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Airbnb, My $1B Lesson

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Re: Airbnb, My $1B Lesson

#141

Post by s73v3r »

PopeOfNope wrote: post #110
someear wrote: post #105

Earlier quoted context omitted.

but at the end of the day, the haggling ended, and terms were agreed upon (it seems). Handshakes done. I think the comments have gone off on a tangent focusing on whether you getting cut out of the deal was ethical (whereas the blog post was just a flat out interesting story to read about). But at least the way your post reads, you definitely got screwed out of the deal. Sure, nothing is done until things are signed,…

> Handshakes done. Nothing's done until the papers are signed. This goes for all things in life, too, from investing to renting apartments. If you don't have a signed piece of paper, you have no deal.

Yes, but going back on a deal once you've agreed makes you a dick, signed or not signed.

Re: Airbnb, My $1B Lesson

#142

Post by jsprogrammer »

gargarplex wrote: post #138
AnimalMuppet wrote: post #136

Earlier quoted context omitted.

Even if your initial strategy is less sound, if you can (and are willing to) update it faster, you can still win (so long as your initial strategy wasn't too horrible).

Thats why comments on Hacker News are editable :)

Happened to my OP :) Pushed down to -1 early, made some edits and now +10

Re: Airbnb, My $1B Lesson

#143

Post by pskomoroch »

paigecraig0231 wrote: post #59
beambot wrote: post #21

If it's bad form for a VC to break a handshake deal, it's equally-bad for a startup too... no? Doesn't that reflect poorly upon the founders? It's so important that YC went through the effort to codify the process: http://www.ycombinator.com/handshake/

You guys are missing the point. AirBnB didn't screw me over - this wa any first deal and I screwed around debating stupid points. I was disappointed they didn't do the deal but this whole post is about lessons learned. And one of the biggest ones was move fast once you have conviction. At the time of this Airbnb event I was just learning. I thought an investor had to worry about all these little details, negotiate to…

Isn't it bad form to post email correspondence like this? Will this make founders uncomfortable communicating with you in the future?

Re: Airbnb, My $1B Lesson

#144

Post by jongraehl »

Some grist for Silicon Valley (Mike Judge's show):

> On a tactical level, I repeat this creative destruction almost weekly as I analyze an individual deal; on an operational level I do it every few months (re-evaluating my deal flow, co-investor network, deal structures, etc.); at a strategic level I sit down almost every year and question my overall philosophy on founders, theses, markets, etc.

[shorter: I don't only regret my mistakes but also try to learn from them.]

Otherwise a well-told story. Thanks.

Re: Airbnb, My $1B Lesson

#145

Post by bbcbasic »

jkarneges wrote: post #51
quadrature wrote: post #39

Earlier quoted context omitted.

Why would you want to invest in a startup ?, VCs can pull it off because they are playing with a lot of money and can eat the (completely inevitable) losses. It sounds like you only have enough to invest into one startup, thats an incredible amount of risk to take.

People also start companies, which is even riskier. Angeling into one startup may be better than never trying anything at all.

I imagine most start a company without ever investing money they can't afford to lose. Sure a few $1000 but nothing to make them broke. Instead the money comes from 'loseable savings', family gifts, profits, loans or investors.

Re: Airbnb, My $1B Lesson

#146

Post by yokohama11 »

pitchups wrote: post #89

It is interesting and a bit ironic that AirBnb accepted funding from YC - who did not believe in their idea [1], and rejected the only investor that not only believed in their crazy idea, but actively sought them out and tried to woo them. Did they go with YC because of its brand, name recognition, or because it offered them better terms? Of course, it is all counterfactual, but could Airbnb have been as successful h…

"In fact, when we funded Airbnb, we thought it was too crazy. We couldn't believe large numbers of people would want to stay in other people's places"

I don't understand why anyone would have thought this at that time unless they did zero research.

VRBO had been effectively doing that for 13 years by the time Airbnb came along, and was (and is) widely used. Yes, Airbnb's focus is a bit different of a market segment, but clearly their success indicated that large numbers of people were willing to rent someone else's place directly from them in spite of the potential concerns.

Re: Airbnb, My $1B Lesson

#147

Post by akrymski »

yokohama11 wrote: post #146
pitchups wrote: post #89

It is interesting and a bit ironic that AirBnb accepted funding from YC - who did not believe in their idea [1], and rejected the only investor that not only believed in their crazy idea, but actively sought them out and tried to woo them. Did they go with YC because of its brand, name recognition, or because it offered them better terms? Of course, it is all counterfactual, but could Airbnb have been as successful h…

"In fact, when we funded Airbnb, we thought it was too crazy. We couldn't believe large numbers of people would want to stay in other people's places" I don't understand why anyone would have thought this at that time unless they did zero research. VRBO had been effectively doing that for 13 years by the time Airbnb came along, and was (and is) widely used. Yes, Airbnb's focus is a bit different of a market segment,…

This exactly. VRBO and HomesAway are the businesses that AirBnB is really competing with, and they've been going for ages. Hotels are for shorter stays, and generally are quite price competitive with AirBnB when staying short term anyhow. As a long time AirBnB host and guest, I've only ever used the platform to rent entire places, and I think that 80-90% of AirBnB revenue comes from renting entire homes. The original AirBnB idea of renting a room or couch from a local was just a beachhead and clever marketing trick to get noticed IMO. Like couchsurfing, I struggle to see that becoming a big business and taking on the Hotels.

Re: Airbnb, My $1B Lesson

#148

Post by akrymski »

pitchups wrote: post #89

It is interesting and a bit ironic that AirBnb accepted funding from YC - who did not believe in their idea [1], and rejected the only investor that not only believed in their crazy idea, but actively sought them out and tried to woo them. Did they go with YC because of its brand, name recognition, or because it offered them better terms? Of course, it is all counterfactual, but could Airbnb have been as successful h…

AirBnB is really two businesses in one:

1. A Hotel disruptor - letting people crash on your couch or empty bedroom. This is the original idea as per pitch deck.

2. Holiday Rental / VRBO / HomesAway competitor - renting out an entire home for a period shorter than a 6 month-lease

Would be interesting to see where most of the revenue actually comes from. My guess would be that the traditional model of holiday lets (#2) brings in the vast majority of revenue, whilst the original idea was used as a beachhead / marketing ploy.

Re: Airbnb, My $1B Lesson

#149

Post by jondubois »

jsprogrammer wrote: post #125
jondubois wrote: post #90

If YC hadn't invested, nobody would have ever heard of AirBnb. This is a case where the investor added a great deal of value to the business. YC is at the center of a large network of investors, startups and bloggers and somehow its investment decisions ultimately influence the habits of technology consumers in general. I think it was a lose-lose situation for the author.

Is every successful company from YC? Is every YC company successful? You must answer yes to both to believe: >If YC hadn't invested, nobody would have ever heard of AirBnb.

I'm exaggerating of course. But I'm sure it did make a massive difference.
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