The Airbnbs
blog.ycombinator.com
blog.ycombinator.com
I still remember when Nate first told me the idea at our first batch meeting and I immediately loved it—at the time I lived in a 4-br house with ~10 people, and we constantly had people on the couches or in a tent on the roof. I would go on to make more money thanks to the Airbnbs during my YC year than I would from my own startup.
But a million times more valuable than money was the path that those guys sent me down. Sure, we both had gotten into YC, but I could immediately sense there was a huge gap between us. I think I've always had a strong work ethic and desire to serve others, but I didn't have the craftsmanship or teamwork skills that these guys had—and they had it in spades. Everyone talks about the cereals, but their apartment had more impressive things they designed and built than that (IMO). Nate was a no non-sense engineer who took software seriously and built great things. His code was far beyond mine at the time. And the team work was incredible.
I dabbled with joining Airbnb early, but never went down that path. I like to joke with my friends that I turned them down, but in reality it wasn't because I had better options, the truth is I knew they were out of my league skills wise, and I had a long way to go to catch up.
The lesson that I learned from the Airbnbs that I think isn't always stressed enough in the "power law startup world" is that you need to be building many, many things—with other people—, and get really, really good at that, before you can go on and "make something people want" and do something world changing, like these guys have done.
I'll never forget driving home in the dark after our Tuesday night dinners in a rental van, the 3 airbnbs and me. After hours of loud demos about their new stuff and listening to everyone in the room about how they could build things better, the drive home would be quiet. You could tell that they were utterly exhausted, but also quietly determined. I doubt that they will stop and rest enough to celebrate this moment, but they "earned this" moment.
They're the real deal. To this day continually inspired by them.
Virtually everything I've heard from people who have actual, personal interactions with the AirBnB founders is positive, and especially that their interactions were inspiring - that is, the AirBnB founders inspired people around them to do better work. I just think that's an amazing quality and something I'm so grateful for when I find it.
Sure, I may have my own gripes about AirBnB, but I can certainly appreciate the unique combination of talent in the founders that made their success possible.
I think a big piece of it is that current the crop of tech startups going public are largely unprofitable companies whose only "innovation" in many people's eyes has been skirting laws and foisting negative externalities on the broader public. These companies have also risen while the cities in which they are based (i.e. San Francisco) have deteriorated substantially.
All in all, the perception is that the current startup ecosystem isn't producing the same innovative, profitable companies that "lift all boats" the way it used to, and the increasing negativity and cynicism here likely reflects that.
It's fine to acknowledge they are remarkable people, but it's also ok to say that the success of AirBnB has had huge negative consequences for many people. And it's hard to see how the former can outweigh the latter.
'Capitalist realism' has us trapped. Many seem to believe no alternatives are possible.
No wonder we have a global mental health crisis:
"Depression is the shadow side of entrepreneurial culture, what happens when magical voluntarism confronts limited opportunities. As psychologist Oliver James put it in his book The Selfish Capitalist, "in the entrepreneurial fantasy society," we are taught "that only the affluent are winners and that access to the top is open to anyone willing to work hard enough, regardless of their familial, ethnic or social background – if you do not succeed, there is only one person to blame." It's high time that the blame was placed elsewhere. We need to reverse the privatisation of stress and recognise that mental health is a political issue.
[...]
The radical therapist David Smail argues that Margaret Thatcher's view that there's no such thing as society, only individuals and their families, finds "an unacknowledged echo in almost all approaches to therapy". Therapies such as cognitive behaviour therapy combine a focus on early life with the self-help doctrine that individuals can become masters of their own destiny. The idea is "with the expert help of your therapist or counsellor, you can change the world you are in the last analysis responsible for, so that it no longer cause you distress" – Smail calls this view "magical voluntarism"." [1]
[1] https://www.theguardian.com/commentisfree/2012/jul/16/mental...
It’s not clear to me what these are. I really don’t mean to be obtuse, but what are the ‘huge negative consequences for many people’?
Airbnb being a company, and a company seeking profits over everything else, one could argue that it's not their job to care about how they affect people. Doesn't mean we can't criticize it for it.
We could go even further and say it's by criticizing Airbnb that we will push governments to regulate this new market.
I don't necessarily think this is bad, disruption is often a sign of optimization.
2. Then there are markets where airbnbs have caused apartment buying and rental prices to go up much faster than what they should have, bringing millennials further away from home ownership. (not going to go into people getting evicted for landlords to open airbnbs, but deserves a quick mention)
This one is more tricky, as it is not strictly bad, but definitely not good. It tends to be good for some sectors of the economy (i.e. tourism, restauration, culture, etc.) As a whole(and in theory) it should drag -with some delays- the construction industry into building more housing units at a faster pace. Now, considering the economy as a whole was very good pre-pandemic and we were near full employment, construction companies likely had trouble finding more qualified workers to fulfill the demand. Government incentives were also either not present or not strong enough for new 'affordable' housing to be build in cities.
I know I went up fairly quickly over these issues, there is so much more going on, I strongly suggest reading/researching more about the various issues as there are definitely valuable startup ideas hiding in there.
Overall, I have no doubts the balance will be reached in the following decades: (i)Regulations to limit the numbers of airbnbs, coupled with permits and taxes. (ii)Strong government incentives to build more housing as I doubt people leave the cities for good following the pandemic, let alone remote working remaining the standard. (iii)Airbnb modifying it's business model. i.e. keeping the actual airbnbs, but potentially acquiring hotel chains amongst other things.
But how? How can you build more apartments in Lisbon or Amsterdam, where every inch is already used? Houses can be build in more distant areas but this forces people to commute longer making their live much worst.
There are creative ways to go around most problems, given the incentives are strong enough. i.e. we all live underground /s
On the other side, too much regulation can prove to be a strong disincentive. In this case I expect architecture or density requirements, amongst other things, in cities like Amsterdam to cool down the market, maybe a bit too much.
In short, in a city like Lisbon, good luck being a student for example. Pay upwards of 500$/mo (or for perspective, 75% monthly minimum wage) for a room in a shared house, or live a 1h30 commute away from campus.
I guess that way I look at it is that people want to visit cities for a variety of reasons. Those people need to stay somewhere. Wherever they stay will take up space, thus driving up rents through land scarcity. I am not really sure how people staying in someone's apartment is much worse than staying in a hotel.
If rents are going up, it's because there is more demand than supply. Unless Airbnb is actually increasing demand (perhaps?), I don't see how it is really affecting this equation.
They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic. This paradox is well-known among city planners (but often ignored by those who make the decisions because it is counterintuitive).
In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
This seems like a regulatory arbitrage that shouldn't exist to begin with. Why should the fire safety regulations for a hotel be dramatically different in expense than the ones for the equivalent apartment complex?
> They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic.
People consistently get this wrong. Bigger roads don't increase traffic. Congestion suppresses traffic. If there is a congested two lane road because it's carrying traffic that would require a four lane road, so then you build a four lane road, you then discover that the four lane road is still congested. Because once you remove some of the congestion, the demand it had been suppressing comes back and you still don't have enough capacity.
The distinction is important because there is a point at which you actually have enough road capacity to satisfy the demand that exists when it isn't being suppressed by traffic congestion. It's just more than you might have expected based on the amount of traffic observed when the road was congested.
> In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
The solution to which is to eliminate restrictive zoning like that, so that supply can respond to demand.
The primary reason that short-term rentals are zoned differently is local regulatory capture by hotels to limit competition and keep prices high. Without restrictive zoning, short-term rentals don't have to come at the expense of long-term housing because you can build more housing and have both.
Current knowledge says that "on average, a 10 percent increase in lane miles induces an immediate 4 percent increase in vehicle miles traveled, which climbs to 10 percent – the entire new capacity – in a few years." https://en.wikipedia.org/wiki/Induced_demand
That said, I think the source of this paradox is ultimately not in the road one is thinking of expanding, but in all the connections between it and other roads. It buys you little to turn one lane into five if all the exits are still the same capacity.
This paper explains this quite well: https://link.springer.com/article/10.1007/BF00166218 - I've heard it is available on sci-hub.
Your second point is very important though, and IIRC is the main reason why so many city planners are so critical of the boring company idea of underground car tunnels: It tries to solve an aspect of traffic that isn't the problem.
You're really just saying the same thing as I did -- congestion suppresses demand.
Suppose you have an uncongested two lane road. Making that a four lane road is not going to induce anything, because the widened road has more capacity than the original one, but you weren't even using the full capacity of the original one. It doesn't encourage anyone to do anything they hadn't already been able to.
The reason it "enables sprawl" is that if the original road was congested, people wouldn't want to travel it to commute, so buying a house in the suburbs and commuting via that road is suppressed. Congestion suppresses demand. If you reduce the congestion by widening the road, some of the demand comes back. And notice that the same thing happens if you alleviate congestion in some other way -- if you somehow make it more attractive to take the subway and then more people do, there is less traffic on the roads and it becomes more attractive to drive.
But you don't actually want the congestion. Traffic congestion sucks. You want to get rid of it somehow.
Part of the solution could be expanding the road, but you could have to expand the road a lot to satisfy all of the demand that would exist with uncongested roads, if you want to use that as the only solution. Which is why you shouldn't. There are other things that reduce congestion.
Like building higher density housing, so that more people can live closer to where they work and have a shorter commute, which in turn makes mass transit more viable. Then that in combination with widening some roads relieves the congestion.
The real problem here is the politics of it. Increasing the housing stock sufficiently to satisfy the demand would tend to reduce housing costs, which existing property owners don't want. So they fight high density construction with restrictive zoning rules and then the high cost and low supply of housing in the city pushes people into the suburbs, which increases the demand for roads.
There is an obvious confounder here, which is that anywhere they add lane capacity is going to be a place undergoing growth, which is why they felt the need to add lane capacity. But if the growth the continues, the new lane capacity once again becomes insufficient at some future point.
I would expect to see the same pattern with electrical transmission capacity. Where they add more capacity, you then see an increase in consumption. Which is to be expected, because why else would they add the capacity?
The difference with roads is that they don't catch fire if you want until after you're over-capacity before expanding them, which makes it more likely that the demand will consume all of the new capacity, since you're starting off from the point of already being underwater.
see: https://www.nytimes.com/2020/09/21/world/europe/airbnb-dubli...
So strong hotel demand certainly does push up land value overall over time, but it happens much more slowly and to a lesser extent than with AirBnB.
AirBnB gives investors a way around hotel regulations and construction costs. You can buy an existing house and with very little friction or cost start generating revenue from tourism demand.
No. They just wouldn't come. AirBnb and discounter-airlines has turned the tourism industry upside down.
Now, I do believe, that it's NOT AirBnb "fault" - AirBnb just accelerates the inevitable (like most technologies do) but the impact is still huge.
