- Looks like they are significantly leaner now as a result of COVID. Cost of revenue is at an all-time low in Q3 (17% of revenue on p164). There's a lot of focus the drastic cuts to Sales and Marketing, but it looks like there's a fair amount of increased discipline across the board.
- It's interesting that Operations and support looks to be very similar in both the first 9 months of 2019 and 2020 despite having drastically different revenue numbers. They had to spend roughly the same amount (600 million) to support 30% less revenue
- Looks like China is a huge part of their future strategy, so much so that it is explicitly called out in their Executive Compensation bonus calculation (p271). I can think of exactly one other American consumer tech company that has had success in China.
A fun anecdote about AirBnB in China: 2 years ago I travelled to Beijing and Shanghai and intended to stay in an AirBnB.
AirBnB had tons and tons of listings in both places, all of which had specific instructions to tell the neighbors you were “a friend” and not staying there with AirBnB.
At the time, and possibly still so, AirBnB was not operating legally in those particular places, and I presume most of the country, but it’s such a good booking platform people used it anyways.
Long story short, I doubt China is not going to copy AirBnB, unless they can find a nice revenue share model with AirBnB the platform.
P.s. There is ripe opportunity to make apps that interface China to westerners traveling there. There was literally no way to hook into the QR payment system, get a Didi, navigate, or get good translations just 2 years ago. Good luck to those of you building products to help non Chinese people in China. You’ll do well.
This seems incredibly dangerous as visitors on a tourist visa are required to register themselves with the local police within 24 hours of arriving at their destination.
Trying to stay under the radar seems like it courts risk of deportation, as I've known _lots_ of folks who got a visit from police at their place of stay who were not aware of this. Virtually all of them settled things fine but it was more headache than had they just done what they're supposed to.
I believe in a hotel stay, your hotel registers you online so that you don't have to deal with this.
So my wife is Chinese and from Shantou, a pretty big city in the South. First time I went, of course we stay at her parents house and I tell them that it's required we get registered at the police station.
Her uncle, my wife, and I went to four police stations. All refused to register my stay and told me to go the next place. The final one told me that they require to see our marriage certificate (which we didn't have as I never read once that it was needed), so we gave up.
I've been many times now, and I've never had a problem although it's a city that foreigners probably do not travel to as much as say Shanghai or Beijing.
I was going to say that was strange as I've stayed in Nanjing and my wifes small town (of several million people) outside of Nanjing and didn't get denied, but then realized that you didn't have the marriage certificate with you. I do believe that's required everywhere. For native Chinese it's becoming easier to visit other places because the registration system is becoming more digital. That unfortunately has the side effect of making it increasingly more difficult for foreigners since the manual method is becoming less common and therefore more confusing for local police.
It is interesting in the context of AirBnB - with the registration system they can't use the same "it's better to ask forgiveness than permission" approach they used in US. I have seen very successful foreign run businesses, for example a friend who imported steel in China, do really well for many years because the government wasn't interested in their industry, and then all of sudden find himself against several competitors and be completely out of business in the space of 6-12 months. I'm bullish on AirBnB but depending on success in China is a risky strategy.
This is kind of off topic of AirBnB but can you share a little bit more about the registration system in China? By the way you describe it, it sounds like not only foreigners must register with the police when they visit other cities.
No, only foreign nationals must register when visiting places. Chinese citizens only must register at the police station when moving - though as if often the case, many people ignore such rules. I just meant that the state is tracking where people visit thanks to digital means - facial recognition and cell records. But foreigners can't really skirt those rules, both because they aren't as easily tracked and because they stand out.
As Chinese you don't need to register when you move. There is Hukou system which determine which city/province you belong to (mostly used for welfare system), the system basically require you to have a permit to stay and work in a different province. It was quite strict 30 years ago because of the imbalance between provinces, many migrate workers. Residence address is not important as in western countries (where your bank account links to your residence address). That said, hotels (and netcafes) do need to register customers' ID.
Hukou is what I was referring to. It's not just welfare, but distribution of state money (like USAs census) and in some places required to purchase property in that area. Most ignore the requirement (like they do many rules), so I understand why you say they "don't need to register", but technically it is required.
This is where it gets fuzzy when you say something in China is "required" - technically it might be so but in practice it's not enforced, unless the government has a particular reason to enforce it, and even then it's usually temporary. It ends up being a weird situation where technically there's more restrictions in China but in practice there's a lot less red tape to deal with than living in the US.
What that means in practice is if Beijing doesn't like you, they will find a laundry list of requirements you violated. Bringing it back to AirBnB IPO that concerns me.
They have a copy of the registrations for previous stays in a centralised computer system used at the border. They don’t necessarily flag up a lack of registration but they do keep the information and nothing to stop them raising it up as an issue in future.
You also don’t need to be married to stay in a private home.
I can say that while staying with locals I never registered or being asked to. And it went like this for a couple of months.
Not only with Chinese, but also expats.
I mainly got my accomodation though CouchSurfing (I wasn't aware of BeWelcome nor TrustRoots back then)
The hosts seemed to have guests very often and we were never asked to pretend to be friends from home or anything.
This happened not only in the main cities, also in some prefecture-level cities.
It happened on a tourist visa, back in 2015
I am moderately involved with various sinology students from Europe. And have traveled to China personally.
Personally I stayed at various AirBnBs within China and registered at the police in Bejing and Shanghai.
The host provided a signed letter confirming where we are staying. With that letter I headed to a local police station where I gave the letter and had to fill out a form with basic personal details and address of where I was staying.
In return I got a stamped letter confirming my stay.
Anecdotes from others:
People who have registered late for various reasons (finding apartment, inconvenient arrival combined with work, etc)
I have as of yet not heard anything experience other than the police saying please register on time next time and still got their stamped confirmation of stay.
One standout story however is someone who looked up a recent political dissident via Baidu and got a visit from the police, nothing really exceptional happened except he got visited at his apartment got told off, had to sign a letter confirming the visit and infraction.
The person in question has been back to china multiple times since.
Chinese police are known to shy away from any work that falls away from what they are normally doing.
Registering a foreigner in a small town is a once in a lifetime experience for them, so many things can go wrong, so they wont do it.
The problem will only arise when you happen to be a criminal and your friend will be in trouble. If nothing happens, no one is going to check the record.
This is why I always stay in a hotel and not with friends or Airbnbs whenever I visit China. I'm not bothered to deal with registration and the hotel takes care of it.
Nevermind that around 90% of hotels in China do not allow foreigners. It was not a fond memory dragging my heavy baggage one place to the next for half a day being rejected all over Beijing (experienced it in Shanghai and Guangzhou too)
Of course the wealthy here would never know, most places priced in the top 20% expensive accept foreigners. I was a poor student and also worked as a teacher($400/mo) looking for midrange accomodations, not to spend a month's pay on a weekend trip
There were two system in the past: hotels for foreigners, designed to take passports and hotels for citizens, taking only IDs. There has been recent national system upgrades, now Chinese can use passport as identification (although still not universally). Since last year, you can use passport to check in high speed rail stations (maybe still not all of them) without queueing up in exchange for a real ticket. The direction is clear. It is a big IT system with different departments, I can imagine the problem will be gone in the future.
What most tourists don't know is that the hotel has to be registered to accept foreigners. I don't know if it's an issue any longer, but some foreigners found out the hard way after booking accommodations through Ctrip.
I rented a number of Airbnb apartments in different countries, many of which required guests to be registered with the police. Typically the owner would meet me when checking-in, and they'd take a copy of my passport or drivers license, and occasionally I'd have to fill out a form with a few basic pieces of information (name, date of birth, etc) for them to submit. It was usually 2 minutes of work.
The downside was it was all incredibly insecure. They'd be snapping passport photos on their personal phone, and one apartment had a book in the living room with passport numbers and personal information of every previous guest.
So, technically it works now in different countries, but Airbnb really needs to assist these owners and get some proper procedures in place.
I had to do this at an AirBnB in Cuba. It seemed like a lot of work for the owners. I was also a little nervous about taking photos of passports and things before I understood it's a government process. The platform should help out here.
How are they going to do that at the place where you're not legally allowed to be staying?
This was reckless and stupid of them and demonstrates what AirBnB often does -- that they put their business above the safety of their guests and hosts.
I do not see how AirBnB can figure it out at all, under their current business model. Their business model depends on not vetting the place of stay and doing bare minimum for deal brokerage. Dealing with this would require them to incorporate all the fine details of hoteling into the business model.
If a hotel can do it, surely there’s no reason why Airbnb can’t figure it out?
A good innovation for AirBnB would be to automatically notify the relevant tax authorities about their hosts income from illegal subletting, ahem, I mean "renting out a spare room"
I researched a bit how Airbnb scaled in China two years ago, not sure how the things are going now.
Obviously there are tons of competitors in that area in China. They have far more employees and use typical Chinese aggressive marketing. The most notable one, Tijia cooperates with the main travel providers - CTrip, Expedia, Qunar.
For me as a foreigner Airbnb works well, although in some rural areas it's better to go with Tijia.
Airbnb entered the Chinese market in 2015 – the same year in which Tujia became a unicorn. The global giant has been slow to expand in China, with 80,000 listings compared to Tujia’s 400,000.
Indeed in 2017, Airbnb Inc's founders were moments away from merging their China business with Tujia. Chesky decided to block the deal out of concern that it would harm the Airbnb brand.
Afaik, Airbnb focuses on the quality of its listings. The company has visited thousands of houses and removed those that do not meet quality standards. The company launched Airbnb Plus, a premium service. The company works with opinion leaders and adapts its products to the market. Thus, apartments can be ordered through mini-programs in WeChat, and checkout using WeChat Pay and Alipay.
I stayed in AirBnB in Sichuan in 2017, all completely official.
I just had to go to local PSB (police) office to register for staying as a foreigner.
The biggest problem was of course the language as the police haven't spoken a word of English. They also didn't know Poland (issuer of my passport) is a real country.
Does the Netherlands have a rule that you register with the local public security bureau for wherever you are staying? I really don't see AirBnB working in China because of that.
In the Netherlands, and elsewhere in Europe, it’s not because of any requirement that tourists must register with authorities, but rather that some towns and cities have rules that restrict (or even ban) short-term AirBnB style rentals.
Here in London there is a 90-day rule (a property can’t exceed 90 days total short-term rentals per year), and it’s 60 days in Amsterdam. This is enforced on the AirBnB platform, but landlords will try to get around it by listing on multiple platforms or by having multiple listings for a property.
Small, family run hostels in China manage to figure it out. AirBnBs in middle income countries operate much more like hotels than the empty apartments they're known for in the US and Europe.
They do, the owner or someone with “works here” goes down to the station to register them; if they are a hotel they’ll be able to fax/scan it to the PSB. It isn’t self service.
As an American who now lives in Germany, it does make me think how the U.S works at all without this "registration". There are times where you fill out government forms with your address, but there's no way to know for sure where someone is living at any given moment. As far as the "government" is concerned (which government? state, local, federal? AFAIK it's all pretty decentralised) I'm still living at the place I registered to vote from years ago.
I suppose it's cultural differences. There's a staunchly individualistic attitude in the US and the idea of a central government tracking its citizens is very unpopular. I get it, too. If you take a look at the "Anmeldung" process in Germany, where the government has a list of everyone and their race/religion/nationality, along with exactly where they live/which building/which floor/which side of the building, you can see how such a system could be dangerous if Germany were to ever shift from the liberal democracy it is today.
Yes I guess it's the cultural differences. But in reality, if the US government wants to find out where you live, they're going to find out :-)
Also, as another child comment said, filling out religion and gender is optional, and no form ever asks for race (at least in Germany and Switzerland I know that for sure).
On the other hand, having better data about citizens makes a lot of things more efficient and fair in government and politics. As I said, I think the US Census is a disaster and always leads to unfair outcomes for minorities and lower class people.
But I agree, it would be better if they woulnd't ask for religion at all.
