
Airbnb Is Raising A Big Third Round, Aiming For A Valuation North Of $2B - ssclafani
http://techcrunch.com/2012/09/26/airbnb-is-raising-a-big-third-round-aiming-for-a-valuation-north-of-2b/
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pault
I thought Airbnb sounded silly when I first heard about it, but I've spent the
last month in the caribbean staying exclusively at apartments booked there.
The UX is awesome, there's a huge discovery value to people with vacation
rentals, and it's way cheaper than staying at hotels. Not to mention the money
that I save because I have a kitchen to cook in. You can usually find a
monthly price only a few hundred dollars more than what you would pay for an
unfurnished rental with a lease. I've also been shocked at the explosive
growth outside the US. When I checked the listings about six months ago I
didn't see much in southern Brazil, but now there are ~500 listings. I don't
know about $2B, but I've been very impressed with everything they've done so
far.

~~~
joelrunyon
I've always found AirBnB not to be _that_ much cheaper than hotels.

Maybe it's just me?

~~~
jobu
Agreed, but in my experience the rooms are better than a hotel.

~~~
Evbn
I got a janky bed in a janky room in a house shared with a not-advertised
invalid. But I evaded hotel taxes so it was a good deal.

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sfard
Just to put this in perspect. Starwood has a valuation of about $10 billion.

Starwood employs 150,000 people, has 1000 hotels worldwide, and has revenues
of ~$6 billion

I'm not saying AirBNB can't be huge one day, but a $2B valuation... wow.

~~~
andrewljohnson
Yeah, you are right... that makes it very clear why AirBnB is so valuable.

If it takes Starwood 150,000 people to make $6B, and AirBnB can make hundreds
of millions with hundreds of people, I think it's pretty clear which is headed
to a bigger valuation.

~~~
fletchowns
Or it's just way overvalued

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asithinketh
One way to look at AirBnB is as a craiglist plus escrow service. The idea is
they spammed people advertising rental properties on craiglist to get them to
visit the AirBnB site and it has worked so far. Eventually, though, all the
people advertising on sites like craigslist will have migrated over to AirBnB
and then the growth ends.

The escrow service seems a little dodgey since they are not licensed (see
Greenspan's critique - he was roommates with one of the founders of AirBnB).
Few major incidents so far, but how long will that last as they scale? The
attraction of AirBnB over craiglist may be that the hosts perceive some added
degree of safety by using AirBnB. But really, how much liability is AirBnB
taking on? Can you sue AirBnB if your property is destroyed? Good luck with
that.

What if another site that has an even faster interface pops up and uses a
growth hacker to lure away hosts listing their properties on AirBnB? Then
what? Acquire them out of fear!

The web is a medium. People use it to advertise things. It's hard to believe
that any one company can monopolize a medium like the web for some class(es)
of goods or services. But it sure looks like they can, doesn't it?

From For Sale ads in Usenet groups to a mailing list that grows to a website
(craigslist) to AirBnB acting as an informal escrow agent to _______?

The interesting thing is that Usenet was originally free. As long as you had
an internet connection, you could advertise for free. I'm not sure I
understand why advertising still shouldn't be free. And we should be able to
reduce the signal to noise ratio, and make doing business via internet more
personable and trustworthy, without having to pay a spammer who acts as a
dubious escrow agent and takes a percentage.

~~~
riffraff
I think you're very off in your analysis.

I have never used craigslist nor other classifieds sites, and neither have any
of my family members, nor my work mates, nor the friends I meet on a weekly
basis.

Yet me, my brother, a colleague and two friends have booked nights on airbnb.
The growth will end when all of my colleagues, and all of my family and all of
my friend use it, and they'll know about it because every time they ask me "so
where did you sleep" I'll answer "found this cheap place on AirBnB".

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confluence
Airbnb is the ebay of housing, creating liquid markets for unused or unwanted
goods without taking on any inventory, risk or capital. This is a service that
literally prints money - and so long as they don't get Meg Whitman as their
CEO - they won't fuck up.

I wouldn't be surprised if they surpassed eBay within the decade in terms of
net profit. Next up on the liquid market list should be cars.

Any other markets out there that need liquidity? Goods that aren't used or
assets that lay dormant? I'm all ears.

~~~
eddy_chan
When you create a company that acts as an agent or marketplace between 2
parties you have to take on some of the risk in the transaction if you're
profiting from it.

AirBnB struck a goldmine in apartments cos it's pretty hard to 'steal' an
apartment and take it away or damage it beyond all repair through normal
expected use. I would gather most places are 'uninsured' for the duration of
the sublease because the normal conditions have been broken but owners feel
that that is a risk worth taking on for the expected return.

Cars that sit around are a different story - I feel for these guys
[http://techcrunch.com/2012/01/01/luxury-car-sharing-
service-...](http://techcrunch.com/2012/01/01/luxury-car-sharing-service-
higear-shuts-down-due-to-theft/) but the truth of the matter is that with the
next tier of high value illiquid stuff below apartments such as luxury cars
and boats the perceived risk of letting somebody 'borrow' it is much higher.
It is entirely feasible that whatever you're leasing out could get
destroyed/sunk/totaled/stolen in normal use for its intended purpose. To
provide such a market you would have to provide the insurance that goes with
it and that's the hard bit.

This is why zipcar et al has stitched up the lower end of the car market. The
car is 'common property' and they have the insurance to cover all who drive
it.

Not saying it shouldn't be done - I'd actually love to build AirBnB for boats
cos I sail but I can't afford my own boat or the charter prices being asked.

~~~
billiamram
Cars also lose value through continued use much more rapidly than "space".
Doubling the utilization rate of a car may halve its usable lifetime.

There's also the issue of liability and risk to the user. A poorly maintained
car might be dangerous to drive and difficult to recognize.

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paulhauggis
But what is their actual profit?

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Evbn
Is it normal to have 10% of a company's valuation be invested/debt cash?

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joering2
Congratulation to PG! Seems like working with top scammer from the FBI list
that you and I had to pay in our taxes for their damages, is finally paying
off!

Pop, there goes a bottle of Dom Pérignon!

~~~
andrewljohnson
Sounds like this could be an interesting comment, but needs substance and a
link or two, instead of sarcasm and malice. No one knows what you are talking
about... I vaguely suspected you were referring to that one isolated incident
long ago where a woman had her apartment trashed by some renters.

~~~
swang
Pretty sure this based off his previous posts:
<http://venturebeat.com/2011/10/27/airbnb-spam-allegations/>

~~~
asithinketh
According to Dave Gooden, AirBnB had a growth hacker who did her magic via
email. "girlsname04@gmail.com" was her address.

She harvested emails from people adveritising on craigslist and sent out
thousands of emails. Some call that unsolicited bulk commercial email. Some
call is spam. Others call it growth hacking.

Remember, wise man say startups need <em> high growth </em>.

Founding startup is like being research scientist. Science!

"girlsname04@gmail.com", an unsung hero of AirBnB.

Harvard grad gets shut down by FTC for sending porn-related spam from custom-
built spam machine in his dorm room. Earns some nice coin. Moves on to greener
pastures:- doing the dirty work for internet venture capitalists. Say hello to
the CTO of AirBnB.

Ivy League indeed.

The eventual victim is untimately the public investor if there's an IPO or the
naive acquirer... because these businesses are not built to last long enough
to provide the return on investment the public expects, nor to cover the
inevitable charge the acquirer has to take.

These petty criminals doing the dirty work for internet VC are young with many
years ahead of them to regain their reputation. But time may not heal bad
reputations as well as it used to... because the internet never forgets.