I have friends who live in Lisbon and Barcelona and from their eyes: tourism, that used to be a profitable "fancy" industry - with middle class people bringing their money to spend it - has turned into something different. These days "tourists" can be a group of 12 football fans, who've spent £18 on a RyanAir ticket and all stay in the same Airbnb room (as a group), getting drunk and vomiting on the streets.
I'm not saying that's definitely a bad thing (everyone deserves the right to experience travel) I'm just saying I can relate to (many) EU cities opposing this, claiming they're not getting any value from these crowds.
Some people like myself (eg. digital nomads) prefer short term rentals, and AirBnB has changed our lives.
Good for you but AirBnB has a proven impact in increasing rent prices for long-term rentals in any touristic city, be it Barcelona, Lisbon, Amsterdam, lots of cities in Europe have suffered from AirBnBs pushing units out of the long-term rental market and being available for people like you. And people like you aren't the majority of the inhabitants of a city, when people that are born and raised in a city are pushed out by pricing due to 10+% of the stock of possible rental units being used as short-term just so landlords can make a bigger buck it's sad and inhumane.
Great that from your perspective it's helped you, it's definitely impacted the lives of a lot of young people that were born in the cities you like to live, AirBnBs are eroding exactly what made them attractive: a good city neighbourhood.
But sure, tell every single young person that the solution for them on the next 5 years is to sit down and demand more housing built. What do people do while that's happening? Allow AirBnB to extract money and rent-seekers to gouge prices for the population?
That's not how the real world works, I'm sorry.
The real world is dictated by supply and demand. When demand is high and supply is low, prices rise as competition pushes them up. The increase in housing prices is a huge incentive for developers to build new housing. And it also increases the capital necessary to build more housing. Obviously the political situation will need to allows for new housing. Otherwise prices will just continue to increase.
It's the same reason developer salaries are high. Demand is high and supply is (currently) low. My company is struggling to find people to hire right now and are offering cash incentives.
Believing that the world is dictated by a reductionist model of supply-and-demand is either myopic or ignorant, the world doesn't work like that, that is a model that works well for a diverse set of markets, not all and not at all if you start to include the social aspects into it.
You can't just start building anywhere and anything, that will kill cities, it's a shallow analysis of a broader scope of issues such as: maintaining livable conditions (as defined by the society and culture of that city, not by some metric of "available units per inhabitant"), maintaining harmony of urban planning, maintaining the cityscape, and so on. Devising the master plan for building is exactly the kind of aspect that a simplified worldview of pure supply-and-demand does not take into account, it's simplistic and unempathetic.
Prices will continue to increase if building new units doesn't take place. AirBnB and greedy landlords shouldn't have the power to increase this damage for short-term profits. And worse: doing that in a rent-seeking way, with little to no benefit to the society of that city apart from some tourism money and "digital nomads" income passing by, rent-seeking behaviour is disgusting, it's pure extraction by virtue of you accumulating enough capital to be able to own a piece of land, that's all, there's no productivity increase for society through this form of extractivism.
The NIMBY'ism of preventing new housing is the very definition of rent seeking. By legally locking in, the existing owners prevent others from entering the market due to artificially constrained supply. Airbnb doesn't create the demand; they are just a marketplace and one of many.
What contribution to productivity do corporations or people who have enough spare cash to buy available land provide to a society?
AirBnB can be just a marketplace, that doesn't mean it isn't damaging to society at large. Excluding the moral aspects of that is an ideology based on capitalism, it doesn't mean it's right.
People in the comments are acting like AirBnB is some villain, when in reality it's just a website that facilitates supply and demand of housing. If not AirBnB, it will be some other site (eg. many AirBnB listings are on other websites as well). So long as that market exists, platforms will come up to cater to those needs.
Everybody loves a good villain. But really the problem and solution are not as simple as AirBnB = bad. You guys sound like taxi drivers bashing Uber/Lyft.
Digital nomads building some pointless SaaS products with inflated egos working remotely in far flung places of the globe, getting to sample the delights of the worlds great capital cities are not an important consideration in the impact of AirBnB globally. The ability to live a lifestyle like that already comes with so much opportunity and privilege which is either denied or impossible for so many people.
And so when AirBnB ravages communities by driving prices up and forcing people out through their carefree regard for local rules and regulations, then yes, I would say that part of the problem also lies with AirBnB, unless you simply believe that any company should be able to bulldoze whatever comes in its path with zero repercussions?
There is a reason that cities like Lisbon are desirable to visit and spend time in. It's not because its increasingly filled with tech-nerds who talk about "Ramen profitability" and play on slides in offices at lunchtime. Its because of the rich history of the place and the communities + people which make it up. And much like gentrification has done, this easy carefree tourism dilutes that and risks turning everything into more of the same playgrounds of the world.
Look we get it, you hate digital nomads and SaaS products. I couldn't really care less, and that has nothing to do with anything I said, which is that local governments are responsible for their citizens. Whether it's AirBnB or Craigslist or Couchsurfing or some other website, there will always be a demand for people to find housing and to rent out spare housing. Villainify digital nomads or AirBnB, that's never going to solve the problem. (though part of me thinks you're more interested in venting about how much you hate "digital nomads" then actually thinking about the problem of affordable housing and what would could realistically be done to fix it).
I don't think it's really useful to put the blame squarely on the local government in Lisbon for example, sure perhaps they should take a share of it, but that doesn't exonerate exonerate Airbnb - far from it in fact. We're not "villainifying" Airbnb with baseless accusations - I've seen you comment elsewhere that if it wasn't Airbnb it would be some other company, that is terrible way to justify things.
I do believe we should villainify them for circumventing and bending local laws (especially in a country which is in a different continent to where Airbnb is based...) to their advantage and to the detriment of the cities they're "disrupting". Just because something is not technically illegal or you can get away with it doesn't mean it's justified.
I don't hate Airbnb either, though I am inherently distrustful of fast growing, power hungry & greedy "tech" companies and in fact have personally had positive experiences with it. I just don't think its as black & white as you're suggesting. Airbnb should be (and thankfully is) being held accountable for the damage its wreaked around the world. Local laws & regulations were perhaps not well enough equipped to deal with this new kind of tech behemoth and have been slow to adapt, but Airbnb didn't have to play the bad guy in violating zoning & short term stay regulations that the rest of the hospitality industry have to follow. But they did... knowingly.
Someone else made the point that Airbnb was kind of like Trump, exposing & exploiting the existing weaknesses in a system to their own personal advantage. We don't point the finger squarely at the the system, yes it clearly failed under Trump and he is in some way just a symptom of more fundamental problems. But it doesn't let him off the hook. Neither should it for Airbnb
Of course the aims of any private company are to maximise profits through whatever means necessary. That's just the world we live in unfortunately. But even if we accept that as a fact of life, it doesn't mean that on an ethical & moral level we should overlook the harm caused.
You don't get to evade responsibility for the your actions and the consequences of your lifestyle, while advertising "worker rights" and "anti-poverty" in your bio.
Again if you actually read my comment, the point is that governments are responsible AND the only entity capable of fixing affordable housing problems.
But sure feel free to villainify AirBnB and AirBnB guests/hosts if that makes you feel better. I was living off AirBnB and short-term rentals in NYC/SF too, I guess that means it's my fault that NYC/SF has expensive housing? Lol ok.
You should actually write a bio so I can anonymously insult your existence from the comfort of my keyboard. /s
Data point: around 25 years ago, I was paying GBP225/month - so that's ~USD300 - for a (tiny!) bedroom in a shared house in Cambridge, UK.
I'm not sure what approach one would best use to adjust for 25 years of house price and/or general inflation, but isn't that in the same ballpark as your '$500' in Libson now?
FWIW, we thought housing was expensive back then, too.
We were postgrad students. No idea about average wages for those who were working, but we were always broke.
Q: Are we talking about average students or average workers?
16 years ago I paid £270/month to live in a sharehouse in Bristol (not generally as expensive a place to live in as Cambridge) in a boiler cupboard that had been converted to a bedroom.
Students are broke, but parents can help, and if your "room" costs half of one your parents wage, that help is less likely to happen. Or make the poorer even poorer.
That situation is totally different if your room costs a quarter of one of your parents wage.
Q: Do "minimum wage" rules apply 1) in theory, 2) in practice to postgraduate students?
Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
> Students are broke, but parents can help
Q: Do we really think postgraduate students should expect their parents to still be funding them?
> £225 per month
Apparently, yes. We do expect parents to still be funding postgraduate students if they don’t want them to starve. £702 pounds per quarter seems kind of hard to live on. That’s like £8 a day to pay for everything except rent.
Actually, that seems kind of doable.
If you have to find a part-time to pay some of your expenses yes. In that case a part-time in Lisbon will pay you slightly more than half of your room and in "your case" it would pay the whole room. It's a BIG difference if you have to go down that road.
> Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
I do agree that post-grads are very badly paid. But that's another issue.
> Q: Do we really think postgraduate students should expect their parents to still be funding them?
Not really, but if there's an emergency I think parents will not let their kids starve.
And this hackernews rhetoric of 'if I suffered everyone has to suffer as well' needs to end. That's not how you move forward.
Subject to ability to do so. I knew many grad students who took part time jobs to send money in the other direction. Their earning power was greater than their family's.
Tuition is already 80€ per month, and even that is waived if you come from a low-income family. But how is someone earning 600€/mo supposed to send someone to college when rooms cost at the very least 350-400€/mo? Plus living expenses, 150€ the bare minimum. Even if you apply for financial aid (which you will get) the amount is woefully inadequate to face this rising costs. The result is that poor families cannot send their kids to uni. That's not democracy, freedom, or equality.
Also those 225£, what fraction is that of the minimum/median household income?
Of course it's not AirBnB's fault that there's no regulatory oversight on the hoarding of basic life necessities, and the original pitch ("couchsurfing but for money") clearly did not have that intent, but at this stage they're going to push back pretty hard against any restrictions on that kind of behaviour.
I wonder what would happen if housing were not an investment but construction would be legalized that turned housing into a commodity. Right now many attractive cities are often captured by home owners who collude against against new housing because that pushes prices down.
I hope the company that comes after Airbnb disrupts the construction industry, allowing cheap but high quality housing for everyone, and not just anywhere but in places of demand.
That said, that kind of balancing takes time in practice, so if you did find a way to deliver a lot of housing at a much lower cost you could exploit the delay and build a lot of housing quickly, which would increase supply, which would lower what buyers are willing to pay. Basically you’d have to flood the market with so much cheap housing that buyers willingness to pay goes down.
I think a better approach to fighting high housing prices is to make more different cities and towns appealing places to live. There already is a ton of housing in this country but it’s in places where not many people want to live.
In other words, it all started as an opportunity for private people sharing their rooms, now there are more and more businesses operating in this space, reaping all the benefits, but giving nothing back in return, paying no taxes, ignoring all safety measures etc. Give people the opportunity to abuse the system, and abuse they will.
Local rental prices skyrocketing is one side-effect, destroying the neighbourhood is another.
