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I'm realizing I'm confused about what value airbnb is offering. If they don't vet people on either end, are they really just a craigslist with payment processi

I'm realizing I'm confused about what value airbnb is offering. If they don't vet people on either end, are they really just a craigslist with payment processing?

Cushman 15y ago
The claim is they're a craigslist where you don't get to find out who the other person is until after the payment processing, which would seem to most people to be negative value. Edit: Except for to Airbnb.
- tokenadult 15y ago
  The claim is they're a craigslist where you don't get to find out who the other person is until after the payment processing, which would seem to most people to be negative value. Exactly this. The first blogger to go public with a report of a place being trashed by an Airbnb guest pointed out that with Craigslist, it is EASIER to contact the guest individually beforehand. Airbnb subtracts value from the typical transaction that would be arranged on Craigslist. That's because Craigslist makes its money from help-wanted ads and a few other ad categories, and doesn't need to monetize transactions for short-term stays in people's homes to keep right on making money. Airbnb claims to be a force for disintermediating the short-term rental industry, but it desires to be market-leading intermediary. It isn't offering a market-leading level of customer service after a problem happens. Nor is Airbnb doing as much to prevent problems as other startup companies in the same space--several of those companies take much greater care to verify guest identities before setting up the transaction. What Airbnb appears to want, compared to other market participants, is to be paid as an intermediary without providing any particular value as an intermediary. That's nice work if you can get it, but that's a business model that is ripe for disruption and not a business model that I would invest in. After edit: I hope everyone is reading the newly submitted article here for the details of what the Airbnb autoresponder message replying to the "urgent" help email address at Airbnb looked like not long ago. As the host thought after his place was trashed, "This freaked me out when I was frazzled. Hundreds of millions in venture financing, millions of dollars in fees, and no 24-hour help desk for emergencies? What am I paying them the exorbitant fees for?"
  - gojomo 15y ago
    Paradoxically, these incidents could solidify AirBnb's lead. If they've been clumsy in the past; they can't afford to anymore. They have the money to implement a leading solution, and they have to become synonymous with the best protections to get the most listings/searches. And, the components of a potential solution – costly one-time background checks, longer reputation histories, insurance pooling, deep experience with all abuse variants – all benefit from scale. Participant fear enhances the winner-take-all nature of the market... if the leader can best assuage that fear.
    - moonlighter 15y ago
      "costly one-time background checks" and "all benefit from scale" sound like an oxymoron to me. Implementing all the suggestions you listed would significantly cut into their revenues and make their business model obsolete.
      - gojomo 15y ago
        High-fixed setup costs, low marginal costs make a defensible moat. That's the classic case of a returns-to-scale monopoly. Background checks are a one-time cost per new participant. It may be costly (in money or time) to set up your initial account, and acquire a positive reputation via a long history of mutual reviews... but then you're part of a large pre-vetted community. Do you then want to go through that procedure many times with every new upstart? Or just once with the largest market?
rdouble 15y ago
If they don't vet people on either end, are they really just a craigslist with payment processing? That's mostly what it is, which isn't a bad idea. It also has a strong couch surfer element that CL doesn't.
officemonkey 15y ago
They also have a spiffy web-site and app that does a nice job showing off properties and assisting you in finding the properties you want. But yeah, they are essentially just middlemen. They benefit from keeping the buyer and seller apart until the deal is done and they get their cut.
- fossuser 15y ago
  And that exact benefit is the source of trouble.
  - ebaysucks 15y ago
    Indeed. The one way for them to lock in market leadership forever is to drop the fees and make their money on payment processing, insurance offers, user screening and safety deposits that renters may or may not decide to opt in for. This would allow users to contact and vet each other before agreeing on a sale while still having some profit streams. Basically AirBnb would become a specialized Craigslist on steroids, but it can only be done if the founders want to build a long term business netting them a few million each year rather than a VC darling to be flipped for a couple of billion dollars.
  - officemonkey 15y ago
    As Upton Sinclair once said: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
- dlss 15y ago
  And benefit from downplaying the risks of renting / putting a property up for rent
acgourley 15y ago
By building a market for buyers and sellers of otherwise unused low marginal cost assets they are clearly creating value. You can argue that by not vetting they invite random disaster which may be more expensive than the cost of the vetting itself. But you can't say they are not creating value overall.
- farrel 15y ago
  This is most certainly what they're not doing. Airbnb has promoted the idea that you can rent out your primary residence to make money. A quote from http://www.airbnb.com/rooms/new http://www.airbnb.com/rooms/new - "Airbnb lets you make money renting out your place. Your apartment will pay for itself!" That is the antithesis of a 'unused low marginal cost asset'.
sambe 15y ago
I never thought that they did anything other than hold money in escrow. I would think this is by far the biggest problem with classifieds (by frequency, at least). The social/reputation system adds some trust, but they never even remotely gave the me impression that they were vetting anything. And what is the problem with that? Some comments seem to be suggestion that - because that evil money thing is involved - they should be required to be in other businesses simultaneously. Perhaps there are things they can do better, but existing system was already quite clear to me (renter; would have to think seriously before hosting).

