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Airbnb raises $1B at $31B valuation, became profitable in 2016 (cnbc.com)
342 points by sloanesturz on March 9, 2017 | hide | past | favorite | 236 comments

I used to use airbnb quite often (as a traveler), but I have to say it's lost its appeal for me. First, it's really not much cheaper than a hotel in most cases (some cases more expensive). Second, it's a hassle when you're on vacation to have to arrange in advance a specific time to pick up the keys to the place. Then, what happens if you happen to lose the keys (happened to me once)? What happens if it's in the middle of the night in a foreign country? This could be a nightmare. On top of that, you're expected to leave the apartment like you never stayed there or face bad reviews (even with a $100+ cleaning fee)! Seriously, one time I got stuck with a terrible review because I left a dirty pan in the sink (had to rush to the airport, I figured the $100 cleaning fee would cover what minor things I had left behind, but guess not).

So now I've pretty much gone back to hotels. You can come any time of day or night, not have to worry at all about losing keys, and you can leave the place a raging mess if you have to (though I am usually a very clean person). Airbnb makes the whole travel experience far more stressful for me.

AirBnB is a now usually a terrible deal for guests and increases resident rental shortages/costs by illegally converting residential units into commercial rentals.

When they started, they were great for guests. Now there's an abundance of guests and a shortage of hosts, so the system is strongly tilted in favor of hosts.

- Hosts always get rebuttals on reviews

- Guests cannot comment when their stay is cancelled before arrival

- Guest reviews are public which discourages honest feedback

- Dealing with a problem is nearly impossible (how do I take a picture of the fact that my 'apartment' is a hotel room? And why can't I talk to anyone?)

- AirBnB's compensation for a failed stay is a 10% re-booking bonus which doesn't begin to cover the additional cost, time, and stress of having to find a new place at the last minute at 10pm because your flight was 6 hours delayed and the one you booked with great reviews was misrepresented

In some markets AirBnB can be the last/best option, but I do my best to avoid financially supporting them if there is a reasonable alternative.


This is a great comment and I have to add a shady tactic that I have noticed hosts doing in competitive cities during peak times... I travel to a particular city yearly for a large conference and every time I've tried to use AirBnB for a stay, it always ends with me sticking to a hotel.

The host posts a bunch of very desirable locations and then when you try to book it, they message you with 'this one is unavailable, but how about these other entirely different units I have?' which is clearly a 'bait and switch' tactic.

I even booked one successfully and I know they had accidentally underpriced that week--similar to their other week costs, not raised for this conference like a lot of other hosts--and instead of just honoring my reservation, they cancelled it saying, 'oh, it turns out the prior guest will be leaving late on your first day.' Of course, this was a total lie because I offered to come even later, give up the first day, etc to no further response. Well, guess what... they re-posted the same dates at a much higher rate.

I honestly think a host should not be able to turn down a verified guest reservation under any circumstance or perhaps be unable to relist for those dates if they deny a person's request.

I emailed their customer service about these clear 'scams' and heard no significant reply.... they offered me a coupon.

Another issue is, the guest cant cancel without horrible fees...ohh but the landlord can, 2 years ago i arrived in nyc homeless, because the landlord cancled my stay during my flight to the US.

Nice experience...not.

> Guests cannot comment when their stay is cancelled before arrival

It's automatically posted as a review on your behalf.

> Dealing with a problem is nearly impossible (how do I take a picture of the fact that my 'apartment' is a hotel room? And why can't I talk to anyone?)

By taking a picture with your phone and contacting support?

There's reasons to dislike Airbnb, but these surely aren't some of them. I've had ~20 stays at Airbnb and never had any of these issues.

ah yes, the time-honored "My experiences don't match yours so clearly yours are invalid" argument.

Your "no message when host cancels" clearly shows that you have no experience at all, so why talk about it?

My what? I think you think I'm someone else.

There's an area Airbnb clearly fails for me, and it's the one your describe: short stays in populated areas. It's slightly cheaper than a hotel, but a hotel has a front desk that's staffed 24 hours a day to solve any problem you have, and you can usually cancel at no charge up to 24 hours before arriving. It's worth the small extra every night.

That said, I've had good experiences with Airbnb for a very vacation-y vacation: house, middle of nowhere, by the beach sort of thing. I don't know of any sites that come close to the global selection Airbnb has.

THAT said, vacation-y vacation rentals are a lot smaller market than short term stays in very populated areas. If I recall, Airbnb launched some business travel capabilities not that long ago and they were not particularly successful. So my general impression is that Airbnb can be a totally successful business, but while it tries to justify a valuation like $31B (rather than focusing on core competencies) it runs the risk of ruining the whole thing.

So you're basically saying they're better than a very fragmented (and not very good) vacation home rental industry. Which is both a pretty low bar and hardly a disruptive business.

I always found VRBO much better for vacation rentals.

> I don't know of any sites that come close to the global selection Airbnb has.

All the major ones? We've travelled through Tuscany/North Italy urban&rural, middle of tourism season, reserving same night stays with nothing but expedia and booking.com. Great deals too.

Have to second this.

I've used airbnb over the years and have seen the standard drop massively (I'd say the same is true for uber).

When I first started using the service, the hosts were all over you to make sure you have a nice stay.

Nowadays it's a complete lottery. You can book a well reviewed place "host is great, nice laid back guy" and turn up to a locked dark house in a foreign country, whilst said host is comatose drunk somewhere having been in a bar brawl, and no phone..

Not to mention bailiffs turning up at the crack of dawn demanding money else the gas will be turned off (another top reviewed apartment).

And that cleaning fee.. no way to not pay it, regardless of if the place has actually been cleaned. Standard response is "sorry, I'm out of town, the previous guest should have cleaned up after themselves"

I too have gone back to hotels.

Yup, I do not know what's the appeal of airbnb.

Little disclaimer, that I am not rich and travel on cheap, so it's from cheapskates point of view.

Airbnbs are neither cheaper, nor more convenient than a hotel/hostel/ etc. When you go to a ho(s)tel - they are licensed, they are cleaned everyday, they give [0] you towels, clean sheets, etc. And many hostels are cheap, have personal rooms, have full kitchen, wifi, etc.

With airbnb, I had experience of cleaning a dirty kitchen, fridge full of mold, from some leftovers, buy cleaning utensils for kitchen and bathroom, slept in a bed full of cat hair, etc. It's like couchsurfing, just without all the couch surfing benefits for a price of extremely expensive rent. Airbnbs are not regulated, they do not account for nothing, etc., personally it's horrible.

So I better travel to hotels/hostels, through booking.com (or similar). I do not pay more than on Airbnb and I get much better service on average (e.g. 24h reception, cleaning, consistency [1], easier to deal with etc.).

All in all, personally for me Airbnb is extremely expensive and unregulated rent with poor service, which does only economical harm for local economy for both - hotels/hostels and long-term rents.

[0] probably more correct way to say that it's included in the price.

[1] 'consistency' - I mean that I know (or at least easily imagine) what a hotel/hostel for XX dollars in YY country should feel like. Whereas with airbnb it's a cat in a box, with some extra surprises/rules on arrival.

Maybe it depends on the place you're going; I can't find anywhere nearly comparable in price for a month stay to AirBnB options with local hotels at a location I'm going to soon. Even pretty bad hotels are at least 2.5x the price of a lower end non-shared AirBnB rental

Totally agree. I got scammed with fancy airbnb pictures a couple of times and now I don't go near it with a 100ft pole.

It's totally lost its feel of welcoming host. Now it's just another hotel that's poorly run by people who want to make a quick buck.

I stay to hotels even if it's slightly expensive. The level of service and quality is always guaranteed

Sorry to hear that. Did those renters also have good reviews?

If so, that might indicate that you can buy fake reviews on ABnB now.

Reviews are a very bad indicator in my experience.

My airbnb stays from 2013-2015 were great and the average tanked.

Airbnb is still doing well and profitable so good for them.

That stinks. I'm a hotel person myself but I am curious did you have any recourse with AirBnB when this happened?

I did message them. The guest had strict cancellation policy so I just got sympathy.

It seemed airbnb customer service did not understand concept of "lifetime value" of customer. They could have made a lot more money in long term if they just refunded a bad experience.

I think if you're considering AirBnB and a hotel room as essentially fungible products, you're missing some of the value proposition of AirBnB. For me personally, I really hate most hotels because I don't like being lumped together with a bunch of other travelers in cookie-cutter rooms. A hotel is convenient and reliable, and sometimes that's most important (e.g., if I'm on a business trip) - but if I'm actually on vacation AirBnB provides a more private and less generic space to unwind and relax.

it's probably helped keeping the hotel prices down.