There are positives too, like I now have the opportunity to easily rent a room or flat with a kitchen so I can cook myself (with various food intolerances/allergies this is important), this would not have been possible - or would have been really expensive - in the pre-airbnb world.
The yellow cab industry might be tightly regulated, but It doesn't seem to benefit the consumers. Cabs suck, plain and simple. Even the worst uber I've personally had was far better than a cab
In general the yellow cab monopoly got smashed apart with a sledgehammer.
Hotels face lots of regulation not only on how they operate (fire safety, egress, food safety, etc) but also where they can operate. AirBnB lets investors get around all these regulations and tap into tourism demand at a much lower cost.
We all have individual stories about the convenience of AirBnB when visiting a new city, but I feel a lot of us are unable to see the bigger picture beyond our own selfish need for slightly increased comfort levels. We either deliberately overlook or are blind to the damage AirBnB and similar tech companies have wreaked on society.
Flimsy, selfish delusions of grandeur from tech wankers who just want to print money in fastest way possible with total disregard for the destruction they cause along the way but don't worry, its "disruptive"! All to be lapped up and praised by people who were brainwashed into the Randian mode of thinking
I also find it quite amusing that some people come back with these replies of "you're just bitter" "jealous of the fact that they're rich and you're not!" just continuously beating everyone over the head with this idea that there's only one true way to measure success. As if, in questioning how that success was reached and the societal, ethical and moral issues it brings up are somehow not acceptable. I guess in pursuit of the American Dream no has no time for such trivial issues.
Those noisey parties happen at my neighbours house all of the time. It's the price of living in a city.
AirBnB - and Uber - just went and ignored these laws wholesale, essentially showing everyone a huge middle finger.
So you talk to your neighbours and you come to an understanding. Since you have a long running relation with them (you live next door to each other) you can improve living conditions for both parties by communicating. If you have different party go-ers every week next door you can't do that.
Housing area's should primarily be liveable. They are not there to provide real estate for someone to speculate with or to rent out to party go'ers. Though I guess this might be a too socialist view for you in which case we'll probably never agree with each other.
Your view sounds more republican. All of the home owners create a gated community with rules. Those who break the rules are kicked out.
I think people are mad that the Airbnb founders are rich (fair, but there are a lot of rich people) and that they have arguably raised rents, though I'm not 100% convinced of that.
EDIT - There is some good data out there suggesting a correlation between airbnb activity and rent increasing. Still researching.
As far zoning and hospitality regulations: it is scarcely exaggeration to say that a municipality can come close to ruining your life, and certainly your personal fortune, through whimsical application of them. Perhaps you live in a place where these things don’t matter, or, more likely, perhaps you’ve never been in business for yourself. I live in Seattle, where they will cheerfully shut down your business for weeks because you have an electrical outlet 6 inches too close to the wall.
For ex I’ve personally not heard anything much from Airbnb w.r.t impact on local real estate markets eg higher prices or low rental inventory. I’ve only heard them actively deny that they put pressure on real estate prices.
And they’ve only recently invested more in safety and have said they are trying to ban house parties after the shooting in Oakland last year when that has been a problem for years.
I think it may be easy to compare the two now, but back in the days they were fairly different. I was a fairly early user of Airbnb (they opened at a time when I was young and traveled a lot, especially solo). During those days, Airbnb was truly about renting out extra space in your own home. (Maybe not an "airbed" every time, but just a room in your house/apartment, nonetheless) All of my early usages of Airbnb (as a guest -- I was never a host) were actually renting rooms in these strangers' apartments, that they live in themselves. This was in France, Italy, Brazil, etc. It's not about vacation houses in popular resort places (Lake Tahoe etc.). In fact, I remember back in the days there was a lot of comparison of Airbnb and Couchsurfing. One is paid and one is free, sure, but both were very much about meeting folks locally.
Correct. I first used VRBO sometime around 2002. They were the only game in town for this kind of thing for a long time. Yes, you could rent out space in peoples' homes, but if you wanted a vacation spot that wasn't a motel, they (eventually) did that better than VRBO did. I'm pretty sure VRBO didn't change their vintage 1996 website until well after AirBNB was a competitor. Multiple years. I could be wrong on that, but suffice it to say that AirBNB also filled a vacation house need that VRBO had been limping on.
Sibling comment conductr is part of the problem, the same blindness as Airbnb: I want what other people have (private pads in cool locations, rented by the day), and I don’t care if that’s unsustainable in the long term, I will just take advantage of it now.
Here's the sad truth: for every one hard-working, hard-cranking, in the right-place-at-the-right-time, never giving up "cockroach" companies like AirBnB that happen to make it, there are a hundred also hard-working, never-giving-up, never at the right-place-at-the-right time people with charisma who people look at and just say "why won't they just give up??"
Because you can't spot an AirBnb out of a crowd of look-alike startups or pick the winner just by sensing the energy of the founder. Good products, great tech, great founders only get you so far on the crazy path of entrepreneurship. There's a million variables and factors that prevent you from successfully completing that path. There are the spectacular flameouts. The great founders with great tech who can't find market/fit. The iterators who can't make spaghetti stick to the wall.
And no, not even a PG can spot that one survivor out of the batch of many, despite how much self-congratulatory survivor bias would say otherwise, even if he did indeed spot the winner from the get-go as he claims in this essay.
Which - to be fair - might have scuppered the company if it had happened early on by chance.
Ps Chris was my favorite speaker - he’s the only one who made sure to tell everyone to chill out, take care of your health, sleep, etc.
People are actually far more benevolent than people think. The number of actual murderers and other miscreants is such a small number as to be negligible for the purposes of renting out your home, your car, getting food delivered to you, etc.
In total the parent comment exemplifies how Chris values and honors life over profit. That’s a tough internal struggle in this industry and is probably why he dipped out a few years ago.
[0] https://www.independent.co.uk/news/world/americas/airbnb-ban...
But you have to remember that his business depends on raising money from people that must buy in to the myth that he does have that special ability to spot a winner on day one.
Ironically though, successfully making people believe that you are able to pick winners actually does make the people you pick more likely to win. Being selected by YC not only allows you to raise truckloads of money more easily, it also gives you a boost when making connections or deals with other companies, hiring the best talent, etc.
It's pretty clear in hindsight that taking note of who PG was hanging out with was a very investable strategy. In fact, one of my batchmates had some money to put into other companies in our batch, and when he asked me for my opinion of who to invest in, that's exactly what I told him. I just did some quick math and would estimate that his ROI today is somewhere in the 1,000x range.
I am not the only who figured this out - while this wasn't quite as much of a factor during my batch, nowadays there is an entire cottage industry of YC-only funds who invest only during YC demo days. As you can imagine, the way they differentiate from each other is by how much insider knowledge they are able to accumulate leading up to demo day (I am not implying that the partners ever leak anything, but these funds are very motivated and they look for all sorts of signals). One such signal is to track all other investors around you, and a well-connected angel can single-handedly increase the valuation of a startup (which explains why they manage to get in before demo day and at a discount).
I have to say though - while the success rate of these YC-only funds is likely good enough to make them quite profitable, none of them come even close to what I observed with PG's ability to pick the winners (which makes sense, since a lot of other people have tried to build accelerators and none of them come even close to YC).
That’s hilarious. Cheers! I never thought of a person’s movements as an investment signal, but in hindsight it certainly must’ve been.
This is nonsense. VCs do not have that kind of power to will something into existence. They can pour money into it, but they can't make a company successful. And if they continually spend more than they make...they don't get to stay VCs for very long.
Looking at the list of "Former Unicorns" on this page [1], I can't see many that fit your description. Sure, there's a handful, inevitably, but it's far from the norm. Most of them have grown into real businesses making real revenues. And sure, some of them may be still making losses but that's a valid strategy where there is still growth potential in the market.
Granted, Uber is a big question mark; it remains to be seen whether they will ever turn out to be profitable. But everyone knows what the strategy and the bet is, it's just a matter of waiting to see if the bet pays off. But no serious commentator could dispute that Uber's founders and present executives are talented people, building a company of substance.
So, if the claim is that it's commonplace for unskilled/disingenuous founders to build huge, successful-seeming companies just through huge sums of VC money being pumped in, then exiting and fleeing the scene before they get found out - there don't seem to be many real examples of that happening as far as I can tell.
[1] https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan...
If you need mathematical proof for this, just ask yourself how many net new customers would you have to add to a business every year if you are at $100m in revenue and have an annual churn of 10%. Yep - you'll be running out of your TAM pretty quickly at that rate. And then add to that the fact that each new net customer will likely keep getting more expensive to acquire [1]. To get to $100m and stay there of even grow beyond that figure, the business fundamentals (first and foremost: churn) need to be good.
You can also think about it from this angle: why is it so rare for the same founder to continuously churn out one IPO after another? With each next attempt, they should be getting better at it and have more people willing to support them. The answer is - it takes a ton of stars to align correctly, and money alone won't fix your unit economics at a moment in time, let alone over many years and 100x growth in revenue.
And it's certainly possible that an experienced builder and investor like PG learns some heuristics and tricks along the way to increase the odds of landing on those few winners.
That's basically what this article is about, recounting some of those of heuristics that led to YC investing in a startup whose idea they originally didn't even like.
It's not about spotting that one survivor, it's about spreading enough bets with effective enough heuristics to ensure a high positive overall EV of the aggregate of all your bets.
"Survivorship bias or survival bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility. This can lead to false conclusions in several different ways. It is a form of selection bias"
It seems safe to say that the majority of Airbnb use now is not a delightful experience of being hosted in someone else's home, but whole-apartment/house rentals or other circumstances with not much interaction between host and guest, feeling very business-like. No? I don't it's common to especially enjoy it as an experience anymore, it's just a way to make money or a way to find a nice place to stay at a good price.
If that delightful hosting experience is what inspired them to keep going... it's still not what the company mostly ended up providing to the world. If we were to weigh the pro- and anti-social aspects of airbnb, that pleasant human relationship between host and guest would barely weigh on the scale, because it's mostly not what happens there anymore. The founders don't seem that concerned about that though, do they?
So what do we take from all that? It seems odd to me to highlight that aspect of the founders initial motivation without even mentioning whether that's what the company actually does now.
Either way, it's not what it is now, and he's choosing not to mention that, while leaving it at the center of the story...
Was it Ford that said: don't ask me how I made my first million?
That still enables the personal-experience ones to exist -- and there are tons of them.
One doesn't negate the other. A supermarket can sell conventional and organic produce at the same time.
Travelers and hosts have different tastes. Why wouldn't you cater to a broad range?
Look at Dr. Bronners soap -- it was for spreading religion. Turned out the soap was more popular than the religious message. But every bar and bottle is still chock-full of the religious stuff.
Or how people start movie theaters to show movies they love, but that's not profitable, which is why they have overpriced concession stands that actually make the entirety of the money.
If someone wants to bring organic food to a town, but the only way that's a sustainable business is to make it a small area of a large conventional supermarket... that's entirely normal.
