Think the response here would be the same if it was MicroSoft or the RIAA caught in something like this and not a YC alum?
Anyway, great investigation and great analysis here, I think.
1) They explicitly violated the posters request to not receive "commercial" mail of any kind. This is basically the same thing as SPAMing. Would HN condone any type of unsolicited SPAM from a YC startup? I think not. The intent of the poster was to receive only credible inquiries from people interested in renting their property, not from competing services or people wanting to sell them on services, etc.
2) They tried to hide the fact that it was SPAM by using fake Gmail aliases and pretending to be normal folk just trying to help that vacation rental owner out. If you're going to push your service out there to people, be transparent about who you are and allow people to tell you to not contact them anymore.
I think startups are held to a looser standard and of course we all love to be "hustlers" but the idea that this behavior should be applauded regardless of it's ethnical nature seems wrong.
The analysis seemed to be from 2009, perhaps things are much different now.
It's a story startups should aspire to. Instead AirBnb seems to get a pass because they are a YC company. I can't wait for irony to strike when another startup does this to AirBnb.
What a complete and utter waste of resources.
Oh and all the false positives that are a nightmare for so many legit uses.
Are there better alternatives I am not aware of?
On a personal level this is very frustrating, because we like everyone we know to behave in a honest and straightforward fashion. But from a business standpoint there is a huge tradition of using some amount of misdirection to push new products to people. Parallels can be made with the animal kingdom and the use of camouflage, bright colors, and social interactions. Sometimes your business is in a position to strut your stuff, because you're the lion in the room. Other times you have to sneak around or be deceptive. Sometimes, fragile, trust-breaking tactics work - at least for a time.
In the end, the real condemnation for this behavior has to come from yourself, not from others. The market sees what is in front of it at the moment; it rarely knows the truth.
It was technically wrong of them to leverage craigslist by circumventing the community's own "no commercial email" request, and they should get dinged for it.
But in the grand scheme of things, when you are a tiny start up struggling to survive, this is a relatively benign grass roots attempt at marketing which the AirBNB guys even probably regret doing.
Comparing RIAA's scare tactics to this seems a little out of place, but it is right in line with Microsoft's shady attempts at astroturfing.
Hmm. Maybe. If you built a billion dollar business would you look back and regret a part of it that may have been instrumental to your success?
I'm definitely not excusing them for their actions but if I were in their position, I don't know if I could honestly say I would've regretted the past.
AirBNB didn't become 'ramen profitable' until April 2009.
I'll just continue to toil in obscurity; self-respect intact.
If so, how did you get your first set of customers ?
If you have not made a product that you need to sell yet, I think you will find when you do it, it's MUCH, MUCH more difficult than you ever thought it would be.
Also, selling a service - i.e. web development/design is very different than selling a product.
I didn't spam. I talked with customers before the product was even finished to make sure we were solving a real problem, to make sure they understood our marketing message, and to make sure we really understood the space.
This led naturally to a situation where I had paying beta customers, and even more customers who signed up and started paying as soon as we launched.
It is about impossible to get a marketplace going from a standing start. I've commented on it before elsewhere: picking off Craigslist users was always critical for Airbnb to get going. There are dozens of startups trying to build companies off the back of what Craigslist doesn't provide.
I'm sure the Airbnb guys probably started with the honest approach, realized it got them nothing but cease and desist notes, so switched to the craftier fake emails from girls interested in the well-being of vacation renters everywhere. I bet it felt icky at the time, but here they are. And "you know what's cool....?"
The standard approach would be to pick a city like NYC, and pound the pavement selling the site to every high-influence group you can possibly identify, do that to get a decent inventory built up and then launch with that inventory and start proving the model.
Then, pound the pavement in other high-influence cities, work to get inches in the media, do biz-dev deals with travel/vacation sites, get yourself interviewed on local radio and tv, find every possible way to insert AirBNB into the news stories of the day And frankly, with the real estate crash, there were a lot of possible ways to insert themselves into the news.
