) used a technique to basically leverage Craigslist audience to grow their own. Mind you, this technique is also being encouraged by a partner at one of the most prominent VC firms in the valley. https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/ https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcra... Point is - it's very easy to blindly select what you feel is "right" vs "wrong" or "bad" vs "good"[0][1] when your money is on the line. [0] - http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html [1] - http://www.paulgraham.com/ronco.html http://www.paulgraham.com/ronco.html
- Reedx 8y ago
  > Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. How quickly we forget... There were huge inefficiencies and Uber was an order of magnitude better than what we had. Getting a taxi was difficult and unreliable. Ask anyone who used to use them in SF. Uber was like magic in comparison.
  - emodendroket 8y ago
    Part of what I wonder is how much worse the experience would really be if you were using an app to hail a yellow cab.
    - slededit 8y ago
      Just like when you'd call in dispatch they might come or they might not. Who knows.
      - emodendroket 8y ago
        No reason you couldn't copy the whole accept, show map, etc. feature set
- subroutine 8y ago
  I think this is a great observation, and well put. FWIW, had you made the same comment a year ago, I'd have only seen Uber, not Airbnb, matching precisely the model you describe. The lore was (and perhaps still is) that Airbnb has a platform substantially different & far better than Uber (e.g. http://archive.is/kE5hq http://archive.is/kE5hq). MSM painted Uber as this ultra-aggressive startup in terms of both company culture and taking on regulators; meanwhile Airbnb was just this wholesome startup simply trying to help student's travel on a shoestring budget and helping people pay rent by letting someone sleep on their couch. Anyway, that was my interpretation back then; but clearly I'm no Paul Graham. It's clear from his blog post that Paul never saw it this way. To him, Airbnb was always destined to be a platform that disrupted the hotel market. Of course if you're going to 'disrupt' the hotel market in any medium-to-large city, that means thousands of residential homes will need to be converted into short-term vacation rentals. It was either a carefully planned timing, or merely circumstance, but Airbnb has scaled at exactly the right pace to (like you mention) "become large enough to get a seat at the table when the regulations are reworked". And unlike Uber they have powerful/wealthy friends who piggyback on the Airbnb platform. It seems like almost overnight Airbnb went from an airbed in some student's loft to Corporation-Owned-Whole-Home-No-Host-punch-in-a-pin-code-to-open-the-front-door-fully-automated "STRs". Living in San Diego I couldn't hate it more. After city council passed a regulation to limit Airbnb's to primary residences (which I believe most SD residence were happy about), Airbnb & HomeAway, and other parties formed a coalition, and hired a bunch of people to gather signatures to skirt our city council's ruling and put this action on a ballet as a referendum (http://archive.is/Yf6GP http://archive.is/Yf6GP). In theory I'm not opposed to voter referendum; but here is a case where Airbnb is clearly undermining the ability of our elected official's to govern our city. The voted regulations will now be put on hold until 2020; and there will be nothing but carpet-bombing adverts for the next two years brainwashing san diegans. There's no hope.
- waylandsmithers 8y ago
  I see the regulatory inefficiencies as being totally different though. It didn't make that much sense apart from protecting holders of medallions for it to be illegal to pay someone for a car ride, but I would actually like there to be laws protecting guests and innkeepers, and preventing the apartment across the hall from turning into a hotel.
aogl 8y ago
While this is an interesting post to read, it is also about 7 years old. It's quite cool how the transcript goes to say "There's no reason this couldn't be as big as Ebay. And this team is the right one to do it." Turns out that literally was the case! Good call Paul!
raverbashing 8y ago
I wonder what was the redacted phrase that was strategic to what AirBNB was doing (I'm sure we might know by now, but not know it was being discusses)
- hobofan 8y ago
  Maybe the "do things that don't scale thing" where Airbnb came to the apartments and took photos of them themselves, to make the offering more interesting for customers?
- kitcar 8y ago
  Maybe related to their craiglist activities? (https://growthhackers.com/growth-studies/airbnb https://growthhackers.com/growth-studies/airbnb)
IndrekR 8y ago
It is interesting to see how PG is selling this to Fred. This is exactly the kind of people you want to work with in a startup. People who believe in you and are not afraid to show it.
- jpeg_hero 8y ago
  Yeah, I don’t know much about PG’s communication style, but in intra-VC communication, this is 100 max over the top support, hair-on-fire. Good for PG, and his words were prescient in ‘09, prescient in ‘11 and still prescient in ‘18. Not many times my you can say that. Ps funny on the eBay name drop. The original marketplace model, and still doing well, but dot think vc’s reference it as often anymore.
- foobaw 8y ago
  Love his passion. I know it's possible PG himself missed out on a startups by convincing people not to invest in a simialr way, but the fact that he's not afraid to express his opinion is just as useful.
abcdcba 8y ago
I wish AirBnB took more responsibility for the damage they are doing to the NYC housing market
- MrEfficiency 8y ago
  What is your proposal?
  - pjc50 8y ago
    In Edinburgh there's a similar discussion, and the proposals I think have value: 1) Tourist tax on all hotel rooms, including AirBnB. Initially a fairly small amount. https://www.theguardian.com/uk-news/2018/jun/27/edinburgh-legal-powers-tourist-tax-hotels https://www.theguardian.com/uk-news/2018/jun/27/edinburgh-le... 2) For whole-unit owner-not-present lets, require planning permission for change of use. You wouldn't be allowed to run a woodworking business in your apartment that inflicted noise on your neighbours, so the same should apply to turning it into a hotel. 3) Keep upgrading the transport infrastructure. The newly rebuilt Border railway is a victim of its own instant success - someone should start the process of widening it to two tracks immediately so it'll be ready in 20 years. And so on. (Before someone says "build houses", there is a lot of family home construction going on in the outskirts. It's the historic centre that's under consideration, and "demolish the existing 4-6 story historic dwellings and replace them with much taller residential buildings" is an absolute non-starter)
    - jermaustin1 8y ago
      What annoys me about tourists in Edinburgh, is that everyone wants to pile into Old Town, even though it is so small. No one contemplates Leith or Newington. Neither of those places are beyond a short walk (1-2 miles) to city center, also there are more options for food and drink (especially on Leith Walk).