I don't know why anyone would wonder about it at all?
The problems she has with guests and the problems Japanese people face as a country are very different. She has had to stop taking specific types of guests because of rude behavior like flushing food down the toilet and damaging tatami mats. When in Japan, a person described their culture as, "having a very specific way of doing things and becoming very upset when people get in the way of that." With so many people having that mentality, hosting is a more friendly sort of thing.
We have different issues. We've become friendly with several of our guests, and even see some past guests once or twice a month to spend time together. When the guests come from AirBNB, we have to maintain a lot of vigilance. We've had multiple drug dealers, a large number of people smoking weed in our rentals, child endangerment, and a few parties. AirBNB has a hands-off policy and there are a lot of pieces of shit who have learned they can abuse AirBNB's system to do what they want, and we don't quite have the same culture of empathy anymore.
Wow, how did you find out? Got calls from FBI or something? (Just curious.)
I am not saying that there are no problems. But it's kind of possible to get them under control and also have a good value proposition as a host. If you don't have this, then switch back to classical long-term renting. If you keep renting (rather short term) via AirBnB, then the value proposition for you (the host) must also be good enough considering all factors. It kind of does not make sense to be an AirBnB host and be unsatisfied - only temporarily.
You assumed what our properties neighborhoods are like incorrectly. You used your faulty assumption to create a story inside of your head so it would be easier to be patronizing. Your unsolicited advice was a waste of my time and yours, but I do hope it gave you that dopamine hit you seem to desperately need.
That's what I actually like about Airbnb. I get a whole house to myself and no one is there. I can go to a new country but still cook food and travel with a family, something that can be annoying in a hotel.
If you feel like being cynical, you can see ycombinator as analogous to a ram pump[0] that raises a small amount of water to a large elevation by dumping a large amount of water from a lower elevation. The way they get that flow is from what inspired people to keep going. So why not promote that? It's only logical.
- Grit and formidability. "They did nothing half-way, and we could sense this even in the interview." If one doesn't feel so strongly about the problem they're trying to solve, it is going to be hard to sustain the energy needed for the effort required.
- The founding team is key. "We didn’t even like the idea that much. Nor did users, at that stage; they had no growth." Despite the "startups = growth" truism, it is refreshing to see that one of YC's biggest exits had no such trait even after a year of work (when they decided to fund them in W09) apart from the fact that the founding team was relentless.
- Momentum is everything. "No one ever worked harder during YC than the Airbnbs did. If you suggested an idea to them in office hours, the next time you talked to them they’d not only have implemented it, but also implemented two new ideas they had in the process." This may sound easy but it is so hard to do in practice (speaking from experience) because of the discipline and focus it requires to keep moving the needle a bit more every day.
- Don't let rejections break you [0]. "One investor they met in a cafe walked out in the middle of meeting with them." Again, it so very easy to let rejections get to you despite trying your hardest to not be bothered by them. You start to question all kinds of things which isn't a healthy thing to do but it is kind of inevitable because the disillusionment hits so hard.
- Live in the future. Care enough to make it happen. "When they first tried renting out airbeds on their floor during a design convention, all they were hoping for was to make enough money to pay their rent that month. But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too... That experience was why the Airbnbs didn’t give up. They knew they’d discovered something. They’d seen a glimpse of the future, and they couldn’t let it go." The Airbnbs weren't the first to realise this [1] but they cared enough about making this work at a scale never done before [2].
- Know your metrics of goodness and identify how to hit them [3]. "They knew that once people tried staying in what is now called 'an airbnb,' they would also realize that this was the future. But only if they tried it, and they weren’t. That was the problem during Y Combinator: to get growth started. The way to get growth started in something like Airbnb is to focus on the hottest subset of the market. If you can get growth started there, it will spread to the rest. When I asked the Airbnbs where there was most demand, they knew from searches: New York City. So they focused on New York." If I take the liberty to draw parallels with Amazon's founding [4], Jeff Bezos (who incidentally is an early Airbnb investor himself) chose Seattle for a reason (taxes and tech talent). He chose Books for a reason (warehouse-ability, shippability). He chose to be online-only for a reason (low costs and reach). Again, easy in retrospect, but requires non trivial amount of insights and delibration when starting up. And it is all too easy to overthink this and get lost in a quagmire. Drinking the kool-aid, as it were.
Survivorship Bias or not, I think Paul would be the first to point out that every startup is different.
[0] https://medium.com/@bchesky/7-rejections-7d894cbaa084
[1] VRBO, HomeAway, CouchSurfing...
[2] https://www.linkedin.com/pulse/airbnb-didnt-create-brand-new...
[3] https://www.artima.com/weblogs/viewpost.jsp?thread=24807
Just before entering YC, they had a handshake agreement with an angel investor for their seed round[0]. The YC partners convinced the AirBnBs to back out of that deal and have YC do the full round instead.
But the idea that Airbnb was "on its last legs" and YC was their one last chance because "investors didn’t think much of the idea" isn't true.
“I was one of the few investors who actively pursued this deal from August through October 2008, and the only among them to agree on a term sheet.”
“Over those extra weeks, however, the other investors who had been circling all dropped out of the deal…instead of a handful of us coming together as I expected, I was the one lone dude writing a check for the entire seed round. But ultimately that was fine by me — I was good to move ahead.”
It’s not like they had a particularly oversubscribed round or anything
The Airbnb founders seem to be good at Making Friends and Influencing People. Which is clearly a valuable trait in Silicon Valley but not all that admirable. Neither is the business they built, which has caused perhaps as much misery in the world as it has eliminated.
YC set out to create the next generation of tech companies like Google/Microsoft/Apple. Instead, YC has only helped to launch some pretty mediocre companies that will be hardly be footnotes in history. Sure, they made money, but they were already rich.
The Airbnb and DoorDash IPOs are evidence of YC's failure to achieve its real mission rather than evidence that it succeeded. If it had succeeded, we'd all be talking about the Google-killer or Apple-killer they launched, and not these super boring room rental and food delivery services they're left with as a consolation prizes.
It'd be awesome to see YC's original mission fulfilled. It was a grand idea and would be great for the world.
You can debate what "walked in" means but I think it's safe to say the story of Airbnb getting into YC is one of Winning Friends and Influencing People rather than any brilliant ideas or work they did on their actual startup, which is precisely what the blog post is saying.
Edit2: just saw on Twitter that @paulg posted the email that got Airbnb an interview. It's hard to imagine a stronger attempt at walking them in than they received. They got very special treatment from friends with connections.
YC’s goal was to make a tremendous amount of money. Without that, none of their other ambitions would succeed. Enough of their bets had to be right.
In that sense, it seems like YC was a success in their original mission. One does not kill google simply by wishing it.
That said, yes, you’re right about the special treatment. But that’s what the real world is like. It’s not meant to be a court with a judge. http://www.paulgraham.com/judgement.html
You (like me, once) can be uncomfortable with the idea of special treatment, but it’s hard to argue with the result. After all, Airbnb IPO’d.
EDIT: By the way, if you’d like to chat privately about the old days, feel free to DM me on Twitter. That 2008-era was interesting, and I remember you were there for it. I’m curious to get more of your impressions.
To say otherwise is cynical bullshit, and you guys should really pause before reinforcing talented-but-disadvantaged people's worry that they don't have a shot. They do have a shot, and if you had any idea how hard YC works not to overlook applicants who show up without special connections, you'd be ashamed of yourselves.
I doubt they were given special treatment afterwards. Their interview probably went like everyone else's. But how can it be true that there was no special treatment beforehand, when it was a special /apply2 endpoint?
Of course talented-but-disadvantaged people have a shot. None of this is to say that they don't, and no one implied that special connections were a requirement. I know how hard YC works not to overlook those.
My position is that there's nothing wrong with it being a special exception. Instacart seemed to be, too. But that's different than saying there was no exception.
pg replied with a link to let them apply, in spite of the fact that the round was closed. It was an exception to the normal rules. And the exception was accessed by having a personal intro from a YC founder.
The rest here is also false. The round was not closed. Application deadlines have never been enforced at YC. By accepting their late application he was treating them the same as anybody else.
Even the point about the intro email is overstated; I did that too upthread, but now that I think of it, it's obvious that pg would have replied the same way to any email he got at that moment: tell them to apply fast, be concise, etc. No good startup investor would say "sorry, you missed the deadline" because they all know that missing outliers for dumb reasons is the biggest mistake they can make, the one that matters more than all the others put together.
So really what this all boils down to is that Justin had pg's email address, and I don't think that's what the people arguing "special treatment" in this thread were talking about.
You know pg better than any of us here. Does /apply2 sound like an endpoint he'd make for the general public? The naming practically screams "special case."
Why don't we just ask pg? He'd reply to you. I trust pg implicitly. He's been many things, but never a liar.
For what it's worth, I completely agree with your points -- it would be dumb to reject their application due to timing, especially when you're getting such a strong signal from a YC founder that this application is worth paying attention to.
Scott and I were in the same YC batch as Airbnb. We had no connections and knew no YC founders. It's simply not the case that you needed "friends with connections" to get into YC, then or now. It's not necessary, and it's not sufficient either.
I don't mean to be a stickler but it's harmful when people imply such things. It discourages founders who don't have friends-with-connections from applying. That's really bad—what if they're just the sort of founder YC wants to fund? A lot of people are, who don't think they are—and maybe they lack the self-confidence to try, or they're teetering. If they run into HN comments or whatever that cynically say "it's all about connections", they may teeter away, and that could have a huge effect on their life. Getting into YC, knowing no one and having no special connections, changed my life bigtime, and that of many others as well.
We met the Airbnb founders in the waiting room because our interview was right after theirs. They were super nervous, as were we, so we bonded around reassuring each other that their startup was great. I remember Brian saying that they had never heard of YC, but they knew the guys at Justin.tv, who had encouraged them to apply at the last minute, and that was why they were there. So the primary effect of the "friends with connections" was not that it got them into YC, but that it got YC into them—i.e. it got YC on their radar in the first place.
https://www.ycombinator.com/library/6t-how-to-apply-and-succ...
That was part of my 'official" curriculum in Startup School. I don't know a date on it, but I haven't officially finished Startup School. As far as I know, that is still their official policy to this day.
The analogy could almost be equivalent to MySpace and Facebook; the former created the mindshare and made the big first mistakes, while the latter learned from them and expanded the concept.
> After all, why do something for free when you could get paid instead?
I really doubt the Couchsurfers were the ones who were converting their listings to Airbnb spots initially. Rather I think Airbnb enabled previously unwilling (or unmotivated) people to start hosting others for a cost.
The type of people I would meet were from a different cut of cloth than Airbnb folks. One picked up my friend and I from a Megabus stop and later we ended up going to our host's second home on Martha's Vineyard. One let us try out his expensive cycling bike out for a bike ride. I've attended a yoga session with my Couchsurfing host before on a trip. When I hosted, I took my guest (a cadet at West Point who hadn't had drinks in forever) on a spontaneous bar hop with my group if friends.