Heck, I remember it getting drilled into me in middle school that the Nazis were able to kill so many Jewish people because they had complete records of where everyone lived and their religious affiliation. When the time came, they knew what doors to knock on. It boggles my mind that this system still exists in modern Germany, of all places.
The American model is highly distributed and need-to-know. Many government forms ask for your current address, but it is not automatically shared with the police and there is no requirement to update it in a timely manner.
Many Americans are highly skeptical of the police, and for good reason. Expecting people to go to the police to register when moving would be a complete non-starter in most neighborhoods that I have lived.
This is somehow connected to the fact that US political parties are mostly not mass membership organisations.
Everywhere else in the world, if you strongly support a party, you join it, and pay a membership fee, and the party adds you to a register. Then, you can take part in party activities, like internal elections.
In the US, you register as a supporter of a particular party with the state. Then, everyone registered can take part in (some) party activities, like primaries.
It's a weird system, and i don't know how it started, but because Americans don't realise it's weird, there isn't much written about it!
Right... but why does the state want to know which party you're a member of? This doesn't get supervised by the state in other countries. It's usually a personal, private matter between you and the party.
First we have a system of primary elections, and in many jurisdictions your party registration status determines which primary you can vote in. You have to be registered Democrat to vote Democrat, registered Republican to vote Republican, etc. The local election board is the one who oversees to vote, so they need to know your party registration in order to make sure you get the right ballot and the right ballot information (which is sent by mail beforehand). In many jurisdictions you can also "decline to state" and then in a primary election you have to tell them each time which ballot you want.
Second, it's used in state redistricting. Having this information be public allows auditors to check if redistricting is resulting in gerrymandering.
But I feel like I can keep asking ‘why’. Why does the state have its nose in political party business? Why are they running party primaries? Seems like something that should be firewalled off from the state?
In other countries parties run their own candidate selections as private business and the state can’t meddle in it, so the state doesn’t have to ask what what your affiliation is.
Ah, right, sure that's a good point but I wouldn't say it's more "extreme" than other countries, seeing as it's a totally optional thing. I can vote in elections without being affiliated with a party. In Germany, for example you don't have the choice but to have your race/gender/religion/address on file with the central government.
Disclaimer: I'm not complaining about how it is in Germany/other countries in Europe. The trust in government is quite high here, and for a good reason :)
Race and religion are definitely not required (=optional for you to give) when you register for permanent residency in Germany. Source: I am a german who completed the form multiple times after moving.
I think you can say “no religion” though and then not pay your tithing taxes, no? There’s no requirement that if you are Jewish you register as such (but then, your synagogue misses out on money).
The US census is also intended to count people without an address.
Also, in the US it is state governments that are the authority for most things pertaining to where people live: property and rental law, identification cards, property taxes, voters registration, etc. Most states do require people to change their voters registration and drivers license when they move between states.
It’s not that strange that you don’t register your address with the federal government, when in fact, the only interaction that many Americans have with the federal government at all is their yearly tax filing.
In reality, there are a lot of problems with the Census that in the end unproportionally effect minorities and lower income folks negatively.
It's the same in Germany and Switzerland (and I think in a lot of other European countries): You register with your local government when you move, not the federal government.
In other countries the role of the census is significantly lessened in modern times because basic population questions can be answered with "instantaneous" (in terms of when it was measured, if not when you get the results) data. The idea of waiting increments of 10 years to get basic counts of where people are living / moving to / from seems ridiculous. Deeper demographic information is usually handled via sampling, and does not require the nationwide (and especially this time, logistically taxing) mobilization of census-takers.
I do agree it would be difficult for the US to shift to such a system given the requirement is constitutional rather than merely a procedure of the civil service.
It's not really registering with the police, though they probably get access to the information. When you do it you go to the council building and register there (at least when I last did it several years ago), so it's more like registering with the city. This means that things like local taxes and such go to you automatically. I do know a lot of people who aren't registered where they live, because they're illegally subletting or something so they're registered at their parents' place or whatever. It's pretty accepted that this is common.
As a Canadian, I concur. I've lived in other countries with a pretty strict registration requirement and it always felt odd. I was always thinking "why do the police need to know where I live? I haven't done anything wrong".
It's really useful information for things like mailing your tax returns, verifying which municipality should receive taxes and also affects you social security. Sending voting information. For police they need to know where to send court documents and so on.
In Finland it's not really handled by police, usually done with Posti. Other great thing is that it also updates your details to most places...
I see registering your place of living is quite importand when dealing with local taxes. Ie when staying in one place for longer than some period of time, alos same information is used for social purposes, for example to assign your kids a place in kindergarten or school. It just so happens that this responsibility is assigned to police. By the way passport issuing is also i think is under police in LT. And yeah tourists who stay for long periods are handled with same subroutine (if i can say so). Stay at one place for prolonget period of time, please register.
The US does do this. I’m always asked where I’m staying when I cross into the US. I have to write it on my landing card and they ask me about it at the border. And this is someone who doesn’t need a visa, even.
that’s something different. Every country asks where you will be staying on their immigration entry forms. This thread is about local police, no immigration and customs agencies.
In Germany, it is required that when you move to a new apartment you walk into the nearest police station or town hall within a few days and fill out a form telling them your new address, who you live with, what their religious affiliations are, etc. You will get in trouble with the police if you do not do this.
In China they take it even further, and even tourist have to do the same. If you stay in an Airbnb in China and do not register with the local police, it is possible you can get in real trouble. This is not “write your hotel’s address on the immigration form”, it is “tell the local cops where to find you.” There is a huge difference in my mind at least.
> This is not “write your hotel’s address on the immigration form”, it is “tell the local cops where to find you.” There is a huge difference in my mind at least.
For tourists, it's something that's rarely enforced. And if you stay at a hotel they'll handle it for you (or presumably, maintain records in case the police have questions).
> In anticipation of the amendment of the Vreemdelingenbesluit (Foreigners' Order), you no longer need to report to the vreemdelingenpolitie (foreigners' police) as a foreign national coming to the Netherlands for a maximum period of 90 days. There is one exception to this new rule. The Dutch representation abroad or the Koninklijke Marechaussee (Royal Military Police) may, in special cases, require you to report to the vreemdelingenpolitie in person within three days.
I'm Dutch. Before 2014, there was a rule (in theory) that foreigners staying at a non-hotel for more than 3 days had to register. In practice, it was not used. In 2014, this rule was completely eliminated. (There's a registration requirement if you stay more than 90 days as a foreigner, but since visas and visa free access to NL is for maximum 90 days anyway, this rule applies to basically nobody.)
To be fair, so many things are "illegal" in China and it mostly serves to give authorities something to get you with if they actually want to get you. See also, VPN use.
Curious, what makes these things so hard for westerners? The Didi app (for example) is translated into English, isn’t it? Is it just a matter of incompatible payment systems?
Until recently WeChat Pay and AliPay could only be used with Chinese bank accounts in China, and to get a Chinese bank account you need to get a Chinese mobile number first.
If you are a frequent traveller and read Chinese, it isn't especially hard to get a mobile number and bank account other than preparing to waste half a day standing in lines. After that, life is heaven for you because you now have access to all the convenience of the myriad e-commerce websites and apps.
Any other visitors would have tough time getting train tickets, booking accommodations, renting bicycles, hell, even buying from vending machines or automated convenience stores, because people really don't use cash anymore, but the system is really only designed for domestic users without much thought for short-term visitors and tourists.
I've used Didi extensively as an American in China, among other apps, both in local dialects and in English. I don't speak any dialects but rely on coworkers and in region partners to be all "just push this button and enter what mall/hotel/restaurant you're going to." Works with my personal/corporate cards.
Had the same experience staying at a AirBnB in Vancouver. In that case it was a unit where (unbeknownst to me) the condo board had banned AirBnB, so we were instructed after booking to say we were 'visiting friends'.
In China you are legally required to go register your location with the police though. It's a bit different than lying to the building doorman or whatever.
I just finished staying in an airbnb for a month in China and didn't have to go to the cop shop. I've now just rented an apartment and did the registration no issues, they didn't highlight any gaps on my travel record so I assume it was all above board.
According to the law, you have to register with the local authorities. Technically a law was broken, unlikely it will be used against you unless they make it a prerogative.
Yes, I believe I was registered. Airbnb takes a copy of my (and any fellow friends staying with me) passport and does a few extra checks compared to stays I've had in Australia. Having said that I was staying in a pseudo-serviced apartment so it may have just been a normal hotel that was advertising on Airbnb.
Is it? I always hated it. I'd be very curious to learn what makes it feel like a good booking platform. It doesn't even show you where the room is located! (only approximate location). Seems way worse than e.g. booking.com, the only reason really to use them might be lower prices... if they still have an advantage here, which I'm genuinely not sure anymore (a while ago I decided I don't want to deal with their crap regardless of how much money I might save).
[edit] "Is it?" was not a rhetorical question. I'm not upset or anything if you downvote, but can you also add what do you feel makes it a good platform? Or what did I say that was wrong?
Yes I made the switch back to "normal" hotels last year and everything was so much easier we arrived much earlier than expected and they had a better room available at that time so they gave us that one. Then took our bags while they cleaned the room went to the hotel's cafe for a coffee. Easy peasy.
> It's interesting that Operations and support looks to be very similar in both the first 9 months of 2019 and 2020 despite having drastically different revenue numbers. They had to spend roughly the same amount (600 million) to support 30% less revenue
That's not surprising to me at all. I'm sure their support and operations teams have been working insane hours during Covid dealing with cancellations, unclear lockdown/quarantine policies, more guest/host disputes, etc.
It could have also been a business decision right - let's not layoff all that support staff or spin down all that infrastructure because eventually the business will come back. So costs are mostly the same.
There are a few others beyond Microsoft and Apple.
Intel has made a huge amount of money from China.
Google's Android positioning in China has made it a lot of money as a defensive position for the rest of Asia. By conquering China with Android, it delayed the inevitability of China having their own domestic dominant mobile OS (which will push into other countries in Asia as well at least, harming Android elsewhere).
And while not in China, Facebook makes a lot of money from China.
Did they? Not only is national demand nowhere near enough to use up the Shanghai production, but they're having to export MIC vehicles and adding Model Y production. All of this with strong government backing of Tesla (as Musk said "the same as any Chinese company") and Chinese banks being told to accept any loan for a Tesla vehicle. Despite that they've had more price cuts than quarters and demand does not show any signs of improvement.
This also on the back of the ticking time bomb that is their Shanghai contract. We should probably wait until the end of 2023 to see if Tesla "succeeds" in China.
Well, it seems that they just can't compete, then. If what you are saying is true, then Tesla is in imminent trouble everywhere and needs to step their game up.
There are plenty of US tech companies that have success in China.
For example I often use Agoda or hotels.com when I travel in China.
I think AirBnB will have plenty of competition in China and broader Asia from well-established players such as CTrip, Agoda or Rakuten.
The "social network" (rating your visitors etc.) aspect of AirBnB I think will matter less in those parts of the world ... but maybe I am wrong and things will change.
The usage you're describing doesn't equate to success in China, you're still a customer outside of China even if they're working with businesses in China.
I'm not saying the two services you referenced do or do not do well with the Chinese market, but it's a different proposition to actually capture a massive distinct market vs expansive options for the existing customer base.
I see Agoda as a competitor to booking.com, I can see they always have a price advantage against booking.com. All these services are not pleasant to use. People normally spend quite a bit time in searching for places to stay. I wish there is more personalized service. I find it is painful to go through reviews and list of properties.
No. But if you go to Airbnb, you probably have already narrowed down your search, it makes the booking process a little bit easier. I find more options is always annoying. Say some reviews are more important than others, I wish sites like booking.com can discard listings when certain keywords appears in negative reviews. All I want is to have a few options to choose from. I personally don't use Airbnb any more.