I'm realizing I'm confused about what value airbnb is offering. If they don't vet people on either end, are they really just a craigslist with payment processing?

Cushman 15y ago

The claim is they're a craigslist where you don't get to find out who the other person is until after the payment processing, which would seem to most people to be negative value. Edit: Except for to Airbnb.

tokenadult 15y ago
The claim is they're a craigslist where you don't get to find out who the other person is until after the payment processing, which would seem to most people to be negative value. Exactly this. The first blogger to go public with a report of a place being trashed by an Airbnb guest pointed out that with Craigslist, it is EASIER to contact the guest individually beforehand. Airbnb subtracts value from the typical transaction that would be arranged on Craigslist. That's because Craigslist makes its money from help-wanted ads and a few other ad categories, and doesn't need to monetize transactions for short-term stays in people's homes to keep right on making money. Airbnb claims to be a force for disintermediating the short-term rental industry, but it desires to be market-leading intermediary. It isn't offering a market-leading level of customer service after a problem happens. Nor is Airbnb doing as much to prevent problems as other startup companies in the same space--several of those companies take much greater care to verify guest identities before setting up the transaction. What Airbnb appears to want, compared to other market participants, is to be paid as an intermediary without providing any particular value as an intermediary. That's nice work if you can get it, but that's a business model that is ripe for disruption and not a business model that I would invest in. After edit: I hope everyone is reading the newly submitted article here for the details of what the Airbnb autoresponder message replying to the "urgent" help email address at Airbnb looked like not long ago. As the host thought after his place was trashed, "This freaked me out when I was frazzled. Hundreds of millions in venture financing, millions of dollars in fees, and no 24-hour help desk for emergencies? What am I paying them the exorbitant fees for?"
- gojomo 15y ago
  Paradoxically, these incidents could solidify AirBnb's lead. If they've been clumsy in the past; they can't afford to anymore. They have the money to implement a leading solution, and they have to become synonymous with the best protections to get the most listings/searches. And, the components of a potential solution – costly one-time background checks, longer reputation histories, insurance pooling, deep experience with all abuse variants – all benefit from scale. Participant fear enhances the winner-take-all nature of the market... if the leader can best assuage that fear.
  - moonlighter 15y ago
    "costly one-time background checks" and "all benefit from scale" sound like an oxymoron to me. Implementing all the suggestions you listed would significantly cut into their revenues and make their business model obsolete.
    - gojomo 15y ago
      High-fixed setup costs, low marginal costs make a defensible moat. That's the classic case of a returns-to-scale monopoly. Background checks are a one-time cost per new participant. It may be costly (in money or time) to set up your initial account, and acquire a positive reputation via a long history of mutual reviews... but then you're part of a large pre-vetted community. Do you then want to go through that procedure many times with every new upstart? Or just once with the largest market?

rdouble 15y ago

If they don't vet people on either end, are they really just a craigslist with payment processing? That's mostly what it is, which isn't a bad idea. It also has a strong couch surfer element that CL doesn't.

officemonkey 15y ago

They also have a spiffy web-site and app that does a nice job showing off properties and assisting you in finding the properties you want. But yeah, they are essentially just middlemen. They benefit from keeping the buyer and seller apart until the deal is done and they get their cut.

fossuser 15y ago
And that exact benefit is the source of trouble.
- ebaysucks 15y ago
  Indeed. The one way for them to lock in market leadership forever is to drop the fees and make their money on payment processing, insurance offers, user screening and safety deposits that renters may or may not decide to opt in for. This would allow users to contact and vet each other before agreeing on a sale while still having some profit streams. Basically AirBnb would become a specialized Craigslist on steroids, but it can only be done if the founders want to build a long term business netting them a few million each year rather than a VC darling to be flipped for a couple of billion dollars.
- officemonkey 15y ago
  As Upton Sinclair once said: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"
dlss 15y ago
And benefit from downplaying the risks of renting / putting a property up for rent

acgourley 15y ago

By building a market for buyers and sellers of otherwise unused low marginal cost assets they are clearly creating value. You can argue that by not vetting they invite random disaster which may be more expensive than the cost of the vetting itself. But you can't say they are not creating value overall.

farrel 15y ago
This is most certainly what they're not doing. Airbnb has promoted the idea that you can rent out your primary residence to make money. A quote from http://www.airbnb.com/rooms/new http://www.airbnb.com/rooms/new - "Airbnb lets you make money renting out your place. Your apartment will pay for itself!" That is the antithesis of a 'unused low marginal cost asset'.

sambe 15y ago

I never thought that they did anything other than hold money in escrow. I would think this is by far the biggest problem with classifieds (by frequency, at least). The social/reputation system adds some trust, but they never even remotely gave the me impression that they were vetting anything. And what is the problem with that? Some comments seem to be suggestion that - because that evil money thing is involved - they should be required to be in other businesses simultaneously. Perhaps there are things they can do better, but existing system was already quite clear to me (renter; would have to think seriously before hosting).