There was always a mentality of paying a good experience forward and a sense of community - which is tough to preserve when it becomes a transactional experience.
That being said, I agree Airbnb likely led to the downfall of the CS community. There were some sketchy ppl in that world. After running into one of those, I slowly found myself preferring to pay for the security and safety although deep down I knew I was going to miss out on all the fun that I couldn't simply pay for. As for hosting, I just wasn't interested anymore knowing that if someone were paying to crash at my place, it would be less about hanging out or getting recs but more about just needing a reliable roof to cover... where's the fun in that for a host?
Eg. I absolutely don't want to downplay Mark Zuckerberg's contribution/genius, but Facebook comes to my mind, which certainly wasn't the first (attempt) at a social network. And: What are they today?! - Kind of the "web" (on phone/mobile) in India for example. With all the social integration and native (applications) first on (Android) phones, they became a better version of the WWW in less developed regions of the world.
https://i.imgur.com/55yP1CZ.jpg
This is from the Harvard Business School case study on Airbnb.
Be clever.
I wonder what the calculation for ramen profitability would look like in a fully remote-work environment, in a place where rent isn't $3500 a month... Anecdotally I've seen a few people renting pretty nice places in Phnom Penh, Cambodia for $500 a month. Some stayed there through the entire duration of the covid19 crisis due to travel shutdowns and have been working on various things.
[0] https://www.kff.org/medicaid/issue-brief/status-of-state-med...
I’m not sure I would recommend it, though. Proximity to customers (assuming US/EU market) and angels/VCs is worth something, and I would suggest that it is worth a lot.
I will also add that when you factor in plane tickets, visa runs, etc., it is probably easier and just as affordable to find a cheap place to stay in your home country.
If you’re bootstrapping a business, especially if you have some tie to Asia like manufacturing or labor (e.g., “virtual” assistants), then the digital nomad option may be better. But for a VC-trajectory business, I somehow doubt it.
this is not a particularly scalable advantage. if you plan on reaching every single corner of the global market, what does customer proximity mean? if you have to have an office everywhere you do business in, is it really a tech driven business or are you just doing bespoke sales? what's the cost of every additional dollar of revenue?
Early start ups are typically going from zero to one, so they really need to find a small and passionate customer base somewhere. As many folks have said before, often times it makes sense to do things that don’t scale early. This might mean in-person visits. YC has many stories of this working, like Airbnb and Stripe.
I will also add that if you are looking to go down the VC path, being near VCs is important. You can raise VC being far away, but it is more difficult, and the associated costs will eat away at what the original commenter seems to be looking for, which is a cheap place to live.
The local food bank has seen a jump in people homeless or paying more to rent farther from the urban center or suburbs. It's almost entirely due to Airbnb operators "renovicting" people. So a protest donation of anti-STR people gave to the same food bank in the amount of nearly $13,000 at last count.
Many people in my small town hate Airbnb due to the sudden, massive, and negative change it's caused in local housing.
https://www.journalpioneer.com/news/provincial/short-term-re...
But it’s hard to really disconnect execution from the insanity of our monetary system this year...trillions in dollars pumped into our economy, 0% rates, and a retail options frenzy has created the perfect environment for speculation on growthy tech stocks.
If you're wondering why it's been such a bad year to be in cash despite the economy crumbling around you, it's because no one knows where else to put their money. Stocks and houses are being bought with inflated dollars.
How do we know the number of dollars is inflated? Maybe there were too few before?
See: Taper tantrum.
If you think the Fed isn’t doing anything when they QE, then ask yourself why they do it.
AirBnB didn't benefit in any way. It just seems insane that we will see such a pop in their stock price.
Or am I missing something here? Does remote work means more business for AirBnB properties in the future?
They also have more “rooms” and any hotel chain without any of the capex or infrastructure costs so it’sa fantastic model that is light on cash and creates tremendous scale.
The pandemic forced them to cancel advertising, save a ton of cash, and realize that their brand is strong enough that advertising isn’t really needed in the traditional sense which improves their balance sheet for 2021 and 2022 and future years.
Meaning that the company has very little insight or control into the quality of any of their listings. So it’s always a dice roll. If the listing ends up looking nothing like the pictures, or is dirty, or you’re locked out you’re on your own, and the best you can hope for is not getting the run around from customer service and they refund you fully and/or put you somewhere else.
I loved Airbnb when they first launched, and I still love renting people's spare rooms. But once a close friend started having problems with his neighbours, I experienced first hand the negative externalities that were involved in making Airbnb rich. Renting out a spare room now and then is entirely different from dedicated "holiday rentals" in the centre of residential buildings. It is hellish for the other residents.
If PG lived in a standard apartment block and was surrounded by Airbnb rentals, I guarantee he would have a very different opinion of Airbnb.
However YC turns a blind eye and praises them for their growth.
Reading Paul Graham’s recent essay have been disappointing. It doesn’t paint the full picture nor does it consider 2nd order effects.
Recent DoorDash and Airbnb posts have quite a bit of survivor bias in them.
I had only bad experiences with AirBnb and after couple attempts will never use it again. Arguably it was long time ago and maybe the company changed, but I do not think I will ever use it, because there's plenty of sites which fulfil my needs.
Problems for me with AirBnb (and their hosts) are:
- Pricing dark patterns. Fees balloon the price above the price of proper hotels.
- You can avoid cleaning fees, but then you will get filthy apartment for outrageous money. Even proper hostel would be better thing for your money then.
- No where to complain other than to airbnb itself, as hosts usually are not registered businesses.
All in all what I got from AirBnb is what they were creating - couchsurfing for money, but shittier. You pay price of a hotel, but get someones shitty couch, without socialisation, experience sharing, etc.
"it seemed like he [pg] dismissed the idea itself entirely"
"As they started to pack up to leave, Gebbia pulled out the cereal boxes; against Blecharczyk’s wishes, he’d sneaked them into his bag. He walked over to Graham, who was by then talking with his partners, and handed him one. Graham thanked him, awkwardly"
https://www.wired.com/2017/02/airbnbs-surprising-path-to-y-c...
And the awkwardness when pg thought they were trying to give him a marketing gift is definitely true to character.
Graham thanked him, awkwardly — he thought they had bought some cereal for him as a weird or bizarre gift. The founders told him, no, they had made and sold the cereal boxes — it was, in fact, how they’d funded the company. They told him the story behind the Obama O’s. Graham sat back and listened, newly intrigued. “Wow,” he mused. “You guys are like cockroaches. You just won’t die.”
I can add something about the cockroach metaphor. At the kickoff meeting of the W09 batch, pg told us "you have all been chosen because you are cockroaches—except for one group of romantic dreamers". Of course we all thought we must be the romantic dreamers.
Why? Because Silicon Valley says it’s cool?
What’s next, an owner opening a hair salon, not needing a permit or zoning “because rights and freedom”
Airbnb destroys neighborhoods , is a direct cause in many areas of decreased available long term housing.
In certain areas maybe. Overall it’s enabled more terrible situations than it helps.
It only drives greed and profit at the expense of community.
The data is all there for anyone to objectively analyze , but now they all counting their profit
Ultimately it'll be an "Uber for biotech" startup that kills or harms a lot of people by moving fast and breaking things. Maybe then people will wake up.
Complicated tax laws beget complicated tax dodges. At this point no one in the UK or US or many other countries is able to answer a simple question like "Has this company paid the amount of tax we intended?" It's all gray areas, and it's all your fault, not the foreign companies'.
Not to complain about individual actors following the schemes that you set up.
Why do you feel Airbnb should voluntarily donate money to the government beyond what they are legally required? How much should they donate? Will all other companies be required to provide this donation, or just the high profile ones that upset you?
Companies don't HAVE to create a double Irish dutch sandwich, creating webs of companies that loan IP to each other and other such nonsense. They make a choice to do this. This isn't about them overpaying or "donating". This is about them doing the right thing.
https://www.theguardian.com/media/2020/nov/28/netflix-to-sta...
They can do the right thing. They just choose not to.
I don't view countries as representations of righteous morality, I view them as market participants, no different than you or I or a corporation or a financial institution is a market participant. Speculators with legitimate reasons to stuff their coffers.
There are many people and organizations like me, and make no mistake, the other countries around a country thinks the exact same way.
When a country cannot reach consensus on how to tax, that is a prison of their own creation. When a coalition of countries cannot reach consensus on how to curb behaviors they don't like, that is also a prison of their own creation.
They are in competition with each other.
Some of us are playing by a set of rules that recognizes that, it is also a more effective set of rules.
It is much easier for a company run by its founders to act morally. Airbnb does not, which to me is not the end of the world, but worth pointing out in thread about how great those founders supposedly are.
Suggesting that it is just the state's fault is a naive view.
The obvious answer that you haven't accepted is that, in this conversation, you are a diver surrounded by amoral sharks.
We all view and see the gradient of relativity and are not swayed by your arguments. The consequences guide the actions, and a municipality's hotel tax or zoning laws are the toothless kinds of laws, so toothless that it isn't even worth bothering to change them. Did you see how gig apps lobbied with push notifications against California laws and referendums and court rulings? Because of the consequences.
The Irish Dutch sandwich would cease to exist if governments wanted to stop it. It’s the responsibility of the people to vote for politicians who aren’t corrupt and will make laws to properly represent our intentions instead of enriching their buddies.
It’s not the companies fault, they are simply following the incentives. All companies have competitors, and if you design a loophole, the nature of competition will force all companies to follow it. Lest your competitor gain a profitable advantage.
Fix the game and players will follow the new rules overnight.
Buddies like... the companies that use those loopholes.
> if you design a loophole, the nature of competition will force all companies to follow it
Does it also force them to lobby to keep that loophole?
> Lest your competitor gain a profitable advantage.
Is the differential value of Airbnb using tax loopholes? Do you mean to say that if Airbnb stops using tax schemes, a competitor will pop up and be in an advantage?
> Fix the game and players will follow the new rules overnight.
Players will complain and try to lobby and even blackmail governments trying to fix the game, and will also actively try to find new loopholes.
Really, we need to hold companies accountable for these schemes. It's very hypocritical to praise the grit and the motivation of the founders but consider the company an abstract and amoral entity whenever it comes to things like paying taxes. Stop excusing bad behavior.
So effectively, by not caring enough to close these loopholes, the people have sanctioned this behavior as okay.
You personally may disagree with it, but apparently a majority of your countrymen do not see it as a big problem. Otherwise it would already be solved.
In many areas the Airbnbs were not illegal, and sometimes "regulatory capture" should be fought as unjust.
Of course, in other areas, you're totally right that sometimes the local regulations should win, the company fined, etc. All depends on what the local community wants, imo.
The problem is that Airbnb was the one deciding what laws to ignore. Odds are the group of laws they considered regulatory capture were much bigger than the group of laws that were considered regulatory capture by consumer protections groups. There is not a clear delineation between what laws truly protect people and what laws only give that appearance. The proper way to fight regulatory capture is through the political system.
