Hacker News new | past | comments | ask | show | jobs | submit login
Subject: Airbnb (paulgraham.com)
614 points by anateus on March 17, 2011 | hide | past | favorite | 134 comments

Fascinating conversation. Thanks for giving insight into how these deals work...

>ABNB reminds me of Etsy in that it facilitates real commerce in a marketplace model directly between two people.

Interestingly enough, I still tend to side with Fred's assessment of AirBnB's future. All my experiences with it as a user have been too unreliable to expect that it can scale to truly massive usability. Selling your old guitar online is a lot different than renting a room to someone. Renting a room has so much more of a personal aspect to it.

There are so many more subtleties to actually having a stranger come and stay in your house than there are to sending a stranger a book, guitar, etc via USPS.

Regardless, I still think there's a massive market out there for this type of thing, I just don't see it swallowing up the whole Hotel industry.

There are so many more subtleties to actually having a stranger come and stay in your house than there are to sending a stranger a book, guitar, etc via USPS.

So, PG is a good salesman, and he hit the nail on the head with this comment:

Just wait till all the 10-room pensiones in Rome discover this site.

If you ever read a Rick Steves guide (which are not exactly the scariest guidebooks on the planet -- they're fairly comfortable middle-class NPR stuff) or tour around Europe in backpacker mode you will become familiar with the pension, aka the German zimmer or the English B&B. These are rooms. In pubs, or very tiny hotels, or people's homes. Which get rented out. They are very common, they have been a tradition forever, and they aren't very formal. Maybe you call ahead. Sometimes that doesn't even work. Sometimes you call ahead but then the landlord forgets your reservation. But ultimately you turn up, meet the landlord, get taken to the room, you look around for two minutes, you say "si" or "no" and fork over a night's rent, and there you go. It's not like buying a house or getting married or anything.

Yes, it's a bit more subtle to rent a room than to deal in used books. But it's not that subtle.

I just did my first AirBNB experience (actually am still in the middle of it) and I can say that it's actually been surprisingly smooth. It's almost like a paid way to make friends. The hosts who I'm staying with are so cool, and since I'm pretty public online, it was easy for them to feel comfortable with me staying at their pad. They've set it up as much like a hotel as I could ask for. It's really great, and it's paying half their rent (they have about 100% occupancy, believe it or not).

I like Airbnb. I've hosted 8ish times and stayed with people once.

Why I think the people on Airbnb are 'cool' is that its a small population that has a lot in common (young or young-at-heart, singles and couples without kids, internet natives, own a macbook, would love to hitchhike Europe while submitting correspond reports for the NYTimes). As it grows, I'm worried that everyone's not going to find everyone else 'cool' on Airbnb.

I wasn't around for the early days of Craigslist, but I imagine it was easy to like people you found on Craigslist because they were probably very similar people to be on Craigslist so early. But now, after scale and popularity, that's gone.

I wonder if Airbnb might lose the 'cool' people edge after scaling.

Like Craigslist, there's also the "everyone was really cool until someone raped and murdered a client" angle.

Good question but I think they will always have the 'cool' crowd simply because allowing a weary stanger to stay in your apartment is inherently a cool thing to do.

also money talks in this case. As has been brought up elsewhere in this thread, there is a huge market here for unused space that AirBnB is exploiting. Even cool people like saving/making money.

I would be afraid of being the uncool person in this equation :-)

What Airbnb would need to do is allow renters to rate rentees. Two-way system like eBay used to be.

We do.

Aww shucks, Thanks, Randall. We really enjoy hosting, and it seems like an even better deal for us (we get paid to make friends).

About the only downside Iv'e experienced so far is that I have to wash sheets all the time (most people stay with us for 2-3 days and since we now have between 70%-100% occupancy thats a lot of sheet washing.

I'm also about to go to Paris and the value proposition of airbnb there is even better (try hipmunk's hotel search in Paris). We are staying in a private entire apartment on the seine with a view of the eiffel tower for about $130 a night.

My wife and I used AirBnB to stay in paris on our honeymoon, we had an entire apartment (a studio) in a nice part of town for a fraction of the cost of hotel. It was great experience that we couldn't have had without AirBnB.

