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Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

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Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#41

Post by bertil »

I’m a little confused: when Elon Musk skirts the law and dodges local concessions, most comments here argue that he is a pioneer, freeing us from evil; when AirBnB renters do, they are doing something illegal.

Prohibiting any rentals between one night and a month is the result of lobbying, just like automobile concessions: either Y Combinator participants considers that laws can be changed to adapt to new business models, and that the current one (in the US) are the result of business pressures or they are not. Yes, hotels are incredibly less dodgy than car salesmen -- but still ‘illegal’ shouldn’t have a different meaning on similar debate.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#42

Post by bertil »

timdellinger wrote: post #29
naterator wrote: post #21

Earlier quoted context omitted.

> [1]"Airbnb doesn’t even own a bed, but its backers think it’s more valuable than Hyatt" Sure, certainly an important thing to consider if you take the pessimistic view. On the very optimistic side, consider the possibility that AirBnB makes hotels almost entirely obsolete (it is definitely putting pressure on them). Hotels are expensive and cookie-cutter. While in some ways predictable is their advantage, expensive…

> On the very optimistic side, consider the possibility that AirBnB makes hotels almost entirely obsolete (it is definitely putting pressure on them). Hotels are expensive and cookie-cutter. While in some ways predictable is their advantage, expensive is not, and cookie-cutter is boring. AirBnB offers location (location location), comfort (home away from home), privacy (if you want it), and novelty (every trip is dif…

> Anyone organizing for a larger group (weddings, sports teams, church trips, conferences, etc.) can't deal with a smattering of different housing providers.

It's funny because AirBnB was set-up (and I still see them mainly) as a convenient solution for such gatherings, when hotels are all booked. They are the reliable reference in that case.

Granted, conferences and weddings in the US have always stricken me as operated by control-freaks who can’t accept that people able to run team of 15 scientists, or parents with three children can find a way to book a room by themselves.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#43

Post by [deleted] »

aaronapple wrote: post #7
goatforce5 wrote: post #5

As a comparison point, Expedia has a current market cap of $9.79bn: https://www.google.ca/finance?q=NASDAQ:EXPE

Well, yeah, but Expedia is primarily a search/booking engine, right? They aren't directly creating new, network-effect related opportunities. Much easier to innovate in that area (e.g. Hipmunk) vs. with a marketplace where scale and availability are key.

[deleted]

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#44

Post by tanzam75 »

bdcravens wrote: post #40
notlisted wrote: post #28

Earlier quoted context omitted.

They also need money for bigger plans/additional services. See http://www.fastcompany.com/3027107/punk-meet-rock-airbnb-bri... By the way, bad stuff happens all the time. I assume a lot if this doesn't make it into the press as they pay people off. Just last week: http://mashable.com/2014/03/17/airbnb-freak-fest/ http://www.latimes.com/business/technology/la-fi-tn-airbnb-x...

I think they'll get hit with something huge. A fire in an apartment that takes out the complex. A rape. A death. Something that'll ding them to the order of tens of millions, or more. For one incident. Something that they can't make go away for $20K. If there's a big enough payday, it will make its way into the press, no doubt.

I wonder why the ambulance-chasing lawyers haven't already dinged Airbnb with class-action suits?

Is the ToS really ironclad in limiting their liability?

Or are they just not big enough yet that they can be counted on to settle the case? After all, class-action lawyers rarely want to go to trial. They're much happier with a settlement that leaves them with a rich payday, but has only modest benefits for the putative class members. (A $10 coupon for your next Airbnb stay!)

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#45

Post by deathflute »

pg wrote: post #35
notlisted wrote: post #9

What a silly joke[1]. Though they are planning to launch additional services [2] @aaronapple below (above?) is right... regulatory changes are on the way. Right now they're violating the law, don't collect or pay local taxes unlike real hotels, don't bother with ensuring that local rules and regulations are followed. This will (and should) change soon. Hiding behind the people who rent out their spaces who are "suppo…

Once they are forced to play on a level playing field, their rates won't be as competitive and their service not as popular. This is a common misconception on HN. People with technical backgrounds love structural explanations for things. You see a similar phenomenon in the number of people who believe that the shape of an airfoil is what keeps a plane up. But in fact the main thing driving Airbnb's growth is not pric…

"But in fact the main thing driving Airbnb's growth is not price, but that guests are looking for authentic experiences"

Do you think that as the services that Airbnb provides gets more standardized, the Airbnb experience will inevitably get more transactional like traditional hotels?

If so, do you think that their core user base is likely to shift towards more traditional traveler?

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#46

Post by riggins »

notlisted wrote: post #34
riggins wrote: post #33

Earlier quoted context omitted.