      - briandear 8y ago
        2 miles isn’t a “short walk” in many parts of the year in Scotland.
hedgew 8y ago
I'd love to see more of these genuine, high-level business conversations. It can be difficult to learn and understand what really goes on "at the top", because probably every top exec is under some pressure to appear superhuman.
- alexpotato 8y ago
  Most of the time I've had access to these conversations it seems like 10-20% of the time there is some really insightful and/or groundbreaking discussion going on. The rest of the time, it's something like this: A: I've always found that business is about increasing revenue and decreasing costs B: I've also always thought that way A: Great! I'm glad we're on the same page
dustingetz 8y ago
This is bullshit. I fund my startup by consulting 1-2 months per year at 40k/month. Zero people think it is impressive. But $25k of Obama cereal makes a better story.
- krn 8y ago
  2008 Democratic National Convention was 10 years ago. At the time, startups, as we know them today, were a rarity. Funding yourself to start one, even more so. Hacker News itself was only 1 year-old.
  - amitutk 8y ago
    Startups were a rarity in 2008?
    - krn 8y ago
      Relatively, yes. Sure, startups have existed for decades, but their popularity now is at a completely different level. Y Combinator, for instance, had 43 startups funded in 2008, and 274 in 2018. I am not even talking about the growth of the entire startup ecosystem, including angel investors and VCs. In 2008, startups were mostly only a thing in the US. Now there are tens of startup hubs across the entire world.
      - lmeyerov 8y ago
        That's rewriting history, including a lot of hard work by a lot of people. YC disrupted the model, it didn't start it. PG repeatedly describes YC as a startup in changing how this works, so mistaking their growth with the industry misses what's happening. The dotcom era had incubators through models like "I have access to capital but no one good idea; let me start a bunch and pick which to go". VCs regularly host EIRs (entrepreneur-in-residence). More dominant, many universities, corporates, and in gov, SBIR. Not sure how the numbers of SBIR compare to YC, but given SBIR is based on a % of each US dept's budget... ;-) The "startup accelerator" changed the model: more $ to more varied entrepreneurs, structured program with educational eco-system, made VC capital more attractive, etc.
MrEfficiency 8y ago
Something I often notice when people complain about AirBNB being a problem in their city- Their city has 'peaked' like a star Quarterback in High school. In my city which is experiencing growth, I find my AirBnB guests are often business travelers who are infulencers in their respected communities. There are some exceptions like college kids on summer vacation trying to hook up away from their parents house- but mostly business people. I see complaints from Europeans about Tourism, but that should be a reflection on the achievements of their ancestors rather than the achievements of the current and recent generations.
- timr 8y ago
  Right. New York, London, Paris and Tokyo have all "peaked".
  - maxwell 8y ago
    Manhattan, London, and Paris all peaked in the early- to mid-20th century. Manhattan: https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhattans-density https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhat... Paris: https://www.parisinsidersguide.com/population-of-paris.html https://www.parisinsidersguide.com/population-of-paris.html London: https://www.washingtonpost.com/news/worldviews/wp/2015/01/07/chart-londons-population-is-finally-about-to-return-to-its-1939-peak/ https://www.washingtonpost.com/news/worldviews/wp/2015/01/07... City of London: https://upload.wikimedia.org/wikipedia/commons/f/f6/Population_of_the_City_of_London_over_time.png https://upload.wikimedia.org/wikipedia/commons/f/f6/Populati... Tokyo is probably approaching peak: https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropertycentral.com%2Fwp-content%2Fuploads%2F2017%2F04%2FTokyo-Population-Chart-2010-2040.jpg&f=1 https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropert... Tokyo Core: http://www.newgeography.com/files/cox-tokyo-1.png http://www.newgeography.com/files/cox-tokyo-1.png
    - timr 8y ago
      Pedantry. If you honestly believe that Manhattan "peaked like a star quarterback" in 1910, I don't know what to say to you.
krn 8y ago
> Our two junior team members were enthusiastic > The three "old guys" didn't get it I think that's the main reason why they passed on Airbnb. The VCs themselves were too far away from the initial target market, and could neither relate with the "airbed and breakfast" user base, nor see how it could scale.
- jamestimmins 8y ago
  I imagine that if the same group debated the appeal of staying in hostels the outcome would have been similar.
- jonny_eh 8y ago
  Those two lines should cause a VC to immediately invest. Unfortunately, the opposite is the result.
deleted_account 8y ago
This pg quote has an r/LateStageCapitalism vibe to me: "They just arrived back from NYC, and when I asked them what was the most significant thing they'd observed, it was how many of their users actually needed to do these rentals to pay their rents."
- quadrige 8y ago
  Yes, and then a casual "there's a lot to like"...
- gcb0 8y ago
  For me it was how PG pushed the investor with the "they WILL get hotels" line. Expected more data and less gut feeling from Ycombinator.
  - jonny_eh 8y ago
    I dunno, PG's always had a great gut instinct about startups. That's why people love his posts.
jl2718 8y ago
This is just from memory. Correct me if I’m wrong. 2005: mobileride.com in Boston, phone-based ridesharing with voluntary cash exchange, shut down in 2006 with regulatory warnings 2006: zipcar hires some of mobileride team and enters rideshare business with shared zipcar rentals among BU students 2007: zimride starts with pre-arranged rideshare at Cornell, works with campus transportation directly to keep it legal. 2007: google rides opens as a platform for several tiers of ride hailing services, dominates the market and then shuts down in 2010 2010: Uber starts in NYC as high-end livery, not sure if they got the license or not, but tweaks business model to have many on-demand part-time drivers instead of full-time, but pays much better portion of fare. 2012: Sidecar in San Francisco allows anybody to accept rides and mobile payments but calls them gratuities instead of fare. Regulators show their will to inaction. Uber responds with massive push into taxi services, completely flouts regulation, and Zimride births Lyft to do the same. CALPERS is rescued from bankruptcy by investment in AirBnB and Uber.
- mkolodny 8y ago
  2000: Craigslist creates a "rideshare" platform https://web.archive.org/web/20000620091420/http://www.craigslist.org https://web.archive.org/web/20000620091420/http://www.craigs...
- dopamean 8y ago
  > CALPERS is rescued from bankruptcy by investment in AirBnB and Uber I would like to know more.
  - jl2718 8y ago