Or they could just spam craigslist.
That said, my big question continues to be 'did they disclose this behavior to their investors'.
My bad experience came when I was the first employee (not founder) at a VC backed startup. I was originally a developer but was promoted to be the technical liason in sales. My job was to sell the incomplete product. We went back and forth between government and enterprise sales while I was there. The company is still around but is doing something completely different now.
In the interest of not burning any bridges, I'll only say that when we would bid on contracts, every vendor from big guys to the other pre-product startups were stretching the truth beyond what I consider simply being optimistic about delivery schedules and ROI.
So yes, I do know what I'm getting into. My plan this time is to build a product that has obvious value to the customer on day 1, and leave selling by 'hustle' to someone else.
Can anyone explain why this is so controversial ? If you downvoted it, mind explaining why ?
I don't hate that they did this, but I hate that they tried to pretend they were anonymous women that happened to really like AirBnB. Why be so shady about it and instead why not just be honest?
"Hey, we noticed your rental and thought you might like something we built. It's helped a lot of people fill vacancies and make money; check it out - url"
You agree not to post, email, or otherwise make available Content:
k) that constitutes or contains "affiliate marketing," "link referral code," "junk mail," "spam," "chain letters," "pyramid schemes," or unsolicited commercial advertisement;
l) that constitutes or contains any form of advertising or solicitation if: posted in areas of the craigslist sites which are not designated for such purposes; or emailed to craigslist users who have not indicated in writing that
it is ok to contact them about other services, products or commercial interests.
m) that includes links to commercial services or web sites, except as allowed in "services";
I wonder if Craigslist could legitimately sue Airbnb.
While it doesn't take a rocket scientist to figure out what's happening here, it takes a bit more than connecting the dots to make a legal case stick.
[EDIT] Just to be clear I'm certainly not a fan of this. It strikes me as unethical and a little low on the "sleazy marketer" scale. I don't however beleive that this is illegal unless you can somehow prove that JillSmith03@gmail.com is professionally connected to AirBnB, and that this was done under corporate directive.
If you have ever been questioned under oath, you know how tough it is to lie (ping me offline for details).
No point in chasing the gmail accounts themselves, that would be a dead-end.
They sent a cease and desist relatively early on (not waiting until we got bigger).
It's likely that they didn't know and have either just sent them a cease and desist or AirBnb has chosen to ignore it.
Groupon: "we've already seen businesses complaining that the Groupons didn't make them money, or that Groupon sales people suggested they raise their prices substantially just before the Groupon 'discount'." http://www.theatlantic.com/business/archive/2011/05/why-does...
Zynga: "I Did Every Horrible Thing In The Book Just To Get Revenues" http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus...
Answers to these questions might be a good test of whether they should have done it or not.
If you want to stop spam, don't rely on bureaucratic processes to resolve it through legislation. Build a spam filter, or do some simple pattern recognition so you know that the same message sent 100 times isn't a legitimate inquiry to a posting.
"Acquit my client, your honour! It wouldn't have been murder if he hadn't have killed them, so he did nothing illegal!"
What are the good reasons for Airbnb's success and valuation? Are there any stories about their actions that inspire both confidence and congratulations. (aside from their Obama O's and Capt'n McCain flash success).
Don't get me wrong, I'm glad he confirmed his suspicion before blogging about this. But even one e-mail like that is suspicious.
He's missing a few steps...
How many email addresses did this dude harvest and blast to get 1,000+ people to sign up for his special vacation rental site?
What did the email say that he sent out?
Was he also sending them from throwaway gmail accounts?
What were his tactics?
This guy needs to follow up with more details. All he's shown is that at some point he posted 4 vacation rentals to Craigslist and he got 5 emails linking to AirBNB.
His findings rely on the fact that he got 1,000+ people to sign up their vacation rentals on his site after spamming some number of emails he admits to harvesting.