If you're renting out your spare room 70-100% of the time, why don't you just get a roommate? Seems like it would be safer, less work, and you'd ideally have a better long term relationship.

Well, we like meeting new people, we probably would have to charge the roommate less and there are different social obligations for a roommate. (For example a guest that stays for a few days is unlikely to leave a mess in the kitchen). In addition any little annoying habits don't have enough time to become tiresome.

Lastly, we can have the room available for our friends and family when they come and visit (which is the point of having a guest room in the first place). My parent stay there (for free, of course) about 2 nights a month.

Seriously, AirBNB should post this comment on the front page of their "List Your Space" page. This is a great value statement.

They can probably charge a premium to the short term guests.

I've got friends who do it 'cause you can't boot your new roommate out when your parents want to come visit for a week...

Well, to look at it from solely a financial point of view, a room in an apartment is worth much more if you rent it out by the night or week rather than by the year (like you would with a roommate).

Here in my neighborhood, in Chicago, one can find a room for about $40/night; 15 nights and I already have half my rent. So yes, having a roommate might be less work (but that depends on what you consider "work") but I can make more money renting a room out by the night.

'It's almost like a paid way to make friends.' - love this :))

I stayed in like 4 airbn places in SV and learned: 1) That it certainly not for everyone, some ppl just dont need all this fun and pretty happy with avg hotel room. 2) If you think that its not for you, still please give it a try, there is a very serious chance that you will absolutely love it. (I was super skeptical too) 3) I dont pay Airbnb fee on second stay and just contact my 'paid friends' directly. They need to consider this and if its a problem in scale. 4) I absolutely love it and will only stay in hotel in worst case scenario if all my "paid friends" in area cant host me.

3) I dont pay Airbnb fee on second stay and just contact my 'paid friends' directly. They need to consider this and if its a problem in scale.

That's a really good point. A common theme in Paul's argument is that "AirBnB could be the next eBay." But eBay's worst nightmare is buyers and sellers communicating directly, saving each other money while cutting the company out of the revenue loop.

AirBnB is almost more like a dating service than a marketplace... a 'buyer' and 'seller' who prove compatible with each other will never need to use the service again, at least not in the same city.

"I just don't see it swallowing up the whole Hotel industry."

I've been out of the travel/hotel game for about 4 years now, but I worked in it on and off from ~'97 through to '07.

It's an industry ripe for a new player to do a Paypal style end run around the traditional banking/creditcard industry.

I don't know whether Airbnb are that player (I'm 100% sure pg and Fred are _much_ better judges of that then I am), but I'm also at least 99% sure that it _won't_ be any of the existing big players (Sabre, Gallileo, Pegasus, MyFideleo, Worldres were the large players I worked with) that revolutionise the hotel booking business.

I'm going to Vancouver soon with my family; the first thing I did with my wife this week was pull up AirBNB (where is your ipad app, guys?) to check out what sort of deals we could get.

I'm not saying I wouldn't check hotel deals, but reading honest reviews from people who really stayed in each room, and sometimes getting to half off a hotel works great for me. They are definitely moving into 'high on my list' for travel, personal and business. I'm guessing I'm not alone here.

I definitely agree! the industry is stagnant and ready to be disrupted.

Strangers renting rooms are only a piece of their future. HomeAway (vacation rentals) just bought a superbowl commercial and are reporting revenue of $100M+.

writing on the wall: https://skitch.com/webwright/rieyj/airbnb-search

Note the # of entire home/apt entries. My guess is that these (with B&Bs, inns, and eventually hotels) will dominate the listings.

ABNB has a challenge with positioning moving forward-- a LOT of people think they are all about renting a room in a stranger's house, sharing a common area, etc. But their growth speaks for itself.

I disagree.

I opted for ABNB literally 5 out of 6 times this past February. All successful.

My take on it is that Airbnb is great unless you're the kind of person that doesn't trust strangers. Sadly, in the United States, the tendency to not trust strangers has been on the upswing for the last few decades.

I think the trusting-strangers thing actually comes down to two questions:

1. The collective level: are there enough people who trust strangers that Airbnb can make tons of money, and help out those people? It looks like the answer is yes.