The "It's easier to ask forgiveness than it is to get permission" mindset can be dangerous when it is applied to issues of public safety.
I’d put them near the bottom of the list of “things that make housing expensive.”
At peak, there was about 20-40k listings in greater Los Angeles on Airbnb.
There’s roughly 19 million people in greater LA. Average household size in the US is 2.6 ppl. Let’s round up to 3 and be generous.
That means there’s roughly 6.3 million households in greater LA. Even if 100% of those Airbnb’s are suitable as full time residences (its probably more like 30%), the 20-40k units wouldn’t even cover a single year of newcomers to greater LA (yes, the core is shrinking but the greater metro is growing).
The main (key word) reason housing is expensive is due to geographic and local government restrictions on zoning and development which chokes off supply relative to the number of people who want to live there. Not some silly web app for millennial travelers.
And many homeless come to LA and SF from other areas that are not as friendly to the homeless. Which is why there are a lot less in Dallas suburbs than downtown LA.
>L.A.H.S.A.’s 2019 homeless count found that 64 percent of the 58,936 Los Angeles County residents experiencing homelessness had lived in the city for more than 10 years. Less than a fifth (18 percent) said they had lived out of state before becoming homeless.
>More than half of the people surveyed in Los Angeles cited economic hardship as the primary reason that they fell into homelessness.
https://www.nytimes.com/2019/11/06/us/homeless-population.ht...
There are about 6 times more permanently vacant units in SF than the peak number of AirBnb, and the amount of construction that has been blocked during discretionary review (met the zoning requirements, people complained about parking) since AirBnb's existence far exceeds the AirBnb units too.
(I am in favor of vacancy taxes, a house being used, even by a short-term renter, is better than the blight caused by properties sitting empty)
2. Citations needed
3. What empirical evidence do you have for your claim that the problem is zoning.
Comparing the number of Airbnb units to the number of housing units citywide can lead to the wrong implication, even if that percentage is low.
And even the short term downward price pressure wouldn’t affect prices by much. We’re not talking the 50%+ drops that would be needed to make housing in the area “affordable” relative to incomes—-as it was for at least half of the last century.
Also important to remember, many of those Airbnb’s would not be legally zoned for permanent occupancy.
> some of the communities that understood how to balance its pros and cons
AirBnB worked against a lot of those communities that tried to balance the pros and cons
https://www.wired.com/story/inside-airbnbs-guerrilla-war-aga...
I think Airbnb when it first came out was great. Like all things tech (a bit broad of a statement) once it got out into the world in a real way it lost its allure. Facebook was great when it started, reddit, instagram, google, etc. Once people figure out how to co-opt the technology for their own uses (or maybe just the drive for ad revenue kills off all the fun or novelty wears off) it loses its lustre quite a bit. Sorry to be downbeat - technology doesn't feel as fun as it was even like 3-4 years ago let alone back in the 00s or the 90s. Or maybe I'm just aging out.
I take solace in the fact that writing code and building things (especially physical world things!) is fun. Web backend is getting duller by the minute, though.
By running illegal hotels. It's easy to be cheaper when you're breaking the law. The whole thing is a criminal enterprise: without the crime, none of the rest of it works.
> Sure, the company made a good profit while there was a profit to make, but their service benefited consumers as well and I think it did leave a positive impact not only on the travellers but also on some of the communities that understood how to balance its pros and cons.
It benefited their clients at the expense of the surrounding communities. Even if you think the laws those communities set weren't in their interests, they were the legitimate laws of those places. The price of living in a society is respecting the law even when you don't agree with it, and AirBnB et al have been tearing that apart for the sake of their profits.
...I don't think that is what angered people. That was bad. But AirBnb not only circumvented the spirit of local laws (taxes being one example), they actually assisted property owners in breaking laws. Not just the spirit of the law. Not just a weird loophole. Because we had a big rental market before AirBnb existed, we had laws that existed for every eventuality but one assumption was that holiday rental companies would comply with local licensing laws...AirBnb refused. So we had a local council, budget cut 70% by central government, having to make the choice about whether to cut care services to disabled and the elderly or cut back on road maintainence, having to employ people to look at listings online and work out where properties were for licensing. Needless to say, that didn't work (the story has a happy ending, the council is introducing fines that will bankrupt property owners for failing to comply, is banning listings altogether in some cases, and has said that more severe measures if neither works).
That is why AirBnb is successful here. People often complain about hotels or the lack of regulations...where I am: every single city had regulations for holiday rentals. AirBnb ignored all of them. AirBnb didn't invent tourism, we had them before and we will have them after, they didn't lead us to become richer. A small group did, everyone else became poorer. And this is a case of a company that only exceeded competitors in its willingness to break and ignore rules, and assisted others in doing the same. I will invest in O&G, miners, social media, gun manufacturers, I don't care...they are just filling a need. Never AirBnb. Even grouped amongst companies doing shitty things (palm oil, payday lending being two that occur immediately), they are definitely up there.
Hostels have always been cheap. And most of the time, AirBnB is more expensive than a hotel when you include their "cleaning fee". It only works if you have a large party or you're staying someplace a while
As a college student it allowed me to attend conferences that I wouldn't have been able to afford, take trips with friends, etc. and as a working person I would still choose it over a hotel many times.
Hotels are expensive, with lots of hidden fees and very little innovation. I'm glad they found a loophole, I think hotels shouldn't be as regulated as they are.
I would also say that Airbnb had (and still has) that "willing to crawl over broken glass" feeling for users. People that want to stay with larger groups of friends or family are willing to deal with older homes, higher prices, worse locations, house rules, etc, because the #1 priority is that they want is to just be in the same rental as their group. They will put up with almost anything because they need the product so badly. A hotel won't even guarantee you adjoining rooms, or rooms all on one floor, there's limited common space, you have to be quieter, etc.
As a silicon valley outsider, blood drained from my face after reading this. Do you have to starve or raise money only to pay rent? I have a profitable business and it scares me to apply to YC after reading this.
An inspiration for wealthy white men in tech? Okay, sure.
> they said the biggest surprise was how many of the hosts were in the same position they’d been in: they needed this money to pay their rent.
Twelve years later, Airbnb has been a very relevant factor in the increase of prices of rentals in a lot of major cities. People still can't pay their rent, although this time Airbnb is not precisely helping. You can also take a look at this other paragraph:
> But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they’d all had a great experience.
Most listings you find now on Airbnb are full rentals, no sharing experience at all. Basically a page for booking hotels and apartments, only they don't care if you're doing it illegally.
So no, for a lot of people they are not an inspiration. In fact, for me, it is the perfect representation of what is wrong with the current tech world: capable people with good ideas and good intentions (let's assume) who just abandon those ideas and intentions in the road to making absurd amounts of money, and who will take advantage of morally grey (and even morally wrong) areas with no regard for real world consequences.
(I suspect this may be the reason it isn’t discussed)
While I agree that grit and persistence eventually lead to success for most smart founders, I think PG's explanation for why the founders didn't give up is misguided. If the explanation for their persistence was the great experience they stumbled upon, why didn't they quit in the preceding 3 years?
My guess is that Brian, Nate, and Joe are naturally stubborn (read: persistent) and have a high degree of self-belief. They eventually hit the lottery with their idea for Airbnb. Had they not founded Airbnb, I bet they would've kept trekking along and stumbled upon another (less) successful idea.
Persistence is a double-edged sword. It'll eventually lead you to success but at what opportunity cost? I'd be interested in seeing studies that help quantify the downside of grit by studying founder failures.
Right there - when Airbnb was about 10 people in total, Brian told me: We'll go IPO. We'll be $100B IPO.
Some people look at life and see the opportunities. Others look and see the obstacles. Some take the hardship they encounter and use it to grow. Others use it as an excuse for their failures.
The older I get, the more people I know, the more I arrive to the conclusion that it’s all about attitude, more than anything else.
It’s our attitude that decides if we end up as winners or losers. It’s our own responsibility and merit, not others'. But pushing a victim mentality, a loser attitude on others - is criminal.
With the empaths, we'd still be in caves.
Yes sir, damn empaths, coming together to take care of the children and the tribe and hunt for prey. Let every person go out there and hunt for themselves.
If it weren't for the "empaths" your would be indentured to a warlord at best. Ayn Rand world does not exist, have never existed and it will never exist.
Here in the comments I see concerns not just about whether the company is successful or not, but whether it has done any good. That is, _good_ for people other than the owners of the company.
That is not about “attitude”, or some other self-help slogan. You can’t evaluate the outside world based on what you read in Think and Grow Rich.
It certainly inspired me. Huge congrats.
Is there any way to be really successful without being some kind of disingenuous sociopath or at least blithely unaware of the broader context of your success and the suffering it's built on?
No, not really. And if that makes somebody bitter, then I think that makes them sane.
This is story is the perfect example of the above. PG is selling us same old story that these two made it through hard work and attitude, while they really made it by opening up residential housing to rent-seeking speculators to use as hotels.
I think this dynamic is generally less recognized by software developers because we're frequently comparatively well paid and well treated at work, and can occasionally accumulate enough capital to break out of this vicious cycle (though we're still paid less than the value of our labour and still deal with much of the BS noted above). However the same can't be said for the people making our computers.
This is also why the expression “you can do anything you set your mind to” is a naive saccharine pile of oliphaunt excrement. Frankly, this overwrought phrase sounds like something an early 20th-century Gilded Age industrialist would have coined as a means of motivating the common man to toil even harder in a world extolling unbridled capitalism as its loftiest ideal.
I don't know what's behind the change in sentiment (maybe the influx of new users?), but big returns require big risk. It's absolute lunacy to pursue a startup, but people do it anyway because we've created a system that rewards ambition.
A system that has elevated the standard of living consistently since it's inception.
For those preaching "survivorship bias", the "crabs in a bucket" fallacy is alive and well here.
Regardless, it's still disheartening. There's a strain of thought that correctly notes that every success story has some luck involved and then incorrectly applies that lesson to believe that it's a 100% lottery. You can, in fact, still learn from people who have succeeded.
If that’s the way to “succeed” with a startup these days then I do think startups are pretty grim. I can’t speak for others but I don’t really want any part of creating a company like that.
What do you define as "living safety"?
Being first in the funnel gives you vertical integration and it helps if you are pro-entrepreneur to get your customers. The rest as they say is history.
There’s no risk here. It’s recreational gambling for the investor class, and play time for privileged white men who have no responsibilities.
Will the kind of Airbnb business inflate the housing market?
Do people need to rent out their private living spaces in the future because paying for a property would become expensive?
In other words, YC got lucky on Airbnb. Because YC's first impression of hundreds (or thousands) of other founders has been wrong. Basing investment decisions on first impressions may be worse than random chance but, as long as it works some of the time, they can convince themselves they're geniuses at picking founders.
On the basis of the idea and progress, the Airbnb founders were judged as bad founders.
