6 ms·

Airbnb Is Raising A Big Third Round, Aiming For A Valuation North Of $2B

27 points by ssclafani 14y ago

sfard 14y ago
Just to put this in perspect. Starwood has a valuation of about $10 billion. Starwood employs 150,000 people, has 1000 hotels worldwide, and has revenues of ~$6 billion I'm not saying AirBNB can't be huge one day, but a $2B valuation... wow.
- andrewljohnson 14y ago
  Yeah, you are right... that makes it very clear why AirBnB is so valuable. If it takes Starwood 150,000 people to make $6B, and AirBnB can make hundreds of millions with hundreds of people, I think it's pretty clear which is headed to a bigger valuation.
  - fletchowns 14y ago
    Or it's just way overvalued
- dmix 14y ago
  Starwoods is valued on the public stock market, not private investors. It might not seem like it, but theres a difference.
  - CoachRufus87 14y ago
    For example: Facebook ($FB)
- andyakb 14y ago
  you cannot make these comparisons. the valuation multiplier based on revenues changes by the industry. an industry with HUUUUUGE overhead [expensive real estate and tons of staff] cannot be compared at all by revenue to a tech startup that will never have anywhere near that amount of overhead. is the valuation high? potentially, but this is not a metric that will tell you anything at all about that
- jcampbell1 14y ago
  AirBnB can reasonably generate profits of $4/night with their current model. A $2B valuation makes sense if they do 30M nights in a year. They did 8M in Jun 11-Jun 12, with 5M of that in the last 4.5 months. My guess is their current run rate is in the neighborhood of 18M nights/year. The valuation is high, but it isn't unreasonable. Also I view AirBnB as having a low risk of falling out of fashion, unlike Zynga or Facebook.
  - vikramhaer 14y ago
    Can I ask what the $4 in profit and 30M nights/ year to justify $2B valuation are based on? Just wondering if maybe my math/ view on it is wrong... Looks like they charge a 3% fee meaning a night @ $100 would bring in $3 of revenue (not profit). At 30M nights that's $90M in revenue, putting the $2B valuation at 22.2x revenue... seems slightly unreasonable (at least not a valuation that public markets are likely to put on it). Thoughts?
    - rdl 14y ago
      20 p/e is awesome for a business which is growing "e" very fast, and in what appears to be a sustainable way. Look at AMZN's p/e...
      - vikramhaer 14y ago
        but it's not really earnings is it? that's 20x revenue, so even with really good margins that would be at least double. You're right that amazon's P/E is insanely high, but on a revenue basis they trade at 1.5-2.0x. I guess with the kind of growth AirBnB has there's nothing really comparable... just trying to understand how they're justifying that valuation
    - mrgordon 14y ago
      From the article: "The company takes an average of 10% on every transaction, according to sources familiar with the business" Your numbers start to look a lot better at a 10% fee instead of a 3% fee.
- rdl 14y ago
  Starwood doesn't own most of their hotels, nor do most of the staff, revenues, etc flow through Starwood. It is just a franchise/branding company with a property management and reservation system. Their direct employees are in line with airbnb.
joering2 14y ago
Congratulation to PG! Seems like working with top scammer from the FBI list that you and I had to pay in our taxes for their damages, is finally paying off! Pop, there goes a bottle of Dom Pérignon!
- andrewljohnson 14y ago
  Sounds like this could be an interesting comment, but needs substance and a link or two, instead of sarcasm and malice. No one knows what you are talking about... I vaguely suspected you were referring to that one isolated incident long ago where a woman had her apartment trashed by some renters.
  - swang 14y ago
    Pretty sure this based off his previous posts: http://venturebeat.com/2011/10/27/airbnb-spam-allegations/ http://venturebeat.com/2011/10/27/airbnb-spam-allegations/
    - philwelch 14y ago
      Oh god, not Aaron Greenspan again.
    - asithinketh 14y ago
      According to Dave Gooden, AirBnB had a growth hacker who did her magic via email. "girlsname04@gmail.com" was her address. She harvested emails from people adveritising on craigslist and sent out thousands of emails. Some call that unsolicited bulk commercial email. Some call is spam. Others call it growth hacking. Remember, wise man say startups need <em> high growth </em>. Founding startup is like being research scientist. Science! "girlsname04@gmail.com", an unsung hero of AirBnB. Harvard grad gets shut down by FTC for sending porn-related spam from custom-built spam machine in his dorm room. Earns some nice coin. Moves on to greener pastures:- doing the dirty work for internet venture capitalists. Say hello to the CTO of AirBnB. Ivy League indeed. The eventual victim is untimately the public investor if there's an IPO or the naive acquirer... because these businesses are not built to last long enough to provide the return on investment the public expects, nor to cover the inevitable charge the acquirer has to take. These petty criminals doing the dirty work for internet VC are young with many years ahead of them to regain their reputation. But time may not heal bad reputations as well as it used to... because the internet never forgets.
deleted 14y ago
[deleted]
paulhauggis 14y ago
But what is their actual profit?
pault 14y ago
I thought Airbnb sounded silly when I first heard about it, but I've spent the last month in the caribbean staying exclusively at apartments booked there. The UX is awesome, there's a huge discovery value to people with vacation rentals, and it's way cheaper than staying at hotels. Not to mention the money that I save because I have a kitchen to cook in. You can usually find a monthly price only a few hundred dollars more than what you would pay for an unfurnished rental with a lease. I've also been shocked at the explosive growth outside the US. When I checked the listings about six months ago I didn't see much in southern Brazil, but now there are ~500 listings. I don't know about $2B, but I've been very impressed with everything they've done so far.