Keep in mind that even though you may not like AirBNB, you're still benefiting from their service. AirBNB has greatly increased the supply of housing in each city, thus causing price drops and forcing hotels to drop their prices in order to remain competitive.

If AirBNB really is overpriced for the hassles involved, then no one would use it, and AirBNB hosts would be forced to lower their prices until they find someone. If you're seeing that AirBNB is just as expensive as hotels, that's because some other tourists had decided that an AirBNB accommodation fits their needs just as well as the hotels they looked at.

> AirBNB has greatly increased the supply of housing in each city

Technically, it's increased the supply of short term lodging. Housing supply would have to be increased by construction or subdivision of units.

> If you're seeing that AirBNB is just as expensive as hotels

It's not an entirely fluid market, and some AirBnb hosts have wildly inflated ideas of what their unit is worth. A lot of AirBnbs (in my searches) sit mostly empty except for during events, during which they overcharge greatly. The vacancy rate acceptable for an AirBnb is much higher than the acceptable vacancy rate for a hotel.

Many AirBnB hosts rent out their primary residence. We rented one for our wedding where the family that lived there just decided to go camping that weekend; if you're income-poor but house-rich, getting paid a couple grand for a camping trip ain't a bad deal. Similarly, we stayed at an AirBnB for our honeymoon in Sarajevo; the place was our host's actual apartment, hand-decorated by her. She stayed with her parents for the weekend; we were paying her about 2 weeks salary in Bosnia for 2 nights there, so it was well worth her time.

Unless you live in a city and pay rent or property tax.

In which case you're now funding AirBNB as residential units are converted to commercial.


Yes, I was referring to the supply of housing for tourists and visitors, since that's the context the previous poster was referring to.

Regarding total supply of housing for residents + tourists, AirBNB does help here as well. There are a number of people who have extra space in their apartments that they would like to rent out temporarily, without any long term commitments or friction. If AirBNB didn't exist, these people would simply not rent their apartments at all, and that extra space would sit there unused. Thanks for AirBNB and similar services, this extra space is now better utilized to grow the overall supply.

Obviously I don't have any aggregate data on how many people use AirBNB as a substitute for renting, vs letting it sit empty. But anecdotally, I personally know multiple people who use AirBNB but would never take on a sublet/long-term tenant.

>AirBNB has greatly increased the supply of housing in each city

They've created some supply by opening up some empty rooms and temporarily unused housing to short term renters. But a significant proportion of AirBnB's listings aren't new supply, they're just reallocated from long term rental properties. This will likely have caused hotel prices to drop, but it also causes long term rental prices to rise.

> AirBNB has greatly increased the supply of housing in each city, thus causing price drops and forcing hotels to drop their prices in order to remain competitive.

That's 2-3 major claims that I just can't believe at face value. I'd like to, but you'll have to convince me.

People are converting rental properties to AirBnBs, which actually could mean less supply of rental properties and the same amount of people looking for them.

Is AirBnB leading to development of new housing to offset this? Maybe. idk

I'm not surprised to see Airbnb became profitable. They've expanded everywhere. I nomad around and always use Airbnb, I've booked places on several continents.

However, I'm definitely feeling the effects of their growing pains. For example, many people have bought places to only rent on Airbnb full-time. Most of these people suck at being an hotelier. It's clear people get lazy and are just trying to make money.

Think about how many hotels you've stayed at that were less than stellar? It's hard to have a good hotel with full-time staff. It's much harder when it's just you on the side, renting some place. I've been to many horrible Airbnb's that I had to checkout of early, and go find a new place last minute.

Unless, they fix this and get more people to review honestly. I think they're going to run into a lot of problems.

> Unless, they fix this and get more people to review honestly. I think they're going to run into a lot of problems.

I don't airBnB, but a friend who does was recently berated by a host after leaving a 4-star review; that host claimed (don't know how true this is) that many hosts will refuse to rent to you again if you leave anything but a 5-star review.

That and other things I've seen and heard about airBnB reviews suggest to me that there a structural problems that are likely to make it problematic for them to become honest and useful in general, even on top of the usual problems in numeric/star rated reviews that come from cultural differences in how people rate when given such a scale even when the actual substantive opinion is the same.

AirBnB reviews are massively inflated. A 4.5 average means you should carefully read between the lines of what the previous guests wrote. A 4 average means you should probably reconsider staying. Hades itself would probably rank around 3.5.

I think a better tell would be displaying the ratio of people who actually reviewed vs the ones who didn't. When people don't like a place they'll usually not review it at all.

I recently booked a place in an apartment complex, and when I arrived, there were big signs at all the entrances saying it wasn't a hotel, that it was for residents only, and anybody found to be renting daily/weekly would be arrested as trespassers. I was only staying there for a couple of nights and didn't have time for the hassle of arguing with Airbnb at the time, so I just took the risk.

After my stay, I reported it to Airbnb. I didn't want to leave a review because I didn't want to deal with the fallout if Airbnb banned the host and they knew I was responsible. Airbnb ignored the report, the listing is still active, and none of the reviews mention the problem. I wonder how many other guests reported the problem to Airbnb without leaving a review as well.

Best bet is to report it to the condo association or property management company. AirBNB will basically turn a blind eye to those kind of rentals.

That's right. Airbnb is the Uber of hotels. One place I stayed, I reported to the hoa and my host basically threatened me until I had to block his number.

Until airbnb starts cleaning up their mess I think people will eventually realize that this is just another scam in the long run.

I had a similar experience (apparently these signs are common in Airbnb apartments in Thailand).

At the same time, the apartment front desk staff and doorman were completely aware of my staying there temporarily. I showed up, asked for the keys, the front desk had an envelope, and there were no questions. They must have someone doing that every few weeks, and the signs are someone else's business.

I live in condo in Bangkok where a couple of units are being rented out on Airbnb despite the warning signs.

Most of the inhabitants are people with 9-5 jobs who wish to enjoy a quiet evening after a long day at work. Having tourists next door doesn't help.

People coming home drunk late at night, kids playing soccer in the hallway, Scandinavian women walking around topless and in thong at the pool* - Airbnb guests treat the condo building like a resort, which it isn't.

The walls and doors are thinner, there's no carpet in the hallway and there are less elevators than in a hotel.

Here's a message to everyone considering renting an apartment on Airbnb: GET A GODDAMN HOTEL ROOM!

Thank you SV for "disrupting" my quiet evening [/endrant]

* I know some might actually enjoy this, but Thailand is a conservative Buddhist country. Respect that please.

That's a great point that I forgot to mention! I will only book a place with sparce reviews (under 5 or so) if the host is very new (listing is less than a month or two old).

People actually review. Otherwise you won't be able to see what the other person wrote about you.

I know that's what they say in their reminder emails, but it's very misleading. Basically, people can't write a review after they have seen the review of themselves. The mechanism is designed to prevent retaliatory reviews.

So you get a window of a few weeks in which you can write a review. If you leave a review, then you get to see the review about yourself straight away. But if you don't review, then you have to wait until your own window has closed. After that, you're able to see the review about yourself regardless of whether you left a review yourself – because you are no longer able to leave a retaliatory review.

Airbnb aren't very clear about this at all, and that certainly pushes people to leave reviews, but it's a side effect that Airbnb play up, not the actual designed purpose of the review system.

That's not true. You can see what the other party wrote without writing a review if you can wait for the review period to end, which is 14 days -- not that long. It must be so because reviews are public.

I haven't done eBay in ages but rating inflation used to be a big deal there when the relationship between buyers and sellers was more symmetrical (among other differences from today). People took anything other than a positive with an "A+++++++++++++++++++++ seller" as meaning that the seller had shipped you a brick and then burned down your house. People got really pissed off if someone left a neutral because, say, the item was damaged in shipment even if the problem was ultimately resolved.

That episode of Black Mirror is coming to mind for me with this discussion. Once the currency of your profile rating points affects your livelihood all sorts of bizarre social ramifications start to rear their heads. The difference between a 4.5 out of 5 and a 5 out of 5 becomes huge.

The whole system of review curation that infests online markets is a problem waiting to be solved. Right now we basically have to parse reviews on the 4.4-5.0 scale because anything outside that is meaningless.

It's amazing to go read a novel rated 3 stars (because it operates outside this loop) and find it transcendently good.

Instead of asking customers to give numeric star ratings, perhaps a better option would be a short list of Yes / No / Unsure questions. Were there clean sheets on the bed? Were there any cockroaches? Did the appliances work? Etc. Such questions are more objective and less prone to inflation.

This is probably a much better way to do it. One of the food delivery company does it this way (I think it's grubhub/seamless). Three questions before you're given an option to review: 1. Was the food on time? 2. Was the order correct? 3. Was the food good? Only then is the person given the option to review.

