Comment by pitchups | Hacker News Reader

Comment by pitchups | Hacker News Reader

It is interesting and a bit ironic that AirBnb accepted funding from YC - who did not believe in their idea [1], and rejected the only investor that not only believed in their crazy idea, but actively sought them out and tried to woo them. Did they go with YC because of its brand, name recognition, or because it offered them better terms?

Of course, it is all counterfactual, but could Airbnb have been as successful had they not joined YC? Recall that PG told them to do things that do not scale - by taking professional photos of rentals in NY - which may have been critical to their early success.

And although PG was initially skeptical of their idea, he quickly changed his thinking about how big Airbnb could become. Revealed in another interesting trail of emails exchanged between PG and Fred Wilson (who also passed on Airbnb). [2]

[1] "In fact, when we funded Airbnb, we thought it was too crazy. We couldn't believe large numbers of people would want to stay in other people's places"

http://www.paulgraham.com/founders.html

[2] http://www.paulgraham.com/airbnb.html

http://avc.com/2011/03/airbnb/

Edit: spelling

>"but could Airbnb have been as successful had they not joined YC?"

These guys had a good idea, some luck, and were able to execute. I doubt that the "brand" of their money or broad aphorisms from VCs had much to do with any of it.

For all intents and purposes, money is money. There's an element of "tech celebrity" in the Valley, and big-name VCs are part of that. In reality, successful businesses around the country are built, every day, by hard-working entrepreneurs who bootstrap it (because their business is making money) or get funding my more traditional means. I don't think VCs have any "secret sauce" for success.

frbo.com had been up and operating for many years before airbnb came around. "good idea" in this case wasn't original, so that would leave luck or connections. maybe it wasnt the YC money that helped as much as YC's connections.

in the end we will never really know, but it wasnt the "good idea" part that made them successful.

It's not the idea. It's the execution.

The world is more than just about idea, luck, and connections.

Just by looking at the websites of airbnb and frbo will tell you a ton.

Yes. I don't think that the YC brand or any VCs would have helped them to attract customers. The VCs are well too far as a marketing environment compare to the kind of people who could use their platform. If it's a company like docker then yes: the VCs, tech guys, and companies using it are all connected and know each other. Their mutual respect and actions create their own brand so it works. But here people renting their apartment not so much, even more cities outside the Valley. They can be in the energy industry, banking industry, manufacturing... so with no particular interest in the tech world or VCs/startup world.

The biggest challenge for them was to find people willing to use their platform to rent their apartment to strangers.

YC invested on the assumption that their business wasn't really working. Arena would have invested on the assumption that it was.[1] YC was right, and helped them get to a true product-market fit. It was the right money to take.

[1] Paige's post is actually very nuanced about how much product-market fit he saw in AirBnB, and how much he wanted to invest because of the market and team. But he clearly gave them more credit on "making something people want" than YC.

"In fact, when we funded Airbnb, we thought it was too crazy. We couldn't believe large numbers of people would want to stay in other people's places"

I don't understand why anyone would have thought this at that time unless they did zero research.

VRBO had been effectively doing that for 13 years by the time Airbnb came along, and was (and is) widely used. Yes, Airbnb's focus is a bit different of a market segment, but clearly their success indicated that large numbers of people were willing to rent someone else's place directly from them in spite of the potential concerns.

This exactly. VRBO and HomesAway are the businesses that AirBnB is really competing with, and they've been going for ages. Hotels are for shorter stays, and generally are quite price competitive with AirBnB when staying short term anyhow. As a long time AirBnB host and guest, I've only ever used the platform to rent entire places, and I think that 80-90% of AirBnB revenue comes from renting entire homes. The original AirBnB idea of renting a room or couch from a local was just a beachhead and clever marketing trick to get noticed IMO. Like couchsurfing, I struggle to see that becoming a big business and taking on the Hotels.

AirBnB is really two businesses in one:

1. A Hotel disruptor - letting people crash on your couch or empty bedroom. This is the original idea as per pitch deck.

2. Holiday Rental / VRBO / HomesAway competitor - renting out an entire home for a period shorter than a 6 month-lease

Would be interesting to see where most of the revenue actually comes from. My guess would be that the traditional model of holiday lets (#2) brings in the vast majority of revenue, whilst the original idea was used as a beachhead / marketing ploy.

I dunno, something like "Make sure you have nice pictures" for a business where visual things (where you're going to sleep) is quite important doesn't seem that groundbreaking of advice.

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