It's a marketplace business, all internet marketplaces are tech companies because they simply aggregate buyers and sellers while owning none of the assets/inventory/risk being transacted on the platform. Airbnb is just a website with a ToS. There is zero marginal cost to Airbnb for servicing a new listing.
Do you also question whether Ebay is a "tech" company?
is cme group a tech company? it is literally marketplace technology. eurex and xetra, nasdaq, nyse, bats, lse all those guys as well.
if you want to go a bit further, jpm, morgan stanley, goldman, barclays and so on are also tech companies, since they're one layer over all these marketplace tech companies, but with their own internal marketplace technology on top of it.
anyway, it's all very silly and meaningless categorization.
Everything can be both tech and not-tech if you want to argue semantics (ie. If you use a computer to do your job, is it tech?). That's not useful.
But I find the zero marginal cost qualification useful. These companies are fundamentally different than companies that are further out on the marginal cost spectrum.
Take for example CME, NYSE, Nasdaq, etc. Pure zero marginal cost. Virtually unassailable positions for the marketplace niches they dominate.
Then compare that to JPM, Morgan Stanley, Goldman (farther down the spectrum). While they do offer software products in trading, retail, etc...they also offer lots of high touch, high human cost investment banking services. Not the same thing.
It doesn't really matter if you IPO with JPM or Goldman. The bank will make lots of fees but it will be proportional to their man hours worked. No obvious winner.
By this definition, you could say they do some tech, some old school professional services.
As a "tech worker," I find this useful when examining which employers to work for. It determines how much leverage I can have in affecting my employers business. Far and away, the best jobs I've had are at companies on the extreme end of the zero marginal cost spectrum (pure tech, by this definition).
To use banking as an example, you can go from zero to $1B quite quickly in the software (zero marginal "tech") side of the business. Look at SoFi or Plaid.
Meanwhile, on the old school professional services side, imagine how hard it would be to get to $1B there.
Airbnb's main offering is its software and its ability to create a market between consumers and producers through that application. I imagine it is also a company that is heavily invested in its software engineering workforce and all the resources that support/flow from that.
To note, it feels like 'tech company' is a bit ambiguous these days and doesn't necessarily have great clarity.
All companies are "tech-dependent companies." This is an intellectual dead end.
Traditionally, the business world has qualified tech companies as those which primarily function via zero marginal cost distribution provided by software and the internet.
If Airbnb and Ebay aren't tech companies, then neither are Google and Facebook. All four are marketplaces (Google and Facebook are advertising marketplaces at their core).
Saas and marketplaces are the most solidly "tech" businesses that exist by the textbook definition. They fully take advantage of zero marginal cost distribution.
This isn't a black or white thing. It's a spectrum. On one end you have pure play tech like Stripe or Facebook (100% zero marginal cost). On the other end you have industrial firms who produce mostly undifferentiated commodities with thin margins like tires (super high marginal cost).
Apple is clearly a tech company since they conduct tons of activities that are zero marginal cost (iOS, MacOS, App Stores, AppleTV, Apple Music, Apple News, Logic Pro, iCloud storage, etc. etc.)
However if you remove the software part of their business, then they'd be a commodity phone company, and valued by Wall Street in the same way TV manufacturers are (ie. like Samsung, with a PE ratio roughly half that of Apple).
The higher value and differentiation is mostly derived from the software (an OLED screen with a processor attached isn't high margin otherwise--see Samsung's margins). Hence why "software is eating the world."
Tesla is a tech company, and Facebook/Amazon/Google are not? Maybe your definition is “right” in some sense, but is also useless, given that it’s not the definition anyone else is using.
Amazon doesn't make anything. Increasingly it doesn't even own what it's selling. Same with AirBNB. They're selling a marketing platform to businesses.
AWS isn't a "marketing platform", and it's where most of their profit comes from. It's a bundle of many different and related technologies, most of which have only a few competitors and would be tricky to implement locally.
And then there's that "Amazon doesn't make anything" claim so neatly demolished by jodrellbank.
Kindle. Firestick. Echo / Echo glasses/earbuds/wearables. Delivery drone (prototypes). Luna controller. The new AZ1 chip inside Echos. They own Ring (doorbells) and Eero Wi-Fi routers.
They custom design[1] their own internal routers, chips, storage and compute servers and network cards, they own Annapurna.
Sure. Their biggest production line is probably the robots that are at work in their warehouses. But it's all still a rounding error for the core Ecommerce & data center businesses.
> biggest production line is probably the robots that are at work in their warehouses
pffft. Robot roles for their warehouses is a distinctly bounded and rather small "marketplace". Kindle sales likely outnumber this by at least 3 orders of magnitude. Not to mention Alexa technologies.
I don't think the labels of "tech" vs "hospitality" are exclusive in any way. I think there's a good argument to be made that we should consider Airbnb a "hospitality" company, but ultimately the label of "tech" company is shorthand for a set of characteristics of the business that other sibling comments have called out -- large amounts of R&D, low marginal costs, and low CapEx. Their product is hospitality, but the company has operating characteristics that have more in common with Facebook than with Marriott.
I think you're confusing them with wework which is famously know for being a real estate company masquerading as tech.
Airbnb has made some non-trivial open source contributions that I'm aware of at least. There's a very popular eslint style guide based on their internal policies and they've also created an svg animation library (the name eludes me) which is popular with designers as it accepts Adobe AE as input.
- No breakfast buffet, restaurants or room service available
- No room upgrades available
- No early check in/late check out available
- No 24/7 access available
- No reception desk 24/7 available where I can ask for good recommendations, learn a bit more about the place without feeling awkward to ask or risk being sucked into a long unnecessary conversation
- No easy way to voice complaints or raise concerns if something goes wrong
- No extra facilities such as laundry, flower service, etc.
- No other guests which I can meet in the lobby, at the bar and so on to socialise
On the other hand I get this at AirBnbs:
- Having difficulties to access the property because hosts
want to meet somewhere in a place which suits them but not me
- Sometimes waiting for the house/flat keys longer than expected
- Sometimes being told on arrival how some things "recently" broke and that they won't be available during my stay
- Awkward hellos and good byes
- Awkward random house rules
- Awkward access restrictions such as can't open this gate after X hour, and so on
- A lot of fake friendliness as long as you don't raise any concerns
- Difficulties to raise issues and getting refunds
- A lot more which I can't think of now, but left me with a really bad aftertaste every time
Wow, totally opposite my view. As a family we always want to stay somewhere with a kitchen and a private lounge area - hotel suites are cost prohibitive to this, and a lot less charming.
When finding chalets or cabins/lodges for outdoor trips, Airbnbs are often much better located.
To me it is not so much hotels they need to replace, but a streamlining of booking vacation houses to the point where it is almost as convenient as hotel bookings are, but with vacation house amenities.
You are pretty much on point. I believe that's really AirBnB's market.
Some people are confused and surprised they expect hotel services(airbnb is to blame for this as well) instead of more "adventurious" accomodation offered by private owners.
AirBnB is the eBay of short term rental with the good and bad parts. Booking.com used(and mostly still is) more a kind of Amazon.
In my case it's been both. While it was just my wife and I, the adventure nature of Airbnb was fantastic. In fact, we preferred cheaper places in better location and didn't mind the occasional `wtf` because the upsides were greater. After having kids, we still prefer Airbnb because we can get bigger spaces (more bedrooms, big living rooms), but the lack of consistency is making it more difficult to choose Bnb over hotels now. Now I want less adventure and more comfort. Losing sleep because someone's bed is too soft, or the A/C is too noisy is no longer acceptable. The reality is that we could get all of that on Airbnb, but then it won't be a good deal, it will be as or more expensive than getting a hotel. So it's not so much that Airbnb has changed, but our needs have changed while our purchasing power has remained the same. Just thinking out loud...
Well of course AirBnb is "better placed"; they're ignoring local zoning. It's probably an indication airbnb has a negative impact on the places you're visiting.
I use Airbnb for most vacation travel. Always rent a whole house/flat. Try to use "Super Hosts" and check reviews. Have had success in the US, Scotland, Iceland, and Italy.
- Don't care about the gym.
- I'd rather cook my own food.
- Rent a nice place, upgrade not needed.
- I've never rented a place that had awkward check-in/out times.
- Not sure what you mean? If you rent the whole place, you can come and go as you please.
- Airbnb facilitates online chat with the owner.
- Never had a concern that needed raised.
- Rent a place with laundry
- I'd rather go to a local place than a hotel bar
- I only meet the host about 1/3 of the time and it's always been at the house. The other 2/3, the house has a key box or similar for access.
- Never happened to me
- Never happened to me
- Never happened to me
- Never run into weird rules
- Never run into this either
- Never run into this. Hosts have always been professional.
- Refunds through Airbnb have been easy (I have several this year)
AirBnB's best-case "ideal" setup has always struck me as just "CouchSurfing[0] but monetised". While AirBnB has received a lot negative press for facilitating the letting of would-be residential property by large-scale professional landlords, the marketing from AirBnB's side has always favoured the "local guide, personal human experience" angle, an angle CouchSurfing has always tried to cover non-commercially.
So in my mind it's a comprehensively bankrupt proposition from either side of the spectrum. It's worse than a hotel (no service), worse than traditional self-catering tourist apartments (more expensive), worse than a long-term let (a LOT more expensive) and infinitely worse than the social, warm-fuzzy personal experience of CouchSurfing (free).
Having used it extensively for travelling to places for concerts and festivals, it’s a massive advantage to be able to shop for places that can accommodate 3-8 people for several days at a time.
I don’t want a couch, I want a whole home that our group can share, and for less than the surge price that a hotel will slap on for a single room, we can fit our needs well.
> While AirBnB has received a lot negative press for facilitating the letting of would-be residential property by large-scale professional landlords, the marketing from AirBnB's side has always favoured the "local guide, personal human experience" angle, an angle CouchSurfing has always tried to cover non-commercially.
Call me cynical, but "Advertise your product for a use that your core moneymaking market doesn't do" would be a good dark pattern to avoid scrutiny/regulation.
Couch surfing.com is basically dead these days because they've had to collect money to stay afloat. But tbh, I felt like there were a lot of pervy guys on there based on how every girl I met had some story of a guy thinking a free couch meant that she should fuck him in exchange. And couch surfing.com basically had no way to filter that.
You are not talking about Airbnb here. You are saying a whole industry which existed well before hotels, before Airbnb and will exist after Airbnb is not a good fit for you.
I was speaking specifically of AirBnb because a clean, good reviewed room in a central location in any city comes almost at the same cost as a hotel room minus all the other things. Here is the thing, my wife and I did an around the world trip for an entire year and we did not stay once at an AirBnb. I checked AirBnb in every new country and every time it lost against a hotel or a hostel. Most AirBnbs were priced at the level of a hotel room, so if we wanted to splash out (after roughing it for a few weeks) then we booked a hotel for the price of an AirBnb and if we wanted something cheaper than a hotel then hostels beat AirBnb by miles every single time. Especially outside Europe many hostels were offering an unbeatable experience where you could get so much more comfort and value for little money than what the cheap AirBnbs had to offer. If during an entire year of travelling we didn't book an AirBnb once (despite trying) then this speaks for itself IMHO - at least from my point of view.
It sounds like you hired it for specific reasons, finding a low cost option quickly or treating yourself to _all the things_, and I don't think AirBnB tries to do those things well.
Try hiring hotels or hostels for large gatherings: bachelor/bachelorette parties, weddings, family vacations, etc. and I think it will be easier to see the difference. They compete more with vacation rentals, which seems old-fashioned since their online inventory always sucks.
I also think hotels are impersonal. As mentioned in this thread, they market themselves as "having a local experience" and I think that's been an effective message. I have gotten great recommendations from hosts on food, dining, and things not to do and I get to choose the location/theme of my stay too. Do I need to work? Am we relaxing for a couple days? The choose your own adventure aspect means that AirBnB is the starting place for all those searches, not hotels.
