Subject: Airbnb (2011)
paulgraham.com
Subject: Airbnb (2011)
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Re: Subject: Airbnb (2011)
#2Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked.
The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by cities. None of the players were able to grow large enough to have a say in the reforming of the laws that regulate them (SF learned its lesson from Uber and moved quickly, limiting their participation to asking for proposals).
This is framed to present a VC as "missing out" in the financial sense. Ultimately a VC is liable to its capital partners in far more ways. If Airbnb had all of its assets seized by the federal government as an illegal enterprise (just as an example), we would be applauding their foresight and brilliance in avoiding this otherwise lucrative opportunity.
Re: Subject: Airbnb (2011)
#3While this is an interesting post to read, it is also about 7 years old.
It's quite cool how the transcript goes to say "There's no reason this couldn't be as big as Ebay. And this team is the right one to do it."
Turns out that literally was the case! Good call Paul!
Re: Subject: Airbnb (2011)
#4I wonder what was the redacted phrase that was strategic to what AirBNB was doing (I'm sure we might know by now, but not know it was being discusses)
Re: Subject: Airbnb (2011)
#5Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by…
I think there's some truth that these guys dodge/ignore/lobby down regulations, but there's this narrative now that that's all they do. Being able to flag a taxi through an app is amazing, so is being able to rent a flat from a stranger with confidence that it will be give and work out. Regulation arbitrage is only a fraction of their value, and the regulations are often just rent seeking by those with power. Insane taxi Union/medallions, ban on flat renting to preserve property values etc.
Re: Subject: Airbnb (2011)
#6I wonder what was the redacted phrase that was strategic to what AirBNB was doing (I'm sure we might know by now, but not know it was being discusses)
Maybe the "do things that don't scale thing" where Airbnb came to the apartments and took photos of them themselves, to make the offering more interesting for customers?
Re: Subject: Airbnb (2011)
#7It is interesting to see how PG is selling this to Fred. This is exactly the kind of people you want to work with in a startup. People who believe in you and are not afraid to show it.
Re: Subject: Airbnb (2011)
#8Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by…
I think there's some truth that these guys dodge/ignore/lobby down regulations, but there's this narrative now that that's all they do. Being able to flag a taxi through an app is amazing, so is being able to rent a flat from a stranger with confidence that it will be give and work out. Regulation arbitrage is only a fraction of their value, and the regulations are often just rent seeking by those with power. Insane…
Its not all they do. But it is the bedrock on which their whole profit model is based. So critisism seems apt.
I find corprate overrule of law for 'benefit' of the consumer facinating, but dont have a dog in the fight. But I can't help feeling its like shooting the moon in a card game. It only works when unexpected, and already on a roll.
Re: Subject: Airbnb (2011)
#9I wish AirBnB took more responsibility for the damage they are doing to the NYC housing market
Re: Subject: Airbnb (2011)
#10Airbnb, like Uber, took advantage of regulatory inefficiencies instead of market inefficiencies. The model is do something (in the minds of regulators) illegal, quickly enough that you can become large enough to get a seat at the table when the regulations are reworked. The counter example to these companies are the ones that quickly raised capital to dump scooters on public streets before they could be shut down by…
Also you might want to notice that the last email from Fred is at 4:26am. In France that would be illegal in itself, sending a work email outside of the working hours. /s