It's outrageous - no way is AirBnB "worth" more than Hyatt hotels!!! not crazy 1. go look at Hyatt's financials. Back in 2010 fiscal year Hyatt only generated $66M of net income. Why? Because hotels generally have high operating leverage (i.e. high fixed costs) and low margins, so small downturns in demand for rooms can have a large impact on profits. And frankly, AirBnB is helping depress demand for hotel rooms. 2.…

Hmmmm... 2010 was apparently much worse than 2011/2012. #1 - Look at 2012/2011 [1] - "As of December 31, 2012, our worldwide portfolio consisted of 500 properties (135,144 rooms and units)". Property has value, even without income. AirBnB has no such thing. "[...]We primarily derive our revenues from hotel operations, management and franchise fees, other revenues from managed properties and sales of vacation ownershi…

Your $30MM ($300MM) is before taxes, before expenses

yes I'm aware of that. In my OP I was going to also say

"at $300M with a 20% net income margin (which would be one of the higher net income margins but not unheard of) AirBnB would be producing $60M of profit." but I figured most people would be able to infer that.

Anyway, think about it this way. TPG is leading the deal right? TPG is one of the top 5 PE firms in the country. While it's possible TPG is making crazy investments, I think the best base case assumption is the TPG is not making crazy investments. I mean these are seriously smart guys with a good track record.

So if we start from the position that TPG is sane, then we ask ourselves, how are sane people getting to a $10B valuation. And I think I gave the outline of how sane people might be looking at it and arriving at a $10B valuation.

Plus I'm old enough to remember when people thought it was crazy that Amazon was valued at more than Barnes & Noble.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#47

Post by mathattack »

notlisted wrote: post #9

What a silly joke[1]. Though they are planning to launch additional services [2] @aaronapple below (above?) is right... regulatory changes are on the way. Right now they're violating the law, don't collect or pay local taxes unlike real hotels, don't bother with ensuring that local rules and regulations are followed. This will (and should) change soon. Hiding behind the people who rent out their spaces who are "suppo…

Many times great minds behind companies have already seen other ways to make money. This could be Google when it was just a search engine, or Amazon when it was just books.

The idea of renting your house can be transportable to many other non-rentable items too. $10 billion is reasonable if in 3 years there's a 80% chance that it's a $2.5 billion company, and a 20% chance that it's a $75 billion company.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#48

Post by hkphooey »

riggins wrote: post #46
notlisted wrote: post #34

Earlier quoted context omitted.

Hmmmm... 2010 was apparently much worse than 2011/2012. #1 - Look at 2012/2011 [1] - "As of December 31, 2012, our worldwide portfolio consisted of 500 properties (135,144 rooms and units)". Property has value, even without income. AirBnB has no such thing. "[...]We primarily derive our revenues from hotel operations, management and franchise fees, other revenues from managed properties and sales of vacation ownershi…

Your $30MM ($300MM) is before taxes, before expenses yes I'm aware of that. In my OP I was going to also say "at $300M with a 20% net income margin (which would be one of the higher net income margins but not unheard of) AirBnB would be producing $60M of profit." but I figured most people would be able to infer that. Anyway, think about it this way. TPG is leading the deal right? TPG is one of the top 5 PE firms in t…

Amazon has physical warehouses and a supply chain. Hyatt has property and employees all over the world.

Airbnb has a website. The entry barrier to competition is very low. They are not unique at all.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#49

Post by yesiamyourdad »

bertil wrote: post #41

I’m a little confused: when Elon Musk skirts the law and dodges local concessions, most comments here argue that he is a pioneer, freeing us from evil; when AirBnB renters do, they are doing something illegal. Prohibiting any rentals between one night and a month is the result of lobbying, just like automobile concessions: either Y Combinator participants considers that laws can be changed to adapt to new business mo…

Worth noting that not everyone is in favor of changing the hotel laws. Neighbors also likely dislike having short term renters. Sometimes lessors are in double violation - city and homeowners association covenants.

Re: Airbnb Said to Pursue Valuation Above $10 Billion in New Fund-Raising Round

#50

Post by bertil »

yesiamyourdad wrote: post #49
bertil wrote: post #41

I’m a little confused: when Elon Musk skirts the law and dodges local concessions, most comments here argue that he is a pioneer, freeing us from evil; when AirBnB renters do, they are doing something illegal. Prohibiting any rentals between one night and a month is the result of lobbying, just like automobile concessions: either Y Combinator participants considers that laws can be changed to adapt to new business mo…

Worth noting that not everyone is in favor of changing the hotel laws. Neighbors also likely dislike having short term renters. Sometimes lessors are in double violation - city and homeowners association covenants.

Absolutely — just like I’ve personally expressed doubts about not being able to tell limos apart from other cars: as a cyclist, both tend to park at random places; taxis also tend to drive more aggressively and pay less attention to side mirrors, I hope Uber drivers won't ever go that trend.

Taxi rules are not just about signaling trustworthy transporters to users.

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