I also think there is a real lack of comparable options to hostels in the states so those could be similar jobs here (not abroad). I know of 1 hostel in my hometown near the airport (top 20 US city by pop).
I do agree that great hosts will push up prices to be comparable to hotels and the gap is closing steadily. I think you can still find great middle ground in most cities.
> Try hiring hotels or hostels for large gatherings: bachelor/bachelorette parties, weddings, family vacations, etc. and I think it will be easier to see the difference. They compete more with vacation rentals, which seems old-fashioned since their online inventory always sucks.
I agree with you that AirBnb fits much better into that category. Having said that, I also frequently rent an entire chalet with friends for skiing and even then we use websites which cater specifically for those types of accommodation (especially in France there are so many good websites to book chalets) that the offerings on those websites exceed AirBnb again in every possible aspect.
Besides that, I don't think that investors have valued AirBnb at the current levels with the idea that AirBnb only caters to bachelorette parties and a few odd student gatherings. That market is not nearly as big as AirBnb is currently going for.
I think the key here is the brand, which does go a long way. When traveling to a new place, I don't know what to look up to find whole-place rentals in the area and Airbnb is a default to finding what's in the area. In that way, Airbnb's value is in its listing/"aggregation" platform, not necessarily the listings themselves. After all, there's very little to stop a competitor from cloning Airbnb's model (and those clones do exist).
Personally, while I default to Airbnb's for finding stays when I travel, I've found myself gravitating back towards hotels as of late because they were generally better value propositions for what I was looking for.
That industry was somewhat small before. For it, AirBnB was its Eternal September, as everyone and their dog suddenly became landlords of their (often rented!) home.
You are spot on.
The one other thing I cannot take anymore with Airbnb is the hosts making it sound like they make us a favor to stay at their place.
It feels like every other booking ends up with an email like "this is our childhood/lovely/whatever reason place, we are very picky about who we accept and we except you to treat it as your home, can you confirm you would do that?".
Every single time I roll my eyes. It's not like I'm paying them more than a hotel for the privilege of staying there.
Airbnb hosts do do some of this stuff - ie. 24/7 checkin is available if you filter for it, as well as other facilities.
But I do agree that it's becoming harder to justify Airbnb use. As it's popularity has risen, it feels like, what was once a cheap stay in someones house, is now the same price as a nice bed & breakfast. And with Hotel's seeing the lost footfall, the gap between a private room in a strangers home and a hotel room with much more privacy has become smaller and smaller.
I've used it every week for about 8 years now for my accommodation when working away but couldn't see using it much in the future
- Want to rent an entire house in some specific area
- Want to rent something as cheap as possible / on a strapped budget.
Very cheap travel/plane tickets and accommodation has made international travel very accessible for a lot of people around the globe. So I can absolutely see why some people swear to using airbnb - but for me? I'll rather pay the extra $50 for a hotel room. That's chump change for peace of mind, IMO.
Actually in my mind, Airbnb is always more expensive than a hotel. Each trip I end up checking both options and I'm amazed at how expensive Airbnb ends up being after you add all the hidden fees.
I think the main use case is for big groups and gathering. When you want to stay with 10 people. And even then, it's still more expensive than 6/7 hotel rooms (if you come as a couple you would only use a single room).
I think Airbnb manage to convince a lot of people that they are always a better deal than hotels. I see a lot of my friends never checking regular hotels anymore.
I don't know about the US, but certainly in Europe a shared room in a hostel is always much cheaper than anything on AirBNB if you're really on a budget.
Like most startups, I think Airbnb was mostly competing on price. But I was planning a weekend trip recently and it wasn't any more money to stay in a hotel. I don't see the apeal at all.
Completey agree. I thought AirBnB was great back in the day but these days I only find it 'useful' (read: cheaper) when sharing a large property with friends. 99% of the time a 4*+ hotel cost is similar if not £20 - £40 more overall which I would be willing to pay because of your list above.
- Many airbnbs have a spa, especially those outside cities. I've also seen saunas and gyms
- Airbnb plus or Airbnb Luxe can have breakfast or groceries basket
- Early check in or late check out is possible. Just discuss with your host prior to confirming reservation. Unless they have a guest coming just after or their cleaning crew can't make it work, they will find a way to make it work
- Many Airbnbs have 24/7 access. Many have electronic door locks
- You can get local, custom recommandations by discussing with the host, and more. Same for complaints
- Flower service, laundry, babysitting options are available with Airbnb Luxe
On the other hand, if your goal is to socialize, talk to hotel staff, talk to other travellers, then of course, airbnb are NOT an option for you. Airbnb doesn't have to provide everything. I can tell you they are great for families looking for a vacation home.
The house rules of some Air BnBs are ridiculous. Things that wouldn't be an issue at a hotel can get you booted out of an Air BnB like bringing 2 people up to your room.
Don't forget wealthy boomer homeowners shaming you in reviews with "not respectful guests" if you don't spot shine the place despite a $90 cleaning fee
Airbnb was cool when it was a place to share with hosts and rent a bed and a breakfast during my trips, allowing me to save some money and meeting some cool people.
now it’s just a boring business of terrible managed apartments with really bad amenities and problems that make you lose time and totally diverges you from the whole concept of hassle-free vacation/renting.
My last 5 airbnbs were apartments fully setted up to be rented in Airbnb just for the money and not for the experience and good service, every single one of them were so much problematic to check-in/check-out, I was charged insane cleaning fees even tho the places were not clean and were never cleaned, I had to deal with people putting cameras around totally disrupting your privacy, I had to deal with overcrowded apartments (some guy decided to rent every room in his place and sleep in the living room without mentioning it anywhere in the listing), I had to deal with last minute cancels that almost made me sleep in the street, etc.
Worth mentioning that all of those bad experiences came from places that were marked as "superhost" and had quite a lot of reviews.
Aand lastly, Airbnb decided to just void a 500$ giftcard that I got in 2018 and I tried to use early 2020 and they said it was invalid, I just lost the money.
My experience has been really different from yours. After my first stay in an Airbnb five years ago I learned I needed to be more careful about reading the reviews and the descriptions. Since then I’ve only had positive experiences. The places I stay in are usual run by an individual, not a manager (and when it is a manager it’s clear up front). The service has been fantastic and the places have been beautiful. My last stay was amazing. With my family at a house in San Juan Bautista, with a private lake, the last week before my kids went back to school.
When I first started using airbnb, I would run into these awful listings because I was scraping the bottom of the proverbial barrel.
On a visit to Boston, I once stayed in a cheap AirBnb in the bad part of Methuen, MA, where the local grocer knew I was from out of town because I paid in cash and not food stamps.
My wife, on the other hand, always reads the reviews and I've never had a single bad experience travelling with her.
If you go by price you get what you pay for. This isn't a failing of AirBnb, its how life works.
"Reading reviews" hit the nail on the head for me.
I miss the days where I can just make purchases without having to "read the reviews."
I'm so time-constrained as it is; making customers responsible for ensuring that they've contracted with a quality host / Uber driver / seller on Amazon -- is one of the things I hate about new age "marketplaces."
While I never really had a bad experience with Airbnb I only consider them as a last resort. If there is an issue with a room at a hotel, I can get another room usually. If there is an issue with Airbnb it's a bigger hassle. Not worth the risk in my opinion.
Yup, I’ve had mostly hosts who while making a packet really do not give a crap about service. I always thought AirBnB was a terrible idea - it’s good if there are ten of you sharing a haunted house - but seriously for a room all I want is a cast iron guarantee to be able to check in and get the key without any hassle. This almost never happens.
> Aand lastly, Airbnb decided to just void a 500$ giftcard that I got in 2018 and I tried to use early 2020 and they said it was invalid, I just lost the money.
If this was in California, gift cards cannot expire (with some exceptions). You might have a recourse there.
The seesaw in revenue over the last 3 quarters is insane: 841M, 334M, 1.3B in Q1, Q2, Q3. They even posted a profit last quarter. I've gotta say, the S1 looks appealing considering how few profitable silicon valley companies there are these days. On the other hand, I have a hard time interpreting whether this is truly a profitable company since the numbers are all over the place.
It also looks like Q3 tends to be their best quarter by far. Is that because of summer vacations?
Compared to something like Snowflake, Airbnb's business is very seasonal (most people travel during summer & holidays), so there is always some seesaw even on good years. NYE is the most popular night of the year.
Widespread supposition is that AirBnB does better than hotels lately because:
1) when people do travel, they'd rather be at a single apartment or cabin than a many-person hotel (not saying that's well-founded, just that it's a widespread opinion)
2) some people who are now remote working decided that if they couldn't do anything in this city, they would live elsewhere for a little while.
I have, however, no hard data to back up if these are actually the reasons.
Yeah, it's hard to say how the numbers work out overall. But, if I were to travel at all over the next few months it would almost certainly be to a place with a kitchen (and preferably someplace separate) so I didn't need to go to restaurants for every meal or mingle generally. Certainly, couldn't find AirBnB for fall time off I was considering.
It's the same reason home sales are strong right now -- when you spend almost all your time at home, space is nice to have, especially for people with children. Not sharing walls with neighbors is also nice.
I'd bet that an AirBnb is normally a bit cheaper than a hotel suite with multiple rooms and a real kitchen.
Good point; I personally know people who were very zealous self-isolators, who bought and moved into a new house. It doesn't make much sense to me epidemologically (I'm pretty sure they used movers), but it makes sense psychologically as a way to change the scenery.
It’s similar to what you see in the broader stock market - I mean we closed at all time highs today.
But Q3 was likely an anomaly since they saw a lot of tailwinds from greater demand for homes in driving distance for easier summer vacations plus Covid was only concentrated in a few hot spots over the summer.
Now Covid is more widespread plus there’s naturally less leisure travel in the winter and still very little rebound in business travel.
Still, I think long term the biggest issue is not rebounding demand, which I think will happen, but regulatory issues. Lots of questions and scrutiny around their impact on local housing and rental prices and safety issues related to home rentals for parties.
It is probably early to congratulate the founders and the team, but as someone who started using Airbnb before they were cool, and having watched the company grow, it is very joyful to see they are finally going public. Hopefully it's just up and to the right even more from here onwards. Good luck!
> Most of our guests discover Airbnb organically, with approximately 91% of all traffic to Airbnb coming through direct or unpaid channels during the nine months ended September 30, 2020.
Anyone know what % of traffic to Bookings and Expedia (and others) are paid vs unpaid? 91% unpaid seems really high, and I wonder if it's because Airbnb is so differentiated / people want to "Airbnb" a place (vs. "stay somewhere")
edit:
> Our hosts had 7.4 million available listings of homes and experiences as of September 30, 2020, of which 5.6 million were active listings. We consider a listing of a home or an experience to be an “active listing” if it is viewable on Airbnb and has been previously booked at least once on Airbnb
IMO it's super sneaky to blend homes and experiences together
AirBnb took the opposite approach of Expedia, Booking, VRBO, etc. Instead of focusing on SEO and paid search like the incumbents, AirBnb focused on brand.
Great article. But I think that saying "AirBNB focused on brand" is almost literally a misinterpretation:
"Brand is an extension of the Airbnb model, not its own strategy. If the product doesn’t deliver on a differentiated experience, brand building usually does not create loyalty."
This post seems to say that AirBNB didn't just focus on brand, but they innovated on /somehow/ making booking UX "10x" (let's leave the ostensible 10 aside for a moment and just say "a lot" instead) better than incumbents. But that requires a durable product advantage, one that consistently creates a differentiated experience. It's more accurate to say that brand is a downstream side effect of the core product than a sole or primary focus.
Bookings and Expedia are way, way, way lower than that. Expedia has been complaining a lot in recent years how Google has been taking away a lot of their search traffic with in-results-page hotel listings.
At one point in the past I heard Booking was the largest spender, worldwide, on Adwords.
That's correct, Booking was the largest Adwords spender. I worked on their adwords integration then. Good fun.
