
Airbnb Is Said to Be Seeking Funding Valuing It at $30B - coloneltcb
http://www.nytimes.com/2016/06/29/business/dealbook/airbnb-is-said-to-be-seeking-funding-valuing-it-at-30-billion.html?_r=0
======
CPLX
I mean I know the stock answers and so on already, but seeing these kind of
articles makes me wonder why the hell companies that are so mature, and
theoretically at least should be spinning off tons of operating cash, feel the
need to raise these really astronomical sums of money.

It's hard to see why the savviest long term strategy isn't just to keep
booking billions of dollars worth of lodging bookings, keep their cut, and use
it to grow the company.

The last time I saw financing in the tech industry seem so out of step with
basic economics was 2001. Not for startups in general necessarily, but for
these super-giants like Airbnb and Uber something seems really wrong.

When exactly do they have to start acting like normal boring businesses that
are supposed to be good at something, and then make their money doing that
thing?

~~~
adventured
Because they can raise a large amount of money at a modest dilution, it's
really that simple. It's a way of guaranteeing their seat at the table,
whether that's in regards to hiring or acquisitions or otherwise. When you're
going up against huge companies like Priceline.com ($60b market cap, $3.3b
cash, $9b sales, $2.5b profit) and Expedia ($15b market cap, $2.1b cash, $6.6b
sales) - the more cash the better. Further, who knows if these relatively easy
capital raising days will last (for Airbnb types at least), or whether we're
rolling into a recession.

Oh yeah, and because they wouldn't be worth $30 billion if they were publicly
traded. They're raising money far beyond what their business is going to be
worth at any point in the next five years based on comparables to either
Priceline or Expedia.

~~~
CPLX
> Oh yeah, and because they wouldn't be worth $30 billion if they were
> publicly traded. They're raising money far beyond what their business is
> going to be worth at any point in the next five years

Indeed. And therin lie the seeds of a problem that could literally destroy the
company, or at least incinerate the stake of the current founders and major
shareholders. Hence the question.

------
chollida1
> A $30 billion valuation would make Airbnb the second-highest-valued start-up
> in the United States behind Uber, which is now valued at $62.5 billion,
> according to a list compiled by CB Insights.

Is there an age limit to being called a startup? Is there a valuation limit?
Revenue limit?

I guess the line used to be when a company went public, but that's not really
cool anymore.

Maybe the new definition of a unicorn should be a private company that is
profitable and requires no outside funding?

~~~
sytse
As long as you're growing fast you are a startup
[http://www.paulgraham.com/growth.html](http://www.paulgraham.com/growth.html)
Size is irrelevant, you can be a small restaurant and not be a startup if
you're not growing fast anymore.

~~~
untog
So when Apple launched the iPhone they were a startup?

~~~
adventured
The premise obviously doesn't make sense.

Start-up means getting started, starting up something, early into the
formation, a young entity, etc. To claim a massive 40 year old business - with
many old products - can be a start-up, would be to intentionally obfuscate the
historical use of the term. There's no good reason to declare that Apple was a
start-up when it was growing fast, it makes no sense. What would be the
purpose of contorting the language for that? It's a: "fast growing company,"
that's all the description that's necessary for any older business that grows
quickly.

~~~
untog
Well that's my point. That the term "startup" is already hopelessly corrupted,
and by the OPs standard Apple would count.

It makes no sense, and is largely the way it is for PR reasons.

------
pyrophane
I wonder if these terms account for the potential impact on Airbnb's growth
that all of the new regulations being proposed in places like NY and Europe
could have. A lot of effort is being put forth to curtail full-time entire
apartment listings in several of the company's largest markets, and there is
good reason to believe that those listings contribute significantly to their
revenue.

For example, a study put forth by housing advocacy groups recently identified
over 8,000 "impact listings" in NYC alone, which are essentially entire
apartments being operated on a close to full-time basis. [1]. Certainly these
groups are biased, but their methodology for finding full-time listings looks
sound. I'll do a little quick math to consider the revenue and fees Airbnb may
be collecting from those:

200 days a year rented (total guess on my part) * $120 (somewhat less than the
average shown for a one night stay) * 8000 (full-time listings) = $192M total
revenue

Or maybe around $19M in total fees collected from both hosts and guests.
Granted, I could be way off here, but I think it shows how much money is
potentially at stake in these listings that, if the current legislation on
Cuomo's desk passes, could go away nearly overnight.

My point is that these new regulations appear to represent a substantial risk
to Airbnb's continued growth. It makes me wonder how much this new raise might
be earmarked for fighting cities on regulations and conducting an aggressive
PR campaign to sway public opinion in their favor.

