Airbnb Is Raising A Big Third Round, Aiming For A Valuation North Of $2B
techcrunch.com
techcrunch.com
Maybe it's just me?
You cannot just enter a date and click button "Book Now". You have to contact multiple hosts and arrange key pick up and stuff.
You cannot just leave the room in whatever state and checkout. You feel like you have to clean and tidy it up a bit.
Picking up keys can be a hassle sometimes.
However you don't have to pay for silly services i never use in a hotel (conference rooms, business centers, telephone in the toilets, etc).
Starwood employs 150,000 people, has 1000 hotels worldwide, and has revenues of ~$6 billion
I'm not saying AirBNB can't be huge one day, but a $2B valuation... wow.
If it takes Starwood 150,000 people to make $6B, and AirBnB can make hundreds of millions with hundreds of people, I think it's pretty clear which is headed to a bigger valuation.
It might not seem like it, but theres a difference.
is the valuation high? potentially, but this is not a metric that will tell you anything at all about that
The valuation is high, but it isn't unreasonable. Also I view AirBnB as having a low risk of falling out of fashion, unlike Zynga or Facebook.
Looks like they charge a 3% fee meaning a night @ $100 would bring in $3 of revenue (not profit). At 30M nights that's $90M in revenue, putting the $2B valuation at 22.2x revenue... seems slightly unreasonable (at least not a valuation that public markets are likely to put on it). Thoughts?
Your numbers start to look a lot better at a 10% fee instead of a 3% fee.
The total airbnb fee on a stay is about 12% (lets assume 9% avg guest fee and 3% host fee). But roughly 3% goes to credit card processing fees and then you have to deal with paying out in countries like Brazil where paypal and ACH aren't viable options. Lets just net it out to 9% for discussion purposes. Average price per booked night when I worked there was $100+.
If you do the same math as the post above then revenue would hypothetically be $270MM, as a revenue multiplier the range we're talking about begins to seem possible for a company on this trajectory with organic growth.
I have a vested interest in a high valuation, but having seen the growth from when I first joined (feb 2011, celebrated 1MM nights booked the first week I was there) to now its really unbelievable - true hockeystick growth.
see: (1) network effects (2) organic demand
The escrow service seems a little dodgey since they are not licensed (see Greenspan's critique - he was roommates with one of the founders of AirBnB). Few major incidents so far, but how long will that last as they scale? The attraction of AirBnB over craiglist may be that the hosts perceive some added degree of safety by using AirBnB. But really, how much liability is AirBnB taking on? Can you sue AirBnB if your property is destroyed? Good luck with that.
What if another site that has an even faster interface pops up and uses a growth hacker to lure away hosts listing their properties on AirBnB? Then what? Acquire them out of fear!
The web is a medium. People use it to advertise things. It's hard to believe that any one company can monopolize a medium like the web for some class(es) of goods or services. But it sure looks like they can, doesn't it?
From For Sale ads in Usenet groups to a mailing list that grows to a website (craigslist) to AirBnB acting as an informal escrow agent to _______?
The interesting thing is that Usenet was originally free. As long as you had an internet connection, you could advertise for free. I'm not sure I understand why advertising still shouldn't be free. And we should be able to reduce the signal to noise ratio, and make doing business via internet more personable and trustworthy, without having to pay a spammer who acts as a dubious escrow agent and takes a percentage.
I have never used craigslist nor other classifieds sites, and neither have any of my family members, nor my work mates, nor the friends I meet on a weekly basis.
Yet me, my brother, a colleague and two friends have booked nights on airbnb. The growth will end when all of my colleagues, and all of my family and all of my friend use it, and they'll know about it because every time they ask me "so where did you sleep" I'll answer "found this cheap place on AirBnB".
I wouldn't be surprised if they surpassed eBay within the decade in terms of net profit. Next up on the liquid market list should be cars.
Any other markets out there that need liquidity? Goods that aren't used or assets that lay dormant? I'm all ears.
