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Comment by crazygringo | Hacker News Reader

To those asking how Airbnb could possible need that much money.

Wikipedia says they have 12,736 employees.

$1B works out to $78,518 per employee (before payroll taxes, health insurance, etc.).

So if you're trying not to lay people off and keep the company afloat while revenue has plummeted to next-to-nothing... it's not an absurd figure. Or even if you're laying people off, it's going to take $$$ to find and rehire and train people when revenue starts coming in again, while continuing to pay the management team and key employees that will be capable of executing on that, and keeping the lights on, and paying rent.

Granted almost 13K employees may sound like a lot... but let's say they operate in 50 countries and have a team of 100 people for each one building up the business, that's 5,000 employees already. I made those specific numbers up, but for a global-local company, it's not crazy.

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I wouldnt offer air bnb a billion for 10%. I dont think they can pay it back. I hope they can't pay it back. Dublin Ireland saw 67% more housing available overnight because air bnb home owners needed to offer their homes to long term stayers since the travel ban. They're a nuisance.

The problem is the lack of new construction leading to limited supply of housing, not AirBnB.

Worldwide housing supply is never going to keep up with radical changes in usage. One takes literally trillions of dollars worth of construction in not just housing but also transportation etc, the other takes a website.

Well yes, but also no. I would hope that it's not terribly surprising that just about any property in a major metro area is going to earn more revenue on average as a series of short term rentals than a long-term tenant or sale. I mean that's pretty much the standard trade you make for lots of things. You accept lower rates in exchange for lower risk and more consistent revenue.

Airbnb did a weird thing and proved/facilitated so much demand that landlords realized that listing on Airbnb could net you that increased profit with lower risk since they provide a steady stream of renters changing the risk/reward profile.

So we're left with some awkwardness of people being priced out of their apartments not because of anything evil but because Airbnb et al close that information gap and proved that short-term rentals aren't nearly as risky as landlords thought and that forking over 30% for customer acquisition still works out in their favor.

I think you’re leaving out the key aspect of Airbnb’s move, which is to transform a large amount of housing into hotels without appropriate regulation. That’s what enables it to be so profitable.

Right but that's an orthogonal issue to what the market will pay for a given property. I agree that a lot of the draw of Airbnb is that it's cheaper than hotels but this is the case where the current crop of regulations are harmful since people on Airbnb know exactly what they're getting. The regulations aren't addressing any information/knowledge asymmetry or safety concerns that aren't covered in "this is just some randos house" disclaimer. I'm sure that helps Airbnb's funnel but I doubt the absence of hotel regulations would make the current crop of hotels any cheaper since the regulations are tailor made for what they were doing already. Yayy regulatory capture. Right! Back on topic. But none of this matters because we're not comparing hotels to Airbnb, we're comparing Airbnb to renting or selling which is a different batch of zoning regulations they're skirting.

But that reinforces my point since the reason that city planners zone properties/areas for long-term residential only sans a few excepted hotels is keep the prices down to levels that individuals and families can actually afford because you're only competing with other people in your rough income range and not commercial buyers. So I don't see a contradiction in cities just banning Airbnb like any other commercial activity for that reason but it's all like artificial mannn.

Also current situation shows there is a 100 year risk that will likely return the average risk of short term renting to the original (pre AirBnB) value. So in a Long enough time frame AirBnB didn‘t change anything?

Airbnb clearly feeds into the limiting of supply.

This is only true if Airbnb creates demand for owner-absent short term house lets. Otherwise it's just a platform taking market share from other platforms like VRBO or Craigslist and the amount of housing supply would be the same with or without Airbnb.

And of course it is the latter. The great majority of listings on the platform are for owner occupied dwellings where a room, loft, basement, or guest house is being let out. This does not keep supply of housing suppressed.

Sure it does, because absent AirBnB those rooms might be let out to long-term lodgers.

I’ve been hearing people say this for years, and it is certainly an easy and nice line to say. But supply for new housing is not the solution or the issue.

1. When new housing enters the market it is priced at “fair market value”. That fair market value is inflated by numerous known and unknown factors. Such as foreign investors, short-term rentals, etc...