1\. [http://www.sharebetter.org/story/housing-report-short-
changi...](http://www.sharebetter.org/story/housing-report-short-changing-new-
york-city/)

~~~
mylons
and also to fund their legal proceedings against the city of San Francisco. I
really do not like that they're suing the city because a consequence of them
winning seems to be more stifling of housing in the city available for those
who live in the bay.

[http://www.nytimes.com/2016/06/29/technology/airbnb-sues-
san...](http://www.nytimes.com/2016/06/29/technology/airbnb-sues-san-
francisco-over-a-law-it-had-helped-pass.html)

------
JNaz
Marriot Intl: 200k employees, 13b revenue, 4000 hotels, 15b market cap

Hilton Worldwide, 160k employees, 11.3b revenue, 4660 properties, 21b market
cap

Hyatt, 97k employees, 4.4b revenue, ~600 properties, 5b market cap

~~~
lettergram
Airbnb takes a percentage of every stay, don't need inventory(I.e. open
rooms), nor more than a few hundred employee's.

My guess is they have their valuation about right, assuming they continue to
grow for the next 3 or 4 years

~~~
kirykl
That they don't need inventory or more than a few hundred employees makes me
wonder what their real value is. Is the brand alone worth $30B ? You could
have the same office staff running airBnb and uber.

edit: I'm also thinking of the non existent switching costs for customers.

I guess it works for credit card companies

~~~
lettergram
Uber is far more complex than airbnb. Airbnb makes money today (I assume),
uber has an issue where they are in a highly competitive space, where
technology matters (GPS, matching, etc.), And can't really even be profitable
yet.

~~~
fjrjdndnd
Either User's business model works or it doesn't. Either they're profitable or
they're not. It doesn't matter if they're in a competitive space. Businesses
are supposed to make a profit, and anything else is just a wall of bad excuses
to protect their valuation.

~~~
argonaut
Tell that to Amazon. Profitability is not the end all be all.

------
iandanforth
I have personally swapped AirBnB for the entire hospitality industry in my
mind. The only times I end up in hotels now are when I'm booked into one by my
employer. I wouldn't, for pleasure, stay in a hotel or motel unless I really
had no other choice. I was very happy to discover that AirBnB has a
significant presence in Japan which made my recent trip there more pleasant
_and_ saved me money.

~~~
dbot
Hmmm...are you mostly using the private room or entire home/apt?

I've found that if you are looking for just a private room, you can get a
deal. But then you are also in a stranger's house, which as a 30-something I'm
not always that comfortable with. When I travel with my wife, it's not even an
option.

When I look at entire home/apt listings, the prices are often very comparable
to nearby hotels, and often I can get a cheaper hotel using an "opaque"
service like Hotwire or Priceline. As between the two, I'd much rather stay in
a hotel, since they are set up for travelers and I can get whatever extra
towels, amenities, etc. that might be missing from an AirBnb.

~~~
iandanforth
I do entire home/apt. Perhaps I've never made enough use of hotel amenities,
but so far I haven't missed them in an AirBnB.

------
lettergram
Every person I know, young to old use airbnb now. I can't say the same for
uber. Plus, as mentioned in a comment, although it would be have a higher
market cap than Hilton, Hyatt, etc. They also have no inventory, employees,
property tax, and so on.

I see this valuation being low in a few years. Instead, of thinking of them as
a hotel chain (or something similar), we should think of then as an insurance
and travel company

~~~
mylons
I have the opposite anecdotal experience. Most people I talk with in the
midwest do not use airbnb, they use vrbo.

~~~
lettergram
Weird everyone in the Midwest (where I'm from) has only ever mentioned uber.

------
bogomipz
It seems like a lot of the gunicorns are topping up their funding lately -
Uber, Airbnb, Spotify.

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grillvogel
a friend of mine who recently interviewed at airbnb said that the employees
have a personal barista that they can sign up to take lessons from, so at
least you know that money is getting put to good use

~~~
jbigelow76
If that next round doesn't come in those barista skills might come in handy.

~~~
frank_jaeger
Having a large portion of your staff barista-trained also allows for some
pretty big pivots. These guys have their eyes on the longterm.

~~~
coldtea
Starbucks won't even know what hit them!

------
mattmanser
_Every person I know, young to old use airbnb now_

Not really much of a surprise as you're a young, white male working and living
in the SF bubble.

~~~
dang
That's unduly personal and not ok.

We detached this comment from
[https://news.ycombinator.com/item?id=11997359](https://news.ycombinator.com/item?id=11997359)
and marked it off-topic.

