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Airbnb raises $1B at $31B valuation, became profitable in 2016

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Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#61

Post by bfwi »

jlgosse wrote: post #4
sloanesturz wrote: post #2

A shame that they didn't raise this money through an IPO. I'm afraid of how long unicorns are staying private: it's a big bummer for their employees and early investors. It'll be a tough sell for early employees of the next batch of unicorns if Uber, Airbnb, Palantir, Dropbox, etc. stay private for 10-15 years or more!

I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this

How does secondary market transaction work, in these cases? Is it only when a round is raised that shareholders can take money off the table, or does it ever happen between rounds as well?

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#62

Post by alehul »

username223 wrote: post #60
alehul wrote: post #38

Earlier quoted context omitted.

I don't mean this rudely -- is what I said offensive to people on HN? You're the first person to comment vs downvote as a reply and you seem to dislike FB quite a bit (and the idea of working for them). Although Facebook as an individual product isn't creating any more value than it already has, the company includes Oculus VR and an AI lab which seem like they'd be fascinating places to work. Additionally, it just se…

FB and GOOG are both large, stable surveillance/ad-tech companies with various money-losing side-bets. Their compensation is structured differently than what you would find at MSFT, IBM, etc. (more workplace perks), but it seems strange to relate that compensation structure to a "startup." People who work there get fat salaries, reliable employment, and perks, not a high-risk bet on a new idea.

That makes sense. I was just thinking of the look and feel of the workplace and people you're surrounded by more so than the company's purpose or risk of employment. Having come from a very non-tech background, I saw a lot of striking similarities in those aspects compared to what I had known.

Thanks for the input!

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#63

Post by nradov »

Tloewald wrote: post #33
dragonwriter wrote: post #23

Earlier quoted context omitted.

> Unless, they fix this and get more people to review honestly. I think they're going to run into a lot of problems. I don't airBnB, but a friend who does was recently berated by a host after leaving a 4-star review; that host claimed (don't know how true this is) that many hosts will refuse to rent to you again if you leave anything but a 5-star review. That and other things I've seen and heard about airBnB reviews…

The whole system of review curation that infests online markets is a problem waiting to be solved. Right now we basically have to parse reviews on the 4.4-5.0 scale because anything outside that is meaningless. It's amazing to go read a novel rated 3 stars (because it operates outside this loop) and find it transcendently good.

Instead of asking customers to give numeric star ratings, perhaps a better option would be a short list of Yes / No / Unsure questions. Were there clean sheets on the bed? Were there any cockroaches? Did the appliances work? Etc. Such questions are more objective and less prone to inflation.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#64

Post by nradov »

benatkin wrote: post #50
beefman wrote: post #31

We haven't had a recession in 8 years, and the postwar average time between recessions is 6 years.[1] The stock market's overall PE ratio is well above average.[2] With Box and Snap, the market demonstrated it is starving for tech IPOs -- even if a company is losing money and entirely based on a millennial fad. So why in the name of sweet baby Jesus would investors, founders, or anyone else delay an IPO at this point…

I think the founders AirBnb and Uber are afraid to transition to being legit companies. The lack of IPO is just a part of it.

Public listings or lack thereof are orthogonal to corporate legitimacy. Cf. Enron and SAS.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#65

Post by ksdale »

beefman wrote: post #54
ojbyrne wrote: post #40

Earlier quoted context omitted.

I would guess that its a combination of Sarbanes-Oxley and the glut of private capital available.

Is there a good explanation of the Sarbanes-Oxley issue somewhere? I tend to doubt procedural stuff like that could really be responsible.

I don't know of any good resources off the top of my head, but IIRC from law school, one of the main objectives of Sarbanes-Oxley is to get executives on the hook for the accuracy of the financial statements they sign, and I believe it also requires that they sign the financial statements.

I don't know enough to have an opinion about whether it's affecting IPO decisions, but I think it's more than just procedural stuff.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#66

Post by zenlikethat »

bfwi wrote: post #58
benatkin wrote: post #50

Earlier quoted context omitted.

I think the founders AirBnb and Uber are afraid to transition to being legit companies. The lack of IPO is just a part of it.

If you're a profitable private company, aren't you legit?

In some sense, yes, but check out Sarbanes-Oxley: https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act. Public companies are under much more scrutiny in terms of compliance, and they have a certain type of pressure to post good quarterly results that private companies don't.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#67

Post by nradov »

beefman wrote: post #54
ojbyrne wrote: post #40

Earlier quoted context omitted.

I would guess that its a combination of Sarbanes-Oxley and the glut of private capital available.

Is there a good explanation of the Sarbanes-Oxley issue somewhere? I tend to doubt procedural stuff like that could really be responsible.

Sarbanes-Oxley isn't solely responsible but it's one factor weighing on the scales. There is extra administrative overhead which costs real money, plus it exposes the company's leaders to more potential liability.

The bill was well intentioned. But it has had the unintended side effect of locking retail investors out of many of the highest returning investments. There is overall a shrinking number of companies publicly traded on US markets as more companies merge, go bankrupt, go private, or never go public in the first place. This is a growing problem for defined-contribution retirement plans.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#68

Post by bogomipz »

brandur wrote: post #7
jlgosse wrote: post #4

Earlier quoted context omitted.

I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this

The company isn't compelled in any way to allow this though, and is actually disincentivized from doing so because it increases the probability of key departures as those people are able to extract some value. If you're in such a position, you better hope that your founders _really_ like you.

I believe most do though, but with a right of first refusal. In which case they will buy them of direct you to their preferred buyer. Source: I have done this and my conversation with the broker for the secondary market who handles a lot of this said it is quite common and that in fact other at the same company I was at had done so. It might be frowned upon internally but you have to look out for yourself. Staying at a startup for 8+ plus years isn't very realistic for me personally.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#69

Post by throw_away_777 »

ucaetano wrote: post #28
ganfortran wrote: post #6

If they are already profitable, why raise money again?

You can be profitable but still be burning cash in a few different ways. Profitable looks only at profit, not at cash flow, so it only means that "booked revenue in a year > booked costs in a year". Keep in mind that capital expenses are not costs, but are cash expenses. Also, some revenue in a given year might not be a cash transaction, because even if you booked it in that year, it might take much longer for you to…

That is a pretty strange way of defining profitable where you are losing money.

Re: Airbnb raises $1B at $31B valuation, became profitable in 2016

#70

Post by zenlikethat »

hagbarth wrote: post #56
muninn_ wrote: post #39

Earlier quoted context omitted.

Yeah I lean toward this view as well. The point of an IPO is to raise capital. But when you do this, unless you own 51% of the company or there is a small group of like-minded individuals that own 51% of the company, you can wind up losing control and instead of doing things Wall Street doesn't like, you're going to have to focus on profitability and pleasing shareholders. It's one route to take, but not the only one…

Yeah, but AirBnB took that route when they got private investors. They expect to get their money back with a good ROI. That would be through an IPO or acquisition, either way you loose control of your company.

True, you lose some control, but a small board of a private company is much easier to convince and compel on long-term vision and plans than the general public.
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