- joelrunyon 14y ago
  I've always found AirBnB not to be that much cheaper than hotels. Maybe it's just me?
  - jobu 14y ago
    Agreed, but in my experience the rooms are better than a hotel.
    - Evbn 14y ago
      I got a janky bed in a janky room in a house shared with a not-advertised invalid. But I evaded hotel taxes so it was a good deal.
  - auston 14y ago
    what is "that"? 50% off? 75% off? I've been using AirBnB to book places for my conference speakers for 2 years & I usually get between 30% and 55% off from a comparable hotel.
  - sebilasse 14y ago
    in my experience cheaper. you get more room and stuff for your money. but it's also more inconvenient: You cannot just enter a date and click button "Book Now". You have to contact multiple hosts and arrange key pick up and stuff. You cannot just leave the room in whatever state and checkout. You feel like you have to clean and tidy it up a bit. Picking up keys can be a hassle sometimes. However you don't have to pay for silly services i never use in a hotel (conference rooms, business centers, telephone in the toilets, etc).
confluence 14y ago
Airbnb is the ebay of housing, creating liquid markets for unused or unwanted goods without taking on any inventory, risk or capital. This is a service that literally prints money - and so long as they don't get Meg Whitman as their CEO - they won't fuck up. I wouldn't be surprised if they surpassed eBay within the decade in terms of net profit. Next up on the liquid market list should be cars. Any other markets out there that need liquidity? Goods that aren't used or assets that lay dormant? I'm all ears.
- felipemnoa 14y ago
  Did a bit of search on Meg Whitman. I found this on Wikipedia: Whitman served as president and chief executive officer of eBay from 1998 to 2008. During her ten years with the company, she oversaw expansion from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue. Doesn't seem too bad. Not trolling or anything but why do you think she is so bad?
  - confluence 14y ago
    http://exiledonline.com/how-meg-whitman-failed-her-way-to-the-top-at-ebay-collecting-billions-while-nearly-destroying-the-company/ http://exiledonline.com/how-meg-whitman-failed-her-way-to-th... http://bits.blogs.nytimes.com/2009/04/23/undoing-meg-whitmans-ebay/ http://bits.blogs.nytimes.com/2009/04/23/undoing-meg-whitman... Third cause successes can hide failures rather well. Companies can succeed despite their absolutely atrocious leadership - not because of it. Both she and Carly Fiorina were two of the worst things that could've happened to eBay and HP respectively (Meg Whitman for both). They are nasty pieces of work. Balmer is another example - he is single-handedly going to destroy a $200 billion dollar corporation and no one is stopping him. Hell they'd save a lot of money by making me CEO :D.
    - eddy_chan 14y ago
      I'd add Stephen Elop to that list as well, he will be judged in due time
    - 14y ago
asithinketh 14y ago
One way to look at AirBnB is as a craiglist plus escrow service. The idea is they spammed people advertising rental properties on craiglist to get them to visit the AirBnB site and it has worked so far. Eventually, though, all the people advertising on sites like craigslist will have migrated over to AirBnB and then the growth ends. The escrow service seems a little dodgey since they are not licensed (see Greenspan's critique - he was roommates with one of the founders of AirBnB). Few major incidents so far, but how long will that last as they scale? The attraction of AirBnB over craiglist may be that the hosts perceive some added degree of safety by using AirBnB. But really, how much liability is AirBnB taking on? Can you sue AirBnB if your property is destroyed? Good luck with that. What if another site that has an even faster interface pops up and uses a growth hacker to lure away hosts listing their properties on AirBnB? Then what? Acquire them out of fear! The web is a medium. People use it to advertise things. It's hard to believe that any one company can monopolize a medium like the web for some class(es) of goods or services. But it sure looks like they can, doesn't it? From For Sale ads in Usenet groups to a mailing list that grows to a website (craigslist) to AirBnB acting as an informal escrow agent to _______? The interesting thing is that Usenet was originally free. As long as you had an internet connection, you could advertise for free. I'm not sure I understand why advertising still shouldn't be free. And we should be able to reduce the signal to noise ratio, and make doing business via internet more personable and trustworthy, without having to pay a spammer who acts as a dubious escrow agent and takes a percentage.
- jaggederest 14y ago
  > Can you sue AirBnB if your property is destroyed? https://www.airbnb.com/guarantee https://www.airbnb.com/guarantee
- riffraff 14y ago
  I think you're very off in your analysis. I have never used craigslist nor other classifieds sites, and neither have any of my family members, nor my work mates, nor the friends I meet on a weekly basis. Yet me, my brother, a colleague and two friends have booked nights on airbnb. The growth will end when all of my colleagues, and all of my family and all of my friend use it, and they'll know about it because every time they ask me "so where did you sleep" I'll answer "found this cheap place on AirBnB".
Evbn 14y ago
Is it normal to have 10% of a company's valuation be invested/debt cash?