    Yeah, this is one of the real secrets of Silicon Valley. The biggest unicorns of the post-Facebook era were all created because of regulatory capture, not despite it. Here are the pre-2010 VC investments: https://www.calpers.ca.gov/page/investments/asset-classes/private-equity/pep-fund-performance/fund&id=4 https://www.calpers.ca.gov/page/investments/asset-classes/pr... And then in 2012, they moved into managed VC/PE through Blackrock, so it's a lot harder to trace, but... https://www.reuters.com/article/us-tech-uber-idUSKBN0EH21I20140606 https://www.reuters.com/article/us-tech-uber-idUSKBN0EH21I20... CALPERS didn't 'start' Uber/AirBnB, but they did make huge bets on them at right about the time when regulation was threatening their existence, and then magically they became legal. Not to mention all of Elon Musk's companies. He may not have needed the money, but easy passage through regulatory barriers definitely secured success.
runT1ME 8y ago
I would be very curious to see what barriers to entry AirBnB has developed vs. say, Uber. While both are marketplaces, Uber benefits tremendously from understanding traffic patterns, from seeing how people ride, from being able to give drivers the option of traveling certain directions, etc. All of that data is worth billions of dollars and not easily discovered, and technically quite challenging to gather and exploit. From what I can tell, AirBnB has a brand and a web application. Technically, I can't imagine the latter is more complicated than the average e-commerce site delivered at scale. I am having trouble understanding how big data can create an advantage (maybe to help owners price their rentals?). If a competitor pops up, there's no reason owners can't list on multiple sites without facing any penalties. AirBnB is not a company I'd invest in for the long term, while I would invest in Uber/Lyft. So, what am I missing?
- konschubert 8y ago
  Airbnb has a global network effect: If I booked my last two holidays on Airbnb, I am more inclined to do it also for the next one out of convenience. I'm already verified anf signed up and I know the interface etc... This requires a global network of hosts. Any competitor has to build a global network of comparable density to be compatible. On the other hand, Uber's network effect and synergies are mostly localized to cities. If I move to a new city and there is a competitor with lower prices, chances are I'll install their app eventually, even if it takes me a few weeks.
  - ahjushi 8y ago
    In addition to that, AirBnB takes a lot of the headache out for hosts in regards to local laws. In San Francisco for example, AirBnB collects and remits the local hotel tax on behalf of hosts, making that a non-issue for hosts. But when I used AirBnB in Italy I had to meet the host and they needed to charge me the tax, print a receipt, and had me sign something...all which I imagine was because at the time or in that locale AirBnB had not set up that convenience for hosts yet. And in SF, they only do this if AirBnB is the sole platform you use--if you use multiple then you'd have to collect/remit taxes yourself I believe. Probably not an issue for someone who rents out multiple units and treats AirBnB as their main job, but for the little guy that just wants to make a few extra bucks from an extra couch, room, etc. here and there AirBnB navigating the tax stuff is huge.
mrnobody_67 8y ago
Why didn't VRBO/HomeAway become AirBnB? It seems there was already a marketplace for short term vacation rentals....
- jedberg 8y ago
  Because they didn't do rooms in an already occupied house (and still don't). AirBnb started with renting couches or spare beds. They only moved into whole houses later, after they built up a reputation, and more importantly, built up their system of tracking the reputation of the renters.
  - mrnobody_67 8y ago
    What % of AirBnB business is single room in otherwise occupied house?
- pram 8y ago
  I think VRBO/HA actually has higher revenue IIRC
- tedmiston 8y ago
  Personally I only even think about VRBO for group trips in vacation rental type areas. I think I've booked 10x the trips with Airbnb, more than half of them for just me solo. Not sure how VRBO's mobile presence compared to Airbnb when Airbnb started gaining traction but that could be a factor?
- davinic 8y ago
  Because the tech was terrible and they did nothing to facilitate the transaction. There was no trust model -- hosts posted their own reviews, usually from paper guestbooks and guests had to mail checks to untrusted hosts weeks in advance. There was no escrow or arbiter upon arrival. Most picture quality was terrible. Because of the transaction difficulty, the concept couldn't scale down to smaller rentals (rooms, etc) for smaller periods of time. The only thing technical were that the sites usually had a calendar, but it was impossible to tell when and if it had actually been updated, so you had to be in contact with a dozen property owners to find a place with availability. These services showed the potential but were little more than a collection of classified ads.
foldr 8y ago
>So I think it can scale all the way to the bed and breakfast market > But I am not sure they can take on the hotel market Not an inaccurate assessment.
- gumby 8y ago
  > > But I am not sure they can take on the hotel market > Not an inaccurate assessment. Not sure. I have stayed in AirBnBs on vacation in other countries and I have stayed in them many times on business, first during a conference when all the rooms were booked ( -- our admin suggested it!) and then after that was so great (we had a whole house for a half dozen team members) we almost always use it. Most people prefer it, though some prefer to have their own place rather than share, even though everyone has their own bedroom. We give everyone a choice and most people choose an airbnb over a hotel. I assume "take on" doesn't mean "replace" but "become a significant player". It doesn't work in Manhattan nor, somewhat surprisingly does it in Omaha, but in most major conurbs its fine.
- tedmiston 8y ago
  For my own usage, they've taken the hotel market for personal travel. I don't think their hold is as strong in business travel yet.
  - gcb0 8y ago
    until you find yourself in customer care hell. I've rented a fake room (lied about size, noise, etc. and had three honest-looking reviews) and I was talking to a rep in the US, in english. Meanwhile the host was talking to a service rep in the country i was in, in french. In the end, the US rep promised me a credit and help. But then the France rep flagged my account. Now i could not book anything until i reactivated a credit card. Even the US rep now couldn't help me until I did that. It was a Saturday. I needed until Tuesday to validate any credit card via their statement methods. Twelve international calls later, and there was nothing they could do. at all. And I was a several-year long customer with 5star reviews all around. Ended up on the street, with three bags, hunting last minute hotels and paying counter price. Never used airbnb ever again. The savings is not worth the risk.
awakenrz 8y ago
Note there is a survivor bias here. Might be even more interesting to see PG's email exchanges with other VCs on some then successful but later failed startups.
iMuzz 8y ago
Did PG make an angel investment in Airbnb?