The "test" site he made (he's since edited it out), but google cached it http://bit.ly/iOPWi5 is www.mimbeo.com.
A quick look at the press page (http://mimbeo.com/vacation-rentals/press) and they have press releases announcing they got 1,000+ properties in one month: http://www.prlog.org/10408565-mimbeocom-reaches-1000-vacatio...
Here's a quote:
> "It's a no-brainer" said one of the founders. "We are offering owners and managers the same great service they receive from the pay-for-placement sites like VRBO & Homeaway. Not only that, but we broadcast our members listings to Facebook, Twitter, Myspace and more - and we do it all at no cost. We like to think of ourselves as the 'craigslist' of vacation rentals - with the added bonus that the listings do not expire - which is the main complaint we have heard from craigslist users."
Seems odd to go through all that for a weekend project "test" website. What's this guy's deal? This seems weird...
But if his claims are true than both and AriBnB was faking user recommendations to gain users than they should get criticized for it. Even more so if they systematically violate Craiglist ToS.
Nor would I want to work there.
I wonder if this is the tenacity of founders that pg speaks of.
So I'm sad.
(I know TC has its critics, but they are exactly what's needed for this kind of story)
> It never fails that I get at least 20 marketing emails a day from airbnb when I post a property on craigslist. I hope they do more of these PR stunts than filling up my inbox with unsolicited messages.
I always thought that getting that first set of customers that will take you to product/market fit was going to be easy. What with the Twitterverse, Facebook and all and sundry. But let me tell you, from experience, it is DAMN HARD!
I guess the true test of whether or not this is 'unethical' is whether those people that signed up felt scammed after using the service.
If I were one of those people that got that email, sure I might feel a bit 'weird' that they presented themselves as 'Jill D' and not AirBnB, but after going through what I have been doing the last few weeks - trying to get customers - I can't say I would be upset.
I post a listing on Craigslist specifically saying it's not "ok for others to contact me about other services, products or commercial interests" (an option in Craigslist) and then a business tries to convince me to use their site using a disguise DESPITE clearly stating that I don't want to be contacted?
No, I'd say the true test of whether something is ethical or not is whether it violates rules and/or the choices of a user. Then again, I'm the type that actually wants businesses to respect my decision.
I think every 'savvy' user always checks those boxes, but if there is an option that allows you to actually fulfill your original intent - i.e. you got no hits on Craigslist, but with AirBnB you have tons of requests and make a ton of money, wasn't that a win/win - even though they used a 'grey' tactic to reach you.
You say you don't want to be contacted, but that's to protect you from emails from the Nigerian prince and the blatantly obvious annoying spam. But things that are targeted at you, and can add value - I think it would be safe to say it makes sense in those cases.
I expect lots of the CL folks were perfectly happy to list their places on AirBnB and so far I've not heard complaints from users about they were approached (although I've not been looking for them either).
MySpace started out purely through spam...Tim Ferris started out in online supplement sales...People complained about Plaxo doing black hat stuff... they sold ok. People complained about Zynga ripping off other games and about breaking every Facebook platform rule there was... look at Mark Pincus now. People complained about Facebook's Mark Zuckerberg stealing their idea... he does not care.
Some investors would reward this; many would encourage it. It depends on why they are investors, right? Those looking for a significant return would take a fairly hard-lined "and the problem is?" position.
Blackhat insinuates that someone is being gamed, in this case, both the home owners and AirBnB are benefiting (maybe craigslist is losing out?).
When AirBnB posts a billion dollars in revenue, then it will be a "Billion Dollar Company."
The value of X, for any X at all, is what someone else is willing to pay for it. That is how markets work. Any kind of market. And it works for everything from pricing apples to pieces of art to companies.
If people are willing to pay $1 billion for your company, it is a billion dollar company. If nobody is willing to pay you a dime for it, it is worth nothing. Your revenue is an input factor into what people are willing to pay, but doesn't determine the price.