I wouldn't immediately consider the hotel metasearch products a problem for booking. It shifts traffic to different paid channels with different tradeoffs (eg. less fine grained control of spend if it's a revshare model). I ran the product development in marketing for a little while. Some years ago (ie. late in the game, largely due to politics), we started investing in cross channel attribution models to better direct spending.
Disclosure: I no longer work for Booking, though. I do work for Google, but am in NO way involved in Ads or travel and an not trying to comment on the company's business.
Ah, I'd be out of date then. Go back a few years and my info would've been authoritative. I was running product development for booking's marketing department then, including the meta search integration.
Even if they would spend more on ads if Covid hadn't happened, it's still remarkable how great their numbers are with this little ad spend. It really speaks to the brand they have been able to build.
Airbnb also stopped performance marketing during COVID, so it is all unpaid for the past 8 months. But yes, Booking and Expedia rely much more on performance marketing, but Airbnb historically has paid a lot more for traffic. Experiences historically has been a very small # and $ amount so its not material. No need for them to break it out separately.
89% for Expedia, assuming you count search + direct. Airbnb is at 88% for the same breakdown according to Similarweb. However SimilarWeb has direct for Airbnb at 61.47% versus Expedia's 37.72%
They reached verb/noun status year ago so 90% isn't surprising. If your mom wants to rent out her guest house does she type "gig economy app that let's me rent out my place" or airbnb?
I like airbnb. They need to get better at weeding out fake/scammy listings, that tend to plague many online marketplaces where things can be listed for free. Maybe some in-person verification system, or a fee that gets refunded if you have a certain number of guests. There are plenty of listings with huge/exclusive homes, yet no reviews and extremely cheap prices. I don't know what people get out of these listings, but it's really weird and makes the user doubtful about the authenticity of the marketplace.
Easiest solution is to force new hosts to provide a "surety bond" to basically be an honest host. Maybe make them pay 10-25k lump-sum in cash. After a certain amount of guests have visited the offering then the money can be returned. If the host is a scammer then the money can be used to reimburse the guests for their troubles.
The risk vs rewards under this system would discourage bad hosts from joining the platform. For new, honest hosts, it would be a minor inconvenience at best.
The lump-sum fee is just an example number. It could be less for smaller rentals but the point is still there. You need to force new hosts to "prove" they're going to be honest and have a penalty for those who aren't honest. This same concept is used in the cryptocurrency world where you need people to have trust. One example I can point to is Storj where they withhold earnings from people who don't perform per the agreed terms (in this case keeping your storage node running 24/7).
It is okay if certain people are excluded because you only want people hosting that are SERIOUS about doing it. If you can't do the surety bond then you simply aren't ready to be a host. It really is that simple.
I understand what you’re saying but your $10-25k example cripples your point. Many people are hosting for extra cash, so any surety bond would keep away a lot of hosts that are actually honest and good hosts.
What about just tracking the users themselves? Why can't they require the country/province's ID card, and blacklist known scammers? It's usually a lot of the same people. If they also cooperated with law enforcement on getting them prosecuted, the return to scamming would evaporate overnight.
25k seems excessive, but 10% of a years anticipated revenue might be appropriate.
It is not unusual to have to but up a bond in order to bid on a contract.
I wonder if guest could also post similar sum before they get to use services. After all guest can cause massive amounts of damage. Maybe something reasonable like 25% of property value... Just to make sure that both sides are honest. Ofc, this will be returned if locations is in perfect condition after the visit.
That doesn't make sense for the hosts, for 80% of them it could be months until they see the money from their first booking.
Airbnb already holds the money for 24h after check-in, which is enough to defuse 99% of scams. The problem is the guests that book outside the platform, then claim they were scammed.
Don't forget, there was the announcement in April [0], they issued $1 billion of that debt at 10% interest, and it's convertible, which is equivalent to rate of about 12-13% non-convertible debt.
What the S1 says about that loan: Interest on the First Lien Loan is payable monthly or quarterly in arrears, at our option depending on the chosen per annum interest rate equal to (i) in the case of LIBOR borrowings, 7.5% plus LIBOR, subject to a floor of 1% (the “First Lien Eurodollar Rate”), or (ii) in the case of base rate borrowings, 6.5% plus the greatest of (a) the prime rate, (b) the federal funds effective rate plus 0.5%, and (c) LIBOR for a one-month period plus 1%, subject to a floor of 2%.
'While we have not yet received a Revenue Agent’s Report generally issued at the conclusion of an IRS examination, in September 2020, we received a Draft Notice of Proposed Adjustment from the IRS for the 2013 tax year relating to the valuation of our international intellectual property which was sold to a subsidiary in 2013'
Well, you spend money as part of doing business, but then, in theory, you make some money. This is revenue. Revenue is taxed at 21% in the US as of the 2019 tax year. Now, if you screw up, and the IRS catches you, you owe penalties. And you owe interest on the money you didn’t pay. And these can add up, especially, like the S-1 filing says, if you have irregularities dating back 7 years.
I’m sure they will have to make a more detailed explanation of this at some point, and it should make for a good read whenever the release it. And they may take their accounting firm to court, because this is large enough to at least suspect negligence or fraud. But until something else happens, all we have is speculation.
pg is surprisingly prescient in his predictions about the potential size of the opportunity. This might just be survivorship bias though, but still, one takeaway I got from the email exchanges is that pg really evaluated founders on both the idea/market opportunity and the qualities of the founders themselves:
I'd recommend having the debate after meeting them instead of before. We had big doubts about this idea, but they vanished on meeting the guys.
To be fair, pg probably has more signal on the founders as individuals and VCs may not get as much signal based on a pitch meeting, but you could also argue that one of YC's edge was their focus on identifying stronger founders moreso than great ideas, whereas VCs, given their general strategy of investing more in large priced post-seed rounds care more about traction and market opportunity and less on the "intangible" traits of the founders.
It's interesting that pg also believed in the eventuality of AirBnB competing with and taking a lot of market share away from hotels. Fred and the "older" guys at their firm didn't believe this.
It's interesting that they both missed the real killer edge here. Fred said it was Etsy, Paul said it would move up into hotels. Neither are really what happened.
Turns out in most places it's profitable to arbitrage long term property cost and AirBnB income. So you have a bunch of small time operators buying or leasing property and putting them on AirBnB. AFAICT that seems to be the bulk of AirBnB business. Not Etsy (person to person) nor Hotels. But a new kind of "hotel" that consists of one person running a handful to a couple dozen apartments.
>But a new kind of "hotel" that consists of one person running a handful to a couple dozen apartments.
The most important part of Airbnb is creating a hotel "chain" or "brand" without having to deal with things like zoning or licensing or insurance for hotels.
While Hilton/Marriott/IHG/Hyatt/Accor/Choice/Wyndham/etc collect 10% to 20% in exchange for putting their brand on the line, Airbnb also was able to create a business where they can take 18% without putting their brand on the line, and keeping the ability to dump all the liability on the hosts. However, I think this is a weakness for Airbnb long term, but they may be able to take advantage in the short term.
Quality control for real world products, especially volatile ones such as abodes rented night after night, are costly and I'm willing to pay a premium to make sure there are some double or triple checks going on.
Those chains don't really deal with zoning or licenses. The actual hotels are almost all franchises.
The real difference, as you allude to, is centralized reputation. If you stay at a crappy Marriott you blame Marriott. If you stay at a crappy Airbnb you blame the host.
It will be interesting what happens in the long run. There's now a proven market for apartment style hotel options. I could see a reputable brand move into the space.
My point was that the above mentioned brands only offer their product in a properly licensed and insured hotel. They couldn't have came onto the scene and enabled small time owners to flaunt local laws like Airbnb did without great reputational risk.
I kind of despise Airbnbs for this reason. It's usually some clean on the surface mess that was mostly cleaned up by the previous guests. I got sick of having to wash all the dishes, take off sheets, etc when I check out (usually having to check out at 11 am or earlier, so it can be as easy as possible on the host to rent it out again!). When I vacation I want a hotel room that someone else professionally cleaned, not more chores and what feels like staying in someone's dirty house.
And we stay in some of the nicest Airbnbs, my brother is a doctor.
I feel like what a lot of the gig economy experiment has shown is that we have created too high of a entrance floor for new businesses. A lot of the taxes and expensive regulations are certainly well intentioned, but making them mandatory prevents a lot of people with entrepreneurial drive but low resources from getting into the game. It also creates a higher cost for people who would be glad to get a cheaper option with some risk of discomfort. It's so hard to roll back regulations once they've been put in place, though, that the only way you can create these options is to build entirely new models that skirt the entire structure.
If it's Hilton/Hyatt/Marriott/IHG/Choice/Wyndham, you can go to the hotel brand's website, you will get the same room for cheaper if you are part of the free hotel rewards program. You're also more valuable to the hotel since you'll be paying netting the hotel more income than someone coming from HotelTonight (since the hotel doesn't have to pay HotelTonight commission), therefore more eligible for perks or upgrades.
Due to rate parity clauses member rates on OTAs like Expedia basically match the franchise reward rates. They’re often the same rate plans in the software hotels use for managing their rates.
I checked Hilton SF downtown for next week and it’s $91 on HT and $95 on Hilton Honors rewards pricing.
In my hotel tonight app, I searched Hilton San Francisco for a 1 night stay in Hotel Tonight.
It returned Hilton SF Airport Bayfront at $93 for a room with either 1 or 2 beds. In the Hilton app, I get the same hotel for the same night at $87 for a room with 1 king size bed or 2 double size beds.
Then I was able to search for Hilton SF downtown in Hotel Tonight and find the Financial District one, which was available for the night of Fri Nov 27 for one night. Hotel Tonight had a price of $152 for the following room:
“The hotel will assign room at check in and it will fit 2 adults”
The Hilton app showed the financial district hotel available on Tue Nov 24 (which the hotel tonight app showed as not available) for $95, and for Fri nov 27, the Hilton app shows 1 king bed or 2 double size beds at $159.
So it looks like you’re right for some nights for some hotels, except they don’t let you confirm a room type on Hotel Tonight. I wonder how this squares with Hilton’s best price guarantee:
Looks like they’re trying to engage in some price discrimination. I would call the hotel front desk and tell them, I can pay the cheaper hotel tonight price, and you get 85% of that (hotel tonight pays the hotel 85% of the price you pay hotel tonight), or the hotel can sell to you directly for 10% off the hotel tonight price and end up making 5% more and see what they say.
It’s also possible the franchisor is violating their franchise agreement by letting hotel tonight sell for cheaper than Hilton’s website, so you might be able to get an even bigger discount by filing a complaint with Hilton.
Wow, the financials are a little bit surprising (in how bad they seem to be, but in actuality might be okay)
Amazing growth and story up to 2018 (only $20M loss on $3.5B rev), clear investment in the marketing side that leads to the 2019 loss, but now curious if they can rebound when the world opens up.
Investing in Airbnb is definitely a bet on their model righting itself in a reasonable time frame. I wonder if their IPO price will have to reflect current realities instead of just future potential (given it probably won't improve its profitability for 2 years now)
Does anyone know what happened with the stock options for early airbnb employees which were expiring this month (Nov 2020)? Did they find some legal way to extend the options, or did employees end up having to find the money to exercise them or else lose out on them?
>>the board of directors reduced Mr. Chesky’s base salary from $110,000 to $1, set his target bonus at $0, and granted him a long-term, multi-year equity award comprised of 12,000,000 RSUs (the “Multi-Year Award”).
Its quite surprising that CEO of Airbnb should make just $110k/ annum in base salary before the company goes public. I would expect it to be around $500k.
It's much more tax efficient for Chesky to get loans against his equity in lieu of cash compensation -- especially if he believes that the equity will grow dramatically in value due to an IPO.
For public securities, margin or a pledged asset line. If it's private equity (structured lending), you'll need to speak with a banker who can structure a deal specifically for you based on an illiquid PE holding.
