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I find it hard to believe that Airbnb is not profitable; they have a well-defined monetization and are wildly popular.

ThomPete 11y ago
Well maybe they are, but not enough to not need more funding. http://techcrunch.com/2015/02/27/airbnb-2/ http://techcrunch.com/2015/02/27/airbnb-2/ Think about that valuation, think about Uber that makes 400m a year and looses the same. How many years do they have to be in business to make those money back and ever honor that valuation? It's completely absurd IMO, but as I said there might be something I am not understanding.
- tptacek 11y ago
  They can be profitable and still be in a position where they can convert investment dollars into new market share. If you've got a machine that you can pour money into and get even more money out, why wouldn't you use it? Especially in 2015, when money for companies like Airbnb is cheap.
  - ThomPete 11y ago
    It's not whether I would use it, the problem is that it seems like you are foced to do that to stay in business even without have an actual business that has the revenue to support the valuations. It reminds me more of a game than anything, and maybe thats what these kind of business have turned into. A big game with no need to ever make any proper money. Just a giant "pyramid" scheme to milk money out of the late comers, just like the housing market.
    - tptacek 11y ago
      I perceive the same thing, but when you choose Airbnb to illustrate the phenomenon, you have to back it up. Airbnb is a weird choice, since it's so clear where their revenue comes from.
      - ThomPete 11y ago
        What i react to with Airbnb is that their current postions and current revenue after all this time and looking at how successful they are still isn't enough for them to support their own growth. I understand how the market work but I am not sure I understand why this is a good strategy unless as a business who want to be around. There will always be competitors always be someone biting them in the behind just like with Amazon btw. If thats what it takes to be in business thats what it takes but it's hard for me to get my head around why this is healthy or normal.
        tptacek 11y ago
        I'm not sure if "their competitive dynamics are similar to Amazon's" is helping your argument, since one of the last things I'd ever want to do is compete head-on with Amazon in one of their core areas.
        ThomPete 11y ago
        I am not making an argument I am not trying to convince you of anything. I am trying to understand whats going on and so far I haven't heard anything that changed my feeling that somethings gotta give in all this. But you have to turn this around and ask why is Amazon feeling like they have to grow when they can be profitable if it's not that they are afraid to be outcompeted at one point.
zaidf 11y ago
You can be raining money but if you spend more than what you're making, you're not profitable. Of course, it is not a bad thing to be unprofitable for a period of time. In AirBnb's case, it is almost certainly better for them to NOT be profitable and instead to spend ever potentially profitable dollar on getting more marketshare.

Well maybe they are, but not enough to not need more funding. http://techcrunch.com/2015/02/27/airbnb-2/ http://techcrunch.com/2015/02/27/airbnb-2/ Think about that valuation, think about Uber that makes 400m a year and looses the same. How many years do they have to be in business to make those money back and ever honor that valuation? It's completely absurd IMO, but as I said there might be something I am not understanding.

tptacek 11y ago
They can be profitable and still be in a position where they can convert investment dollars into new market share. If you've got a machine that you can pour money into and get even more money out, why wouldn't you use it? Especially in 2015, when money for companies like Airbnb is cheap.
- ThomPete 11y ago
  It's not whether I would use it, the problem is that it seems like you are foced to do that to stay in business even without have an actual business that has the revenue to support the valuations. It reminds me more of a game than anything, and maybe thats what these kind of business have turned into. A big game with no need to ever make any proper money. Just a giant "pyramid" scheme to milk money out of the late comers, just like the housing market.
  - tptacek 11y ago
    I perceive the same thing, but when you choose Airbnb to illustrate the phenomenon, you have to back it up. Airbnb is a weird choice, since it's so clear where their revenue comes from.
    - ThomPete 11y ago
      What i react to with Airbnb is that their current postions and current revenue after all this time and looking at how successful they are still isn't enough for them to support their own growth. I understand how the market work but I am not sure I understand why this is a good strategy unless as a business who want to be around. There will always be competitors always be someone biting them in the behind just like with Amazon btw. If thats what it takes to be in business thats what it takes but it's hard for me to get my head around why this is healthy or normal.
      - tptacek 11y ago
        I'm not sure if "their competitive dynamics are similar to Amazon's" is helping your argument, since one of the last things I'd ever want to do is compete head-on with Amazon in one of their core areas.
        ThomPete 11y ago
        I am not making an argument I am not trying to convince you of anything. I am trying to understand whats going on and so far I haven't heard anything that changed my feeling that somethings gotta give in all this. But you have to turn this around and ask why is Amazon feeling like they have to grow when they can be profitable if it's not that they are afraid to be outcompeted at one point.

zaidf 11y ago

You can be raining money but if you spend more than what you're making, you're not profitable. Of course, it is not a bad thing to be unprofitable for a period of time. In AirBnb's case, it is almost certainly better for them to NOT be profitable and instead to spend ever potentially profitable dollar on getting more marketshare.