2. The individual level: are you okay with trusting some random strangers from the internet? I think you probably should be -- people tend toward decency, overall -- and it's possible to change the way you feel about something with a little effort.

Interesting that completely missing from this conversation is:

-- Their website design -- Their code (Rails? Jquery?) -- Their hosting / scalability / "cloud" strategy -- Source control methods, dev environment, tools -- APIs, "ecosystem", social media, "viral rate" etc. -- And more...

Basically, all the things that most of us here spend most of our time discussing.

Instead: 1) Idea / Team 2) Execute 3) Talk to people with money 4) Go to #2



That's all Fred is looking at in that phase-- because even an awesome team won't build a venture-sized business in a tiny or low-growth market.

At our Demo Day, there was two teams that had a veritable investor feeding frenzy around them-- and they were both attacking markets that were either huge/rich or markets that were growing like gangbusters (and they had the good sense to talk as much about the market opportunity as they did about their product).

To be fair, anyone who makes it through YC and gets pg's recommendation should be pretty competent.

Why would anyone talk about that stuff when pitching to a VC?

Sure the operational factors are important (and that's why they get discussed here), but they're secondary to size of the market and the nature of the solution when it comes to how big the investment opportunity is.

This is a great point....market potential seems to be top of mind more than anything else.....which reminds me of how Sequoia invests....clearly they got the larger vision (and presumably had more data points as they invested later)

not sure whether this is in 1) but the fact that they actually talked to their customers in NYC etc. is a huge point as well.

Because "we" talk about it so much "we" are able to kill it and make it a non-issue so investors can focus on more imp issues.

I think this is the post that best gives an idea of "Why should you do YC".

And this is the post that tells you why you should read HN too.

Absolutely there is a lot of meat there. And hope for all of us!

I've told this story before on HN, but it's worth telling again.

I rented a room in L.A. using Airbnb. The owner of the room said he made $4000 in 3 months on two rooms that would have otherwise been vacant. If you're making this much money for people you've tapped into one helluva market.

I can cover the rent of a 2-bedroom apartment in Manhattan by renting out one of the bedrooms on Airbnb. I don't expect the situation to last forever, but for now it's great.

Wonder how elastic the market is. Don't know LA enough, but can assume that eventually too much demand will ruin the seemingly perfect situation. It's a luxury position. Huge profits were possible on ebay too at one point in time...

Nice, pg.

Have you ever given a similar vote of confidence to founders who didn't live up to your expectations?

Maybe not quite that persistent, but I've definitely tried to sell investors on startups that didn't end up doing very well. Even by the end of the 3 months we are far from perfect at predicting who the big winners will be.

The idea with this kind of thing, as far as I can tell, is to be as nuts (i.e. risk-friendly) as you can possibly get away with. If you're never wrong, that's probably an indicator that you could get away with being a lot more nuts.

Moreover, if you do pump a startup and you are wrong, then to explain the situation is often to piss all over the work of said startup.

Fred Wilson tweeted: Reading the email discussion between paul graham and me with 20/20 hindsght is both useful and painful


So this post has done two things in my estimation.

1) Improved the perceived standing of PG among the entrepreneur-class. It proves that he really adds value the way he says he does - hawking, what can easily be seen as a very weird idea at a time when not many people see it.

2) Improved my perception of Fred. Even though he passed on the deal, he is stand-up enough to not only admit it - but allow PG to post this email exchange that shows that he was "one of the old guys" that were skeptical. It also shows that he wasn't just pulling PG's chain, but was really debating it internally.

Great examples of VCs never saying no directly and of a strange insider be-terse-and-get-out-of-my-way writing style.

Actually he did explicitly say no a few weeks later. Fred is pretty good in that department.

Is it terse or is it just concise?

So many 'business' people think that long waffling sentences seem clever and impressive. Nothing is further from the truth.

This is neither terse nor concise. Terse and concise means you write what you mean. When the VC writes, "we are still in the data-gathering phase", he really means "I see what you are saying, but my gut says no right now. I may contact you in the future when I know more."

This is longer, but it actually means something. Instead of saying that he needs more data in order to make a decision, he's said that he needs more time to make a decision. The data comes natrually.