2. Cost of construction follows the trend and what used to cost X to build is now 2x, 3x.

3. Numerous cities have reduced pricing of permits and have even simplified the planning approval process for homes in an effort to attract imvestors and developers.

4. Cost of land is at an all time high. Which again is a factor of the fair market value. Land owners are wanting to sell to large development projects that have investors. Developers are bidding against each other to secure land.

Those and more are compounded into a complex relationship that has created a market that very few people can afford to live in. Is it possible that the fear of being priced out is driving a lot of these motivations?

According to Berlin 5€ per m² is a fair market value for a 50+ year old apartment. It's obvious that new construction can never reach a price that is this absurdly low.

I've never understood this focus on rental pricing. The problem has never been the price, how can prices constantly go up if nobody can afford them? Well, the answer is that someone can actually afford the price and for some reason you are competing with that person that is far more richer than you. Remember one of the core causes of inflation? Too much money chasing too few goods? It's not just printing an excessive amount of money that is necessary to cause inflation. You also need a shortage of goods. You need to have more people than housing to cause inflation of rental prices. If there are 10 houses but 15 people then you can be assured that landlords will only care about renters with high incomes and construction companies will focus on building for these high income people first and only after there is enough housing will they build housing for the less wealthy residents.

Does this imply I can build a 100-100m2-flat-house for 50000 EUR? How many 0 digits did you miss?

I think parent meant 5EUR/m^2/month?

#1 #3 #4 are all related to "supply of new housing"

I once stayed at an Airbnb condo in Toronto that was relatively new. I saw many, many tourists coming in and out of the building, the lobby looked like a hotel with about 20 different groups with luggage, etc. It looks like this entire condo was mainly for investment purposes and for people to Airbnb these condos out. It's not surprising that Dublin saw a huge increase in rentals and I bet the same thing has happened across the world.

You think no one would simply fill the void if they go away? That model is here to stay for the foreseeable future.

One of the fun things about governments is their ability to ban things they don’t want and punish those who flout the ban with fines or imprisonment.

Such things are not perfect, naturally, but any popular website listing property does literally let the government know which house to confiscate, if fines don’t get paid.

How can you determine that the 67% is due to Airbnb shutting down as opposed to all the other current insanity?

What other effect besides travel restrictions would effect housing supply as quickly as in a month?

I suppose that no landlord would have been able to kick out a tenant short on a month of rent in Ireland.

For starters, a bunch of people losing their jobs would give up their highly-priced city rental that was close to work.

Not everyone actually wants to pay the premium for city life, and once the job doesn't tie them there they can quickly leave.

Many of the shelter-in-place orders have banned anything not essential, like groceries or other supplies. That includes moving.

How did the supply dry up so fast when no one is to leave their houses? It has to be AirBnB/travel bans; even the 2008 housing bubble 'asplosion didn't move that fast.

The 2008 collapse didn't leave nearly so many jobless. I assume you've seen the unprecedented unemployment claim charts? https://www.cnn.com/2020/04/02/economy/unemployment-benefits...

It's all beside the point. You'd have to refute literally every single other possible cause to establish that airbnb was the culprit here.

Hmmmm, what else changed in that period... I can't think of anything. Other than airbnb's drying up, my life is about the same as it was a few months ago. There are so many things that have changed in that period, it's nearly impossible to make a strong argument that any one change caused any one other change. In stats speak, the exclusion restriction you'd usually require for this kind of statement is not valid here.

I think that's great that 67% of supply was quickly re-allocated. Imagine if this was a hotel. How many people would loose jobs and how many buildings would have to be demolished.

A hotel can tie up the resource of 100 places to live in temporarily inside one single building. Airbnb spreads that out to 50-100 separate places to live in. There's a difference, don't you think?

Sure, economy of scale should prevail and hotels should be cheaper. But they aren't.

For C19 unsure what's better. Cramped place or randomly distributed. I hear cruise ships are not very popular at the moment.

Empty hotels have the same CPVID19 effect as empty AirBNBs.

