
Subject: Airbnb (2011) - tinderliker
http://www.paulgraham.com/airbnb.html
======
hedgew
I'd love to see more of these genuine, high-level business conversations. It
can be difficult to learn and understand what really goes on "at the top",
because probably every top exec is under some pressure to appear superhuman.

~~~
alexpotato
Most of the time I've had access to these conversations it seems like 10-20%
of the time there is some really insightful and/or groundbreaking discussion
going on.

The rest of the time, it's something like this:

    
    
      A: I've always found that business is about increasing revenue and decreasing costs
    
      B: I've also always thought that way
    
      A: Great! I'm glad we're on the same page

------
IndrekR
It is interesting to see how PG is selling this to Fred. This is exactly the
kind of people you want to work with in a startup. People who believe in you
and are not afraid to show it.

~~~
jpeg_hero
Yeah, I don’t know much about PG’s communication style, but in intra-VC
communication, this is 100 max over the top support, hair-on-fire. Good for
PG, and his words were prescient in ‘09, prescient in ‘11 and still prescient
in ‘18. Not many times my you can say that.

Ps funny on the eBay name drop. The original marketplace model, and still
doing well, but dot think vc’s reference it as often anymore.

------
deleted_account
This pg quote has an r/LateStageCapitalism vibe to me: "They just arrived back
from NYC, and when I asked them what was the most significant thing they'd
observed, it was how many of their users actually needed to do these rentals
to pay their rents."

~~~
gcb0
For me it was how PG pushed the investor with the "they WILL get hotels" line.
Expected more data and less gut feeling from Ycombinator.

~~~
jonny_eh
I dunno, PG's always had a great gut instinct about startups. That's why
people love his posts.

------
foldr
>So I think it can scale all the way to the bed and breakfast market

> But I am not sure they can take on the hotel market

Not an inaccurate assessment.

~~~
tedmiston
For my own usage, they've taken the hotel market for personal travel. I don't
think their hold is as strong in business travel yet.

~~~
gcb0
until you find yourself in customer care hell.

I've rented a fake room (lied about size, noise, etc. and had three honest-
looking reviews) and I was talking to a rep in the US, in english. Meanwhile
the host was talking to a service rep in the country i was in, in french.

In the end, the US rep promised me a credit and help. But then the France rep
flagged my account. Now i could not book anything until i reactivated a credit
card. Even the US rep now couldn't help me until I did that. It was a
Saturday. I needed until Tuesday to validate any credit card via their
statement methods. Twelve international calls later, and there was nothing
they could do. at all. And I was a several-year long customer with 5star
reviews all around.

Ended up on the street, with three bags, hunting last minute hotels and paying
counter price. Never used airbnb ever again. The savings is not worth the
risk.

~~~
tedmiston
Luckily I have not experienced any international issues.

I have experienced one issue where the host cancelled hours before arriving
while we were already en route, but Airbnb upgraded us to a much better place
as everything comparable was sold out (New Year's Eve in NYC).

------
jl2718
This is just from memory. Correct me if I’m wrong.

2005: mobileride.com in Boston, phone-based ridesharing with voluntary cash
exchange, shut down in 2006 with regulatory warnings

2006: zipcar hires some of mobileride team and enters rideshare business with
shared zipcar rentals among BU students

2007: zimride starts with pre-arranged rideshare at Cornell, works with campus
transportation directly to keep it legal.

2007: google rides opens as a platform for several tiers of ride hailing
services, dominates the market and then shuts down in 2010

2010: Uber starts in NYC as high-end livery, not sure if they got the license
or not, but tweaks business model to have many on-demand part-time drivers
instead of full-time, but pays much better portion of fare.

2012: Sidecar in San Francisco allows anybody to accept rides and mobile
payments but calls them gratuities instead of fare. Regulators show their will
to inaction. Uber responds with massive push into taxi services, completely
flouts regulation, and Zimride births Lyft to do the same. CALPERS is rescued
from bankruptcy by investment in AirBnB and Uber.