A "data-gathering-phase" is the phase that everyone is always in about everything. I am currently in a "data-gathering-phase" with respect to whether or not I should make another cup of coffee. My current cup is cold, but still contains liquid. So it's not a sure thing that I should make myself another cup of coffee. On the other hand, hot coffee is nice. I can't decide, so I will continue to gather temperature and flavor data until I make a decision or I spill my coffee.

See how meaningless that is?

I was in data-gathering about coffee until I read that you wanted coffee too. I have asked an associate to bring in some coffee for discussion.

I've completed my data-gathering-phase and need coffee too!

This has gone viral!


i'm in a data gathering phase on this comment thread

You can call it meaningless, but people in the business do understand exactly how it is meant. The way he phrased it just sounds a lot more polite.

Just because people understand businessspeak doesn't mean it's good to use. You would know what I meant if I typed "teh" instead of "the", but we all try to write "the" anyway.

Every niche has it's own lingo. VC's that need to bring the above message across several times a day just don't want to come across as rude or worse. Therefore they use euphemisms of which the messages are perfectly understood by their peers and which leave them as much room as possible (eg. making it easier to come back later and say "finished data acquisition phase -- we are in"). Classic VC play.

In the end, I can somehow understand, and don't find it 'wrong' or 'meaningless' per se.

This is confusing to me. If I'm asking people for money and they don't want to give it to me, I wouldn't really be offended if they said, "the reason I don't want to give you my hard-earned cash is because I think your idea sucks." I wouldn't give someone with an idea that sucked cash either.

This would also not preclude, "you know, I was wrong... still interested in some cash?" It's a business transaction, not dating.

It only does not preclude that if the person who received the message is mature about the whole situation. Unfortunately some people won't be mature, and that is simply not grief that the VC wants.

Furthermore when you come off as rude the first time, you discourage them from asking the second time. What if they come back with an idea that is good, and a team that rocks? Don't close doors that you don't need to close.

Just reminds me of: "Ron wrote back in literally 2 minutes and said, in what I have learned is Ron’s distinctive email style (immediate, short, all caps), “AM ON IT.”" (http://bhorowitz.com/2010/04/07/ron-conway-explained/)

The format seems more IM-over-email than "email where important shit goes down."

That terseness is how Fred writes every email, it's not unique to this thread with Paul. When you try to reply to a couple hundred emails a day, this terseness is the result.

i suspect you have a few of those in your gmail archives to andrew ;)

One or two long ones too :)

In my experience, Airbnb's biggest competitor is HostelHero and I found this much more convenient than Airbnb while traveling (if only because hostels nearly always have space, unlike the many rooms we encountered on Airbnb advertised as free but suddenly not when you book them).

Arriving in a new city without internet it was great to have HH and be able to find 10 hostels and know they are going to be open. I guess McDonalds wifi etc. means Airbnb could have been a competitor, but the ease of finding accommodation reliably, of a reliable standard, and at more affordable prices meant we used HH far more than Airbnb.

Having said that, the times we could manage to find a room that was genuinely free, and appeared to be genuine people with a spare room, were some of the highlights of our travels. The people and the rooms were both fantastic, and it's this "home away from home" and social aspect I think Airbnb should be pushing. I think at the same time they should be working hard to remove the listings that I could best describe as dodgy guys trying to run a hotel out of an apartment building without adhering to local hotelier laws as we found these far too prevalent in some cities.

What an incredible post. Thanks for sharing, pg.

YC absolutely does hustle for you like this, and it's the best kind -- genuine.

>(Fred Wilson): I am also talking to my friend Mark Pincus who had an idea like this a few years ago.

Mark Pincus is better known as the founder of Zynga, unless this is another Mark Pincus.

same mark. he has hundreds of ideas for businesses to start and has pitched me on many of them over the years

Nope, same guy. Fred has written a fair bit about him before.

Wow, thanks PG (and Fred and AirBnB team). This is an awesome insight into angel/VC investment decisions. It's hugely valuable.

  It just seemed a very good sign to me that these guys were actually
  on the ground in NYC hunting down (and understanding) their users.
That's a funny comment from paul because he was the one to tell them to go to NYC. That they went is to their credit, but still. I think of this sometimes with the pitch coaching for demo day. How many investors think "that's a great way to phrase that" when watching a presentation and what they are actually hearing is PG? When you've seen a few of them, it is quite stunning.