In fact, empty hotels are serving very important roles right now around the world housing homeless and quarantined people and travelers.

Finally there is no comparison between a hote and a cruise ship. Travelers in hotels, much like Airbnbs, are all back at their homes. The problem with cruise ships is that they cannot easily get back to wherever they’re from.

As someone living in an area that is frequented by AirBnB travellers, mostly young people who want to party, I agree. This house has become a pain.

FWIW -- according to LinkedIn, they have 14554 employees, with the top two functions being: 1. Arts & Design (3365 employees) 2. Engineering (1990 employees)

I see these numbers sometimes and it’s a bit staggering.

Why does AirBNB need 2000 engineers to display houses for rent in two phone apps and website? Kind of amazing.

There are entire companies that successfully run far more complex businesses with less than 2,000 people.

Damn they really have more engineers than stripe has employees

Lots of custom build HR and Sales tooling would be my guess. Also data sciency stuff (i.e. basic analytics pipelines that poop out pretty graphs for the c-levels).

One thing is good sure. It’s not the sport topping or employees

In AirBNB's case the counterfactual actually exists, and you can check its performance. Craigslist.

Great server performance, terrible financial performance for the shareholders

Sure, it's not like they have complex admin tools, customer service systems and lots of other internal systems...

I always read this comment and and amazed how people here underestimate the complexity of running a large business with global reach and billions of dollars in transactions. Airbnb is in >100 countries and uses home grown payment system. Now imagine the number of currencies it needs to process and number of finance and tax laws that it needs to follow. Also, when you have traffic at Airbnb's scale, architecture and engineering becomes competitive advantage. Every millisecond of performance improvement or every last % of latency improvements lead to dollars. Finally, Airbnb is heavily regulated at the regional and city level. So I am assuming they require army of lawyers and ops people at these regions to comply. This is a start, and I haven't even touched the customer support side or defense against fraud and other malicious actors.

> Every millisecond of performance improvement or every last % of latency improvements lead to dollars.

I just pulled up their front page for Vancouver and it took 3 seconds to load completely. Just the initial HTML server time was over 1 second.

It's gotten amazingly slow while it used to set example for other sites.

That said, most real estate related sites suck very badly. It's almost like everyone should stick to a single platform or smth.

Ok, so don’t use a home grown payments system, that sounds daft.

Look at hotels.com, which in many ways is comparable. It has around 1000 employees (one thousand). From wikipedia:

Hotels.com has 85 websites in 34 languages, and lists over 325,000 hotels in approximately 19,000 locations.

Going back to your comments, you could rephrase some of the earlier comments as: why on earth would you need millisecond performance improvements for a website/product listing rentals?

Hotels.com is part of Expedia group. Expedia has 25k employees.

Millisecond improvement is needed because travel is commodity and bounce rate is very high. If website doesn't load in time, visitors bounce off to other providers

They have 2,000 engineers, not 2,000 employees. Employees are like 13,000.

> Arts & Design (3365 employees)

Wait what? I must be missing something major about their company structure. Any idea what these positions are? There's no way web or app design scales in a helpful way to 3000 designers.

I was surprised myself, and I don't know what they're for. I have heard they are a design-driven company though. Also, they have a magazine (airbnbmag.com)

Might they rent out designers in a Client Services model, where they help owners take good pictures and basically tart up the property profiles?

Likely they're mostly photographers. Airbnb hires a lot of professional photographers to take listing photos. Here's an example job posting: https://careers.airbnb.com/contractors/1404981/

But that posting is "freelance contractor" photographer which means they are not employees. Is AirBnb/LinkedIn counting non-employees in that ~3365 Arts & Design headcount?

Probably? I think it's self-reported. If I was mostly working for Airbnb as a photographer, I might put them as my employer on LinkedIn, freelance or no.

I bet these are not majority employees, but contract photographers or even Airbnb hosts

Also, most people are missing that Airbnb is going to be paying some hosts a percentage of their lost revenue from canceled stays.

They are expecting to be bailed out, just like everyone else.

I bet the hotel industry is lobbying pretty hard against that one.