27 points by ssclafani 14y ago

sfard 14y ago

Just to put this in perspect. Starwood has a valuation of about $10 billion. Starwood employs 150,000 people, has 1000 hotels worldwide, and has revenues of ~$6 billion I'm not saying AirBNB can't be huge one day, but a $2B valuation... wow.

andrewljohnson 14y ago
Yeah, you are right... that makes it very clear why AirBnB is so valuable. If it takes Starwood 150,000 people to make $6B, and AirBnB can make hundreds of millions with hundreds of people, I think it's pretty clear which is headed to a bigger valuation.
- fletchowns 14y ago
  Or it's just way overvalued
dmix 14y ago
Starwoods is valued on the public stock market, not private investors. It might not seem like it, but theres a difference.
- CoachRufus87 14y ago
  For example: Facebook ($FB)
andyakb 14y ago
you cannot make these comparisons. the valuation multiplier based on revenues changes by the industry. an industry with HUUUUUGE overhead [expensive real estate and tons of staff] cannot be compared at all by revenue to a tech startup that will never have anywhere near that amount of overhead. is the valuation high? potentially, but this is not a metric that will tell you anything at all about that
jcampbell1 14y ago
AirBnB can reasonably generate profits of $4/night with their current model. A $2B valuation makes sense if they do 30M nights in a year. They did 8M in Jun 11-Jun 12, with 5M of that in the last 4.5 months. My guess is their current run rate is in the neighborhood of 18M nights/year. The valuation is high, but it isn't unreasonable. Also I view AirBnB as having a low risk of falling out of fashion, unlike Zynga or Facebook.
- vikramhaer 14y ago
  Can I ask what the $4 in profit and 30M nights/ year to justify $2B valuation are based on? Just wondering if maybe my math/ view on it is wrong... Looks like they charge a 3% fee meaning a night @ $100 would bring in $3 of revenue (not profit). At 30M nights that's $90M in revenue, putting the $2B valuation at 22.2x revenue... seems slightly unreasonable (at least not a valuation that public markets are likely to put on it). Thoughts?
  - rdl 14y ago
    20 p/e is awesome for a business which is growing "e" very fast, and in what appears to be a sustainable way. Look at AMZN's p/e...
    - vikramhaer 14y ago
      but it's not really earnings is it? that's 20x revenue, so even with really good margins that would be at least double. You're right that amazon's P/E is insanely high, but on a revenue basis they trade at 1.5-2.0x. I guess with the kind of growth AirBnB has there's nothing really comparable... just trying to understand how they're justifying that valuation
  - mrgordon 14y ago
    From the article: "The company takes an average of 10% on every transaction, according to sources familiar with the business" Your numbers start to look a lot better at a 10% fee instead of a 3% fee.
rdl 14y ago
Starwood doesn't own most of their hotels, nor do most of the staff, revenues, etc flow through Starwood. It is just a franchise/branding company with a property management and reservation system. Their direct employees are in line with airbnb.

joering2 14y ago

Congratulation to PG! Seems like working with top scammer from the FBI list that you and I had to pay in our taxes for their damages, is finally paying off! Pop, there goes a bottle of Dom Pérignon!

andrewljohnson 14y ago
Sounds like this could be an interesting comment, but needs substance and a link or two, instead of sarcasm and malice. No one knows what you are talking about... I vaguely suspected you were referring to that one isolated incident long ago where a woman had her apartment trashed by some renters.
- swang 14y ago
  Pretty sure this based off his previous posts: http://venturebeat.com/2011/10/27/airbnb-spam-allegations/ http://venturebeat.com/2011/10/27/airbnb-spam-allegations/
  - philwelch 14y ago
    Oh god, not Aaron Greenspan again.
  - asithinketh 14y ago
    According to Dave Gooden, AirBnB had a growth hacker who did her magic via email. "girlsname04@gmail.com" was her address. She harvested emails from people adveritising on craigslist and sent out thousands of emails. Some call that unsolicited bulk commercial email. Some call is spam. Others call it growth hacking. Remember, wise man say startups need <em> high growth </em>. Founding startup is like being research scientist. Science! "girlsname04@gmail.com", an unsung hero of AirBnB. Harvard grad gets shut down by FTC for sending porn-related spam from custom-built spam machine in his dorm room. Earns some nice coin. Moves on to greener pastures:- doing the dirty work for internet venture capitalists. Say hello to the CTO of AirBnB. Ivy League indeed. The eventual victim is untimately the public investor if there's an IPO or the naive acquirer... because these businesses are not built to last long enough to provide the return on investment the public expects, nor to cover the inevitable charge the acquirer has to take. These petty criminals doing the dirty work for internet VC are young with many years ahead of them to regain their reputation. But time may not heal bad reputations as well as it used to... because the internet never forgets.

deleted 14y ago

[deleted]

paulhauggis 14y ago

But what is their actual profit?

pault 14y ago

I thought Airbnb sounded silly when I first heard about it, but I've spent the last month in the caribbean staying exclusively at apartments booked there. The UX is awesome, there's a huge discovery value to people with vacation rentals, and it's way cheaper than staying at hotels. Not to mention the money that I save because I have a kitchen to cook in. You can usually find a monthly price only a few hundred dollars more than what you would pay for an unfurnished rental with a lease. I've also been shocked at the explosive growth outside the US. When I checked the listings about six months ago I didn't see much in southern Brazil, but now there are ~500 listings. I don't know about $2B, but I've been very impressed with everything they've done so far.

joelrunyon 14y ago
I've always found AirBnB not to be that much cheaper than hotels. Maybe it's just me?
- jobu 14y ago
  Agreed, but in my experience the rooms are better than a hotel.
  - Evbn 14y ago
    I got a janky bed in a janky room in a house shared with a not-advertised invalid. But I evaded hotel taxes so it was a good deal.
- auston 14y ago
  what is "that"? 50% off? 75% off? I've been using AirBnB to book places for my conference speakers for 2 years & I usually get between 30% and 55% off from a comparable hotel.
- sebilasse 14y ago
  in my experience cheaper. you get more room and stuff for your money. but it's also more inconvenient: You cannot just enter a date and click button "Book Now". You have to contact multiple hosts and arrange key pick up and stuff. You cannot just leave the room in whatever state and checkout. You feel like you have to clean and tidy it up a bit. Picking up keys can be a hassle sometimes. However you don't have to pay for silly services i never use in a hotel (conference rooms, business centers, telephone in the toilets, etc).

confluence 14y ago

Airbnb is the ebay of housing, creating liquid markets for unused or unwanted goods without taking on any inventory, risk or capital. This is a service that literally prints money - and so long as they don't get Meg Whitman as their CEO - they won't fuck up. I wouldn't be surprised if they surpassed eBay within the decade in terms of net profit. Next up on the liquid market list should be cars. Any other markets out there that need liquidity? Goods that aren't used or assets that lay dormant? I'm all ears.

felipemnoa 14y ago
Did a bit of search on Meg Whitman. I found this on Wikipedia: Whitman served as president and chief executive officer of eBay from 1998 to 2008. During her ten years with the company, she oversaw expansion from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue. Doesn't seem too bad. Not trolling or anything but why do you think she is so bad?
- confluence 14y ago
  http://exiledonline.com/how-meg-whitman-failed-her-way-to-the-top-at-ebay-collecting-billions-while-nearly-destroying-the-company/ http://exiledonline.com/how-meg-whitman-failed-her-way-to-th... http://bits.blogs.nytimes.com/2009/04/23/undoing-meg-whitmans-ebay/ http://bits.blogs.nytimes.com/2009/04/23/undoing-meg-whitman... Third cause successes can hide failures rather well. Companies can succeed despite their absolutely atrocious leadership - not because of it. Both she and Carly Fiorina were two of the worst things that could've happened to eBay and HP respectively (Meg Whitman for both). They are nasty pieces of work. Balmer is another example - he is single-handedly going to destroy a $200 billion dollar corporation and no one is stopping him. Hell they'd save a lot of money by making me CEO :D.
  - eddy_chan 14y ago
    I'd add Stephen Elop to that list as well, he will be judged in due time
  - 14y ago

asithinketh 14y ago

One way to look at AirBnB is as a craiglist plus escrow service. The idea is they spammed people advertising rental properties on craiglist to get them to visit the AirBnB site and it has worked so far. Eventually, though, all the people advertising on sites like craigslist will have migrated over to AirBnB and then the growth ends. The escrow service seems a little dodgey since they are not licensed (see Greenspan's critique - he was roommates with one of the founders of AirBnB). Few major incidents so far, but how long will that last as they scale? The attraction of AirBnB over craiglist may be that the hosts perceive some added degree of safety by using AirBnB. But really, how much liability is AirBnB taking on? Can you sue AirBnB if your property is destroyed? Good luck with that. What if another site that has an even faster interface pops up and uses a growth hacker to lure away hosts listing their properties on AirBnB? Then what? Acquire them out of fear! The web is a medium. People use it to advertise things. It's hard to believe that any one company can monopolize a medium like the web for some class(es) of goods or services. But it sure looks like they can, doesn't it? From For Sale ads in Usenet groups to a mailing list that grows to a website (craigslist) to AirBnB acting as an informal escrow agent to _______? The interesting thing is that Usenet was originally free. As long as you had an internet connection, you could advertise for free. I'm not sure I understand why advertising still shouldn't be free. And we should be able to reduce the signal to noise ratio, and make doing business via internet more personable and trustworthy, without having to pay a spammer who acts as a dubious escrow agent and takes a percentage.

jaggederest 14y ago
> Can you sue AirBnB if your property is destroyed? https://www.airbnb.com/guarantee https://www.airbnb.com/guarantee
riffraff 14y ago
I think you're very off in your analysis. I have never used craigslist nor other classifieds sites, and neither have any of my family members, nor my work mates, nor the friends I meet on a weekly basis. Yet me, my brother, a colleague and two friends have booked nights on airbnb. The growth will end when all of my colleagues, and all of my family and all of my friend use it, and they'll know about it because every time they ask me "so where did you sleep" I'll answer "found this cheap place on AirBnB".

Evbn 14y ago

Is it normal to have 10% of a company's valuation be invested/debt cash?