I don't mean this in a negative way. It actually is just evidence that paul graham is a badass.

We were already meeting our users over the previous year, including at the DNC and Inauguration. We had ambivalence to continue to do so city-by-city because, as we were warned by others, it didn't scale. PG gave us permission to continue these efforts, and to "do things that don't scale." It was one of the greatest pieces of advice we ever received.

I talked with one of the founders of Hackruiter (YC S10) last weekend and he told me Paul gave them the same advice! The two founders (or "the Hackruiters" as PG would say) are scheduling days completely full of half-hour 1-on-1 in-person meetings in different cities with people who might be interested in joining a startup. This is one of the most un-scalable processes I can imagine.

By the by, I was very impressed with the founder I talked to (Nick), and I would suggest that if you are a superb developer who is itching to join an existing startup, get in touch with Hackruiter. If they think you are a good fit, they may very well be able to either make the right connections on your behalf or at least point you in the right direction.

He told them, but they did it.

It's interesting that in the end Airbnb raised from Sequoia, I wonder if lots of other VCs passed.

It possibly shows why Sequoia are the best.

True that is. +1 for the suburban golf loving VC's - at the end of the day, they are successful for a reason.

Have you met the Sequoia guys?

i THINK that by the time sequoia invested, airbnb was obviously on a roll. i could be wrong though.

You won me over PG. I'm applying to YC tomorrow.

the most amazing thing is that it took them only 2 years to come to a stage that a VC had to write a blog regretting missing them out.

This exchange cements my concerns about AirBNB only being huge if they can end-run the hotel regulatory system.

pg: Did they explain the long-term goal of being the market in accommodation the way eBay is in stuff? That seems like it would be huge. Hotels now are like airlines in the 1970s before they figured out how to increase their load factors.

fw: So I think it can scale all the way to the bed and breakfast market. But I am not sure they can take on the hotel market.

The problem is, the regulatory system (not to mention the neighbors) do not want unlicensed, widespread "crowd-sourced" illegal hotel rooms, and are working hard to block them:


Paul Graham talks about the 'eBay' of accommodation -- but a huge percentage of eBay's revenue comes from professional sellers, which is exactly what will run afoul of regulation in the rental/hotel market.

not only regulation.

hotel chains won't be sitting idly while few geeks eat their market.

oh and btw, isn't eBay kinda dead thanks to Craigslist?

If someone still has any doubts about the value of YC, they should read this email exchange. PG is pushing for the startup as if it was his own. He genuinely wanted them (and also the VC firm) to succeed.

Great stuff.

What? He was invested in them. Do you think he wants to see them crash and burn?

Actually I don't think I worried that the Airbnbs weren't going to be able to raise money. They were one of the top startups in their batch, and the top startups always manage to raise money. The reason I nagged Fred so persistently was that I thought he'd be a good match for them and I was annoyed that I couldn't convince him.

You still really think he did all of that only because of YC's ~6% stake in them?

I'm not trying to take anything away from pg here, but "all of that" refers in this case to 7 emails with one VC.

AirBnB has raised $7.8M (at, what, around a ~$40M valuation at the time? 6% of which would be over $2m). Is it really that incredible that someone would send a few emails for a shot at that kind of money?

He's risking his reputation if he's pushing a company that he's not confident in. The reputation is worth a lot too, probably mostly in reciprocal connections.

That's true, but he's also risking his reputation (and his paycheck) if he doesn't shop around for later stage investors for his companies. This kind of thing is his job, it's what Y Combinator exists to do. When one of his companies looks like it's going to be successful, he has to do this kind of stuff to actually get a return out of it.

Which, again, isn't to denigrate him at all. He's obviously very good at what he does and deserves a lot of respect for it.

6% is a large stake for an angel, and even bigger for a seed investor.

Sometimes it can be advantageous for an investor to have a company crash and burn. If the company's main assets are likely to survive such an event without being destroyed, but be undervalued by people not familiar with the company, then an alert investor can buy those assets out of bankruptcy at a time when the people most invested in the company (founders, employees) have run out of money.