But on the basis of personality, estimated in a few minutes, they were judged as great founders.
It explains a lot about YC's success rate that they use this fuzzy "culture fit" test to filter founders. Anyone able to seem genuine, earnest, and flattering ("oh, look, they took notes of my ideas!") for 10 minutes can game the system, as the Airbnb founders did.
Of course, it's lucky for YC that the Airbnb founders were able to manipulate them into investing. It's just kind of pitiable that YC can't do better than this.
A huge improvement for a YC-like investment firm would be to do something more objective. Competent people do not hire employees on the basis of a first impression, they spend many hours assessing their skills, abilities, personality, etc.
A better YC would spend a lot more time interviewing founders and really delve into their abilities and personalities. YC has excuses for why they don't do this, but they're bad ones. But, again, they've had enough success to not feel the need to improve.
IIRC, YC has rarely rejected a company that would be valued at $1B+. Perhaps SendGrid is the only one.
> It's just kind of pitiable that YC can't do better than this.
I don't believe any seed investor has a better rate of return than YC. I don't think it's even close. Whatever you imagine as "better" doesn't exist.
> A huge improvement for a YC-like investment firm would be to do something more objective. Competent people do not hire employees on the basis of a first impression, they spend many hours assessing their skills, abilities, personality, etc.
Perhaps it's not wise to fund founders based on how companies hire employees. Companies hire for risk minimization, not return maximization - just look at your average tech interview.
I think you underestimate the value of culture fit when it comes to building successful businesses. I'm sorry it doesn't fit into your framework of objective assessment.
Just like Facebook, etc, people who support/work for it are not without blame. Bankrolling huge political efforts to overturn regulations. Nonsense rules that allow corporate owners to buy up low-income housing turn it into vacation homes. Simply terrible company.
I'd hate to hear what you think of people who work in the energy sector, or textiles, or agriculture, or any of the other dozen industries that cause farm more social and environmental harm than AirBnB could ever hope to.
> Any normal person would have given up already. They’d been funding the company with credit cards. They had a binder full of credit cards they’d maxed out.
I'm all for being gritty, but that sounds entirely the wrong thing to glorify. In this case "survivorship bias" sounds ominously not like a metaphor.
I find it really disturbing that so many VC's and CEO's highlight how important it is to actually do the work of your business in order to understand your service, customer and product better. Why is this a revelation? I would think that this is business 101. It seems to me that all of the best companies have leaders that know their products inside out and are personally invested in said product (Jobs, Musk, Chesky, Mckinnon, Collisons).
I'm still shocked to hear of tech CEO's of massive companies who have never used or installed the products they sell.
I'm asking because I keep hearing that at first nobody thought that renting their couch was a good business idea, and how airbnb proved them wrong, yada yada. But IMHO, if right from the bat they explained how they'd be a full blown competitor to hotels because cheaper price and more convenient, I feel like the conversation would have been different with VCs.
The moral of the AirBnB story is basically: Do illegal shit, laws be damned and also rack up a ton of bad debt. If you succeed you’ll have so much investor money that not only will you believe to be above the law, but the law will begin to believe you. And if you fail? Well fuck you thats your problem now you’re probably going to prison and having a shitty credit score forever but thank you, next.
And people wonder why I’m so willing to abandon morals and ethics in the pursuit of dollars. Look at this world.
Between SPACs and "startups" rolling public at the moment signal from the owners is it's a good time to be a seller.
I don't like to do that, but here pg sounds quite egomaniacal (which he probably isn't, but still).
> Any normal person would have given up already.
I’d be interested to see how “normal” the kind of fall back options these founders had.
I don't feel any of these successful founder kids had anything handed to them, however, they generally have a 'nice, clean journey' from birth to founding whereas most people face bumps, barriers etc..
But it's also a little unfair to generalize and there are absolutely opportunities for all types.
'Spoiled' is the Lambo in high school for the kid with bad grades.
Moreover, most private HS are not considerably better than good public schools, there are advantages but not giant leaps there.
Much more advantageous is private College, but it's somewhat more competitive and at least partly meritocratic.
These kids are not from massive homes, with baller cars and 1M follower instagram accounts. They don't have chefs, their Uncles are not Senators. They live in the suburbs in slightly better than normal homes, their parents drive Audis and they do their homework. They had braces as kids, and never had to worry about healthcare. Their 'Dentist' father is not 'connected'. They are really not that different from most kids, other than they never have to worry.
Same is not true of any private college, since the government hands out loans without discretion to anyone. A selective college, however, offers you similar benefits.
But it's probably a much bigger advantages to have 'Harvard' on your resume.
And FYI it's not 'the money' quite as much as the 'stability, support and fallback cushion'.
I think it's pretty natural, if your resources are exceptional, to treat that as extending to your immediate family. Therefore it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit.
I don't see a special moral dispensation for, 'this kid APPLIED himself and therefore it's okay that he never had to worry'.
"it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit."
Just because you love your kid doesn't mean you give them everything.
In fact, being superlatively rich probably comes with a whole bunch of extra challenges in raising a kid.
No matter how many 'resources' a kid has access to, doing a 'good job' and having a little bit if self discipline are essential to having a good character, being civic, and also creating a positive future for oneself and ones community.
Having a 'Lambo' is a very exceptional thing it stands out definitely more than one's peers. A poorly behaved, entitled kid who'll use that Lambo to rub it in the faces of his peers, who accomplishes little doesn't deserve it.
Of course not everyone 'get good grades', it's entirely possible a kid is deserving in some way, by grades are at least some crude measure of applying oneself.
Frankly, however much money I had I wouldn't even give my kid a Lambo, it's way too much attention and ostentatious luxury, children are not good at handling that. It's excessive and materialist.
'Access to capital' is an entirely different story as investing for the prospect of value creation is difficult than conspicuous consumption of luxury items.
Funny: Sometime after paying off the first time, I was talking with a CSR at one of the credit card companies, and she looked at my account, and said, kinda awkwardly and with surprise, "You've been a very profitable customer...". I'm pretty sure that's not in any script. :) But I did have a stellar credit score by then.
One of my businesses did some great and beneficial work that I feel really good about, but I should've used angel/seed investors from the start. That would've made things a lot less painful, helped me formulate a more profitable business, and helped the second business actually get all the way to launch before I couldn't stomach any more fistfuls of personal debt.
How I see it now: no matter how much I'd prefer to focus solely on product and engineering, and not having to play business-person with investors, investors are so much more preferable to self-funding a startup as a non-wealthy person. If you can't convince investors, I'd advise being very skeptical of a survivor bias story from Airbnb, and instead find a way to modify or explain the business to convince investors. (You could just tell them: "we'll make money by disregarding existing regulations for a market, undercutting the competition." :)
For my current passion project, a video game , I plan on dumping between 10 to 20k in before trying to pitch it to publishers. When that likely fails I'm going to self publish , I really really enjoy programing with Unity so I'm not too worried about making my money back.
I can't imagine anyone who's not well connected can walk into an industry conference and walk out with a seed round
If you get positive feedback and a bunch of sign ups, proceed. Otherwise iterate on the concept/website/marketing strategy until it clicks, then continue with your plans.
I guess you can see a YouTube video of my prototype on the static site ?
And yeah a prototype video sounds like a great way to test people’s enthusiasm.
https://www.indiehackers.com/post/how-to-brainstorm-great-bu...
My history in SF weirdly intertwines with AirBnB. I first met them in 2007, at an "unofficial startup school afterparty" (this was before they were funded by YC). The party consisted of Brian and (IIRC) Joe, and a couple of bottles of booze and some soda in their apartment (the one they rented out to the first guests). Let me just say that they weren't living in luxury: there were mattresses on the floor. The only notable piece of furniture in the place was a table, and a bookshelf filled with white, blank-covered book galleys that Brian had gotten for free from some print-industry connection.
I then worked at Justin.tv when these guys were getting advice from Michael and eating lunch with us on a regular basis. I bought them drinks because they were broke. The unsold Obama-O's boxes were sitting around the office.
I'm as cynical as the next guy about the relative well-off-ness of a lot of startup founders these days, and I don't have any personal insight into their finances at that time. That said, as much as anyone in SF in 2008 had no fallback plan, the AirBnB founders seem to fit the bill.
For example, if I was in these 3 gentlemen's shoes, I would have not maxed out my credit cards, because my parents were entering their 50s and they didn't have gold plated health insurance from government or a F500 company, so I knew I had to play it safe and be ready to be there if and when they need me for assistance with healthcare expenses.
I don't mean to detract from any of their achievements, surely they put forth effort into getting into the right schools, studying the right subjects, and focusing their energy on something that netted them a very high ROI.
The purpose of my comment was to shine a light on how being in a position to max out credit cards in SF in the first place without greatly negatively altering your family's trajectory qualifies you as "normal" in a very restricted sense of the word "normal".
Please people, do not max out your credit cards, at least not until you are as good as what you do as they Airbnbs were in 2008.
I think there's a cognitive bias at YC where they don't realize that most people (especially 20 year olds) are not very good at making things, and so on average the best advice you can give the general public is just to get better at making things.
The Airbnbs were exceptionally skilled and hard working people. They made all sorts of weird stuff—and did it well. The cereal boxes were the tip of the iceberg. Brian and Joe could design (and throw a good party!). Nate was a terrific coder who did CS at Harvard.
I would absolutely say they had the best fallback plan—they could make things. They could've gotten other jobs. That takes decades of hard work (I'm sure they started building things when they were very young).
So if you can't make good things, DO NOT max out your credit cards. You will be setting yourself up for disaster. Instead invest in your skillset. If you aren't good enough to build something great, go out and get a job(s) and keep working on it.
I like a poem written in 1916 about being someone who "delivers the goods" (https://breckyunits.com/deliver.html)
Chesky - Both parents are social workers, probably would have been in a rough spot taking on that debt. Would have moved somewhere else and gone back into industrial design.
Gebbia - Father is/was a successful businessman in the Atlanta area, currently a city councilman. Probably would have been better off than Chesky, but the debt probably still would have stung. Would have gone back into industrial design.
Blecharczyk - Upper middle class family + Harvard alum. Taking on the debt might have been painful, but he probably would have been fine eventually, especially with his technical background.
I don't think their fall-back options were great. If they had "rich uncles" or something, I don't think they would have needed to max out credit cards in the first place. I think Chesky's level of conviction was simply unwavering. I'm certain there are much more affluent people who would have given up sooner.
Being independently wealthy or being able to take a high-paying job (FAANG+) would be a good fallback. Seems more founders these days have those.
Why can't we get back to a place of finding the good in every story/person instead of trying to tell everyone that they're doing something wrong?
Also, holy cow! From credit card debt to billions. It makes the story that much better!
...of also debt. 2.2 billion.
I struggle to understand how their expenses are so high. Or why investors are happy to keep buying into a company that has failed to ever be profitable. Look at the cap tables. They've gone into massive deficit every year running an app. A $3B/year app.