161 points by tinderliker 8y ago

dsl 8y ago

Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by cities. None of the players were able to grow large enough to have a say in the reforming of the laws that regulate them (SF learned its lesson from Uber and moved quickly, limiting their participation to asking for proposals). This is framed to present a VC as "missing out" in the financial sense. Ultimately a VC is liable to its capital partners in far more ways. If Airbnb had all of its assets seized by the federal government as an illegal enterprise (just as an example), we would be applauding their foresight and brilliance in avoiding this otherwise lucrative opportunity.

zimablue 8y ago
I think there's some truth that these guys dodge/ignore/lobby down regulations, but there's this narrative now that that's all they do. Being able to flag a taxi through an app is amazing, so is being able to rent a flat from a stranger with confidence that it will be give and work out. Regulation arbitrage is only a fraction of their value, and the regulations are often just rent seeking by those with power. Insane taxi Union/medallions, ban on flat renting to preserve property values etc.
- justtopost 8y ago
  Its not all they do. But it is the bedrock on which their whole profit model is based. So critisism seems apt. I find corprate overrule of law for 'benefit' of the consumer facinating, but dont have a dog in the fight. But I can't help feeling its like shooting the moon in a card game. It only works when unexpected, and already on a roll.
- lexs 8y ago
  At least in Europe there were apps to call a taxi and sites to book vacation homes before either Uber or AirBnB came over. But sure ruthlessly minimising personnel responsibilities and costs can be another "value".
  - vasilipupkin 8y ago
    Not like Airbnb. We had sites like VRBO before Airbnb. The big difference was that you deal with Airbnb, you aren’t signing contract with the host.
  - the_clarence 8y ago
    Come on. These apps were not reliable AT ALL. There is no comparison here.
  - meowface 8y ago
    As someone currently living in a German area with almost no Uber service, mytaxi (the equivalent Uber-like taxi app) is inferior to and much less reliable and functional than Uber and Lyft.
    - timmy-turner 8y ago
      I tried mytaxi during a vacation in Italy. Went through the whole onboarding, including checking the trips expected fare and entering CC details only to get told after pressing the 'call taxi now' button by a popup that the service is not available in this area. WTF? Also the whole app looked very cheap and felt fragile. In my hometown I'm just calling taxis off the street or via plain old phone.
  - presscast 8y ago
    >At least in Europe there were apps to call a taxi Where? In France the taxis never accepted debit cards (= tax evasion), and generally provided piss-poor service. They've stepped their game up massively since Uber arrived. In the UK I never saw a taxi app that wasn't an utter heap of garbage. Sweeping generalizations about EU countries are almost always wrong or meaningless.
cft 8y ago
Also you might want to notice that the last email from Fred is at 4:26am. In France that would be illegal in itself, sending a work email outside of the working hours. /s
- bpizzi 8y ago
  What do you mean exactly by illegal? Nobody's going to jail for sending an email outside of working hours, even in France. Edit: actually, for anyone wondering, the law is that a >50 employee's company should document it's own recommendation about how not to harass your colleagues during out-of-work hours. When fully applied, the worst case scenario would be that, as an employee, you can officially (ie. under a legal base, not legal right, but IANAL) ask your employer to have workaholic colleagues to step down on their out-of-hours emails. Nothing more, nothing less, very very far from "in France it's illegal to send a work email outside of the working hours".
  - deleted 8y ago
    [deleted]
- sctb 8y ago
  > Avoid unrelated controversies and generic tangents. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
vasilipupkin 8y ago
Seems to me people often confuse something being illegal with something being an actual crime. They had the insight that these minor regulations can be easily broken to deliver value with very few repercussions
- collyw 8y ago
  Could you explain the difference to me, as I am clearly in the minority in thinking that the two are synonymous.
  - vasilipupkin 8y ago
    sure. My town has a paid beach with lifeguard and a free beach without. It is illegal to swim on the free beach. It is not a crime. Worst case that happens is they kick you off the beach.
    - otterley 8y ago
      Lawyer here! Crime is the general term, and describes any offense against the people or the sovereign. Offenses are divided into severities, ranging from felony (worst) to infraction (least), with penalties to suit. In this case, swimming on the free beach is probably an infraction, much like failing to use your turn signal. The worst penalty you’ll face in the usual case is a fine. But if you swim on the free beach, get yourself in trouble, and a rescue party has to come save you, the fact that it’s a “crime” now gives the state the ability to recover their costs from you afterwards.
    - collyw 8y ago
      Not sure that actually makes things any clearer to me. Is it actually illegal, or is it just "not allowed"? (Is the free beach public?) What would make it "a crime" as opposed to just being "illegal"?
      - vasilipupkin 8y ago
        Illegal means against the law or against the rules. A crime is a function of how severe your illegal action is. Put it another way, people think if something is illegal, punishment for that must be a felony or something. But often times, it’s just an infraction so punishment is at most a fine or a minor action like getting kicked off the free beach
throwawaymath 8y ago