The problem with star based rating systems is that they're INCREDIBLY subjective. I oftentimes read yelp reviews that are 3 star reviews where the person raves about the restaurant and then complains about a minor issue. I have a similar issue with app store ratings where I've had a rash of people rate one of my apps 1 star with the review text reading "I just downloaded this, I'll raise my review to 5 stars if love this app".

Also a lot of times on Amazon the low reviews are reflective of an issue with that particular sale instead of the item itself (ie damaged while shipping, etc).

Another annoyance is amazon not allowing rating separate editions of something. For example a bad kindle version resulted in bad ratings for Dune a few years ago. Sometimes certain versions of movies are bad while the movie in general is great.

Booking.com does it, btw. And I strongly prefer it.

Surprised there is only one mention of Booking.com here. It is an indispensable tool for booking my vacations. The reviews are very useful and a lot more accurate than things like yelp. I have glanced at other websites, but nothing gives me the reassurance of the legitimacy of the reviews that booking.com does.

Agree - it really helps you identify which parts of the experience are problematic. If the location is 8.7 where everything else is 9.5+, you know you'll be walking a distance to get anywhere useful. If the location is 9.5 while cleanliness is 7.8, you can consider the trade-off to be in the thick of things.

So do low end hostel sites, funnily enough. Arguably they need it more to distinguish between the places that are popular because they're clean, good value and quiet and the places that are popular because they have a very good (and loud) bar and a vendor who's very good at persuading people to go on his tours

They also require more time, and most people don't bother to leave reviews anyway.

But if you're going to review, a few extra seconds shouldn't matter

It's how the "official" reviews from Marriott/Hilton/etc all work

1. Require each person to answer one specific question per listing. Yes/no/almost

2. Ask each person a different objective question, intentionally filling in the gaps.

3. After a few people, you have an objective, relatively thorough view of the house, but you've not burdened any of your users with more than one question per stay.

The new review flow on Airbnb asks for more details about specific aspects of a listing.

Is anyone trying to solve this right now? It seems like a really interesting problem that would be really useful to solve.

It isn't just online, and it isn't just a technology problem. I recently bought a car and the manufacturer sent me a survey about the process. The salesman made sure, numerous times, to let me know that I'd be getting said survey and that anything less than a 10 meant he failed and that there would be negative consequences for him. Since I was mostly happy with the process, I gave him all 10s, even though one or two areas I would have rated a little lower. He got his good review and it didn't really bother me, but the car company lost out on some potentially useful feedback.

Some of the problems - like different people having a tendency to rate on different scales, ratings coming from different factors, etc - seem pretty amenable to a ML approach to make reviews a lot more useful, though. I wonder if anyone outside of a handful of companies (Amazon, Yelp, AirBnB, Google, etc) has enough data to make it useful, though?

Many services have this issue, that perfection is the minimum requirement. I don't understand why, given this, we don't just go to a thumbs up / thumbs down rating system. We have one option that means "fine" and four (or nine) that mean "terrible, and a risk to your business".

I know I personally gave plenty of three star reviews on Lyft before I learned better, meaning them as "no complaints". Who knows what happened to those drivers as a result. Why even invite the misunderstanding?

This could be a cultural design thing. A lot of these apps (Airbnb, Lyft, etc) are from the US, where getting full marks in school is a frequent occurence if you study reasonably well.

In France for instance, it's very rare for a student to go above 15/20 or so at the college level (I graduated in the top 10% of my class with a 12/20 average; the top ranked student, whom I was friends with, had a 14/20 average).

But when I graded homework as a graduate student for an american university, the professor told me I was too harsh, and after adjusting my criteria to match what she wanted, I found myself giving many 100/100.

The US is also where you insult service staff and deprive them of income by giving them a gratuity which would be considered generous thanks in most tipping cultures. But at least that's baked into one's understanding of the price.

When it comes to ratings used by others to evaluate, no system is more customer and vendor-hostile than one where everything that meets a minimum threshold for adequacy should be rated as perfect.

It's silly that they have a system that pressures you into lying.

In a lot of ways, yes. On the other hand, it seems like a hard problem to solve - how do you get honest feedback in situations like this, where you want to use it to both improve things overall and judge your employees/contractors? Maybe you can't.

I guess, at least a small step would be to make it so values less than the highest rating don't count against you so negatively - it should be ok to be a 3/5 or 7/10.

I wouldn't even believe the salesman that anything other than 10 will get them into trouble. I'd just refuse filling it out.

Has anyone ever tried

1. normalize reviews to make a 4 star from someone who always gives 5 stars worth less than a 3 star from someone who always gives 2 stars; and

2. make reviews secret?

I've wondered this myself. Someone with a dozen 5-star reviews is essentially providing no information and should be removed from the equation.

Reviews are a problem, but not for novels.

Perception of books and concepts covered within are entirely subjective.

However, when it comes to service or product quality, you can be almost entirely objective in its value judgment.

>Reviews are a problem, but not for novels.

Hmm. I'm willing to accept that the average reader is a more sophisticated and thoughtful consumer than for some other product categories. And there may be less overt tribalism and fanboyism in book reviews.

But, in my experience, there's still a lot of people who will almost unthinkingly give 5 stars to a favorite author or genre. (And I know some of those people who are pretty uncritical about SF books or whatever.)

Goodreads reviews are still pretty inflated. Anything around or under 3.5 or so probably has some big flaws.

I have found no correlation between the Goodreads score and my own perception of the book.

Again, novels and products are entirely different in that you're hopefully shopping for a product by its specs. You can't 'research' novels beforehand (unless you count as reading other novels by the same author as research) and they don't have any specs to go by.

> However, when it comes to service or product quality, you can be almost entirely objective in its value judgment.

No, all assessments of value are subjective (and for most services involve subjective weighting of multiple different subjective quality factors.) And the mapping from an internal value judgement to a star rating is something which is a separate subjective evaluation, and one on which research has shown substantial cultural variation along ethnic and other lines.

While that may be true for other people, I have no trouble giving a purchased object a rating for its objective value (but I do excessive research on buying options beforehand). Even if the judgment is relative to other products, it can still be objective.

The rating may be inaccurate because you can only measure in full stars, but it'll still be objective and the inaccuracy is the fault of the rating system, not me.

Objective (adjective):

> (of a person or their judgment) not influenced by personal feelings or opinions in considering and representing facts.

This doesn't seem to be as big of a problem in Japan.

On the popular restaurant review site Tabelog, a 3.6 (out of 5) is a very good ranking; there's more 3-star Michelin restaurants in Tokyo than restaurants above 4.5.


How about making you rank the places you've stayed at? You could do it by subset if there's a lot.

Or normalize the ranges between min/avg/max of the ratings given by each individual user to min/middle/max of the scale before merging the number into the total.

If you do it secretly like shadowbanning and introduce it softly by slowly blending between conventional score and normalized, it would drive a whole generation of SEO/social/share-economy experts delightfully mad. Think of all the free publicity!

Jokes aside, it might help to regard low ratings as what they are: a way to flag bad behavior, dead serious stuff. We should stop pretending that it is a game, then maybe solutions will be more likely to appear.

Fundamental challenge with star rating system is your perception of what counts as 5 star & my perception of what counts as 5 can be very different. It basically comes down to what your personal standards of something 5 star are. I am generally a very adjusting person, so minor glitches might not lead me to move from 5 to 2 star but someone could be more particular than me in which case his 5 star will move to 1 star at slightest issue.

It's a difficult problem. Survey response scales have probably been a matter of research and discussion before the web even existed.

There are particular instances (like in this case) where there are a lot of incentives for just about everyone to give 5 stars, 10 stars, or a positive and call it a day.

But, in general, there are issues with self-selection, bias toward the high end of the scale, ratings meaning different things for different types and classes of product, etc.

I had the same thing. Stayed at a really disgustingly dirty place. No toilet paper, no bed sheets, no curtains on the windows. Gave it a bad review and had the host rip me apart about it. "What the fuck did you expect? I would feed you grapes?".

>I don't airBnB, but a friend who does was recently berated by a host after leaving a 4-star review; that host claimed (don't know how true this is) that many hosts will refuse to rent to you again if you leave anything but a 5-star review.

Airbnb pushes hosts really, really hard to achieve >80% 5-star reviews. If <80% then the listing gets pushed down the rankings and you lose SuperHost status.

Some guests never give 5-star reviews for whatever reason. They really, seriously hurt the host. If your average is >4.0 (and it should be over 4.5) then any review less than 5 stars will lower your rating.