~~~
dopamean
> CALPERS is rescued from bankruptcy by investment in AirBnB and Uber

I would like to know more.

~~~
jl2718
Yeah, this is one of the real secrets of Silicon Valley. The biggest unicorns
of the post-Facebook era were all created because of regulatory capture, not
despite it.

Here are the pre-2010 VC investments:
[https://www.calpers.ca.gov/page/investments/asset-
classes/pr...](https://www.calpers.ca.gov/page/investments/asset-
classes/private-equity/pep-fund-performance/fund&id=4)

And then in 2012, they moved into managed VC/PE through Blackrock, so it's a
lot harder to trace, but... [https://www.reuters.com/article/us-tech-uber-
idUSKBN0EH21I20...](https://www.reuters.com/article/us-tech-uber-
idUSKBN0EH21I20140606)

CALPERS didn't 'start' Uber/AirBnB, but they did make huge bets on them at
right about the time when regulation was threatening their existence, and then
magically they became legal.

Not to mention all of Elon Musk's companies. He may not have needed the money,
but easy passage through regulatory barriers definitely secured success.

------
krn
> Our two junior team members were enthusiastic

> The three "old guys" didn't get it

I think that's the main reason why they passed on Airbnb. The VCs themselves
were too far away from the initial target market, and could neither relate
with the "airbed and breakfast" user base, nor see how it could scale.

~~~
jamestimmins
I imagine that if the same group debated the appeal of staying in hostels the
outcome would have been similar.

------
aogl
While this is an interesting post to read, it is also about 7 years old.

It's quite cool how the transcript goes to say "There's no reason this
couldn't be as big as Ebay. And this team is the right one to do it."

Turns out that literally was the case! Good call Paul!

------
mrnobody_67
Why didn't VRBO/HomeAway become AirBnB?

It seems there was already a marketplace for short term vacation rentals....

~~~
jedberg
Because they didn't do rooms in an already occupied house (and still don't).
AirBnb started with renting couches or spare beds. They only moved into whole
houses later, after they built up a reputation, and more importantly, built up
their system of tracking the reputation of the renters.

~~~
mrnobody_67
What % of AirBnB business is single room in otherwise occupied house?

------
awakenrz
Note there is a survivor bias here. Might be even more interesting to see PG's
email exchanges with other VCs on some then successful but later failed
startups.

------
runT1ME
I would be very curious to see what barriers to entry AirBnB has developed vs.
say, Uber. While both are marketplaces, Uber benefits tremendously from
understanding traffic patterns, from seeing how people ride, from being able
to give drivers the option of traveling certain directions, etc. All of that
data is worth billions of dollars and not easily discovered, and technically
quite challenging to gather and exploit.

From what I can tell, AirBnB has a _brand_ and a web application. Technically,
I can't imagine the latter is more complicated than the average e-commerce
site delivered at scale. I am having trouble understanding how big data can
create an advantage (maybe to help owners price their rentals?). If a
competitor pops up, there's no reason owners can't list on multiple sites
without facing any penalties.

AirBnB is not a company I'd invest in for the long term, while I would invest
in Uber/Lyft. So, what am I missing?

~~~
konschubert
Airbnb has a global network effect: If I booked my last two holidays on
Airbnb, I am more inclined to do it also for the next one out of convenience.
I'm already verified anf signed up and I know the interface etc... This
requires a global network of hosts. Any competitor has to build a global
network of comparable density to be compatible.

On the other hand, Uber's network effect and synergies are mostly localized to
cities. If I move to a new city and there is a competitor with lower prices,
chances are I'll install their app eventually, even if it takes me a few
weeks.

~~~
ahjushi
In addition to that, AirBnB takes a lot of the headache out for hosts in
regards to local laws.

In San Francisco for example, AirBnB collects and remits the local hotel tax
on behalf of hosts, making that a non-issue for hosts. But when I used AirBnB
in Italy I had to meet the host and they needed to charge me the tax, print a
receipt, and had me sign something...all which I imagine was because at the
time or in that locale AirBnB had not set up that convenience for hosts yet.
And in SF, they only do this if AirBnB is the sole platform you use--if you
use multiple then you'd have to collect/remit taxes yourself I believe.
Probably not an issue for someone who rents out multiple units and treats
AirBnB as their main job, but for the little guy that just wants to make a few
extra bucks from an extra couch, room, etc. here and there AirBnB navigating
the tax stuff is huge.

