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They should not be tanking. Airbnb is in a highly profitable business with very high operating margin. For reference, they take 20 to 30% commission on each bo

They should not be tanking. Airbnb is in a highly profitable business with very high operating margin. For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.

shartshooter 7y ago
A company growing as aggressively as AirBnB wasn't taking a 20-30% profit and paying out shareholders. They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc. When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs. Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this. AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time. Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.
- user5994461 7y ago
  What I am trying to say is that AirBnb is a solid business that is not at any risk of disappearing. I am moderately sure that they could have turned profitable any minute if they wanted to. There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics. Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger. They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.
- imperialdrive 7y ago
  There is NO WAY they have 15K employees! edit: Wow, ok, so the number appears to be 12,736 - incredible. Well, I'm speechless. Good for them for passing money down to staff, but my goodness, how does it make financial sense, no clue.
  - CydeWeys 7y ago
    You're right, the correct number is around 13k.
CydeWeys 7y ago
Why shouldn't they be tanking? Everything in the travel sector, including hotels, is tanking right now. They're not highly profitable; indeed they've never turned a profit. > whereas the fixed costs to run a website are ridiculously low This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs. It sounds like you're arguing from hypotheticals, none of which actually apply to Airbnb as it exists in the real world.
- user5994461 7y ago
  Not turning a profit is a meaningless metrics for a silicon valley company. They could burn endless amounts of (VC) cash with zero relations to how well the business is doing or how solid it is. I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.

shartshooter 7y ago

A company growing as aggressively as AirBnB wasn't taking a 20-30% profit and paying out shareholders. They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc. When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs. Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this. AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time. Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.

user5994461 7y ago
What I am trying to say is that AirBnb is a solid business that is not at any risk of disappearing. I am moderately sure that they could have turned profitable any minute if they wanted to. There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics. Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger. They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.
imperialdrive 7y ago
There is NO WAY they have 15K employees! edit: Wow, ok, so the number appears to be 12,736 - incredible. Well, I'm speechless. Good for them for passing money down to staff, but my goodness, how does it make financial sense, no clue.
- CydeWeys 7y ago
  You're right, the correct number is around 13k.

CydeWeys 7y ago

Why shouldn't they be tanking? Everything in the travel sector, including hotels, is tanking right now. They're not highly profitable; indeed they've never turned a profit. > whereas the fixed costs to run a website are ridiculously low This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs. It sounds like you're arguing from hypotheticals, none of which actually apply to Airbnb as it exists in the real world.

user5994461 7y ago
Not turning a profit is a meaningless metrics for a silicon valley company. They could burn endless amounts of (VC) cash with zero relations to how well the business is doing or how solid it is. I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.