If you study financial theory, the theoretically correct price for a company is the "expected present value of future revenue". Meaning that if you look at all future revenue that it should ever make, divide that revenue by a discount factor for the fact that a dollar tomorrow is not worth a dollar today (and further discounts for risk), that number should be the present value of the company.
So a company with little revenue and good growth prospects may be worth much more than a company with great revenue which is going off of a cliff. It is worth this both in practice and in theory. And anyone who says otherwise simply doesn't understand how to value companies.
Note that in practice, in illiquid markets (which stock in privately held companies always is) the variance of market value from the theoretical relationship becomes wider. We still price companies based on what someone, somewhere, was willing to invest in it. We do that because someone educated people, who is paid to get this right, with possession of more facts than we probably are, decided that this was a reasonable price after doing research. They may be wrong, but the last price paid is the best market indicator of the value of the company.
Common usage that I've seen is to refer to the market cap as the value of the company. For a random example http://www.fool.com/investing/general/2010/03/19/how-does-ap....
The other common usage that I've seen is to refer to a company as being worth X billion a year. In that usage the a year bit is not dropped, because dropping it would introduce confusion with the first common usage.
But when I Googled for "billion dollar company" then "million dollar company" the first usage I found that wasn't in some way tied to startups was http://www.goodnewsnetwork.org/most-popular//red-mill-goes-t... where it clearly refers to revenue.
Ah well. Around here there is no question which usage is more common.
PS You may be amused that the top hit for "x billion dollar company" is http://hackerne.ws/item?id=2033232 which involves you.
The first three google results for "billion dollar company" all refer to companies with billions in revenue.
According to Google and every economics class I ever took, people assume it refers to revenue. In common vernacular, "billion dollar company" means a company that actually generated a billion dollars in revenue, not speculative investment.
I mean come on... why is it fair to refer to AirBnB as a billion dollar company when there are actually companies generating a billion in revenue?
And nobody's paid nearly $325B for Apple. But someone just bought a bit under 1 billionth of the company for about $350, so that's what the market cap works out to be.
I'm not disagreeing with the definition. I'm trying to point out that even though the maths might be the same, I see a difference between startup valuations (based on funding rounds) and market caps (shares * share-price) of listed companies.
I generally expect to receive spam from CL when posting or responding to ads.
Not that the latter isn't "spam" of a sort, but it doesn't feel quite like "craigslist spam".
If they turked each property one-by-one, I think that might be fair game.
Eg, be naughty, not evil. Whether they crossed the line or not, dunno. It's a far cry from Microsoft intentionally leveraging their OS monopoly to destroy companies and corner industries back in the day.
I'm surprised to see how negative the comments are on this. This is like Yelp paying people to write reviews. Shady? Sure. Illegal? The only part of the CAN-SPAM Act Airbnb broke was (1) not including a physical mailing address, (2) not mentioning it was an ad, and (3) not including an unsubscrive link. Otherwise, CAN-SPAM is laughable at best. It's hardly enforced. Don't expect Craigslist to come at Airbnb with a lawsuit, it'd probably not hold up in court.
I see this instead as one of Airbnb's many tactics to try and reach out to users. If you look at this logically, they've been covered by the press a lot. The amount of growth they might (or might not) have reached doing this would hail in comparison to how much they obtained by press and simple product and customer development.
Also I quite enjoy the irony that an account name of throwaway is defending the practice of using throwaway gmail accounts to spam people. Warms the cockles.
I'd like to borrow his words in regard to this post.
Fred's original post - http://www.avc.com/a_vc/2011/03/airbnb.html
I think Fred Wilson's quote is referencing entrepreneurs who 'hustle' and try very hard/use alot of energy in the sports analogy --- and NOT entrepreneurs who are 'hustlers' and use shady means to fulfill their needs.
The spam is the opposite of all that. The spam destroyed a wonderful founding story. The spam destroyed their professional and ethical credibility.
Are you saying it's a violation of the CAN-SPAM act? Or something else?