Both options are reasonable investment strategies but for folks who will take a gamble to have a bigger pie, #1 is pretty reasonable. Especially if you can later cut costs and still have that 10% profit margin.
When Amazon spent years and years not making a profit, I understood: They were investing in infrastructure and taking on new industries. They could make a profit any time they wanted by simply not re-investing any further.
Tesla, SpaceX, and many other companies necessarily have to invest heavily in the early days to build out their infrastructure and capabilities. I understand completely why they might not be profitable for years and yet still be good long-term investments.
With Airbnb, I struggle to understand what they're investing in. There's no inventory. They own no real estate. That's supposed to be the genius of the business model. And yet they keep losing hundreds of millions each year.
When you say they're investing in growth, what exactly are they investing in? What am I missing? What are they doing that costs $3B a year, and how does their cost-to-revenue ratio improve as the business scales?
From where I'm sitting, it looks like the more business they do, the more money they lose.
With Airbnb, Dropbox etc, YC should have billions in asset.
Any recent employees able to talk about a standard price and quantity range they earned shares at?
What does YC own?
How about the founders?
I want to salivate over some numbers about the least probable IPO until the market got super frothy. If only Adam Neumann waited a year he really could have shoved WeWork down our throats.
Tried to cancel, no luck, out $1000. Airbnb says if you book anywhere after March it’s your fault if the government shuts down the location.
Glad I played a small part in helping Airbnb’s valuation.
So earnest. Their inability to police fraudulent/scam listings. It comes from a place of earnest conviction. Their blatant attempts to circumvent and disregard local laws about illegal hotel listings. It comes from a place of earnest conviction.
Why is there always a need to sugarcoat these bio pieces like they're describing somebody in line for canonization?
The Doordash piece was even worse.
It's a post specifically focused on why someone thinks a certain team succeeded.
Given that, of course it's about positive traits.
Edit: Perhaps I am a bit harsh here. I am frustrated overall at the general idea that nothing can ever be condemned, and morals may not be discussed, merely because they include a subjective value judgment. Those value judgments occur at all times, and are what give importance to the facts.
Your point about the morality of their actions is totally valid in itself. A valid and well supported opinion.
However what I refer to is that you question how a piece like this article can go ahead and not point out the immortality of their ways. And I really think that from their business-centered, libertarian point of view, there just isn't any immortality here. In their opinion, they did things right. Therefore they could not point it out.
It's intended to give would-be entrepreneurs insight into traits of previously successful entrepreneurs. In particular traits the writer believes should be emulated.
Those will naturally be positive traits, because the entire point of the piece is to give readers something to aim for.
> Flaunting social norms
In the case of Airbnb, what was the social norm? Staying in a hotel? Wouldn't all disruption be flaunting social norms??
I think applying your own moral standards to a company in this way can get precarious. Beside the outlier cases of trashed rentals or someone left in the cold (which is harmful, but again, a very small percentage of their volume), the majority or Airbnb hosts and guests seem to find value in their service and choose to use it. How immoral is that, in reality?
The social norm is the expectation that your neighbors won’t be running a hotel next door.
https://www.quora.com/Did-Airbnb-get-sued-for-running-a-robo...
"What Airbnb did in 2010 and 2011 was to use a bot to spambot to email who had posted short term vacation rental ads on Craigslist. The emails claimed to be from women who liked their listings, suggesting that they try Airbnb. "
Does Craigslist actively monitor the messages being passed through?
Edit: Why did I get downvoted? It was a legitimate question. It may have deviated from the article subject, but that’s how conversations flow, and how you learn of new things.
Paying your taxes. AirBnB has managed to avoid VAT by pushing that responsibility onto hosts. UK is looking to changing this arrangement.
Leaves a bad taste in my mouth to ever use Airbnb again.
Come on, dude.
Maybe that's your strategy to VC investing. I don't think it's particularly good to apply a zero or negative coefficient to this trait. But that's okay, the market shall speak on this one.
I had multiple break-in attempts, attempted physical altercations and loud parties on weeknights.
Airbnb ignored complaints, my landlord ignored complaints, it took Covid-19 to get rid of the parasitical infection on my peace of mind.
They certainly are wealthy, but I was not happy. Well-intentioned residential zoning laws were ignored at my expense.
I don't think that's really fair. AirBnB as originally conceived is something that would make the world better for a lot of people. Something you can be proud of building. What it's turned into is far more of a mixed bag, of course, but that doesn't change the earnestness of how it began.
Like Couchsurfing before AirBNB destroyed it.
Maybe someone with a better understanding can say something here but it seems like the way we do IPOs is not great. I'm not sure how to do it better, but I'm sure that there is a better way to do it. I guess this should be the next yCombinator startup. Disrupting the IPO landscape :P.
In the old days, there would have been recriminations. These days, people just shrug and think it's acceptable that the financiers lock up most of the gains for economic value created (or, depending on your thoughts of Airbnb's business model, acquired) by others.
It's one of the reasons Wall Street has fought so hard to prevent become fiduciaries again. If they were fiduciaries they couldn't get away with crap like this.
VCs + founders would have been diluted a bit by that (~8% I think?) but they typically[0] still own all of the shares that they did previously.
[0] In some situations founders + VCs + early-employees can sell as part of the IPO itself. I do not know if that applied here.
For some reason, the financiers were able to convince the gullible tech founders that giving up 50% or more of the IPO to the financier's best buddies was a good thing. And in their greed, the founders gladly went along, screwing themselves and their employees in the process.
(Theoretically, the underwriters are granted a pop because of the risk they theoretically undertake. But by the time the IPO occurs, the underwriter has already lined up sufficient buyers and there is no longer much if any risk, certainly not a level of risk justifying most of the gains of the IPO).
But no. Anyway, critics could/should use that. You're welcome?
In my opinion, this kind of behaviour needs to stop being glorified. 99 out of 100 times this does not end with a billion-dollar company, but rather with someone drowning in personal debt.
The only "acceptable" time you can really run up a literal binder full of credit card debt is when you have a very easy safety-net to fall back in to, which again, does not apply to the large majority of people who would find this "came from nothing" story inspiring.
I get that times were different in 2008, but who was giving them all of these cards with no income and a stack of already-maxed-out cards.
I do. Credit cards weren't hard to get. Even if you were in debt up to your eyeballs. I know because I was, and I could still get new credit cards.
It took a credit management service and ten years of steady payments, but I'm now out of (consumer) debt. Thankfully.
<Edit> Sorry if the above sounded snarky. Being that much in debt still evokes some painful memories.
Honestly, I was in high school. So, no, not really. There were other reasons that no one would give me a credit card.
> It took a credit management service and ten years of steady payments, but I'm now out of (consumer) debt. Thankfully.
Wait, you mean the binder full of credit cards didn't work out to a billion-dollar company for you?!? That sucks. I guess we're 1 for 2 on that one today.... 50% chance of success. /s
Sounds to me like it was a calculated risk they needed to take.
Also see Paul's point on how the Airbnbs would have given up incase "this Y Combinator does not work out."
I think it's evidence for "Billionaires Build", which is an apologia for billionaires. pg seems to think we are in a moment where billionaires don't have enough cultural respect.
I think pg is trying to show us that billionaires, at least the kind he funds, are just better people, or are at least more tenacious. The binder of credit cards is supposed to inspire admiration for their dedication (rather than horror).
And I think he's congratulating himself for being able to spot them. By extension, spotting billionaires (helpful, tenacious, people who love to build) and helping them - well, is he saying that he's a great person, squared?
Well, this is true. Compare the average self made billionare to others and yes - they are more tenacious.
But that's obvious.
"Chesky felt Graham was impressed that they knew so much about their market and customers, but it seemed like he dismissed the idea itself entirely."
https://www.wired.com/2017/02/airbnbs-surprising-path-to-y-c...
This is an attempt to go back in time and talk about how smart everyone was.
They aren't an honest company, they're just burning through goodwill.
You can obviously find other paths to success, but he's just doing what's he's discovered to work. If you were seeing growth despite being introverted, I'm sure he'd pay attention.
You can be introverted and still talk to people.
https://247wallst.com/services/2020/11/17/airbnb-gears-up-fo...
>Airbnb Gears Up for IPO, Finally Chris Lange November 17, 2020 10:35 am
>Airbnb has filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) for its initial public offering. The company did not mention any pricing details in the filing, but the offering is valued up to $1 billion. Airbnb intends to list its shares on the Nasdaq under the symbol ABNB.
>The underwriters for the offering are Morgan Stanley, Goldman Sachs, Allen, BofA Securities, Barclays, Citigroup, BNP Paribas, Mizuho, Credit Suisse, Deutsche Bank, Jefferies, Wells Fargo, Baird, Canaccord Genuity, Cowen, D.A. Davidson, JMP Securities, KeyBanc Capital Markets, Needham, Oppenheimer, Piper Sandler, Raymond James, Stifel, Wedbush, William Blair, Academy, Blaylock Van, CastleOak, C.L. King, Guzman, Loop Capital Markets, MFR Securities, Mischler Financial Group, Ramirez, Siebert Williams Shank, Telsey Advisory Group and Tigress Financial Partners.
These are the Wall Street investors who are going to take the company public by purchasing huge amounts of shares from the private investors (like YC) and equity owners (like founders & early employees) who held the private corporate shares until then.
They will negotiate an issue price of the IPO which is what they will be paying the earlier private shareholders who cash in. This is like the wholesale price. It determines/is-deterined-by the overall company valuation at this point.
After that the shares will trade publicly on the exchange which the underwriters represent.
Any broker on that exchange can get shares for you at market prices after the market exists, and sell them to you at retail markup above that or not depending on your account terms.
If you want to actually participate in the IPO you may ideally have an account with one of the underwriters who is a dealer, such as Raymond, James & Assoc. listed above, and agree in advance to their mark-up above the issue price, to purchase for your account upon issue.
In this case that would have been a way to acquire at a price well below the market's opening price.
An excellent nugget of wisdom from Paul Graham. That was worth the read by itself.
Fluid flow near surfaces becomes a near zero vector.
It's also kind of strange for me to see this level of conviction against a company that rents out rooms while barely commenting on others that are involved in so much worse ranging from human trafficking and modern slavery to global warming, corruption and extreme waste.
You may call them disruptive, but I regard these companies as something bordering on evil. The right thing for them to do would have been for them to convince local communities that this was worth changing the laws. Just remember that the next disruptive service could take away the business you or your loved ones worked a lifetime to create, and PG would be there in the background bragging about how awesome his team was.
The key to me is that when I use AirBnB I really feel like I'm dealing directly with people, with the interested party who is passionate about and responsible for my experience. That's what their marketplace means to me. No hotel can provide that.
I know very well you have to look for this kind of interaction on the platform and there are plenty of uninvolved multi-property rent seekers, but I avoid them and AirBnB makes it possible to avoid them and for that I am extremely grateful.