Whitman served as president and chief executive officer of eBay from 1998 to 2008. During her ten years with the company, she oversaw expansion from 30 employees and $4 million in annual revenue to more than 15,000 employees and $8 billion in annual revenue.
Doesn't seem too bad. Not trolling or anything but why do you think she is so bad?
http://bits.blogs.nytimes.com/2009/04/23/undoing-meg-whitman...
Third cause successes can hide failures rather well. Companies can succeed despite their absolutely atrocious leadership - not because of it.
Both she and Carly Fiorina were two of the worst things that could've happened to eBay and HP respectively (Meg Whitman for both).
They are nasty pieces of work.
Balmer is another example - he is single-handedly going to destroy a $200 billion dollar corporation and no one is stopping him. Hell they'd save a lot of money by making me CEO :D.
Whitman led eBay to incredible valuations (6x from 1998 IPO to 2005), until the bizarre Skype flop, and as the MS buyout showed, Skype was run by some very clever crooks.
AirBnB struck a goldmine in apartments cos it's pretty hard to 'steal' an apartment and take it away or damage it beyond all repair through normal expected use. I would gather most places are 'uninsured' for the duration of the sublease because the normal conditions have been broken but owners feel that that is a risk worth taking on for the expected return.
Cars that sit around are a different story - I feel for these guys http://techcrunch.com/2012/01/01/luxury-car-sharing-service-... but the truth of the matter is that with the next tier of high value illiquid stuff below apartments such as luxury cars and boats the perceived risk of letting somebody 'borrow' it is much higher. It is entirely feasible that whatever you're leasing out could get destroyed/sunk/totaled/stolen in normal use for its intended purpose. To provide such a market you would have to provide the insurance that goes with it and that's the hard bit.
This is why zipcar et al has stitched up the lower end of the car market. The car is 'common property' and they have the insurance to cover all who drive it.
Not saying it shouldn't be done - I'd actually love to build AirBnB for boats cos I sail but I can't afford my own boat or the charter prices being asked.
There's also the issue of liability and risk to the user. A poorly maintained car might be dangerous to drive and difficult to recognize.
There may be potential for this sort of humanization in other areas where the perceived risk of a transaction currently outweighs the benefit. One way to think about it may be to consider things that you borrow from a friend. Airbnb covers the sleep on a friend's couch/spare bed niche quite well.
Some interesting things I can think of... perhaps using space on a more granular level such as holding a meeting in a conference room or watching a movie on a home theater system. Things like renting parking spaces might be interesting as well in some areas where parking is very limited.
Pop, there goes a bottle of Dom Pérignon!
She harvested emails from people adveritising on craigslist and sent out thousands of emails. Some call that unsolicited bulk commercial email. Some call is spam. Others call it growth hacking.
Remember, wise man say startups need <em> high growth </em>.
Founding startup is like being research scientist. Science!
"girlsname04@gmail.com", an unsung hero of AirBnB.
Harvard grad gets shut down by FTC for sending porn-related spam from custom-built spam machine in his dorm room. Earns some nice coin. Moves on to greener pastures:- doing the dirty work for internet venture capitalists. Say hello to the CTO of AirBnB.
Ivy League indeed.
The eventual victim is untimately the public investor if there's an IPO or the naive acquirer... because these businesses are not built to last long enough to provide the return on investment the public expects, nor to cover the inevitable charge the acquirer has to take.
These petty criminals doing the dirty work for internet VC are young with many years ahead of them to regain their reputation. But time may not heal bad reputations as well as it used to... because the internet never forgets.
There's no way AirBnB is going to try to IPO after the Facebook debacle. They must entice someone to acquire them. The higher the valuation the more enticing. Pump it up!
I don't wish anyone bad, but if one day your family too will be bomb by foreign troops and you will wake up in a hospital and see your daughter without arms and legs, you too will understand that.
Until then, God bless you!