Great observation. > The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by cities. I live in NYC, and I’m frequently in Westchester (the county immediately north of NYC, for those not familiar with New York). There’s been a large influx of Lime bikes in the past several months. My opinion on Lime - the bike/scooter company - has quickly evolved from idle curiosity, to weak dislike, to outright disdain. That evolution started happening when I saw Lime bikes being parked in arbitrary places that blocked pedestrian foot traffic, but I think the straw that broke the camel’s back was when someone parked a Lime bike directly in the spot I usually place my garbage. Sometimes the hustle of skirting regulation seems to be a net positive. Company culture notwithstanding, I’m happy overall that Uber exists as a concept. I don’t have a savvy opinion about their future, but I enjoy Uber rides significantly more than yellow cabs. Likewise I’ve stayed in Airbnbs before and enjoyed the experience, though I wouldn’t say it’s changed my day to day life as much. But other times it seems like companies are being actively negligent in their awareness of the legislations they’re flippantly ignoring and the consequences of doing so. I don’t have a lot of sympathy for a system being disrupted which depends on the artificial scarcity of taxi medallions. On the other hand I find it very frustrating when my sidewalk or park is “disrupted” by a random bright green bike that yells at you if you try to move it without paying. I wish there were a way to easily categorize the behavior of companies - between those whose cavalier approach to disruption mostly impacts existing incumbents, and those whose approach is actually a pain to end users. Sometimes the laws are legitimately outdated or very inefficient, and disregarding them vastly improves the user experience. But other times - like with Lime - it feels as though companies are pointing to those examples so they can get away with a “product” that automatically opts you into a “new normal” just because a subset of people use it.
- zaphod12 8y ago
  I agree with almost everything you've said, but have to mention that Lime bike was entirely endorsed by White Plains - https://www.lohud.com/story/news/local/westchester/white-plains/2018/06/04/bike-sharing-pedals-into-white-plains/668856002/ https://www.lohud.com/story/news/local/westchester/white-pla... Not sure if they're winding up in other towns nearby (inevitable, I guess), but in this case the city was totally on board with them showing up!
spectrum1234 8y ago
Its not just regulatory efficiencies. Its more market efficient than using craigslist as many on the sell side previously were.
mbesto 8y ago
> quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. It also makes sense to do this in areas where no one is watching. For example Monkey Parking got shut down almost immediately during the same time SF was probably at it's height of negotiating what it was going to do with Airbnb rentals in SF. https://www.wired.com/2014/06/app-that-lets-users-sell-public-parking-spots-is-ordered-to-shut-down/ https://www.wired.com/2014/06/app-that-lets-users-sell-publi... Also, Airbnb, like many other companies who tout "growth hacking", illegally (in the eyes of the craigslist ToS) used a technique to basically leverage Craigslist audience to grow their own. Mind you, this technique is also being encouraged by a partner at one of the most prominent VC firms in the valley. https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/ https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcra... Point is - it's very easy to blindly select what you feel is "right" vs "wrong" or "bad" vs "good"[0][1] when your money is on the line. [0] - http://www.paulgraham.com/good.html http://www.paulgraham.com/good.html [1] - http://www.paulgraham.com/ronco.html http://www.paulgraham.com/ronco.html
Reedx 8y ago
> Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. How quickly we forget... There were huge inefficiencies and Uber was an order of magnitude better than what we had. Getting a taxi was difficult and unreliable. Ask anyone who used to use them in SF. Uber was like magic in comparison.
- emodendroket 8y ago
  Part of what I wonder is how much worse the experience would really be if you were using an app to hail a yellow cab.
  - slededit 8y ago
    Just like when you'd call in dispatch they might come or they might not. Who knows.
    - emodendroket 8y ago
      No reason you couldn't copy the whole accept, show map, etc. feature set
subroutine 8y ago
I think this is a great observation, and well put. FWIW, had you made the same comment a year ago, I'd have only seen Uber, not Airbnb, matching precisely the model you describe. The lore was (and perhaps still is) that Airbnb has a platform substantially different & far better than Uber (e.g. http://archive.is/kE5hq http://archive.is/kE5hq). MSM painted Uber as this ultra-aggressive startup in terms of both company culture and taking on regulators; meanwhile Airbnb was just this wholesome startup simply trying to help student's travel on a shoestring budget and helping people pay rent by letting someone sleep on their couch. Anyway, that was my interpretation back then; but clearly I'm no Paul Graham. It's clear from his blog post that Paul never saw it this way. To him, Airbnb was always destined to be a platform that disrupted the hotel market. Of course if you're going to 'disrupt' the hotel market in any medium-to-large city, that means thousands of residential homes will need to be converted into short-term vacation rentals. It was either a carefully planned timing, or merely circumstance, but Airbnb has scaled at exactly the right pace to (like you mention) "become large enough to get a seat at the table when the regulations are reworked". And unlike Uber they have powerful/wealthy friends who piggyback on the Airbnb platform. It seems like almost overnight Airbnb went from an airbed in some student's loft to Corporation-Owned-Whole-Home-No-Host-punch-in-a-pin-code-to-open-the-front-door-fully-automated "STRs". Living in San Diego I couldn't hate it more. After city council passed a regulation to limit Airbnb's to primary residences (which I believe most SD residence were happy about), Airbnb & HomeAway, and other parties formed a coalition, and hired a bunch of people to gather signatures to skirt our city council's ruling and put this action on a ballet as a referendum (http://archive.is/Yf6GP http://archive.is/Yf6GP). In theory I'm not opposed to voter referendum; but here is a case where Airbnb is clearly undermining the ability of our elected official's to govern our city. The voted regulations will now be put on hold until 2020; and there will be nothing but carpet-bombing adverts for the next two years brainwashing san diegans. There's no hope.
waylandsmithers 8y ago
I see the regulatory inefficiencies as being totally different though. It didn't make that much sense apart from protecting holders of medallions for it to be illegal to pay someone for a car ride, but I would actually like there to be laws protecting guests and innkeepers, and preventing the apartment across the hall from turning into a hotel.

