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Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

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Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#31

Post by thaumaturgy »

pg wrote: post #20
photon_off wrote: post #15

Earlier quoted context omitted.

I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand. There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise deci…

I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.

Yet, you (reportedly) weren't fond of the idea, either ...

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#33

Post by nostrademons »

photon_off wrote: post #15
olivercameron wrote: post #9

I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even if people are saying "it's a stupid idea". I know a lot of founders who, after being told by many of the Valley's finest angels that their idea is no good, would just give up. It just goes to show that you can create a $1 billion company, even if no one really…

I think there's something to be said about knowing when to fold, and not to view these nobody-believed-in-us-but-we-overcame edge cases as motivation to play a losing hand. There will always be false negatives, ideas that are rejected by angels but which later become enormously successful. However, if the industry's finest angels are all passing, and you can literally find nobody to invest, it is probably a wise deci…

I think it matters who tells you it's a stupid idea. If it's investors, you can safely ignore them; they aren't looking for what you're selling anyway. If it's potential customers, however, you probably have a problem.

In AirBnB's case, they had already validated the market. They had their first 3 customers before they even thought it could be a business. If people are willing to pay you money for your idea, it really doesn't matter what investors think.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#35

Post by nostrademons »

tptacek wrote: post #30
mrchess wrote: post #26

This might be a stupid question but what do you do after you secure such a large series of funding? Go on mass expansion? Would anyone mind telling me how startups typically use this kind of money (closing Series with 100+mil)?

Big ticket items: * Mainstream promotional marketing * Direct sales efforts (identifying target markets, staffing sales teams to pursue them) * Business model changes to ramp up customer acquisition at the expense of profitability * Rollups of related companies and acquisition of complementary companies. * International expansion * Lobbying And there's just always something to be said for having a war chest; in today…

Hiring as well. I remember that Twitter was about 25 people when I was looking for jobs in 2008, just as they'd closed their mammoth $50M+ round. They're now at 400+.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#36

Post by thaumaturgy »

IsaacL wrote: post #14
olivercameron wrote: post #9

I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even if people are saying "it's a stupid idea". I know a lot of founders who, after being told by many of the Valley's finest angels that their idea is no good, would just give up. It just goes to show that you can create a $1 billion company, even if no one really…

Yes, it's quite inspiring to see how much it succeeded despite the overwhelming negative feedback. Just goes to show that judging the viability of ideas is hard , no matter how many experts there always seems to be in the TechCrunch/HN peanut gallery. I've really tried to train myself to answer "do you think this is a good idea?" with "I haven't a clue."

I don't think anyone can predict what's going to be big, and what isn't, and that's why bad VC/investor/coach advice is so pernicious.

Let's look at the progression: Google shows up, makes a big splash among the tech elite but attracts little attention in the popular market until their obscene IPO, and investors collectively say, "Damn, well, I don't want to miss out on the next Google!" Then there was Facebook, and again, investors collectively say, "Damn, well, I don't want to miss out on the next Facebook!" Now there's Airbnb, and investors are saying what now?

(I'm skipping over a ton of other big to almost-big examples in this progression; hopefully someone more knowledgeable will fill in some gaps, but I don't think it will diminish the point.)

The thing is, Facebook wasn't the next Google and Airbnb wasn't the next Facebook. None of the breakout hits have been entirely original ideas, nor would an early-stage pitch have been compelling to anyone with the ability to be a significant early investor. There were zero signals that would have worked as a strong early indicator of future success.

The more I observe this industry, the more it strikes me that any investor that's investing in the hopes of being part of The Next Big Thing is simply gambling. Just as in gambling, if you study the game and the rules carefully enough, you can tip the odds in your favor a bit, but there's still no such thing as a guaranteed win. When I hear people say, "We're looking for the next X," my eyes roll back into my head a bit.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#38

Post by wtn »

alex_c wrote: post #5

Congrats to AirBnB! The way I understand it, the biggest threat to Airbnb's model are local governments starting to clamp down on this kind of (usually unlicensed?) subletting. I'm curious how the high valuation factors this risk. Of course, I suspect the high valuation means Airbnb is planning to expand to hotels and travel in general?

Lots of unreported personal income as well.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#39

Post by jhuckestein »

Airbnb is in a prime position to expand into the market of web-based PMS (I'm not kidding -- Property Management Systems) that are super expensive and still run on old MS-DOS machines in many hotels. Give hotels a web-based solution that interfaces with hotels.com and other sites (there's a rather involved protocol that you need to license, but the name escapes me) and you're in business.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#40

Post by palish »

spicyj wrote: post #23
pg wrote: post #20

Earlier quoted context omitted.

I can think of cases where startups have found no one to invest, and have ended up doing well. This is where something like YC can help, actually; we can tell people candidly whether we think it's the investors who are wrong, or the startup.

Why are you more likely to be able to accurately judge a startup than other potential investors?

Most investors want to play it safe. YC wants founders to succeed. Sure, there's money in it for them, but that's not why they're doing it.
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