------
dsl
Airbnb, like Uber, took advantage of regulatory inefficiencies instead of
market inefficiencies. The model is do something (in the minds of regulators)
illegal, quickly enough that you can become large enough to get a seat at the
table when the regulations are reworked.

The counter example to these companies are the ones that quickly raised
capital to dump scooters on public streets before they could be shut down by
cities. None of the players were able to grow large enough to have a say in
the reforming of the laws that regulate them (SF learned its lesson from Uber
and moved quickly, limiting their participation to asking for proposals).

This is framed to present a VC as "missing out" in the financial sense.
Ultimately a VC is liable to its capital partners in far more ways. If Airbnb
had all of its assets seized by the federal government as an illegal
enterprise (just as an example), we would be applauding their foresight and
brilliance in avoiding this otherwise lucrative opportunity.

~~~
throwawaymath
Great observation.

 _> The counter example to these companies are the ones that quickly raised
capital to dump scooters on public streets before they could be shut down by
cities._

I live in NYC, and I’m frequently in Westchester (the county immediately north
of NYC, for those not familiar with New York). There’s been a large influx of
Lime bikes in the past several months. My opinion on Lime - the bike/scooter
company - has quickly evolved from idle curiosity, to weak dislike, to
outright disdain. That evolution started happening when I saw Lime bikes being
parked in arbitrary places that blocked pedestrian foot traffic, but I think
the straw that broke the camel’s back was when someone parked a Lime bike
directly in the spot I usually place my garbage.

Sometimes the hustle of skirting regulation seems to be a net positive.
Company culture notwithstanding, I’m happy overall that Uber exists as a
concept. I don’t have a savvy opinion about their future, but I enjoy Uber
rides significantly more than yellow cabs. Likewise I’ve stayed in Airbnbs
before and enjoyed the experience, though I wouldn’t say it’s changed my day
to day life as much.

But other times it seems like companies are being actively negligent in their
awareness of the legislations they’re flippantly ignoring and the consequences
of doing so. I don’t have a lot of sympathy for a system being disrupted which
depends on the artificial scarcity of taxi medallions. On the other hand I
find it very frustrating when my sidewalk or park is “disrupted” by a random
bright green bike that yells at you if you try to move it without paying.

I wish there were a way to easily categorize the behavior of companies -
between those whose cavalier approach to disruption mostly impacts existing
incumbents, and those whose approach is actually a pain to end users.
Sometimes the laws are legitimately outdated or very inefficient, and
disregarding them vastly improves the user experience. But other times - like
with Lime - it feels as though companies are pointing to those examples so
they can get away with a “product” that automatically opts you into a “new
normal” just because a subset of people use it.

~~~
Reedx
> but I think the straw that broke the camel’s back was when someone parked a
> Lime bike directly in the spot I usually place my garbage

Granted that's a problem and hopefully they're working to discourage bad
behavior. But traffic and pollution are bigger problems that bikes and
scooters help with. Does the fact that they're sometimes misplaced mean it's a
net negative?

~~~
emodendroket
The scooters might be good for this, but Uber is likely encouraging more
people to either drive around looking for fares or hail a ride when they would
normally use the train or walk. So the brave new world of no regulation
doesn't necessarily trend toward a greener world.

------
raverbashing
I wonder what was the redacted phrase that was strategic to what AirBNB was
doing (I'm sure we might know by now, but not know it was being discusses)

~~~
kitcar
Maybe related to their craiglist activities?
([https://growthhackers.com/growth-
studies/airbnb](https://growthhackers.com/growth-studies/airbnb))

------
MrEfficiency
Something I often notice when people complain about AirBNB being a problem in
their city- Their city has 'peaked' like a star Quarterback in High school.

In my city which is experiencing growth, I find my AirBnB guests are often
business travelers who are infulencers in their respected communities. There
are some exceptions like college kids on summer vacation trying to hook up
away from their parents house- but mostly business people.

I see complaints from Europeans about Tourism, but that should be a reflection
on the achievements of their ancestors rather than the achievements of the
current and recent generations.

~~~
timr
Right. New York, London, Paris and Tokyo have all "peaked".

~~~
maxwell
Manhattan, London, and Paris all peaked in the early- to mid-20th century.

