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I never understood the Airbnb business model. Sure, some regulations seem designed primarily to protect existing interests, but more often, there are very good
by jqm 13y ago
I never understood the Airbnb business model.
Sure, some regulations seem designed primarily to protect existing interests, but more often, there are very good reasons for the regulation.
For instance, I believe hotels must maintain a record of visitors car license plates. And they are often inspected by health departments.
I'm all for innovation, but I don't think we can throw out an entire regulatory framework that took decades to develop. There is just too much that can go wrong.
As for 10 or 20 billion dollar valuation for Airbnb? Reality says "Ridiculous!".
- tptacek 13y agoA 10+ figure valuation for something that extracts 80% of the value of a hotel chain while sustaining 1% of its costs and at the same time handsomely remunerating the vendors that provide its inventory does not sound at all crazy to me.
- jqm 13y agoBoy I would sure hate to see what crazy sounds like to you then:)
- jqm 13y agoIs it an idea that is not easily executable by someone else? Does it have a high technical/expense barrier to entry? I'm sorry, the valuation at those levels just seems way way out of proportion. Never mind the underlying legal problems.
- tptacek 13y agoSomething where you can't draw a straight line between execution and billions of dollars in profits?
- lectrick 13y agoA new form of money that nobody controls, which has its ledger stored in a public decentralized database, with cryptographically-secured transactions, with a limited total number of units, whose unit value is decided by the market, and where new units of the currency are introduced over time in a decreasing schedule by paying them to the enforcers of the security of the network, who are all voluntary. There is no way this crazy idea could ever actually work...
- toomuchtodo 13y agoMy assumption is that the valuation is "crazy" because vendors in some of the most desired markets are violating the law to provide their service. "get while the gettin's good" sort of thing.
- tptacek 13y agoIf that was true, car stereo theft rings would also have billion dollar valuations.
- toomuchtodo 13y agoI don't believe that's a fair comparison, but you're entitled to your opinion. I believe Airbnb definitely has a headstart in the placesharing space, and preventing rentals in SFBA, NY, etc wouldn't cause a significant dent in their valuation (two cents). Their model works so long as the local jurisdiction supports it.
- tptacek 13y agoIt's possible we're talking past each other. I think Abnb should take responsibility for making sure it operates lawfully in SF and NYC (and elsewhere where it is encumbered by regs), but I think the model is a good one.
- toomuchtodo 13y agoI believe that's the case, and that we're in agreeement. I owe you a coffee.
- jqm 13y agoas long as the local authorities support it... and as long as "Dateline" doesn't run a special on the AirBNB killer... Sure, they have a head start, but the various problems haven't been fleshed out nor resolved. And, there is going to be a very active resistance from many sectors (for good reason). I might be wrong, and not to rain on parades and such, but I just don't see that valuation level reflecting reality at all.
- milesskorpen 13y agoNot sure how it extracts 80% of the value of a hotel chain — from what I've seen, estimates place the average AirBNB night at ~$80, which would mean AirBnB gets ~$10/stay. I don't think I've ever seen a hotel night, outside of a hostel, for $12. (And I'm not trying to say it is a bad business at all — non-customer-acqusition costs probably go down by a larger % than revenue.)
- bsder 13y agoThey get $10/stay and the cost to AirBnB is fixed at whatever it costs to run the computer systems. Effectively, their profit is $10 per stay and their expenses border on $0. The valuation is a bet on a YouTube exit. Most of YouTube was massive copyright violations (still is) and was a massive bandwidth cost sink (suspect it still is), but since Google bought them out that doesn't matter anymore. In fact, YouTube is a gigantic brake on innovation in the video side of the web precisely because they choke off any useful profitable business models. Similarly, if AirBnB can get somebody big to buy them out before the lawsuits overrun them, cha-ching, go the owners and initial investors.
- milesskorpen 13y agoTotally agree, but the parent said that AirBNB gets 80% of the value (revenue) of a hotel chain. That's just false — the host gets ~85% of the value, not AirBnB.