A state law cannot pre-empt a federal law; when a federal law and a state law are in conflict, the federal law takes precedence over the state law. (U.S. Constitution, Article VI, Clause 2.) Notably, the CAN-SPAM Act expressly pre-empts any state law that "expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto" (15 USC 7707). (So, a CA law against fraudulent email would survive pre-emption by CAN-SPAM, but a CA law against simple bulk spamming would be pre-empted by the federal law.)
Pre-empts it. www.DanHatesSpam.com
You might consider AirBnB's actions unethical, but they certainly aren't illegal - which would be obvious to anyone who bothered reading the CAN-SPAM wikipedia page. It's not illegal to violate Craigslist's TOS, and AFAICT the "spam" messages were sent from a legitimate Gmail account.
For those of you claiming "I'd rather be poor than violate craigslist's terms of service": Bullshit.
They most certainly are illegal. They are unsolicited advertising (which is fine under CAN-SPAM, sadly), and contain none of the requirements of CAN-SPAM - a legitimate business address, and a clear unsubscribe link.
Just because they come from gmail accounts does not exempt AirBnB from the law.
The method seems risky at first, but when you think about the risk and how they solved the problem, it is perfectly acceptable.
To catch danger from unsolicited email (from the end recipient), the mail must first be reported. A complaint must be made. If the recipient doesn't report it, there is no action taken. Most of the time, it doesn't take but a few reports and then there are people digging into the scheme trying to figure out who is abusing the end users. This is because most people sending unsolicited email are not able to directly target their market. Viagra spammers have to send out boat loads of messages just to hit their market of old men with erectile disfunction who are too embarrassed to get the pills through traditional means AND not web savvy enough to realize that giving out their credit card information to a fly by night company selling drugs isn't the smartest idea.
Simply put - if you can directly target your market AND you have something that is game changing to those people - eg a superior product / experience / service compared to their current business efforts, you won't get flagged for spam. They'll check out your site, think it's the greatest, and become your customer because you make them money.
The problem for AirBnB was that Craigslist has evolved to try and prevent unsolicited mail of all kind - because most people or companies are NOT able to hit the sweet spot where they are sure that what they have to offer is exactly what the recipient wants, but doesn't know it until the email is received.
Having interns, family, friends, or other people who are genuinely excited about your business send email recommending it to exactly who will want it, without revealing their relationship to the business, is an acceptable, if temporary solution.
But you only need to build momentum, because if your product is amazing, the recipients of the previously unsolicited email will do all the word of mouth marketing for you.
So before you go and try and repeat this alleged successful route, make sure you have all the pieces to the puzzle before giving the mission a green light.
[cite: personal past experience at an ESP watching and doing the digging in resolving spam/fraud complaints]
When the end doesn't justify the means, sure, complain about the means. But this is not such a case.
Either he doesn't know what "literal" means or I need to get a pickaxe and head on over to Craigslist.
I think we need a movement against improper use of these such as "do I have to physically login and chage the details" rather than manually, and this "literal gold mine" which is clearly metaphorical.
What can we call it? How can we stem the tides before the dystopian precitions of Idiocracy become a reality?!?
Airbnb may be spending that $100M sooner than they thought: "Each separate email in violation of the law is subject to penalties of up to $16,000, and more than one person may be held responsible for violations. For example, both the company whose product is promoted in the message and the company that originated the message may be legally responsible."
You think they'll be using anonymous proxies or something? I doubt it.
Remember, we only got 1 life to live.. think about it. Arguing right or wrong makes little sense
this definitely reduces their valuation.
You get maximum impact if you wait two years and post when your competitor gets really big so everything is forgotten and really untraceable.
> Each separate email in violation of the CAN-SPAM Act is subject to penalties of up to $16,000
If it was outright illegal then they'll have to face the repercussions of that, but I doubt they'll lose much sleep feeling bad about what they've done.
Really? Personally, I hate spam.
This was illegal in the "this was illegal" sense.