Manhattan: [https://urbanomnibus.net/2014/10/the-rise-and-fall-of-
manhat...](https://urbanomnibus.net/2014/10/the-rise-and-fall-of-manhattans-
density)

Paris: [https://www.parisinsidersguide.com/population-of-
paris.html](https://www.parisinsidersguide.com/population-of-paris.html)

London:
[https://www.washingtonpost.com/news/worldviews/wp/2015/01/07...](https://www.washingtonpost.com/news/worldviews/wp/2015/01/07/chart-
londons-population-is-finally-about-to-return-to-its-1939-peak/)

City of London:
[https://upload.wikimedia.org/wikipedia/commons/f/f6/Populati...](https://upload.wikimedia.org/wikipedia/commons/f/f6/Population_of_the_City_of_London_over_time.png)

Tokyo is probably approaching peak:
[https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropert...](https://proxy.duckduckgo.com/iu/?u=http%3A%2F%2Fjapanpropertycentral.com%2Fwp-
content%2Fuploads%2F2017%2F04%2FTokyo-Population-Chart-2010-2040.jpg&f=1)

Tokyo Core: [http://www.newgeography.com/files/cox-
tokyo-1.png](http://www.newgeography.com/files/cox-tokyo-1.png)

~~~
timr
Pedantry. If you honestly believe that Manhattan "peaked like a star
quarterback" in 1910, I don't know what to say to you.

------
iMuzz
Did PG make an angel investment in Airbnb?

------
abcdcba
I wish AirBnB took more responsibility for the damage they are doing to the
NYC housing market

~~~
jMyles
Well, we don't all agree that the changes are tantamount to "damage", first of
all.

For my part, having lived much of my adult life in New Paltz, AirBnb has
greatly increased the availability of NYC housing for me, as I typically only
live in NYC for 3-10 days at a time.

I can understand that, if your desire is to live there perpetually for years,
you might have a different perception.

Perhaps living in a single place in perpetuity (especially near the center of
a major metro/cosmopolitan hub) is just not as sustainable in an environment
where smallish organizations like AirBnb (or the decentralized versions to
come) can easily subvert statutory attempts to force a particular market
outcome.

Also, in NYC in particular, the role of "rent control" is worth taking into
account.

~~~
jermaustin1
> if your desire is to live there perpetually for years

You mean like 99% of people? When you work in the city, grew up in the city,
have met almost everyone you know in the city, to then be forced out of the
city because people want to rent their apartments out for 3-10 days at a time
instead of 1-3 years means that people who need the stability of a permanent
address now have to either shell out much more cash than a land lord can get
(illegally) on airbnb, or move out of the city and abandon the thing they have
known their entire lives.

I'm not saying I have a good solution to it, other than the typical
protectionist idea of tax the things that are destroying us, but at least that
way there is money in the treasury to try and save a portion of the people
affected by it.

~~~
TheTrotters
But the solution _is_ simple: build more apartments. There's no reason there
shouldn't be enough housing for way, way more people other than that it's the
policy of local government and the preference of many voters.

~~~
jermaustin1
This is a solution in places like queens, brooklyn and statan island, but
manhattan is quite nearly fully developed, and without displacing people to
build new high-rises (which kind of exacerbates the issue), there isn't much
that can be done.

------
dustingetz
This is bullshit. I fund my startup by consulting 1-2 months per year at
40k/month. Zero people think it is impressive. But $25k of Obama cereal makes
a better story.

~~~
krn
2008 Democratic National Convention was 10 years ago. At the time, startups,
as we know them today, were a rarity. Funding yourself to start one, even more
so. Hacker News itself was only 1 year-old.

~~~
maxxxxx
" At the time, startups, as we know them today, were a rarity. Funding
yourself to start one, even more so. "

Come on! Never heard of the dotcom bubble? It was all about startups.

And people have been self funding businesses throughout history.

Airbnb did what a lot of other people had been doing since eternity. Nothing
new.

~~~
krn
I am writing from a European perspective, but my impression is, that even in
2007 starting a startup or working for one was still not as common as it is
today for a recent graduate in the US[1].

[1]
[http://www.paulgraham.com/notnot.html](http://www.paulgraham.com/notnot.html)