I've heard this before, but what advantage does the loan have? Doesn't the CEO still pay just as much tax when he/she sells the stock to pay down the loan? Is it just to allow the stock a chance to appreciate?
That's not how taxes on RSUs work (at least federally in the US). Nothing happens when RSUs are granted because they have no value until they vest. Once the RSUs vest, you are taxed based on the cost basis of $0 (since you pay nothing for RSUs).
No, money is the thing you use to allow yourself to spend 200% of your time at work. Private tutors to school your kids so you don't have to. Cleaning services so you don't have to spend time cleaning. First class plane tickets so you can relax, sleep or work on the flight. Private driver or Ubers so you can work while driving places. A personal assistant to book travel, appointments and everything else mentioned so far.
Uber XL or black (need space and comfort to work efficiently) for 1 hour a day probably adds up to $200/day or around $50k/year. Which isn't cheap.
edit: That's a rough estimate and probably a low estimate. You'd be using Uber for commuting, going to work social events, driving kids on weekends, driving out of the city on vacation, etc.
How does one figure whether the business will keep growing without blasting people's faces with ads? If so much spend on ads is required to generate revenue growth then there will either never be profits or the revenue growth will stall (and thus the equity is worth rather little), if ads are not required then why are they spending so much on them, or maybe when will they stop spending.
All the "heroes" of the tech boom (Facebook, Google, Apple, Microsoft) did not suffer from this problem - they were profitable before going public.
It feels like this time we're in an advertising bubble. Nearly every single S-1 submitted to HN has this feature.
I am genuinely puzzled by this, if someone can offer some perspective on how can you model something like this I would be grateful - what assumptions you'd be making here.
The general idea here is that there will only be one major winner who will capture the market due to network effects.
So scaling as fast as possible is the #1 goal, because if you don't someone else will and you'll go out of business.
Therefore sales and marketing is a huge factor in growth. Then the idea is, once you've grown as much as you can and it's too hard for others to compete because of your entrenched network effects, you can reduce sales and marketing to a a reasonable, highly profitable level.
That's it in a nutshell and it works in any market with strong network effects, which AirBNB strongly fits into, in facts it's a poster child for the concept. Yelp is another good example -- sign up all the restaurants before a competitor does.
There are a lot of different business models out there, which you can study (and MBA programs teach you). This is just one model, and it's a legitimate one. Google, Facebook, Microsoft and Apple all have different models from it (and all drastically different from each other as well).
To evaluate ad spend, you don't look at just short-term return. There's a reason that "lifetime value" is a critical concept for companies. It's fairly normal in large companies that, in a given year, you may spend more on ads than you gain from those ads - but you expect the customers you gain from them to continue spending over many years.
So you may spend $100 to gain a customer who spends $20 in the first year... then $40 in the second... then $80 in the third... now all of a sudden your return on that was positive, three years later.
These are the kind of ads you want to buy, even if in the short term it looks bad. These large marketing expenses should have compounding benefits over many years. The people who care about the short term like that are not the investors you want and not the people you're trying to please.
Okay, so how would you model that? Can you be precise? What's the lifetime revenue generated by $1 of ad spend? This number is critical, because if that number is too low then the equity is, mathematically, worthless. It's not about patience, it's about whether you're compounding a number that's >1 or a number that's <1. I just cannot tell.
Yes, companies have ways to do this with a decent amount of precision and accuracy based on existing user behaviors. They can often even be detailed enough to know that LTV differs depending on the channel that the customer was acquired by (e.g. organic vs. Facebook ads vs. search ads) and tailor their ad spend accordingly.
I don't know what AirBnB's numbers are, companies aren't required to disclose this and they guard it very closely :)
Yeah but as an investor why would you buy this stock, and at which price level if so? My point of view is that of an investor - how would I know if they're compounding up or down. Is it a zero? Is it great? All you're saying is "trust the management".
I am not saying they're doing a bad job, I am merely saying that it looks difficult to tell. Remember, the management has a huge incentive to sell you the stock regardless of the future value of the business, it's your job to figure out if it is a good idea.
I'm not saying "trust the management", I'm telling you how an investor would think about it. High spend on marketing can absolutely be justified. Additionally, there's rarely enough public info to allow any investor to independently verify whether it's justified in a specific scenario or not. But if an investor thought that there was positive ROI on that spend, they're not going to fret too much about how large that amount is - as long as it's bringing in a positive return.
Incidentally, half of those companies you've mentioned are in the top 50 spenders for marketing [1]. I'd hazard to say that they are all in the top 100 in global spend.
I understood what was meant. Companies don't just start marketing once they have multi billion dollar profitability.
If you're consumer focused, you spend on marketing, if you're business focused, you spend on sales. There are few examples to the contrary (Google, Atlassia, for example).
AirBnB early on was sniping Craigslist vacation listings[1], and now they have the resources, and scale to market directly. If AirBnB isn't doing it right, what constitutes the 'right' time to spend on marketing?
I'm curious as to how some folks would respond to this, and why.
Well yeah but that's because of how massive they have become (thanks to being profitable and internal compounding). Their marketing spend in terms of % of revenue is not comparable to the late IPO up-starts, they make very very very healthy margins.
I am not saying advertising is bad, or that it doesn't work, or that you shouldn't do it. Nothing of this sort. It's just unclear to me what's the plan for eventually returning anything to the shareholder. All of the eventual value depends on this.
> Mr. Stephenson’s offer letter provides for an initial base salary of $600,000, an initial target bonus of 75% of his base salary, and a one-time hiring bonus in the aggregate amount of $2,400,000
While I've received signing bonuses in the past, I was not aware that you could get a signing bonus that was 4x of your base salary.
> Dave joins Airbnb from a 17-year career at Amazon, where he was most recently Vice President and CFO of their Worldwide Consumer Organization, which is responsible for all of Amazon’s global website sales including Amazon Prime and subsidiaries such as Whole Foods and Zappos.
For someone like that, you pay whatever you need to pay.
Wouldn't they just do a 1 for 1 trade in AirBnB stocks or at least RSUs or options? That would seem preferable from an "aligning of interests" perspective.
I'm curious how badly the pandemic has hit and will hit AirBnB. I scanned a couple of tidbits from the S-1:
- Reducing full-time employee headcount by approximately 25% (I'm curious from what/to?)
- Setting expectation for the potential of no employee bonuses for 2020 and reducing executive team member salaries for six months (interesting that executive team _salary_ is getting reduced rather than bonuses, no? At this level isn't most of your compensation not direct salary?)
- (to the above point) , in May 2020, we announced a reduction in our workforce of approximately 1,800 employees (So I guess they had ~9,000 employees?)
- Outstanding RSU obligations are quoted as ~$2.7B
It seems fair to wonder, given the timing during a pandemic, that there's a need or desire to cash out by the investors and founders.
I wonder if their headcount downsizing wasn't severe enough. 9,000 employees seems like a lot for an intermediary. A lot of these companies seem to get in the habit of thinking they're the next Google long before they have the Google revenues to fund such pursuits.
The risks section reads as expected.
I do wonder if the tide is turning against home "sharing". Unlike ride-sharing, there are significant externalities to deal with. People don't generally don't want to live near an illegal (in many cases) hotel and it's not so easy for them to up and move. It's classic tragedy of the commons.
What's more AirBnB has (IMHO) a provable negative impact on the supply of rental units in many cities.
So cue the standard self-serving defense of AirBnB. I, for one, would not be sad to see it go.
You're not far off on your numbers, they laid off around 1900 people back in May, out of ~7500 employees.
I would think the IPO is happening despite the pandemic, not because of it. They had been planning to go public long before the IPO hit, so I wouldn't read into that too much. I definitely have similar reservations about the company as you do though. I get the impression the tide is generally turning against the airbnb model at least within major cities.
While those are certainly negatives. I could see AirBnB turning into a double-edged sword for communities. Yes, AirBnB would bring in some nuisances but it would also bring in tourists - who spend money in your community. Areas that ban AirBnB would suffer the loss of tax revenue and have to figure out how to deal with that.
Also AirBnB just gets blamed for the rental shortage in many communities. The truth is poor zoning results in a shortage of rental units. Many areas with rental unit shortage have that shortage because zoning does not allow for high-density construction. The easiest solution to any shortage is to simply increase supply.
> Many areas with rental unit shortage have that shortage because zoning does not allow for high-density construction. The easiest solution to any shortage is to simply increase supply.
London says Hi!, where every garbage building that has some semblance of age is marked a Listed Property, and where it's more fashionable to let people be homeless/living in refurbished toilets than to build taller buildings because they would "destroy the character of the city".
In my view, AirBnb made the travel pie substantially larger. More people can afford to travel when rooms in far away places can be rented for small amounts. If the choice is not traveling at all vs. putting up with the friction of finding the property and getting the key, reviewing the house rules and then stripping the bed and taking out the trash before you check out, many people will choose the convenience hit and take more trips. Such as 260 entire place stays in London for under $60/night.
Put that together with some ridiculously low international air fare, like, RT SFO LHR for $700, pre-pandemic, and many more people will travel.
The other segment where Airbnb filled a huge market need is medium-to-large family travel. I went to Italy last year with 4 family members ranging in age from 3 to 70. Staying in hotels would have been prohibitively expensive and more cramped, so we probably would not have gone. They definitely made the pie larger in the category.
All these things. I’ve used AirBnB to snag a single bed at a hostel at $3/night to renting out a ski villa in Breckenridge for the whole clan of 14. While there are a lot of hotels pretending to be owners in high travel hotspots, most of the time it’s someone trying to offset or profit off a room/place they have and you’ll gladly take it for the different experience from the hotel room which start to all look the same.
More people can afford to travel when rooms in far away places can be rented for small amounts.
Maybe some areas. In Europe, Asia and Australia I have always found AirBNB more expensive than hotels which incidentally waste less of your time, have better signage and access, and can provide value-added services like multiple contactless keys, key replacement, waste disposal, laundry, holding luggage and local recommendations. Oh, and they support three sometimes-killer features: payment on arrival, cash, and pre-inspection of rooms.
If cities and townships were to have looser regulations on hotels - which evidently they should, given the vast demand and 'mostly' it's not excessively problematic for communities - then AirBnB wouldn't exist because hotel prices and types would have much more variety and competitiveness, and so would listings.
If anyone could just get in their car and tell the local dispatcher 'they want to drive tonight' - probably Uber would have never been able to come to fruition in the first place.
I'm not saying that either company is good or bad, or that the regulations are good or bad, rather, that the underlying business models depended on a kind of civil regulatory asymmetry.
Personally, I wish cities would adjust their regulations to be more appropriate, I don't think there needs to be an Uber or AirBnB.
"How does anyone find a regular hotel these days? That's why you need a website to coordinate"
? So your point is only AirBnB 'can make a website' ?
If regulations were lax before AirBnB existed there'd be 1000 different sites you could list upon and hoteliers of all kinds would charge less. Or at least many would.
Because AirBnb was the progenitor of the lease-your-room modality they captured the market and have a little bit of a natural monopoly in it, as there's some coordination with marketplace, identity, etc..
Just like there are a myriad ways to 'book a hotel room' - there'd be a myriad was to book your '6 room place'.
There are a myriad of ways to book hotels right now.
There's no reason, that with more open regulatory scnearios, there wouldn't be a myriad ways to 'book your 6 room flat'.
Or rather, you could have the option to list with a few.
AirBnB 'broke through' into a market that didn't quite exist, partly because it's literally illegal in most places. Very few landlords allow subleasing rooms as well.
Both AirBnB and Uber created a market in a 'regulatory grey area' so they kind of developed a marketplace monopoly.
If that gray area did not exist previously, AirBnB and Uber would not have had the power to break through and dominate.
These companies have a weird human shield - that prosecuting individual house owners or drivers has little tin no impact on the supply (whereas it would have a huge impact on a normal commercial supply) - so the usual weapon regulatory bodies have is simply useless.
If regulators wanted to actually go after AirBnB they could do it directly, it's a matter of political will.
It really demonstrated the absurdity and borderline incompetence of a lot of regulatory entities: both Uber and AirBnB operate out in the open even where it's essentially illegal. The Hotel industry lobbies to keep the rules in their favour - and none of us are winners really.
Accommodation rules should probably be opened up somewhat, AirBnB has provided overwhelming evidence of a supply/demand mismatch. The taxi industry is considerably more difficult to redress because the cities have already sold medallions.
Assuming COVID ends up as less of a threat towards the end of next year, this might be good timing in favor of employees. Travel (and market sentiment around travel companies) might pick up right around the time when their lock-in period expires.
I heard a podcast discuss the possibility of AirBnB offering shares or options to superhosts (like me) ahead of the IPO–essentially as a "thank you" to the people who helped build the marketplace.
Anyone have thoughts on if that is possible or plausible?
Airbnb Host Endowment: A fund that is intended to provide support to our host community now and in the future, which we expect will be initially funded with 9.2 million shares of Airbnb stock
Employees that get and exercise stock options are not accredited investors either. Couldn't they take a similar route?
I admit, I ask mostly selfishly (my wife and I are superhosts, we have managed a full-time AirBnB in CA for 2 years). But it's also an interesting thought experiment. It would be quite the contrast to how the rideshare and food delivery companies treat their non-employees.
The S-1 has this section with title "Directed Share Program":
"At our request, the underwriters have reserved up to [blank] shares of Class A common stock, or [blank]% of the shares offered by this prospectus, for sale at the initial public offering price through a directed share program to:
* Eligible U.S. hosts who hosted on our platform in 2019 and 2020 [...]"
I just got an email from AirBnB outlining their plan to offer shares to hosts as a part of the IPO with first dibs to hosts that first came on the platform.
Personally, I wish AirBNB rules would be stricter in London and that it requires some special licensing from the council were neighbours can easily complain about the person's guests.
I am sick of the random people being rude to me and the constant parties/noise. I can't do much about it. The bylaws of the building doesn't forbid it. I am trying to get elected to be part of the board so I can request these change to the bylaws.
I prefer to know my neighbours, might not be friends, but at least have some relation to them.
Can anyone estimate what an investors in 2009 in Air BNB will get for an ROI post- IPO? I just looked and S&P 500 returned 426.134% with dividends reinvested through September 2020.
I believe in 2011 the strike price (accounting for both stock splits) would have been around $0.75-0.80 after they raised funds around May 2011. Assuming they are worth at least $30 billion, the shares would be around $50 for around a 6150% total return assuming $0.80 initially.
If someone got shares in 2009 they likely had a substantially higher return.
Strike price in 2011 post series B and after splits is $0.30. At the time I think the nominal price was like $2-4 a share, I'd have to go back and look.
Re: 2009. I recall an early employee saying YC told them not to hire anybody, but they hired him anyways off of his very creative outreach. But let me tell you they all earned every penny of it. It's hard to remember how crazy of an idea Airbnb was ~10 years ago.
I think shares on the open market were selling for around $230 a share 2 years ago, I don't know valuation on that number but despite covid and the $1B loan amongst other things the people who joined earlier are making out like bandits(a few of my ex-coworkers went there and a friends wife joined there in 2011).
As one of the most successful tech growth stories of the 2010s, obviously they 1,000X'd the returns of the S&P over that time.
The real question is though, going forward, what ROI will Airbnb deliver vs. the S&P 500.
Growth stocks seem to be nearing bubble territory at the moment, so if we get a repeat of the 2000s where interest rates start rising again and value stocks become more in favor, it doesn't look great.
Then again, selling fractionalized access to highly restricted real estate supply in all of the world's major cities doesn't sound like a bad bet for the future. If the lack of desire to invest in new construction in cities due to the covid narrative of cities being dead (obviously overblown) leads to further supply deficits, the future for Airbnb looks bright.
So in summation, its impossible to predict, buy index funds instead.
Would be quite hard to tell. AirBnb raised money 22 times since it was founded in 2008, including 6 rounds of VC funding. The early investors could do great or they could be wiped off if that's what the later investors wanted to do.
Airbnb in the less urban areas where I live was incredibly popular during the summer / fall. Covid-19 encouraged people in the city I live in to travel in the province instead of go to other countries.
Yep. COVID surprisingly ended up increasing the usage of Airbnb amongst my circles. My entire Insta/Twitter timeline is full of people who wanted to take advantage of the remote work situation and travel, but didn't want to stay in hotels due to a perceived risk of COVID, so they chose Airbnbs.
And then of course they also posted a lot of pics of said Airbnb on their timelines, which basically became advertisements encouraging other people to do the same...
To be fair the loss in 2019 is largely attributed to the drastic increase in marketing spend, but also their increase in product development cost line item. Neither of those increases led to a significant increase in revenue though.
Makes me wonder what the 2020 story would have been without COVID.
Personal bias makes me think Airbnb is here to stay and the marketing spend can definitely be cut back. The timeline to revenue growing back against their costs is probably 2 years with this pandemic though and that hurts anyone who is looking to invest and hold.
This is the big risk factor that I'd be concerned about as an investor:
Laws, regulations, and rules that affect the short-term rental and home sharing business have limited and may continue to limit the ability or willingness of hosts to share their spaces over our platform and expose our hosts or us to significant penalties, which have had and could continue to have a material adverse effect on our business, results of operations, and financial condition.
Most of the most big, vibrant cities that are the biggest tourism draws and should be growth areas for Airbnb also have housing pressures, and we have seen housing advocates push governments to implement Airbnb restrictions. Due to covid this has not been a big issue of late, but my expectation is that as tourism increases again, attention will once again return to Airbnb's distortionary impact on the housing market (both sale and rental).
In most of the world Airbnb will not be able to buy a law like Uber/Lyft did with Prop 22 to get out of this jam.
I just started hosting with AirBNB and experienced a bug with the platform. It offered the wrong price ($100 instead of $278) and the guest accepted before I could intervene because the platform defaulted to AutoAccept.
When I reported the problem, the support rep claimed it happened that way because I had "Smart Pricing" on. It was set ON by default. But AirBNB's own documentation says the Custom Price I set for the dates in question (Xmas week) override all other pricing.
Even if "Smart Pricing" had applied, it shouldn't have offered the lowest price for the highest demand week of the year, because AirBNB's own calendar shows the demand peaking high for the week, not low.
Now I've been 3 days trying to get a response from tech support.
They deny responsibility, and promise to escalate it to a supervisor, then close the case without responding to my detailed evidence.
What can I do? Does anyone know how to escalate to an AirBNB IT person? I would have thought AirBNB would like to know its platform has a serious bug.
I couldn't help myself because I'm sure it's a bug and I can't stand to let a bug go so I persisted with technical support. One guy got it and traced through what happened. He's escalated it to the subject specialist.
It's an important bug. The "Smart Pricing" is broken, or at least in 3 cases of mine it was, and the documentation in the guides for Hosts is discordant.
Airbnb S-1
Page 191
> Serving Our Stakeholders
> Pricing. While hosts set their own prices, we provide hosts with Smart Pricing tools that suggest prices for their listings based on changes in demand for similar listings. Our Smart Pricing recommendations are based on the type and location of a listing, the season, expected demand, and other factors. In addition, we provide data insights that include how host occupancy rates compare to other listings on our platform.
Well, there's no scepticism required. The Airbnb documentation for hosts explains how the pricing works, and it didn't work that way. It certainly didn't work like "Smart Pricing".
Xmas/NYE is the middle of summer in Australia. My pad is right next to the beach in a nice part of South East Queensland, and everything like it is already booked out for Xmas.
If you have access to my account data, which the support team does, Airbnb FAQ Articles #503 and #1168 are all that's required to establish that the pricing made in the offer to my guest is the result of a bug, which I have characterised in writing.
But how to establish that with Airbnb and get a resolution? I've been trying for 4 days..
When I read the S-1 with the beautiful sentimental story of the evolution of Airbnb, I couldn't help but post here. Not because I'm pissed, but because I believe in the story promoted by Paul Graham about these people. It would be great if they could retain some of their essence by responding to this incident instead of blocking it with bureaucracy.
They do have good customer support people, and evidently they have retained their culture, but it doesn't facilitate responding to bug reports from hosts in a timely manner. As the support guy told me, without reports, they'd never know about pricing bugs. Surely this is an important one, given that "Smart Pricing" is a feature in the S-1, and hosts are considered important stakeholders in the prospectus.
I've got to wait until the subject specialist verifies the bug and reports it to engineering. If engineering verifies the bug and reports back to the subject specialist, who might then report back to the support guy, who might then consult with his supervisor about whether they can compensate me or my guest somehow, this could all work out fine. So long as that happens before 21 December, no problem. Otherwise, I better cancel the booking before then and find a new guest, and hope the woman who thought she got a bargain can find somewhere else to stay for Xmas. Or just disregard my feelings for this guest and be more detached about hosting. And other people's bugs.
Cool. You might want to let her know first before canceling, since I think she's on the shorter end of the stick here. After all, you'll get someone easily, going by the occupancy rates near yours.
She is, yes. I did tell her right from the start that it's a mistake, and I need to get the correct price. She asked me to team up with her to ask Airbnb to compensate her i.e. pay the difference. I totally think they should, because their bug has lead her astray. She is also an Airbnb host in her home country. So, according to the S-1, we are both valued stakeholders.
The support guy last night who escalated it to the specialist said they can do things to help her, such as find her another place. Knowing that, I am hanging on a bit longer to see if they come through...
I wonder about their long term business model. Sure they have opened up the industry, but I'd think its quite easy to copy them. Sure there are a bunch of people that will keep AirBnB their favorite but when I'm looking at places I'll religiously check every site I can. There will be nothing unique about them.
I'd also like to add that Airbnb has become a pretty widely adopted verb. Once a brand becomes a verb, overtaking and unseating that degree of brand recognition becomes a feat that I can't recall has ever been done before.
When I travel as a business user, I don't check any of the hotels apart from the top most brands. Sometimes, even if there is a 5 star hotel from a brand I don't know of, I wouldn't choose it over a 4 star hotel of a brand I do know of. The vast majority of business travelers behave (or book via their companies) the same way more or less.
When I'm choosing a place for a vacation, again, I'm looking at the top brands I know of, including AirBnB. Since the major hotels all resemble my business hotels, I'm more or less stuck looking at AirBnB rentals, simply because it's a more casual brand that I know of. I assume the vast majority of casual travelers are just like me.
I've had very good experiences using AirBnB in smaller towns, even in otherwise poorer places in Asia and Europe. On the contrary, I've had shitty AirBnB experiences, mostly in large cities in developed markets.
I disagree strongly on this point. Building up a two-sided marketplace is incredibly difficult. On the consumer side, consider that many younger travelers have zero affinity towards hotel chains, and manage their entire accommodations arrangement through AirBnB, which feeds into an absolute requirement for hosts to list on the platform. This is not simply two markets you can copy: the feedback loops are so powerful already.
Totally anecdotal, but in the early years of Airbnb, I was a staunch advocate of their mission and execution. Fast forward to now and several negative experiences with the firm (which have only really happened over the last couple of years) have left me wary of the company, especially having had great experiences with other services like Booking.com. That said, for the chief product that Airbnb mediates - rooms or apartments instead of hotels or hostels -, they're top dog. Alternative options in this space are mighty slim if you're looking beyond non-sketchy options, perhaps because barriers to entry, by way of building large-enough user and hosts bases, are _really_ difficult to build up.
How often is it the case where a house is split into many units though? They're all for rent, but none are for the whole house. Yet the whole house is being rented in pieces.
I think the number is bullshit. They can't tell the difference between a room and a full home.
At least that's my experience when I was trying to search on the site. There was little filtering available and the owners were listing their properties as anything.