aogl 8y ago

While this is an interesting post to read, it is also about 7 years old. It's quite cool how the transcript goes to say "There's no reason this couldn't be as big as Ebay. And this team is the right one to do it." Turns out that literally was the case! Good call Paul!

raverbashing 8y ago

I wonder what was the redacted phrase that was strategic to what AirBNB was doing (I'm sure we might know by now, but not know it was being discusses)

hobofan 8y ago
Maybe the "do things that don't scale thing" where Airbnb came to the apartments and took photos of them themselves, to make the offering more interesting for customers?
kitcar 8y ago
Maybe related to their craiglist activities? (https://growthhackers.com/growth-studies/airbnb https://growthhackers.com/growth-studies/airbnb)

IndrekR 8y ago

It is interesting to see how PG is selling this to Fred. This is exactly the kind of people you want to work with in a startup. People who believe in you and are not afraid to show it.

jpeg_hero 8y ago
Yeah, I don’t know much about PG’s communication style, but in intra-VC communication, this is 100 max over the top support, hair-on-fire. Good for PG, and his words were prescient in ‘09, prescient in ‘11 and still prescient in ‘18. Not many times my you can say that. Ps funny on the eBay name drop. The original marketplace model, and still doing well, but dot think vc’s reference it as often anymore.
foobaw 8y ago
Love his passion. I know it's possible PG himself missed out on a startups by convincing people not to invest in a simialr way, but the fact that he's not afraid to express his opinion is just as useful.

abcdcba 8y ago

I wish AirBnB took more responsibility for the damage they are doing to the NYC housing market

MrEfficiency 8y ago
What is your proposal?
- pjc50 8y ago
  In Edinburgh there's a similar discussion, and the proposals I think have value: 1) Tourist tax on all hotel rooms, including AirBnB. Initially a fairly small amount. https://www.theguardian.com/uk-news/2018/jun/27/edinburgh-legal-powers-tourist-tax-hotels https://www.theguardian.com/uk-news/2018/jun/27/edinburgh-le... 2) For whole-unit owner-not-present lets, require planning permission for change of use. You wouldn't be allowed to run a woodworking business in your apartment that inflicted noise on your neighbours, so the same should apply to turning it into a hotel. 3) Keep upgrading the transport infrastructure. The newly rebuilt Border railway is a victim of its own instant success - someone should start the process of widening it to two tracks immediately so it'll be ready in 20 years. And so on. (Before someone says "build houses", there is a lot of family home construction going on in the outskirts. It's the historic centre that's under consideration, and "demolish the existing 4-6 story historic dwellings and replace them with much taller residential buildings" is an absolute non-starter)
  - jermaustin1 8y ago
    What annoys me about tourists in Edinburgh, is that everyone wants to pile into Old Town, even though it is so small. No one contemplates Leith or Newington. Neither of those places are beyond a short walk (1-2 miles) to city center, also there are more options for food and drink (especially on Leith Walk).
    - briandear 8y ago
      2 miles isn’t a “short walk” in many parts of the year in Scotland.

hedgew 8y ago

I'd love to see more of these genuine, high-level business conversations. It can be difficult to learn and understand what really goes on "at the top", because probably every top exec is under some pressure to appear superhuman.

alexpotato 8y ago
Most of the time I've had access to these conversations it seems like 10-20% of the time there is some really insightful and/or groundbreaking discussion going on. The rest of the time, it's something like this: A: I've always found that business is about increasing revenue and decreasing costs B: I've also always thought that way A: Great! I'm glad we're on the same page

dustingetz 8y ago

This is bullshit. I fund my startup by consulting 1-2 months per year at 40k/month. Zero people think it is impressive. But $25k of Obama cereal makes a better story.

krn 8y ago
2008 Democratic National Convention was 10 years ago. At the time, startups, as we know them today, were a rarity. Funding yourself to start one, even more so. Hacker News itself was only 1 year-old.
- amitutk 8y ago
  Startups were a rarity in 2008?
  - krn 8y ago
    Relatively, yes. Sure, startups have existed for decades, but their popularity now is at a completely different level. Y Combinator, for instance, had 43 startups funded in 2008, and 274 in 2018. I am not even talking about the growth of the entire startup ecosystem, including angel investors and VCs. In 2008, startups were mostly only a thing in the US. Now there are tens of startup hubs across the entire world.
    - lmeyerov 8y ago
      That's rewriting history, including a lot of hard work by a lot of people. YC disrupted the model, it didn't start it. PG repeatedly describes YC as a startup in changing how this works, so mistaking their growth with the industry misses what's happening. The dotcom era had incubators through models like "I have access to capital but no one good idea; let me start a bunch and pick which to go". VCs regularly host EIRs (entrepreneur-in-residence). More dominant, many universities, corporates, and in gov, SBIR. Not sure how the numbers of SBIR compare to YC, but given SBIR is based on a % of each US dept's budget... ;-) The "startup accelerator" changed the model: more $ to more varied entrepreneurs, structured program with educational eco-system, made VC capital more attractive, etc.

MrEfficiency 8y ago

Something I often notice when people complain about AirBNB being a problem in their city- Their city has 'peaked' like a star Quarterback in High school. In my city which is experiencing growth, I find my AirBnB guests are often business travelers who are infulencers in their respected communities. There are some exceptions like college kids on summer vacation trying to hook up away from their parents house- but mostly business people. I see complaints from Europeans about Tourism, but that should be a reflection on the achievements of their ancestors rather than the achievements of the current and recent generations.

timr 8y ago
Right. New York, London, Paris and Tokyo have all "peaked".
- maxwell 8y ago
  Manhattan, London, and Paris all peaked in the early- to mid-20th century. Manhattan: https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhattans-density https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhat... Paris: https://www.parisinsidersguide.com/population-of-paris.html https://www.parisinsidersguide.com/population-of-paris.html London: https://www.washingtonpost.com/news/worldviews/wp/2015/01/07/chart-londons-population-is-finally-about-to-return-to-its-1939-peak/ https://www.washingtonpost.com/news/worldviews/wp/2015/01/07... City of London: https://upload.wikimedia.org/wikipedia/commons/f/f6/Population_of_the_City_of_London_over_time.png https://upload.wikimedia.org/wikipedia/commons/f/f6/Populati... Tokyo is probably approaching peak: https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropertycentral.com%2Fwp-content%2Fuploads%2F2017%2F04%2FTokyo-Population-Chart-2010-2040.jpg&f=1 https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropert... Tokyo Core: http://www.newgeography.com/files/cox-tokyo-1.png http://www.newgeography.com/files/cox-tokyo-1.png
  - timr 8y ago
    Pedantry. If you honestly believe that Manhattan "peaked like a star quarterback" in 1910, I don't know what to say to you.

krn 8y ago

> Our two junior team members were enthusiastic > The three "old guys" didn't get it I think that's the main reason why they passed on Airbnb. The VCs themselves were too far away from the initial target market, and could neither relate with the "airbed and breakfast" user base, nor see how it could scale.

jamestimmins 8y ago
I imagine that if the same group debated the appeal of staying in hostels the outcome would have been similar.
jonny_eh 8y ago
Those two lines should cause a VC to immediately invest. Unfortunately, the opposite is the result.

deleted_account 8y ago

This pg quote has an r/LateStageCapitalism vibe to me: "They just arrived back from NYC, and when I asked them what was the most significant thing they'd observed, it was how many of their users actually needed to do these rentals to pay their rents."

quadrige 8y ago
Yes, and then a casual "there's a lot to like"...
gcb0 8y ago
For me it was how PG pushed the investor with the "they WILL get hotels" line. Expected more data and less gut feeling from Ycombinator.
- jonny_eh 8y ago
  I dunno, PG's always had a great gut instinct about startups. That's why people love his posts.

jl2718 8y ago

This is just from memory. Correct me if I’m wrong. 2005: mobileride.com in Boston, phone-based ridesharing with voluntary cash exchange, shut down in 2006 with regulatory warnings 2006: zipcar hires some of mobileride team and enters rideshare business with shared zipcar rentals among BU students 2007: zimride starts with pre-arranged rideshare at Cornell, works with campus transportation directly to keep it legal. 2007: google rides opens as a platform for several tiers of ride hailing services, dominates the market and then shuts down in 2010 2010: Uber starts in NYC as high-end livery, not sure if they got the license or not, but tweaks business model to have many on-demand part-time drivers instead of full-time, but pays much better portion of fare. 2012: Sidecar in San Francisco allows anybody to accept rides and mobile payments but calls them gratuities instead of fare. Regulators show their will to inaction. Uber responds with massive push into taxi services, completely flouts regulation, and Zimride births Lyft to do the same. CALPERS is rescued from bankruptcy by investment in AirBnB and Uber.

mkolodny 8y ago
2000: Craigslist creates a "rideshare" platform https://web.archive.org/web/20000620091420/http://www.craigslist.org https://web.archive.org/web/20000620091420/http://www.craigs...
dopamean 8y ago
> CALPERS is rescued from bankruptcy by investment in AirBnB and Uber I would like to know more.
- jl2718 8y ago
  Yeah, this is one of the real secrets of Silicon Valley. The biggest unicorns of the post-Facebook era were all created because of regulatory capture, not despite it. Here are the pre-2010 VC investments: https://www.calpers.ca.gov/page/investments/asset-classes/private-equity/pep-fund-performance/fund&id=4 https://www.calpers.ca.gov/page/investments/asset-classes/pr... And then in 2012, they moved into managed VC/PE through Blackrock, so it's a lot harder to trace, but... https://www.reuters.com/article/us-tech-uber-idUSKBN0EH21I20140606 https://www.reuters.com/article/us-tech-uber-idUSKBN0EH21I20... CALPERS didn't 'start' Uber/AirBnB, but they did make huge bets on them at right about the time when regulation was threatening their existence, and then magically they became legal. Not to mention all of Elon Musk's companies. He may not have needed the money, but easy passage through regulatory barriers definitely secured success.

runT1ME 8y ago

I would be very curious to see what barriers to entry AirBnB has developed vs. say, Uber. While both are marketplaces, Uber benefits tremendously from understanding traffic patterns, from seeing how people ride, from being able to give drivers the option of traveling certain directions, etc. All of that data is worth billions of dollars and not easily discovered, and technically quite challenging to gather and exploit. From what I can tell, AirBnB has a brand and a web application. Technically, I can't imagine the latter is more complicated than the average e-commerce site delivered at scale. I am having trouble understanding how big data can create an advantage (maybe to help owners price their rentals?). If a competitor pops up, there's no reason owners can't list on multiple sites without facing any penalties. AirBnB is not a company I'd invest in for the long term, while I would invest in Uber/Lyft. So, what am I missing?

konschubert 8y ago
Airbnb has a global network effect: If I booked my last two holidays on Airbnb, I am more inclined to do it also for the next one out of convenience. I'm already verified anf signed up and I know the interface etc... This requires a global network of hosts. Any competitor has to build a global network of comparable density to be compatible. On the other hand, Uber's network effect and synergies are mostly localized to cities. If I move to a new city and there is a competitor with lower prices, chances are I'll install their app eventually, even if it takes me a few weeks.
- ahjushi 8y ago
  In addition to that, AirBnB takes a lot of the headache out for hosts in regards to local laws. In San Francisco for example, AirBnB collects and remits the local hotel tax on behalf of hosts, making that a non-issue for hosts. But when I used AirBnB in Italy I had to meet the host and they needed to charge me the tax, print a receipt, and had me sign something...all which I imagine was because at the time or in that locale AirBnB had not set up that convenience for hosts yet. And in SF, they only do this if AirBnB is the sole platform you use--if you use multiple then you'd have to collect/remit taxes yourself I believe. Probably not an issue for someone who rents out multiple units and treats AirBnB as their main job, but for the little guy that just wants to make a few extra bucks from an extra couch, room, etc. here and there AirBnB navigating the tax stuff is huge.

mrnobody_67 8y ago

Why didn't VRBO/HomeAway become AirBnB? It seems there was already a marketplace for short term vacation rentals....

jedberg 8y ago
Because they didn't do rooms in an already occupied house (and still don't). AirBnb started with renting couches or spare beds. They only moved into whole houses later, after they built up a reputation, and more importantly, built up their system of tracking the reputation of the renters.
- mrnobody_67 8y ago
  What % of AirBnB business is single room in otherwise occupied house?
pram 8y ago
I think VRBO/HA actually has higher revenue IIRC
tedmiston 8y ago
Personally I only even think about VRBO for group trips in vacation rental type areas. I think I've booked 10x the trips with Airbnb, more than half of them for just me solo. Not sure how VRBO's mobile presence compared to Airbnb when Airbnb started gaining traction but that could be a factor?
davinic 8y ago
Because the tech was terrible and they did nothing to facilitate the transaction. There was no trust model -- hosts posted their own reviews, usually from paper guestbooks and guests had to mail checks to untrusted hosts weeks in advance. There was no escrow or arbiter upon arrival. Most picture quality was terrible. Because of the transaction difficulty, the concept couldn't scale down to smaller rentals (rooms, etc) for smaller periods of time. The only thing technical were that the sites usually had a calendar, but it was impossible to tell when and if it had actually been updated, so you had to be in contact with a dozen property owners to find a place with availability. These services showed the potential but were little more than a collection of classified ads.

foldr 8y ago

>So I think it can scale all the way to the bed and breakfast market > But I am not sure they can take on the hotel market Not an inaccurate assessment.

gumby 8y ago
> > But I am not sure they can take on the hotel market > Not an inaccurate assessment. Not sure. I have stayed in AirBnBs on vacation in other countries and I have stayed in them many times on business, first during a conference when all the rooms were booked ( -- our admin suggested it!) and then after that was so great (we had a whole house for a half dozen team members) we almost always use it. Most people prefer it, though some prefer to have their own place rather than share, even though everyone has their own bedroom. We give everyone a choice and most people choose an airbnb over a hotel. I assume "take on" doesn't mean "replace" but "become a significant player". It doesn't work in Manhattan nor, somewhat surprisingly does it in Omaha, but in most major conurbs its fine.
tedmiston 8y ago
For my own usage, they've taken the hotel market for personal travel. I don't think their hold is as strong in business travel yet.
- gcb0 8y ago
  until you find yourself in customer care hell. I've rented a fake room (lied about size, noise, etc. and had three honest-looking reviews) and I was talking to a rep in the US, in english. Meanwhile the host was talking to a service rep in the country i was in, in french. In the end, the US rep promised me a credit and help. But then the France rep flagged my account. Now i could not book anything until i reactivated a credit card. Even the US rep now couldn't help me until I did that. It was a Saturday. I needed until Tuesday to validate any credit card via their statement methods. Twelve international calls later, and there was nothing they could do. at all. And I was a several-year long customer with 5star reviews all around. Ended up on the street, with three bags, hunting last minute hotels and paying counter price. Never used airbnb ever again. The savings is not worth the risk.

awakenrz 8y ago

Note there is a survivor bias here. Might be even more interesting to see PG's email exchanges with other VCs on some then successful but later failed startups.

iMuzz 8y ago

Did PG make an angel investment in Airbnb?