I realize the political nature of this topic, so please hear this question as sincere and not baiting / trolling: How is it a bail out if the government shut everything down to protect us from a pandemic? We’re intentionally pausing the economy, which will undoubtedly lead to a recession. Many of these companies were doing well financially prior to this disaster.

And I’m not defending AirBnB. I’m asking this about all companies. Isn’t this exactly the time our tax-funded government should step in and prop up successful companies, small, medium, and large.

What public service is Airbnb providing that they should be artificially sustained in the absence of a viable market instead of giving direct public financial support to their employees?

Ok I'll bite: they provide a marketplace for people to list and book rentals. You may not like it but it's what they do.

Yes I know what they do. That wasn’t the question. I have used them, like many. But that doesn’t mean they should be sustained in the absence of a viable market. The employees should all be supported, like anyone who is living through this. No question. But the company? Why do we, as a society as a whole, need to sustain the company in the absence of a market? Someone else would create the same business again when there’s a market for it. If there is again.

There's a great thread on Twitter about this, written by a professor of economics:

https://mobile.twitter.com/PerBylund/status/1247624230021271...

So Airbnb should be bailed out because government imposed the barriers by closing short term rentals.

The argument seems to be that because the government adopted business operating, they should get a hand.

I'm not sure I buy that. When you're a business owner, you take risks. Also ones that you weren't explicit about.

Suppose the government creates a rule that adds paperwork, so that all businesses now need to pay more to fill in docs. That could easily be the thing that kills certain businesses. Should they get bailed out? This actually happened in my business.

I'm not sure I'd go that far. I think if there is a major, near-unforseeable danger that where public policy requires shutting down business, then I think Bylund has a fair point that it shouldn't be treated as "sucks to be you" entrepreneurial error.

But I also think there's a lot more gray area. What if you were exploiting the fact that something was illegal but not enforced? That doesn't seem to merit a bailout.

What if you were running on extremely tight margins so that a week of lost revenue for any reason, even a justified one like a pandemic, would shut you down? Again, doesn't seem to merit a bailout.

> Isn’t this exactly the time our tax-funded government should step in and prop up successful companies, small, medium, and large.

Yes but that doesn't mean they should rescue companies that were a house of cards waiting to collapse before all of this started

This is a natural disaster, businesses shuttered before the government did anything because many people wisely started to quarantine themselves. So to be fair to the government, a lot of shutting down was happening anyway.

Being a natural disaster, I think the fairest characterization of the money is a relief effort, just as if a hurricane had struck.

A bailout is a fair term if the market screws up, as in the 2007 financial crisis due to subprime mortgages. Though the causes were complex, people were selling dodgy financial products that obscured value and risk.

In this case, many companies are adapting to a big shock quite well because of automation and delivery, but there are a ton of businesses that closed because they have a face to face business model.

I cant speak about AirBnB, but the reason bailouts are unpopular with some companies...say...airline companies is because they purposely implemented stock buy-backs and wasted most their reserve cash chasing EPS. Now they come for money. How is that fair to other companies which remained cautious and maintained cash reserves?

Are you saying every airline should have held cash reserves (really more likely to be bonds or other investments) sufficient to sustain them through a total wipeout of their entire customer base for months on end? A scenario that has never happened before in the history of commercial aviation?

Resources tied up in cash buffers are resources not deployed elsewhere, after all.

No, if companies aren't allowed to fail then the economy is broken. Every time a company is bailed out it just incentives less accountability in the future. Besides, no one is going to bail out the small, or even medium sized companies despite what politicians say.

> How is it a bail out if the government shut everything down to protect us from a pandemic? We’re intentionally pausing the economy, which will undoubtedly lead to a recession. Many of these companies were doing well financially prior to this disaster.

I don't think it's a question of moral deserts; as you say, none of the businesses suffering right now are doing so because they did something irresponsible which blew up.

But the concern is that we likely can't bail out literally every business in the economy that's in trouble, in which case the choices we make should be driven by global societal utility. Eg, if the airline industry was destroyed, the economy would be far worse off post-crisis, so it's reasonable to keep airlines afloat to some degree.

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