My experience is that you have read the listing extremely carefully trying to devise what is it about.
Is it a whole flat, or a room in a property with the landlord living in, or a room in a property fulled rented on airbnb (how many people?), or a bed in a bunk of beds (yes that's a thing). There's listings for everything and quite a few are misleading. It doesn't help that you have no idea what is the normal price range when traveling abroad and may not speak the language very well.
If you're interested by the way. My counter experience renting a flat on airbnb over the summer, is that guests are evaluating everything they could use including beds and couches and ground space. The guest renting a one bedroom could be anything from a person or a couple to a family (maybe with extended family/cousins joining in) to a group of many friends. It's always a surprise whether there will be 1 or 6 people showing up.
since the pandemic started, i've seen airbnb guests constantly showing up for a stay in our apartment building where subletting via airbnb is specifically prohibited. leasing office doesn't care and looks the other way. this has contributed to the spread of covid-19 without doubt. it's infuriating to have total strangers hang around the property while trying to concentrate on work and writing software. these people show up, refuse to wear masks and then get drunk and hang around / go to the beach nearby. airbnb doesn't contribute anything to society and how this company can be profitable at all is a total mystery to me.
Gotta love the accounting practice of putting coupons/discounts in the Sales and Marketing Expenses. I saw the same thing in Doordash's S-1. I wonder what their true gross margin is.
Seems like they have an upcoming bigger than expected tax bill...
> In September 2020, we received a Draft Notice of Proposed Adjustment from the IRS for the 2013 tax year proposing an increase to our U.S. taxable income that could result in additional income tax expense and cash tax liability of $1.35 billion, plus penalties and interest, which exceeds our current reserve recorded in our consolidated financial statements by more than $1.0 billion.
I’m a millennial and I love using Airbnb. That being said I struggle to understand what the competitive advantage / moat is for Airbnb.
Outside of brand / name recognition I don’t know any reasons why someone would pick Airbnb over VRBO or another service.
Is there some sort of data play that they are making? Why would I invest in Airbnb when I could buy into a REIT or some other real estate asset?
Would love some ellucidation.
I'm not extremely well-versed in this issue, but it seems like investing in Airbnb is completely different than investing in real estate itself. I feel like the comparison is similar to investing in Amazon versus investing in a company that sells its products on Amazon. Betting on real estate means betting on the value of the home/land increasing, while betting on Airbnb means betting on the company + the future of the market of renting homes.
I did some initial research on Airbnb vs. VRBO, and they do seem like very similar companies. However, VRBO started in 1995, while Airbnb started in 2008. VRBO had a head start, and yet has only 2 million listings in comparison to Airbnb's 7 million[0]. The faster growth of Airbnb in comparison to VRBO might be one reason you'd want to invest in Airbnb over VRBO, especially in an America that allows monopolies to thrive under certain conditions.
Has anyone done a comprehensive review of the Airbnb regulatory environment? I know there's a bunch of places where some of it has settled but also many where hosts might still be operating contrary to regulations. Would be interested in knowing how that breaks out around the world.
There's a long list of cities with what they started to do. Search for "Paris" or "London" and should find them in the document.
It's not really a problem from a financial perspective because law is lagging decades behind the real world and there's way too much money on the table for renters to care about the restrictions/bans (and there's almost zero enforcement of restrictions anyway).
The stock options were written to expire after ten years and the ten year expiration date was coming up. Airbnb wanted to IPO to ensure these early employees got properly rewarded for their huge contributions. I’m not sure exactly why they couldn’t just grant replacement options but I believe this would cause issues with the cost basis / additional tax and they probably can’t issue equivalent options to some of those people who no longer work for them due to IRS regulations
They don't need that much cash. The business is incredibly capital efficient and has great working capital dynamics because they collect the entire booking value up front and then pay the host once the booking occurs.
Uber I can still believe due to their complex app (real-time tracking of drivers and riders, matching algorithms, route mapping, pooling, fare calculation, surges). Not to mention other divisions like food delivery, autonomous driving, freight etc.
AirBnb is...a database of static listings and a search engine on top. Their top technology problems were all solved by Expedia like 20 years ago.
Uber is not that difficult. There's work for hundreds of developers between the few products, the localization for tens of countries with different language/currency/culture, and maintaining the main applications in working condition 24/7 at global scale. That's about it.
They have thousands of engineers sitting idle or making pet projects, struggling to justify their existence, as regularly attested by internal employees when an article pops up.
I switched from hosting with Airbnb over to a property management company when I'm out of town. Airbnb continues to refuse to take security seriously and won't fulfill their host guarantee in the event that a guest causes thousands of dollars in damages. They should be an easy company to beat for long term rentals since they're so poorly run in many ways. I don't think they have any serious competition for very short term housing rentals ( not talking about hotels).
Yes someone tried to book a long term rental with me recently and I said I wouldn't take it on Airbnb since they've screwed me over in the past. I realize people here don't like others being critical of quality of tech companies but it's just the reality many have experienced
To anyone who disagrees with above statement though...I'd love to debate you if you think it's acceptable for them to just back out of their host guarantee.
Another middle-man company goes IPO, getting more funds to lobby/bribe local politicians to allow smooth operation at local population's quality of life expense. Hope they don't live too long. Covid might've done something good here
Airbnb sucks. They wouldn't let me delete my account without providing them my photo ID. Something they never asked for when I created my account. Reduce churn by being total assholes. Great.
For a normal non-tech company, this would be considered beyond over leveraged, in fact no one would have ever lended to them at all. Granted these notes have warrants attached, I’m guessing SVB was involved, but still that’s a lot of debt service for a company with no cash flow.
Roadshows must start 15 days after the listing. After that the company will start with their roadshow with institutional investors to gauge interest (~20 more days).
Once demand and supply of the shares is established, they can announce a public price for the share on the date before the IPO.
My initial guess is that we can expect pricing of the IPO on the week of 12/14
Excited to learn more about the specifics. Really hoping people don't flood this thread with their anecdotal bad Airbnb experiences ("I paid below market rate this one time 6 years ago and got a crappy host, therefore this company is going to fail!"), which seems to happen every-time someone mentions their name.
The experiences that people report often indicate systemic issues within the platform/product, especially when they are as pervasive as some on the AirBnB platform are.* I wouldn't be so quick to dismiss them.
* I've had two shit hosts that left me up a creek scrambling to find housing, as has my S/O. As a consumer, I am way less likely to use the platform now because my experience has shown me that AirBnB either doesn't care or doesn't have an effective lever to pull to improve this situation.
You can interpret anecdotal data however you see fit - I'm not going to run a survey to validate the hypothesis either way.
That said, I think you'd be foolish as a potential investor to not consider that AirBnB appears to have some unresolved platform issues that could create opportunity for a competing product to make inroads. And while the voices we hear may well be the loudest ones, they can still be influential in driving change, positive or negative.
If there's one in a million chance for a problem to occur in a particular day with a particular host, given a million of hosts, you should expect the problem to occur approximately every day.
airbnb sides too much with the host in my experience.
When a host left me and my family in an unsafe environment due to a gas leak, airbnb was impossible to work with. It took months of escalation with airbnb to get things fixed, despite providing all the documentation required the same day that I didn't stay at the property and had to book a last minute hotel at increased cost.
Got punched in the face outside of an Airbnb once and left immediately. Host charged me for damages including blood on the towel because I got punched. Airbnb sided with the host.
This is one of those examples where someone's point of view is so foreign to me that I start wondering if they live on another planet.
You seem to insinuate that because it wasn't within the host's control that I bled on their towel that it somehow falls on me instead. What? Did I choose to bleed, then? I mean, obviously it seems to me that it should fall on Airbnb itself to pay in cases like these. Perhaps the owner of the house should have demanded funds from Airbnb in exceptional cases like these. The outrage here is that the owner of the Airbnb - and you, apparently - seem to think that it's somehow a burden that I myself have to bear, as if I chose to get punched in the face.
Oh and by the way I did pay a standard multi-hundred-dollar cleaning fee. Apparently that wasn't enough, though.
If I got in a car crash in an Uber, because another car backed into me, do you think they would have fined me if my head hit the headrest in front of me and I got a bloody nose? To suggest as much would be outrageous. In fact, I have gotten into a car crash in Uber, and even Uber, one of the scummiest companies out there, knew to do the right thing. They immediately comped the ride and gave me another one for free. (OK, one could argue they could do even more...)
If I went to a hotel that was located in a shady area and walked outside and got punched in the face and bled on the floor when I came back in, do you think their first reaction would have been to charge me to clean it up?
I look at IPOs quite differently than most. For me, I am looking at the fundamental business. For me the usual questions are:
Does the company have a legitimate business advantage that can establish market dominance?
How easy is it to replicate the business?
Consumer trends - Who is using the product - young people vs older?
Revenue: Quarter over quarter increase? or a logical explanation if the rev is not growing.
*Consumer comments: Do people like the company so much that they tell their friend about it?
Based on this, I think AirBnB is a winner all around. The company has developed a platform and a brand loyalty that has basically eliminated most competition in this space. In fact, their competitors are so small that most could not even name them.
From a technology standpoint, it is relatively easy to replicate but the branding and loyalty to AirBnB is unrivaled so this is what creates their moat. First-mover advantage is strong is this sector and it is clear AirBnb has gained the first-mover advantage by a wide margin.
Consumer trends - Young people love it. As these consumers get older, their income will increase and they will book more through AirBnB. The very young will most likely start off using AirBnB and never use hotels directly.
Revenue - Showing consistent growth prior to COVID-19. With COVID-19 apparently on the way to being vaccinated away the "COVID-19 slump" is not a concern for me. I could see vacation spending soaring once COVID-19 fears subsidies with consumers.
Consumer comments - People love AirBnB so much that they tell their friends about it. There are some issues with fraud but my guess is over time, AirBnB will figure out how to snuff these bad hosts out of their platform.
Because Chrome is just as aggressive with it's nag prompts, it would be a bit weird for Microsoft to just lay down and take it in this case though.
I think for the average user Chrome/Edge are pretty much interchangeable now. For advanced users it's pretty annoying but it's less than a second to switch off.
No idea what the process for getting this information released is... but it feels unlikely to be a coincidence that on the day a 2nd extremely effective vaccine is announced to the world... Airbnb files their public S1.
A lot of that document talks about COVID-19 and how it's effected their business (no surprise there) but also several mentions of vaccines. Mostly in the following phrase (repeated 3 times in the document, I think):
> The extent and duration of the adverse impact of COVID-19 on the Company over the longer term remain uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of COVID-19, the extent and effectiveness of containment actions taken, including mobility restrictions, the timing, availability, and effectiveness of vaccines, and the impact of these and other factors on travel behavior in general and on the Company’s business.
1. It’s been well known for a long time that vaccine results will start showing up this month.
2. Every single company in the world had to list COVID as a potential source of adverse effect to their business. It turned around whole economy and further impact is still unknown. And by every I literally mean every. Even companies like Zoom, that are super hot as a result of COVID - for them getting control of COVID will mean potentially big slides down.
It's not something you can just throw together on news of a vaccine. It's maybe possible they had it ready for this eventuality, but given they need to synchronize this with investment banks, the SEC, etc, I don't see them able to hold that credibly until news breaks.
- Looks like they are significantly leaner now as a result of COVID. Cost of revenue is at an all-time low in Q3 (17% of revenue on p164). There's a lot of focus the drastic cuts to Sales and Marketing, but it looks like there's a fair amount of increased discipline across the board.
- It's interesting that Operations and support looks to be very similar in both the first 9 months of 2019 and 2020 despite having drastically different revenue numbers. They had to spend roughly the same amount (600 million) to support 30% less revenue
- Looks like China is a huge part of their future strategy, so much so that it is explicitly called out in their Executive Compensation bonus calculation (p271). I can think of exactly one other American consumer tech company that has had success in China.