I worked in a restaurant and was trying hard to get our TripAdvisor ranking higher. One quiet night a guy comes in so we chat and give him some great service, special dishes etc. At the end of the meal he said it was excellent and had left us a 4 star review. I said "Dude, our average is 4.8 stars, you just made us look worse."

In the end we got to #2 in our city. The #1 was a cafe that was only open 7 am to 4 pm. All you need for 5 star review in a cafe is a hot coffee, so we settled for #2.

But AirBnB reviews don't work like that. Even though you leave star rating, nobody sees it (I don't know how it looks like on the host side though, as I only used it as a tenant). Only feedback traceable to you is text you write, but you can be honest with stars. And you see compound rating on the property page, which they only show when there's enough reviews (so again, if you left your review first, they can't see what it was either). I think the system is pretty good.

I have been an Airbnb host for a while and if you follow your reviews closely, you can tell when someone leaves you low star ratings. In the host dashboard, you only see aggregate stars, but it will break it down as x 5-stars, y-4 stars, etc for each category, so if you know that before your last guest left a review you had 20 5-stars and 3 4-stars and now you have 4 4-stars it's pretty easy to figure out where that came from.

I'm a host as well, and their new stats section breaks down the reviews in detail. You can see who left what stars. Don't know if this works the same for the traveler.

The review system for AirBnB has gotten more complicated over the years.


> cultural differences in how people rate

This is an interesting problem, and yes, needs to be accommodated some how. I used to manage a SW product and service offering that had customers around the planet. We sent out quarterly report cards in order to ensure we were meeting customers needs. It was As and Bs exclusively except for one country that was Ds and Fs for the same level of quality and service.

Some type of calibration or break down is needed.

In the Silicon Valley world where Trump is the Silicon Valley candidate except for ideology, that calibration would be manipulating everything to average to 4.5 stars while appearing random.

Isn't that why AirBnB is pushing the Instant Reservation system really hard?

Nah, that's mostly to reduce the long tail of rentals.. in some cases it takes months to turn a person into a customer and book now/instant reservation helps shorten this cycle and reduce off platform fishers/scammers.

And it helps address the racism issues they've been having trouble with.

this is why Uber punishes drivers who go under a 4 star average. 5 should be the default.

Well don't go there again then? - AND lower the score and report the user if those are possible.

All of my bad AirBnB experiences were ones where there were no actual tenants. The ones where it was an actual non-professional bed and breakfast, as the name implies, were fantastic.

I travel so much that consistency is important and that is what hotels offer. I see AirBnB as an inferior option for hotels, not a way to meet new friends.

I think the idea that AirBnB is going to kill the hotel industry is way overblown - professional travelers (not the startup crowd largely) like consistency above all else.

AirBnB is inferior now because those hosts aren't necessarily designing it for business travelers. They don't have the insight to accommodate that audience. Or maybe the places you are booking don't get a lot of biz travelers.

I'm specifically only hosting in destination places because when people are on vacation they are inherently happy. Not saying you are unrealistic or unhappy, but it's a different mindset and you have different needs.

So yes I agree with you - it takes a lot more effort for you to have a good, consistent experience as a business traveler because you have to spend time wading through listings.

But there's no reason why AirBnB can't solve that by creating a standard for what business travelers want - perhaps a business superhost designation. I don't think it's overblown for them to put a hurting on the hotel industry. All it takes is for them to take a decent chunk out of RevPAR and many will be done. Hotels typically have a 5 year cycle and they've been having record years. So it's definitely overblown as of now. But killing the investments in hotels is more about what happens when you steal share during the bad times. And also - what happens when there's a good AirBnB rewards program to lure business travelers and they can make it easier for them to book and be consistent as you mentioned?

The hotel industry will remain, but there will be a lot less inventory and operators may decide they don't need to fly the big brands or can't afford the fees.

I'm specifically only hosting in destination places because when people are on vacation they are inherently happy.

Perfect, and I'll bet you have a great place. See my previous statement.

But there's no reason why AirBnB can't solve that by creating a standard for what business travelers want - perhaps a business superhost designation.

Supply and demand. To curate that hard, you'd have to have a ton of supply of business focused programs. Might as well just open a hotel at that point.

My point was that a lot of hosts cater to people on vacation because that's the bread and butter for them and AirBnB right now. They're well positioned for vacation rentals, not more-demanding business travelers at this point but they're getting better. They haven't cracked that nut; but they could and they are already trying.

I just looked and they have a section for business travelers and for wading through listings [1]. They already have Business Travel Ready Listings [2] which was what I was suggesting. Have you used that or did you go through the front door for your bookings? I didn't know it existed and

Separately - there are advantages of an AirBnB that are more friendly to biz travelers already, like being able to have more flexibility for check-in, free high speed wi-fi, kitchens in almost all listings, better work spaces, etc. So it's a matter of ironing out a few things to make booking easier, adding a good rewards program, and ramping up marketing to compete and steal market share.

[1] https://www.airbnb.com/business-travel

[2] https://www.airbnb.com/business-travel-ready

Agreed. For business I always prefer hotels because I know what to expect and it always has the services I need. For vacation (especially with large groups) AirBnB is much better because I'm able to book more custom housing (entire houses, multiple rooms connected with a shared space, etc).

It goes both ways. I'm an Airbnb host and renter(1). Mostly I have had good experiences, but I have had more problems on the hosting side lately. I take pride in my property and lived there myself for years.

But I've gotten guests who nit pick everything and then ask for a refund. I had one guest ask for a refund because there was snow in Tahoe, and they stayed for the full time anyway. Another guest wanted a refund because my shower curtains were expanding tension rods and not permanently mounted.

Generally it still makes sense for me, but running an Airbnb well takes a lot of effort. I have a great support team, and I still struggle at times.

(1) https://www.airbnb.com/rooms/12247150

Tahoe is a tough market. Prices should be way higher for what you get in my opinion. I'm not in Tahoe but I can sleep 16+ people at my place and I have more problems when I have the price lower.

I had guests complain once that there were a few things in one of the bedroom closets (still tons of storage for their stuff), some things in a small pile in the garage and some food in the cupboards (usually have ketchup, hot chocolate, popcorn, etc).

I had my head of turnover go over and chat with them in person and removed all the stuff just to be nice. She told them that some of the things were destined for Goodwill and then the lady who was complaining started picking through it and her tone completely changed! They also showed up with a small towable U-haul full of stuff and a crazy amount of canned food for a short trip. This was a big trip for them.

So sometimes people are just unrealistic. Complaining about some things in the bedroom closets - you're staying at my house! And the stuff in the pantry is for you to use!

However, some people are spending a lot more of their money proportionately and they have different expectations because of this. They want everything to be perfect. Maybe they're being guilted by their spouse or family for spending that amount. They'll complain about really trivial things.

I don't really like instant book because anyone can book. You have to do legal discrimination - AirBnB doesn't do much to help and hosts are often hesitant to leave bad reviews on renters for some reason.

We had a group of 30+ sorority girls message us wanting to stay. Legally we're approved in our area for 16; if you're doing it right and you pay your TOT taxes and are registered - you get approved based on square footage. So of course we declined their request. If they instant booked, I'm not going to be able to kick them out, I'll get more wear and tear, and I could be fined by the city or get my license revoked. Not worth it.

I see why Airbnb is pushing instant book but not participating helps me minimize risk.

Wait, can't you enforce the number of guests with Instant Book?

People lie. You still get negative feedback if you cancel a guest that is obviously lying.

Sure, you can follow up w/ airbnb, but since they outsourced their staff to a Clearwater, FL and Ortigas, Metro Manila call center their SLA dropped from 24 hours to 2 weeks.

This is changing the subject slightly, but Tahoe, especially S. Tahoe, is a total bargain. There are few destinations which offer what Tahoe does for the price. I will never understand why other alpine destinations can demand higher prices. There is quite a bit of supply in Tahoe though.

I do think people have unrealistic expectations, but my house is pretty damn nice. My cleaners are amazing. I'm pretty happy to stay there myself.

Yes I agree. Prices should be WAY higher for what you get. I looked at buying in Tahoe but didn't because I was buying for cash flow, not strictly for a second home. There's just too much high quality inventory and the amount of snow can be an issue for guests. It's a magical place though and if I lived closer I might buy regardless of cash flow.

I don't know of a better value for the consumer. One of my family members purchased a place up there about a year ago and she's starting to do better but it's been a grind. She told me that her renters are often unrealistic. I find it odd given the amount of money up there and the low nightly price but it's probably just the supply and the fact that a lower price means people aren't forced to really evaluate the value as they should. That and the fact that primary housing prices are so damn high, that when people get away they don't/can't spend a lot.

I've rented thru AirBnB twice in the Tahoe area and both times it had been absolutely phenomenal. I mean unbelievable in terms of value for what I was paying. The competition there must be epic.

You have a head of turnover, which implies other employees under them, and you only rent out your primary residence?

It's my second home which I rent out about every weekend in the winter peak season. I say head of turnover because she runs a property management firm but I've contracted her operation only for turnover. The property management firms want too much % for the effort which is mostly being decent at yield management and being responsive on AirBnB and VRBO/HomeAway. They used to get 20-30% but with AirBnB and HomeAway, it's moving downward to 10-15%.

My wife is a superhost on AirBnB and it's not challenging - you just have to be responsive. The challenging parts are when you have difficult guests but I also pay my head of turnover to handle those issues a la carte if needed locally, otherwise my wife handles remotely.

It would be very hard to turnover my place without using a company that has staff due to it's size. Laundry takes about 5 hours alone. You have to have multiple sets of clean laundry if you're doing it right. I have a license and pay 10% TOT tax. Other operations aren't registered, don't pay hotel like taxes and don't replace with clean sheets. I did 80k in revenue on one property alone last year and I'm buying another soon. There's a lot of opportunity but you have to buy it right, meet guest expectations, and be compliant.

Clearly those are lame asks from the renter. Does Airbnb assist you in those situations? If you forward those requests to Airbnb support will they prevent a bad review from showing?

Wifi network and password in the Airbnb listing description, is this a normal thing to do?

I had one renter complain that they couldn't get the wifi network and password (and again ask for a refund), so I just gave in and put it in the listing. Airbnb has a way to enter it securely, but most guests never figure it out. Airbnb should probably text the wifi network and password automatically when a property is booked

Update: I'm on phone with AirBNB support about this right now. Frankly their phone support is pretty poor, eventhough I'm a "super host." They can't seem to answer basic questions about how the wifi network and password is provided to guests

Dealt with similar issues as both a host and a guest.

The biggest problem to me is poor expectation setting. There are hosts that run BnB quality services, ones that run a mock-hotel like you described, and ones that just rent out a spare room in their apartment.

As a guest, it'd be great to know what I'm walking into. As a host, having guests that understand they are staying in my home and NOT a hotel would be great.

My guess is, dividing up the listings into service tiers would lead to legal issues (like you saw last year in NYC), but it would surely help with the guest-host relationship.

AirbnbX, Airbnb Black, Airbnb Pool

You can filter on entire space vs just a room

>As a guest, it'd be great to know what I'm walking into. As a host, having guests that understand they are staying in my home and NOT a hotel would be great.

Usually, the description and previous reviews gives you all you need. When it doesn't, I simply ask the host. It's never been a problem.

>Think about how many hotels you've stayed at that were less than stellar?

Very often. I'm counting motels, because I'm comparing the same price points.

My experience with AirBnB has been both positive and negative. For the negatives, I never felt I got less than what I paid, and motels would have been more expensive. For the positive, it has always been cheaper than a motel.

I got to stay in downtown San Diego, renting a whole apartment, for a really good deal. No hotel would have been that cheap.

It was a nice apartment, not a super cheap-o place. And free parking.

I will say I don't demand too much. I'm not the type of person who wants fancy service. Just make it clean. And offer basic stuff (tissues, soap, etc).

Yep, my only bad Airbnb experience was someone who was doing this. They were renting out their place in Eastern Europe and living in London. There was loud construction on the entire building, for my entire trip. Had that person lived there, I'm guessing they would have known about that before allowing someone to book it.

Once people make careers out of this, it really ruins the spirit of the service and then it's not much more than someone getting around paying hotel taxes.

> and get more people to review honestly

This. Something I hate is when people think that 5 stars have to be given "by default". For me, an uneventful stay in a clean place should mean 3 stars. If the place is specially nice or the owner was really kind, 4 stars. And 5 stars should only be for my _favourite_ places.

I stopped doing airbnb when, for several times, I booked 4.5 star places and they turned out to be honestly crappy.

People often rate 5 stars but the comments always describe the place in details.

Typically the cheapest places are also the ones where people don't have high expectations so they will rate 5 stars but leave a comment describing the quirks of the place

Anecdotes are cool, man.

I've also Airbnb'd over several continents. I've had one sub-par experience out of many stays.

I think with Airbnb it's also "you get what you pay for"...

My experience has been that price is a better predictor than reviews, which I think is what kilroy123 (and you) was getting at.

I booked a few AirBnB's in Southeast Asia and it's usually a sketchy experience. A lot of the locally owned hotels contract out to sketchy dealers in Australia or China who handle the bookings for them. I think it's technically against the TOS but that doesn't hold much weight around there.

> I'm not surprised to see Airbnb became profitable. They've expanded everywhere.

Uber also expanded everywhere and it only increased its loses. It could be that their business model is not based on subsidies borne by investors as in case of Uber.

Having a good ecology of ratings and reviews is definitely important. It's probably a hard problem because you're rating people, Sasha or Adam. It's rude to say bad things about them publicly because they didn't had dishes in the sink or whatnot. Civility is important. OTOH, ratings and reviews need to convey information.

As a user, Id rather they err on the side of amateurish. Airbnb can't be the whole market. It works best for recreational travel. Even people who buy or rent to Airbnb generally do it on a small scale.

When they started out here in India, they had professional photos for all properties.

I think they don't have that requirement anymore because most properties I see locally have smartphone camera quality pictures with improper lighting.

I get that it's cheaper, but after a certain age, I just want to be comfortable on a vacation, not have to think "will it be terrible?"

The only exception is if the property offers something hotels don't (like a lodge in the forest or a rooftop apartment overlooking the Dome of the Rock in Jerusalem)

They could fix the review process by weighing the review by the amount paid for the stay (or some similar formula). So your buddy who "pays" $20 and then writes a fake review would have their review dwarfed by real users who pay the full price.

An interesting question is: is it better to optimize for more inventory or better quality?

Oh yah I feel you. I often tell people that AirBNB offerings come from a bunch of amateurs, amateur hoteliers that is.

I believe rating take care of rooms like this automatically, it just take a while.

A shame that they didn't raise this money through an IPO. I'm afraid of how long unicorns are staying private: it's a big bummer for their employees and early investors. It'll be a tough sell for early employees of the next batch of unicorns if Uber, Airbnb, Palantir, Dropbox, etc. stay private for 10-15 years or more!

Dropbox and AirBnB have already been private for almost 10 years! (Palantir - 13!, Uber - 8)

I was at Dropbox for a while and left in no small part because of the frustrating lack of potential liquidity on my equity.

i expect companies that remain private while dangling equities for it's employees to create an opportunity for them to sell privately - e.g., a liquidation event, where the buyer is an investment/VC firm that wants in. It's good for both parties - employees get a liquidation event, the VC gets foot in the door, and founders aren't diluted.

I guess, though, in this case, the employee is the party without power, as they are offered a price (which is probably lowballed, since they don't have a choice) in a take it or leave it fashion...

wow ... did you give up all your vested options? or at least buy a bit of them?

I don't know, something feels off about Palantir being around for 6227020800 (13!) years...

I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this

There was a very "insider baseball" moment in 2011 with regards to AirBNB and a well known investor "discussing" taking money off the table. Note, the investor was basically saying that if the founders get some liquidity, you should offer the same to employees. I will never forget how much that raise my esteem him. [0]

So yes, if they were willing to do it in 2011, I am sure that they are doing it in this round too.

[0] - https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbn...

Thanks for sharing that link. Always good to see which investors look out for employees and which founders don’t. Taking a dividend out of the company when most your employees shares are options and not eligible for a dividend is definitely not team spirited. The more transparency to these things the better.

To me it sounds like an argument the investor would make to leverage founders not getting equity.

Investors get paid before employees. What if airbnb had answered to him "we will do that, but also, you cannot make any money at all until employees get it, otherwise this shady way of things will harm you long term".

Well, the investor made it quite clear in his note that he wasn't disagreeing with taking money off the table:

> My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone.

Coupling one concession to a requirement makes its harder for it to happen: "Sure, I will give you a salary raise if you can commit to working any saturday i tell you to".

Think also that the least money the founder gets off the table, the investor gets lets capital into his investment itself, he is interested in getting as much money into the business itself, not into the founders pockets.

Arent the investors preferences clear in this point? HE prefers the founder not to get money off the table, and puts a requirement on it.

Another way to put it, he recommends a course of action, but is he the one adding extra money so that course of action goes to his preference? If he is, then by all means its at least a great gesture.

Addition: and also, think of it the other way around. What if a founder told the investors "you are not getting any money unless my employees are getting money as well". Becuase thats not how the deals are structured nowadays.

The company isn't compelled in any way to allow this though, and is actually disincentivized from doing so because it increases the probability of key departures as those people are able to extract some value.

If you're in such a position, you better hope that your founders _really_ like you.

I believe most do though, but with a right of first refusal. In which case they will buy them of direct you to their preferred buyer. Source: I have done this and my conversation with the broker for the secondary market who handles a lot of this said it is quite common and that in fact other at the same company I was at had done so. It might be frowned upon internally but you have to look out for yourself. Staying at a startup for 8+ plus years isn't very realistic for me personally.

Many companies have periods of time where you get an opportunity to cash out a percentage of your equity. It gives confidence to early employees that the company has their back and they aren't really disincentivized to leave because they still have a majority of their equity "locked".

How does secondary market transaction work, in these cases? Is it only when a round is raised that shareholders can take money off the table, or does it ever happen between rounds as well?

Can you ELI5 exactly how any employee "takes money off the table" --- I have always been farked in my dealings... so how do I profit? What is the best strategy?

If the company allows it, they will facilitate transfer of stock from employees directly to investors as part of a funding round.

If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation to stay private. It blocks out any negative opinions' effect that you'd have if public via investors shorting / betting against the company.

This probably leads to an overly high valuation it wouldn't hold up to on the stock market, though, (i.e. Uber) so then the company feels pressured to stay private until they can justify that overly high valuation. In Uber's case, though, they'll keep raising money at absurd valuations and keep the cycle going.

Palantir is an exception: If they were public and had to disclose much information, their value would plummet, so it'll likely stay private in the foreseeable future.

Isn't that bad for employees with stock options though? The market could tell them how much those options are really worth.

Completely, and a small part of why employees are cautioned on here to take salary over equity.

The market telling them would be a loss of billions for the investors/founders, both on the value of their own equity and the increased equity they'd have to offer employees (many exceptions apply, but this seems to be the case particularly with startups who lack an easy path to profitability but can show substantial growth).

Palantir will regularly buy its employees' equity fwiw.

But without the market you could easily be getting ripped off selling your shares back... They're not doing it out of the goodness of their heart.

Becoming a public company has it's own set of issues, though.

Yeah weird how people hold up IPO as a holy grail. Its the worst thing to do if you are actually passionate about the company, if it is your labor of love.

Its the best thing to do if you want to make a lot of money from your money machine and are largely apathetic about the outcome of the business itself. Easy enough to find the next MBA graduate to feign passion for you while they are just trying to sell the company.

> Yeah weird how people hold up IPO as a holy grail

Because employees actually gain out of it. That's also a benefit as it gives more people financial freedom and they can go off and do their own companies. Instead these people get locked in to AirBnB for years.

Companies always have the option of giving dividends to common stock shareholders, buying out shareholders, simply giving bonuses or any number of things if they didn't continue to reinvest all capital and pursue losses.

Private companies even issue bonds on public bond markets, these can be as large or larger than equivalent equity offerings on the stock markets.

Don't let the mechanisms pursued by a handful of VC firms in Silicon Valley distort your understanding of capital formation.

Prime example is Cargill. $100B in revenues, privately held.


If any of these tech companies decided to just go with 6 months of positive revenues, they could issue bonds in Europe representing waaay cheaper capital than VCs and not have to worry about it for the next two decades.

Yeah I lean toward this view as well. The point of an IPO is to raise capital. But when you do this, unless you own 51% of the company or there is a small group of like-minded individuals that own 51% of the company, you can wind up losing control and instead of doing things Wall Street doesn't like, you're going to have to focus on profitability and pleasing shareholders.

It's one route to take, but not the only one.

Yeah, but AirBnB took that route when they got private investors. They expect to get their money back with a good ROI.

That would be through an IPO or acquisition, either way you loose control of your company.

True, you lose some control, but a small board of a private company is much easier to convince and compel on long-term vision and plans than the general public.

why is this downvoted? every company I've worked at that has IPO'd companies has been, in my experience, soul-sucking.

My experience tells me Airbnb is in big trouble.

Last year around Nov, I tried to book a Lake Tahoe cabin for 2 families (1 is mine, another is a friend's) for a simple trip for our young children.

I booked via Airbnb few days in advanced. The day before driving to Tahoe, we even called Airbnb to confirm that the listing is OK. The host accepted, but didn't answer to any of our questions.

The next morning when we woke up, we packed everything, then out of bad habit, I opened up the app and checked again. I was caught on surprised that the host cancelled, just 4 hrs before our suppose arrival time. We were very shocked and pissed. I was booking for a friend's family and it was very embarrassed. I immediately contacted Airbnb support, and all they call do for me was to give me $100 back for my NEXT reservation. And they couldn't do anything about my existing. I thought they would put a penalty on Airbnb's host who cancelled on us in less than 24 hrs, but they said they don't have such policy. I was upset because I knew they had such policy for the renter. They also mentioned the best they can do is to find me the next 10 houses to book in the similar location, but cost 3x more as it is bit last minute. They did not anything else to help me.

I was very upset and went to Homeaway.com and found something immediately, even cheaper than the original reservation I had with Airbnb.

My story was a clear first-hand witness on how I believed Airbnb failed at customer service, and will be very difficult to become a successfully company.

Sorry you had that bad experience (I would be pissed too), but the logic of (you having a singular bad experience therefore company will likely die) is next to baseless.

No. The point is that there is zero protection for customers getting cancelled by the host at last minutes. This would be about the worst thing that can happen on your hard earned vacation, especially if you are traveling with families. Customers can't even leave a review! All the while there is asymmetry that customers will be punished if they cancelled at last moment on host.

Sorry, I should've been clarify a bit more.

The reason I don't believe in Airbnb simply because they lean toward the hosts, but offering no protection for the renters. In some cases, they have policy only applies to renters, but not at the hosts.

Last I checked, the host cancelled on my reservation is still listing and hosting. I believe they can do better. Even Uber lets both driver and rider rate each other.

this is for a vacation rental. Most of Airbnbs listings are not that (Homeaway or VRBO is the leader)...

What are they?

We haven't had a recession in 8 years, and the postwar average time between recessions is 6 years.[1] The stock market's overall PE ratio is well above average.[2] With Box and Snap, the market demonstrated it is starving for tech IPOs -- even if a company is losing money and entirely based on a millennial fad.

So why in the name of sweet baby Jesus would investors, founders, or anyone else delay an IPO at this point? Can anyone explain it?

[1] http://www.nber.org/cycles.html [2] http://www.multpl.com

I think the founders AirBnb and Uber are afraid to transition to being legit companies. The lack of IPO is just a part of it.

Public listings or lack thereof are orthogonal to corporate legitimacy. Cf. Enron and SAS.

If you're a profitable private company, aren't you legit?

In some sense, yes, but check out Sarbanes-Oxley: https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act. Public companies are under much more scrutiny in terms of compliance, and they have a certain type of pressure to post good quarterly results that private companies don't.

What is the incentive to go public in today's environment other than an initial fundraising, and an unpredictable monetary bonus for employees?

Edit: Appended another question.

That is how most investors cash out and turn a theoretical return into an actual one.

It also makes the value of your corporate equity much clearer which can enable acquisitions.

Depends. I think with the increased scrutiny as a public company, you have much less wiggle room for creative accounting tricks.

Not an answer to your question but semi-relatedly Scott Sumner had a post this week where he predicts that recessions will be significantly rarer in the future.


It's interesting to think about.

It is interesting, but "this time it's different" is a song I have heard before. I am deeply disconcerted at extending the time between recessions; would much prefer shallower corrections more frequently.

These predictions are pointless. Economy is not driven by extrapolating past charts, it's driven by outlier events. The thing about outlier events is that no one can predict what they would be, except that they are bound to happen. A magnitude 9 earthquake in Northwest, fraud in big company, scandal in administration, or war with Iran - all these can totally change economic outlook.

His assertion is that the Fed is now better at controlling the money supply to more quickly respond appropriately to outlier events.

Recessions are always and everywhere a monetary phenomena.

I would think that being well overdue for a recession and being in an objectively overvalued market would be a good reason to not want to get in now lest you be the one to IPO a week before judgement day. I heard on NPR today that one, if not the only, bull market to last longer than the current one ended with the dot com crash.

Because statistics are not laws of the universe? Because you may be misinterpreting the statistics? Because they're waiting their price to get higher in maybe 1 year, or maybe 7 years?

I would guess that its a combination of Sarbanes-Oxley and the glut of private capital available.

Is there a good explanation of the Sarbanes-Oxley issue somewhere? I tend to doubt procedural stuff like that could really be responsible.

Sarbanes-Oxley isn't solely responsible but it's one factor weighing on the scales. There is extra administrative overhead which costs real money, plus it exposes the company's leaders to more potential liability.

The bill was well intentioned. But it has had the unintended side effect of locking retail investors out of many of the highest returning investments. There is overall a shrinking number of companies publicly traded on US markets as more companies merge, go bankrupt, go private, or never go public in the first place. This is a growing problem for defined-contribution retirement plans.

> locking retail investors out of many of the highest returning investments

maybe there's a narrative that by preventing retail investors from investing in high return investments they have also protected retail investors from high-risk investments (if we believe the returns are proper risk premia!)

I don't know of any good resources off the top of my head, but IIRC from law school, one of the main objectives of Sarbanes-Oxley is to get executives on the hook for the accuracy of the financial statements they sign, and I believe it also requires that they sign the financial statements.

I don't know enough to have an opinion about whether it's affecting IPO decisions, but I think it's more than just procedural stuff.

Maybe the smart money is on a market shock in the next several months and IPOs are leery of something terrible happening during the window between announcement and implementation. We do, after all, have a very strange political situation.

I've definitely had mixed experiences with AirBnB. When it's genuinely someone renting a spare room on the side, it tends to be a neat experience; I had several of those traveling in Australia solo and it was a good way to get to know the area. I also had positive experiences in Rome and LA with similar arrangements.

When it's just landlords short-term renting a furnished apartment on the side, the experience tends to be subpar. The worst experience I had was in Chicago, when it was clearly a condo owner breaking the terms of the HOA for their building--they told us to say that we were 'just visiting' the occupants of the apartment, not to unlock the door if an actual resident was nearby, etc. The general feeling of "sneaking around" was unpleasant.

It's a mixed bag--the original idea of home sharing is a great experience, but clearly not the most profitable aspect of their business. I wonder if they could figure out ways to support that better...

The hogging of VC funds by airbnb, uber, and many other not startups is super unhealthy for the startup ecosystem. The public markets will eventually punish these companies for valuations that lack transparency. Airbnb is on the way out with their current short term renting business in most large cities. It's illegal and the quality of service is suffering dramatically. Supply side quality is on the way down. Demand side quality is terrible too. To justify their valuation they are opening up the gates to terrible customers. I get it, they may go into other markets with all this money like the long term rental business or tours business or airline flights.. maybe hotels? Reality is they are not going to be great or better at any of these things than the current companies in those markets and certainly not by any significant degree to own the market.

If you are down voting why not offer some opinion so it can be a discussion..

Upvoted but sadly you can't take YC prodigy and downvote. It's a lose-lose propositon kinda like staying in an airbnb. Say something nice about YC or don't say something at all.

Small minded to think or act like a cabal

Small mindedness sadly doesn't prevent wealth and power accumulation. Depending on your view, YC or Trump both prove this.

I didn't downvote, but your claims could use some justification. What makes you think quality is declining? Personal experience? Second hand anecdotes? Media stories?

Personal experience. It's fairly obvious if you have been using the service for any length of time in cities like SF, NYC, LA, Berlin, Paris, Barcelona, really any large city that has banned or curtailed the legal offering of the service. The result is you have a lot more people offering properties where it is banned leading to awkward situations for customers. The listings are not permanent and get removed as soon as they receive a bad review. There are no checks on host providers at all. I actually think it is not any better than craigslist at this point.

Have their early employees been able to cash out yet or are they basically trapped into either losing their hard earned options from work done years ago or staying still more years at the company?

they can always exercise their options, buy the stocks, pay the taxes on them, and then just sit on illiquid assets until the IPO or their own deaths.

oh...it's not a very appealing prospect you say? well, hmmm, errr, awkward.

My AirBnB experiences have all been poor, despite staying exclusively at 4.5/5 star reviewed properties. The lack of service isn't worth the extra savings or superior hardware. Hotels are so much more comfortable due to the constant service/follow up in case anything goes wrong.

I'll admit, I'm pretty amazed that AirBnB has succeeded.

I never thought that injecting even more uncertainty into travel was a winning proposition, but they've clearly found a willing market.

Perhaps a better way to look at it is "There was an underserved market that had a higher tolerance for uncertainty, and AirBnB seized the opportunity."

I'm finished with Airbnb as the places get shabbier with each booking. Linens are threadbare, kitchens have dirty/stained pots & utensils and suddenly 4-6 flight walk ups without a mention in the listing. Zero customer service to boot. I'll pay the few dollars extra for a hotel.

Airbnb's growth as it relates to stays to per a night has been 500k since at least 2014 and as recent as mid-2016. In 2015, they stated they wanted a million stays per a night by 2016.

Any reason to believe Airbnb is really growing?

I helped my parents rent an AirBNB where the people owning the house were still living there but it said nothing about this in the ad. After the owner gave us the keys, a few hours later somebody opened the door, and I seriously thought it might be a robber or something. Turns out it was the son of the owner who was living there, and basically my parents were renting a single room inside of their house. It was very uncomfortable for everyone.

I wonder if they’ll still be profitable as more and more cities become aware of the negative side effects of Airbnb use and implement various sorts of bans on types of commercial Airbnb activity.

A researcher at UBC estimated that commercial operators were responsible for generating 77% of Airbnb revenue in Vancouver. The City of Vancouver is planning on legalizing Airbnb, but will ban commercial operators that rent out entire residences. This will likely significantly reduce the amount of commercially operated Airbnbs in the city and this could result in significantly less revenue that Airbnb generates from Vancouver.

If this researchers’ numbers are at all reasonably accurate, and other cities have similar levels of commercial activity, and the trend of cities banning commercial operators catches on, that would be a major impact on Airbnb revenue.


I spent 12 months as a digital nomad in SE Asia and AirBnB was a godsend for me.

If you're checking in at some place you've never been to in the middle of the night, then of course a hotel is a better option. Likewise if you can't be bothered to tidy up a bit before checking out, then a hotel is the way to go. Personally, for short stays, like a few days or a weekend, I'll go with a hotel. But for anything of a week or longer, AirBnB is terrific.

Through AirBnb I was able to book very nice condo apartments, with awesome amenities (rooftop swimming pools, brand new gym facilities etc) and very gracious local hosts who showed me things I never would have been able to discover on my own. Moreover, with AirBnb I don't have to worry about landlords ripping me off like I would if I actually signed a rental contract in a foreign country.

I think most of this criticism is rather petty. AirBnb isn't a hotel or hostel replacement and it isn't supposed to be.

If they are already profitable, why raise money again?

You can be profitable but still be burning cash in a few different ways. Profitable looks only at profit, not at cash flow, so it only means that "booked revenue in a year > booked costs in a year". Keep in mind that capital expenses are not costs, but are cash expenses. Also, some revenue in a given year might not be a cash transaction, because even if you booked it in that year, it might take much longer for you to actually get paid.

Some of the ways to burn cash:

(1) Expand operations: hiring people, hiring external services, leasing offices, leasing capacity, etc. All that happens far before any additional revenue comes in.

(2) Capex: capital expenses (buying servers, equipment, etc.) require cold, hard cash (or debt, which "costs" more than equity for a startup, so it is better to do equity funding).

(3) Working capital (current assets - current liabilities): some companies have positive (they receive the revenue cash before dispensing the costs cash) working capital, using their customers' money to expand the operations, others have negative working capital, requiring external funding to expand their operations.

My guess is that (2) and (3) don't apply for AirBnB, they are not a capital-intensive business, and as they get paid when the booking is done but pay out when the guest arrives, their working capital might actually be positive. So they probably need it to expand operations.

Regarding #2, I don't know what AirBnB does, but many web software companies capitalize their software expenses, e.g. all the development of _new_ features and functionality of their website and app. It's possible the majority of costs for software developers, designers, etc. is treated as capex.

That is a pretty strange way of defining profitable where you are losing money.

Accounting is complicated. For example, let's say you buy a box for $50, pay it right away, then sell the box and deliver it on December for $100, but the buyer only pays you in January.

Then you need to publish your results for this year. How do you do it?

P&L statement:

Revenue: $100

Costs: $50

Profit: $50

Cash flow statement:

Cash from sales: $0

Cash paid to suppliers: $50

Net cash flow: -$50

So you had a negative cash flow, but was profitable.

Think of it this way. Imagine if airbnb took its 1 billion dollars and bought bars of gold, and put those bars of gold in a vault.

Is airbnb losing money, because it now has 1 billion dollars less in cash, and 1 billion dollars more in gold bars?

No, it is not.

Actually, IIRC (and correct me if I'm wrong) for accounting purposes, gold counts as "cash & cash equivalents", so if it bought $1B in gold bars, AirBnB's cash wouldn't change.