More prosaically, if you can delay the company's getting to break-even, they'll need more rounds of investment, which mean you can buy more of the company.

And then, of course, there are personal feuds. Remember what happened to Scout Electromedia? Their shutdown probably had as much to do with investors being pissed off about being ignored as with any actual rational assessment of their future prospects.

This is great stuff. You can't blame any VC for being cautious at that early a stage though, and although the idea of hotels using airbnb to list their vacancies hasn't happened yet, as far as I can tell, it may not even matter. I have just started trying them to rent my apt in NYC, lets see how it goes. Personally as a "landlord" I feel like I do a great job accomodating my tenant, but on a site like craigslist, which is where I'd been posting my listings, this never gets reflected as there are no opinions/ratings, etc. As a result, I can't "stand out" from other landlords. It's not hard to get tenants in NYC, but I can imagine in some other parts of the country or world this may be a bigger issue. This is where I hope airbnb comes in handy.

Lesson: even pg can be rejected.

It's not the end of the world.

Unrelated to start-up investment, just a random thought about ABNB:

I was thinking about the impact of hotel chains' business traveler kick-back schemes (euphemistically known as "rewards" programs) on the independent room providers (a phrase I just coined to run the gamut between someone renting out his spare room and a boutique hotel) ability to attract business travelers. How, as a business renting out 40 rooms in a single city, do you compete with Marriott who can offer some guy and his wife a free weekend stay anywhere in exchange for funneling his company's (or even his company's client's) dollars toward their brands? What if ABNB offered up to these independent operators a rewards program similar to those offered by the big chains? They would move beyond be a transaction facilitator toward being closer to a consumer brand. I believe that lower-end hotel chains basically follow this model -- independent owners become franchisees of the brand as a way to get bookings, have a recognizable brand, etc. While I doubt that too many of today's ABNB bookings are business-related, that number will surely increase. I love playing armchair QB :)

You can also hook into the kickback schemes by partnering with major reward programs like Amex Membership Rewards. Or work with state governments to have a voucher program like what Ireland has for BnBs.

It's a great business.

Was I the only one that kind of smiled when reading the emails from PG to Fred pitching these guys? I loved that!

Very encouraging to see that AirBnB struggled to prove market size. I know the pain.

I have to say, it's pretty inspiring to see that PG went to bat that hard for the Airbnb guys.

Is it just me or just Brian Chesky reply 2 minutes before PG sends the intro? Time differences won't account for it since NYC is ahead of SF

VCs often say they invest in team first and idea second but USV decided not to invest in AirBnb despite having no (obvious) reservations about the team or their ability to execute.

Does this mean that ideas are more important than investors really let on?

Markets are the most important. Great team in a small market: no hope. Bad team anywhere: no hope. Great team in a great market, bad idea: there is hope (changing the idea is easy, just pour more money - changing the team is close to impossible)

Airbnb is a good startup but the founders struggled so much at first without gaining any significant traction. And even with PG's endorsement they still had trouble getting funding from a progressive-minded VC. I wonder if they (Airbnb's founders) could make it to this point without YC.

Thanks for sharing PG, this is fascinating! We as entrepreneurs are generally busy trying to sell you and we rarely get to see your approach when "pitching" one of your companies. Your point by point break down of a market and how a company can grow into it is very insightful. I am taking note of your use of character validation (cereal story), peer validation (YC poll), market/community focus validation (out talking to users) and master vision for my own future investment communications. So short, subtle, and to the point, love it!

Airbnb has definitely tapped into a latent market, but I wonder how such "rentals" may square with terms in lease agreements or condo association provisions. States and / or municipalities may quickly try to capture taxes, as Zipcar has discovered, or they may try to prevent or regulate such "rentals" on the basis of licensing, public health and safety, or other laws or ordinances. I wonder if the typical renter is properly reporting the income to the appropriate tax authorities.

Note that there is zero mention of VRBO or Homeaway in this entire email thread. That's the real opportunity (not hotels or bed and breakfasts) and neither Fred nor Paul saw it.

It seems PG has utmost belief in AirBnB guys from the beginning by the way he repeatedly tries to convince Fred to invest it.

Thanks for sharing the inside story. :)

This seems right up USV's alley too. Marketplaces and platforms.