Gold as a commodity (bonds). Gold bars are not liquid.

Bonds can be considered cash equivalents if they have short maturity.

Gold is highly liquid, and from what I've read, it can be considered (in bullion) cash equivalents, except for banks, that due to Base 3 regulations can only consider part of their gold holdings as cash equivalent for liquidity purposes.

If you can raise money on great terms, it's usually in your best interest to do so. Maybe they want to build up their war chest as they see increasing regulatory hassles, more competition, and a possible downturn in the market. I'd also guess they are expanding their scope now to more expensive endeavors, as they are building physical hotels now (and probably many other things they haven't announced yet).


Wow, that is an interesting move. If that is the route they are going after, it is more understandable.

Profitable can also mean $1.

Their business operations are cash flow positive (such as we see with Amazon) but they want to raise more money for capital investments such as to expand.

> That's EBITDA profitability, according to the Wall Street Journal, meaning that expenses like taxes are not included [0]

So it's profitable - as long as you exclude such meaningless items as "interest, tax, depreciation, amortisation". Nice.

[0]: original post.

Expedia's market cap is at 19B today. 31B is much more valuable than it.

Every time I see AirBnB's latest valuation, I compare it with Sabre (bigger, higher value hotel room inventory... and they've also got a profitable airline distribution and consulting business). SABR market cap is around $6bn

So when we say '$31B valuation' what does that mean in real money? Lets say that I am the founder of airbnb, how much of that money could I get when I sold the business?

I booked a spare room in London a couple years ago in the Mayfair neighborhood, a quite expensive area. The woman who owned the flat wasn't the one in the photo, and a number of things about the flat seemed rather odd. Long story short, she was a prostitute.

> Mayfair

You can upgrade your description to "most expensive area in central London". It's the final, £400 property on the London version of the Monopoly board, and is still worthy of that position.

The woman would probably prefer the term "high class escort". I think it's supposed to mean you can have a conversation afterwards.

Example -- NSFW, obviously: http://www.hautegirlslondon.com/

And they are still being called a startup...

Another company that shouldn't be allowed to exist.

Airbnb is a "disruptor" apparently and a Unicorn. What did they disrupt? The housing market for sure in certain cities. 90 day booking restrictions for example (London), banned in Berlin etc.

The Airbnb service startups now have limitations on their business plans and on the ground issues, residents abuse and legal challenges. This is disruptive and not necessarily a good thing.

Airbnb has opened up new tourist routes and brought income to airlines and local businesses, so the economic contribution has been interesting.

But what is the real message. "Live like a local". I know personally that even if you live in a foreign land for several years it's hard to live a like a local. Its smart marketing, the offer of shared spaces and local people. This was the shared house approach it all started with. This is long gone. Head off to airdna.co and check out the stats on whole apartments. It's a misnomer and still carries through in the press.

Is it better than a hotel? Depends: If its more space and similar price then maybe, always depends on this vs location, its quality, is it really licensed or allowed, and how convenient is entry.

You can of course have parties that hotels may frown on! Hotels have front desks, are quality controlled and for most business people so much more convenient with bars and breakfasts. They also tend to have well organised support and be in convenient locations, You can always use Uber to get a cheap taxi though...Uber and Airbnb, neat merger.

As this thread shows all the latter can be a problem and hence the "SuperHost" status.

Do Airbnb love Super Hosts? Yes of course. Reviews pay booking dividends . But Super Hosts don't always let their places all year and being smart cookies realise being paid at checkout, being charged a commission and the guest paying up to 12% extra could mean more money in their pocket if they did it direct.

Many are direct marketing too and certainly doing rebookings direct. Do Airbnb see this as a problem? Of course, they want 24/7 and all the margin. This is why they hate leakage and try to force instant book and convenient cancellations. This is also guest centric and owner impossible for so many. The two are hard to equate. Booking.com's mantra "Most rooms with free cancellation" is the killer, but does NOT apply 90% of the time to their rental inventory. Clever marketing again!

Airbnb also want to ensure quality inventory and no come-back. Hard with a thousands of unstandardised accommodation. Bad review police-ing is expensive!

Do Airbnb want to be in the main holiday rentals seasonal space? Yes, they just bought Luxury Retreats for $200m, but even this is a slippery fish as these are mainly managers and owners who market everywhere and want/need maximum margin. It's an unusual play but maybe just paying to understand the market more. Trying to forcing any form or control on these properties may well see further industry rebellion.

Add in the Trips launch and other revenue streams and you can see strategically they realise a zenith is approaching on the main models and which company needs so much litigation?

Best prices? Lots of comments on this. The best price is always likely to be direct, price parity slipped out the backdoor years ago. The "Guest Service Fee" is not charged direct. Imagine paying $2000 and then seeing a further $200+ as a service fee. Look under the question mark at checkout, it's their fee not the accommodations. This is beginning to annoy people (a lot).

They could often just book direct with a little searching. It may take 10 minutes, and that's $1200 per hour work! Even lawyers struggle to get that!

The big brands: Expedia (inc HomeAway), Booking.com, TripAdvisor, Airbnb, essentially offer the same thing and thousands of properties are advertised on all of them simultaneously as they sit out front and use the guest fees to pay Google Search (the real controller).

The smart guests are using them to identify great places and then phoning and emailing direct (using Google again) but saving money and getting more information.

Ref: https://www.smarthosts.org/posts/BnTAS2ujKWfNw47TW/airbnb-s-...

This feels like another example the new gilded age, where the spoils of capitalism stay at the top.

They should stop calling companies like Airbnb "startups". They are big companies now and should be treated as such.

Working for a company like Google, FB or even Airbnb or a questionable 'startup' is still much different than working for any other type of company. It's even markedly different than working for tech companies that would never be referred to as startups, such as Samsung, AMD or even HP.

These large companies (FB, Google, etc) may no longer be bootstrapped and employees may no longer have versatile roles, but they still resemble what we'd call 'startup culture.' It seems reasonable to define a startup based on culture rather than size, though it's not so etymologically sound.

edit: If you disagree, please comment why rather than downvote! This is a question I've heard people discuss extensively and would appreciate input or an opposing perspective.

But we have a phrase for that already, those things are called "tech companies"

Then we'd have to group in rather standard, traditional Samsung-like companies though, which seem to be just as different work experiences from FB or Google as FB or Google is different from newer, smaller startups.

Samsung is not a Tech company, it's a multi-national conglomerate.

It comprises numerous affiliated businesses,[1] most of them united under the Samsung brand, and is the largest South Korean chaebol (business conglomerate) https://en.wikipedia.org/wiki/Samsung

Microsoft/Google are multinational companies but their core business has remained. Samsung on the other hand did food processing, textiles, insurance, securities and retail and only got into the electronics industry after close to 30 years.

"Nerd nurseries?"

What do you even mean by "startup culture" in an ad-tech company with thousands of employees that has been doing the same thing for years? Open office plans with skateboards? Free food? Making the world a better place?

I don't mean this rudely -- is what I said offensive to people on HN? You're the first person to comment vs downvote as a reply and you seem to dislike FB quite a bit (and the idea of working for them).

Although Facebook as an individual product isn't creating any more value than it already has, the company includes Oculus VR and an AI lab which seem like they'd be fascinating places to work. Additionally, it just seems like an interesting, fun place to be where one could network with interesting people.

I'm not defending its dependence on ad-tech, but the experience (yes, including working conditions + benefits as you noted) seems closer to what I've found in small, new startups than companies like Samsung.

FB and GOOG are both large, stable surveillance/ad-tech companies with various money-losing side-bets. Their compensation is structured differently than what you would find at MSFT, IBM, etc. (more workplace perks), but it seems strange to relate that compensation structure to a "startup." People who work there get fat salaries, reliable employment, and perks, not a high-risk bet on a new idea.

That makes sense. I was just thinking of the look and feel of the workplace and people you're surrounded by more so than the company's purpose or risk of employment. Having come from a very non-tech background, I saw a lot of striking similarities in those aspects compared to what I had known.

Thanks for the input!

Many large companies — including some that you wouldn't think of as "tech companies" — have changed or are in the process of changing their corporate cultures to be more "startup" like. So I don't think culture is a useful discriminator any more.

It might be more useful to differentiate based on target or expected future growth. Real startups are intended to be scalable. A company can only reasonably be described as a startup if it expects to grow >10× in revenue or employee count over the next few years.

let's not call it "startup culture". let's just call it "modern tech company culture".

1b @ 30b is very weird.

Does this mean they're about to IPO? I should probably interview with them ASAP then.

I think it's the opposite.

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