If I remember correctly, USV didn't exactly pass, but made a play around the time Sequoia did.

yup. right up our alley. in our wheelhouse. which is why i'm kicking myself for missing this one. this is our kind of deal.

Not that I doubted it, but this shows that YC are really prepared to fight and defend your corner to help you advance. Great to read.

We tried to use airbnb here in Bali to search for a house but we had to give up as there were too many kinds of accommodations. Houses dubbed as villas, rooms dubbed as houses, one floor dubbed as a full house and even a gazebo where we were supposed to stay 2 months. All this is fine but I wonder how usable it will become once you throw the hotels in.

Fascinating -

I could be wrong but I don't imagine too many people push back so hard on @paulg like that.

I have great respect for @fredwilson for pushing back and then admitting in a very public way that he felt he made a big mistake.

The best line of the email is @paulg describing @fredwilson: "He is the least suburban-golf-playing VC I know."

Glad this story was shared and glad there is continued mutual respect there -

How long have you had twitter disease? We're working towards a cure as fast as we can.

pg seemed a bit direct in terms of what he wanted in his email, which I found refreshing. On the other hand, Fred seemed to 'beat around the bush' as when he said 'we are in data gathering phase'.

Just curious what the norm is around the vc/angel circles. Are most people pretty direct/candid? or do they mostly hide behind business speak?

maybe i knew this email was going to get published someday and was careful about what i said. it's kind of amazing that pg only was asked to redact one small thing in the entire thread

Here's what I appreciated:

Both Fred and PG are willing to a) admit mistakes and b) be totally transparent about it and c) publish that transaction for others to learn from put them BOTH in a class above and beyond traditional VCs.

Are you "other" guys listening out there? This is why YC is eating your lunch with new startups...

Fred: "I'm just not sure how big it's going to be"

- had he seen couchsurfing at the time?

http://www.couchsurfing.org (launched as beta in 2003)


Are Airbnb copycats?

One huge difference is that couchsurfing is free... do some chores around the place maybe to be nice, but the whole point is sharing and using each other's space for free. I think Airbnb is aiming for a different market, actually - for example, my parents would feel "weird" about crashing on a stranger's couch but booking a quaint and unique little bed and breakfast over the internet makes them feel cool. Conversely, I would feel bad about charging somebody to stay in my disgusting apartment but I'll happily host somebody just passing through.

I was wondering how ABNB would compete here as well. I guess just better/more marketing.

I love the term "cereal entrepreneurs" from one of the commenters on Fred Wilson's post:


(The Disqus link doesn't quite work all the time tho...)

Could there possibly be a better pitch for YC than this? Awesome read!

Wow. I did not get the pun in AirBnB until I saw it spellers out widhelm he lowercase b in airbed.

The capital B is either a branding miss or an intentional branding effort to look more upscale than Airbed.

Based on previous discussions, I think it's done intentionally to reflect a pivot (away from airbeds).

I wonder if missed investments like this have the senior guys listening to the junior members a bit more, or whether the young guys are wrong enough to keep it biz as usual.

Hey PG,

Thanks for publishing this exchange. I've never known you to be anything but exceedingly polite and thoughtful; now I learn you're doing good work behind the scenes too. Inspiring!

The content is wonderful to read through but the time frame that this conversation takes place over (a month) has a lot to say in itself.

I love the succinctness of the email exchange.

All other important factors aside, everything comes back to scalability. This helps further drill that point.

I am surprised couchsurfing.org is nowhere mentioned - it was a working example already 5 years ago.

Yes but couchsurfing wasn't a business... it was more of a "movement". that was the concern: could couchsurfing be commercialized.

What could YC/Airbnb have done to prevent this? Anything you guys would do differently in hindsight?

Prevent what exactly?

interesting stuff

I was under the impression that YC introductions were pretty much the equivalent of "hey, here are some guys...invest in them"...but here you can see that there is a lot more pressure....bordering on begging

We earned PG's recommendation by working really, really hard.


I wish PG could back up my idea like that. What if.. I simply signed Paul Graham? : )

I realize that you're joking, but I think it's really important to point out that Paul was backing the team more than the idea. At least that's how I read it.

Team > Idea.

Of course.

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact