I recall that Facebook's first day closed at or near the offer price: Opened at $38 and closed at $38.23. That's a masterful IPO pricing accomplishment, meaning, FB left $0.23 per share on the table.
Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return.
It's just my opinion, but ABNB missing by more than 100% ($140 close vs. $68 open) is a major fail on the part of their CFO.
So what happened to the Dutch Auction idea? Seems that tech is more powerful / autonomous in some ways than Wall St. now and could eliminate this risk? Why subject themselves to this process -- what are they gaining?
Instead of letting the underwriter dish out shares to favored institutions, Google held a Dutch auction in which everyone who wanted a share put in a bid. The lowest successful bid became the price that everyone got their shares at, even if they bid a higher amount. This method guarantees that the initial offering price is set to sell all of the shares at a price that conservatively reflects market demand.
About ~10% of AirBnbs shares were offered in the IPO. So only the shares sold in the IPO "left anything on the table". The other 90% of shareholders still have the option of selling at the higher market price.
Who's the say this wasn't the intended effect - the benefit to the valuation of the 90% of shares still being held is greater than the opportunity cost of the 10% shares sold in the initial IPO?
I know it doesn't really work this way anymore but the theoretical point of a public offering is raising capital for business operations. This represent billions in working capital that AirBNB missed out on.
Plus of the 10% of the shares soldo, most were to institutions with an understanding that they are going to hold it "long term" (i.e. which may be just a few months). Part of the IPO road show is for the company to select investors that believe in the company and who will be "good" shareholders.
If they opened higher than the market was willing to pay, the compounded effect would have been brutal, the media would have effectively declared airbnb dead on the sport with article after article contemplating exactly how they would die. And realistically that would have been the case with even a lukewarm launch, so who’s to say the net effect of leaving some money on the table for the 10% investers doesn’t overall pay itself back? The story today definitely isn’t “AirBnB is dying after covid period cuts them to the bone”.
This was the second largest "money left on the table" from an IPO. Jay Ritter's document shows how much AirBNB could have picked up if they had priced their IPO appropriately.
AirBnB is the loser; people who bought at the IPO price are the winners.
Let's say a company IPOs by selling 1,000 shares at $1/share. An investor buys them all. Opening bell rings and demand let's that investor sell shares at $2/share.
So the company sold 1,000 shares for half of what people were willing to pay. The investor bought shares at half the price they could sell them for.
AirBnB is the loser because they could have gotten that money, the people who got to buy at the initial IPO price are the winners because they got those billions.
This is akin to AirBNB selling dollars for 50 cents.
Winners: The investors who bought Airbnb shares at $68 whose shares are now worth $140.
Losers: Existing Airbnb shareholders who have shares in a company that could have raised $7B in cash but instead raised $3.5B. In theory, the mispricing "cost" Airbnb around 4% of its market cap, so existing common shares are worth 4% less than they should be.
But there's a caveat[1].
Companies like Airbnb (no stable profit) are almost entirely valued on sentiment and expectation. Assuming perfect information and rational actors, in an alternate universe, a direct listing would have resulted in around a $146[2] share price, on top of which the company can raise a secondary listing for $3.5B without affecting the share price. They'd have the same assets and liabilities as they have today, except pocketing the difference (by limiting dilution) instead of handing it to investors.
However, there's no certainty that the valuation would be $146 today had they gone this route. Humans, especially hype-powered retail investors who like to jump on flashy IPOs, are very susceptible to things like IPO bumps when making their buy or sell decisions. An entire field[3] of investing with significant buying power essentially relies on predicting sentiment.
If I'm a common shareholder, sure I'm sad that my shares are worth maybe 4% less than they "should" and that the financial world pocketed the difference, but I'm probably pretty happy my shares are worth what they are and aren't too interested in, for example, rehashing the deal or picking a offering strategy that could have swayed investor sentiment in a way that made my shares worth much more than 4% less.
[1] - The impact of "more perfectly" priced IPOs on market sentiment and thus public valuation is the most significant factor, but a secondary one is the practical aspect that the IPO process consists of a lot of risk, both on the part of the underwriting investment bank who gives the company the money raised in the IPO and the small number of powerful investors get access to (often) preferential pricing from the investment bank in exchange for an advanced commitment to buy the shares and hold for some agreed upon time. This illiquid market is dominated by relatively few actors. An IPOing company who doesn't "play ball" may find itself unable to find someone willing to underwrite their funding round or buy into it at all.
[2] - This theoretical loss per share is computable two ways. The easy way is that they "left $3.5B on the table" which divided into Airbnb's current market cap of $84B is ~4%. The other way is the counterfactual way. Airbnb currently has 600M shares outstanding, having issued 50M shares in the IPO in exchange for $3.5B. So if not for the issuance, Airbnb is worth $80.5B with 550M shares outstanding, or $146 per share.
[3] - https://en.wikipedia.org/wiki/Technical_analysis
Do you really think that the CFO should be accountable for pricing in market hype? I would much rather under-estimate and over-perform then over-estimate and fall short. The narrative between those two scenarios is drastically different.
Related. Look at Snowflake, it's trading well beyond any logic. Most retail doesn't realize that ~10% float is trading. Watch for Monday as lock-ups expire, the price action will be something.
> The narrative between those two scenarios is drastically different.
Who cares about the narrative unless you need to raise capital again soon? The money you get in an IPO actually goes into the business, while the trading price of the stock has no impact on the business.
The banks care because they do this all the time. One way they convince people to buy into the shitty IPOs is to also get them access to the good ones. Then the bank can make the fees from taking shitty companies public without upsetting the investors who buy those shitty IPOs.
An individual company is not part of an iterative game but the underwriters and institutional investors are, and it creates misaligned incentives.
It’s the reason for the hype around direct listings. So far no one has raised money that way but it’s only a matter of time. The difference is between floating publicly and floating publicly with a raise is basically nothing.
Airbnb employees get paid in stock. For many it may be as much as 40% of their total compensation. If the price drops, those employees are going to be very upset. The trading price matters very much.
Pretty sure they've been paying pre-IPO employees in RSUs for a while by now. Most late-stage companies stop paying options at a certain point. And even the pre-IPO employees will need to be paid RSUs in the future to retain them.
Say, I join a public company. If they say they will pay me 500k USD worth of stocks, it generally means that I get 500k/(average share price of month, share price on stock offer date etc.) stocks subject to vesting cycle. Basically, I have fixed number of shares from that point and they appreciate or depreciate with the market.
I am assuming if AirBnB offered 500k USD of RSUs similarly and the RSU price was say 50. That means the person had 10k RSUs subject to vesting cycle. So, if the stock price is 120 now they have 1200k USD worth of stocks subject to vesting cycle.
That's my understanding too. But if the RSU was granted at $50 and the price drops to $30, the employee is going to be quite upset (this could've happened to me at a different company if I had taken a certain offer). That's why I said that the share price continues to matter to the company, even post-IPO.
Expecting share prices to only go up and not move with broader market cycles would be quite naive. Maybe the fed will succeed in keeping this bubble from popping forever, but I certainly wouldn't be counting on it when considering any offer.
Surely they don’t care about it all the time — only when they wish to sell it. One would think that managers who make decisions based on business value — rather than stock “narratives” — would create the most value for long-term owners of the company.
Its funny you should mention that case(fb). It was very well priced if you were facebook as you lost barely any money. I remember the headlines during 2012 were the exact opposite, it was priced way too high and there was no 1st day "pop", everyone in the media/financial group declared the IPO a flop, the stock dropped after and settled near $12 a share a few months later, from there is started its huge rise to 200+.
It's not that easy to extract all the money from IPO in a market that's in the bubble. You need institutional investors to agree. They are somehow reasonable, at least compared to what happens on the first day. Once trading starts, you'll have robinhood crowd pumping the price, without any understanding of valuation. They only know that stonks go up, so better buy early! And hedge funds that understand that behavior will also make sure to get their piece of cake.
Doesn’t the market play a role as well? Back in 2013 or whenever FB IPOd, things in tech stocks were a bit less crazy than everything right now. So could they really expect it to close at $140?
Someone posted a terrific explanation for why companies are not “leaving money the table”. In short, if a fool pays $140 for 1 share of Airbnb, does that magically make the entire company worth 2X more? If I sell 1 share of my startup for $10, is my company worth $1B?
Ignore the rest of the company’s shares and just look at the ones sold in the IPO. AirBnB could have gotten twice as much money for them, so of course they left money on the table.
This is incorrect. There needs to be large investors willing to buy at $140 in order to say the CFO failed. There likely wasn't.
You can't compare the actions of "smart money" like Fidelity, etc to a small investor swept up in the speculative mania and buying 50 shares at $140. Those are the ones propping up the prices until the big money deems it safe enough to buy large volumes.
I really wonder who all the sellers were in the IPO. In my case, were I to get allocation from my broker (I didn't) I would be subject to a 15 day holding period. Presumably the institutional investors that got the lions share of the $68 allocation weren't subject to this holding period? I read somewhere else that ABNB employees were allowed to sell 15% of their holdings at IPO? Perhaps that's where another initial set of shares that hit the open market came from?
Not if they don’t need the cash. The underwriters price shares based on analysis, but the market prices shares by supply and demand. If you undersell the demand, you get a price rise, which becomes the new ‘market’ valuation. Worst case, they traded $3.5B cash for $50B in equity.
it's not like they can just ask any price they want. they have to negotiate with the initial investors. if they have no investors then there is no IPO. plus, the IPO consisted of only 7% of shares right? they prob have a lot more to sell if they want, at the higher price.
Another strong argument in favor of doing a direct listing to determine market price (and raising privately beforehand if possible).
Anytime one party does a transaction repeatedly as their job and one party does a transaction once (maybe twice) in their life, the transaction will be structured to favor the first group (along with a compelling narrative/PR of why this is not the case).
Airbnb lost out here. It's easy to discount since people are happy to have made money, but I'm not sure this was a stunning IPO considering that. If I was on the company side, I'd be pissed at the initial pricing and the money that was left on the table.
The counter narrative is that pricing is hard and the banks try to do the best they can (with a slight preference for under pricing to benefit themselves). This is probably closer to the truth, but there's a lot of evidence that they're just not good at it.
It'd be interesting to see some clause that if the banks mis-priced by some X% the partners would have to sell and give 50% back to the company. Though I suspect even this wouldn't help because market price is hard to predict even if you're incentivized to try your best.
> If I was on the company side, I'd be pissed at the initial pricing and the money that was left on the table.
Eh, would you really though? I suppose maybe a maniacally focused founder or CEO might. But anyone in a position to be involved in these decisions has a huge personal stake in the situation. If I thought I was going to make $100M and instead I made $200M, it's hard to imagine being mad at the bankers for leaving the company's money on the table. But maybe that's why I'm not a big company executive.
But anyway, the flip side of a transaction that is incredibly important and you do only once, is that if you go against the norm and it goes badly, it could go very badly and you might not get a redo. If you go along with the experts, you are genuinely probably taking less risk.
Which is how it ends up structured to benefit the bankers.
People who only do something once or twice are more likely to defer to the 'experts', the only problem is the experts have their own incentives that are not directly aligned. The experts are also really good at selling since that's mostly their job so it makes it even harder to go against the grain.
I get why founders do it, but I think it's a mistake. Founders are also usually pretty good at first principles thinking and risk taking. DPO is also pretty solid ground now that a few companies have done it.
> "Eh, would you really though?"
Impossible to know, but I think so? After you're worth 5+ Billion it's more about money you can leverage via your company to grow and build. I think personal wealth has diminishing returns a bit before that point. Losing out on that much money for the company would irritate me.
There's a funny story (I searched briefly, but couldn't find) that when Elon took Tesla public via an IPO and the bankers told him the initial price he just said "no, at least $XX or no deal". I think the bank price was $17 and he said at least $19, but I could be off on the numbers. They did his price and that price was still too low.
Two arguments can be made. On the one hand, there are definitely more private places to be rented out then there are hotel rooms in those 5 chains. On the other hand, I'm not entirely sure that Airbnb can ever be profitable enough with all of those rentable places to justify the cost, especially since much of their stock is misused long term rental capacity that many municipalities are cracking down on now.
So yes, it is rather unlikely that Airbnb will grow enough to justify the market cap. This is tech bubble hype at it's epitome.
> especially since much of their stock is misused long term rental capacity that many municipalities are cracking down on now.
And thank heavens they are. I've been on the suffering end of trying to find a place to rent before but couldn't due to everyone preferring AirBnB for long term rental properties as they could make more money. I won't say it's the root cause of housing crises in cities worldwide, but it's definitely a major contributor, as you have the same number of people now fighting over less area. The quicker AirBnB gets regulated to go back to being a place to rent out a spare room, the better.
>availability in the rental market has bounced, with 41 per cent more properties for rent nationally and 92 per cent more in Dublin.
>In Dublin availability was almost double what it was a year ago, with nearly 3,000 homes on the rental market on August 1st compared to fewer than 1,600 in August 2019,
It's interesting you quote the Irish Times, as Ireland is where I had my trouble.
> In Dublin availability was almost double what it was a year ago, with nearly 3,000 homes on the rental market on August 1st compared to fewer than 1,600 in August 2019,
It literally doubled the market, something much needed. And there's honestly probably still more where the owners didn't hop back into long-term rent. Hopefully it stays like this next year when I plan to go do a masters. And that the government works on fixing it.
Petco is well established (founded 55 years ago), based primarily in brick and mortar retail, and don't try to market themselves as a tech or "dotcom" company. We may be in a bubble, but I don't think their IPO is comparable to Pets.com of the dotcom era.
I think the post COVID-19 phase will actually be good for them in that regard. Companies switch to remote, at least a bit and cities will empty a bit more. This might make some more space for permantent tenants. But could be also completely wrong about that.
Based on Airbnb's other product of "experiences", I could see them growing into the broader vacation industry.
I remember a talk by Brian Chesky where he lamented the (pre-COVID) style of travel where tourists just herd into queues at mainstream tourist attractions. Airbnb experiences are supposed to subvert this and create an industry of tourism that is more serendipitous and less standardized.
It's already so easy to do non-standard tourist activities on a vacation that I'm skeptical there is a big opportunity here. All it takes to avoid the standard tourist traps is having interests that influence your travel, talking to locals, or firing up something like Groupon to find something to do in a new area. I've always figured that so many people hit up classic tourist spots because that's what they actually want to do.
That said, I don't have any real insight into the tourism market and won't be shocked if this works out well for Airbnb. I personally try to avoid crowded tourist spots like the plague and this could just be my bias talking.
You and I seem to travel in the same way, but I know many people - even of roughly my generation, late 20s/early 30s, who literally don't know the right tools or communities to plan a trip like that. Its guidebooks, maybe some YouTube videos, and mostly things like Pinterest boards that get used to plan a trip. No trips to the local destination's subreddit, certainly no use of Google Translate to read some local media/magazines, etc.
For a lot of people, "tourist trap" doesn't register as a thing - those are just the things you _do_ when you go to whatever place you're going to.
If Airbnb becomes the safe, convenient, well-marketed way to discover reputable but not stereotypical local experiences in a marketplace that takes your credit card, they could do well IMO.
'Something like Groupon to find something to do' is the pitch though, because actual Groupon isn't the ideal place to find things which are interesting to experience on holiday. (And in many of places asking locals meets with either utter bemusement or a commission-paying introduction to a standard tourist activity)
AirBNB aren't the first people to try this, but they're pretty well placed brand-wise to sell the 'real local experience curated by ordinary local people' image. And yes, in practice it'll leverage that to sell standard tourist activities and some customers will be delighted, just like they use AirBNB to find ideally situated self-catering holiday apartments run as businesses rather than airbeds in suburban spare rooms
Yes this seems reasonable. I used to work for one of the main competitors of Airbnb and this was our strategy for growth outside of our core business of selling hotel "roomnights" until Covid hit.
The margins on flights and attraction tickets are tiny as you might expect, but the idea was this would lead to more growth in our core business since it could all be tied together in one platform. There's also the less well defined but non-zero benefit of data, marketing and so on that this extra visibility provides.
Brian has talked about getting into flights in some capacity. I wonder if dealing with bookings is not their goal but imagine if they had Airbnb louges in major airports. Those traveling with an Airbnb stay booked could access the lounge free of charge. Sort of like a loss leader to promote downstream Airbnb bookings.
>Airbnb experiences are supposed to subvert this and create an industry of tourism that is more serendipitous and less standardized.
Although the experiences I saw were either around (vegan) cooking and stuff or the general stuff that you can book at a normal tourist agency, just a lot more expensive.
Booking.com, a major online hotel aggregator and probably more akin to Airbnb than a physical hotel chain, has a market cap of $85B — not far off from Airbnb's $100B.
I don't think individual hotel chains are an equivalent business to Airbnb, since those have high real estate costs and have clear physical hurdles to growth: you have to buy property and build hotels, and staff all of them to run the front desk, carry people's luggage, clean the rooms, do laundry, etc. The comparison to other OTAs like Booking — that don't own the properties but make money from listing them and allowing booking — makes more sense IMO. The valuation looks a lot less frothy with those comparisons.
(I am an ex-Airbnb employee and still hold many shares FWIW.)
I agree, but I also think the valuations of certain OTAs also look frothy compared with digital distribution platforms with comparable cost bases and scale and arguably better moats. Sabre's market cap is under $4bn.
Airbnb’s business model is much more capital efficient than regular hotels. It can grow and respond to market conditions much faster than a hotel, has much lower customer acquisition/marketing costs, and operates in a wider market segment than hotels since extended stay is a much more common use case (yes, you can stay in a hotel for an extended stay, and there are extended stay hotels, but anecdotally I’ve never heard of a consumer paying for that out of pocket unless they are like homeless or temporarily homeless. It’s usually a corporation or insurance paying for it AFAIK).
I still don’t think it necessarily justifies the current market cap.
Airbnb has more rooms, as rafiki6 said, but without the disadvantage of having to own all those rooms. And maintain them. And pay taxes on them, and mortgages.
It's like saying that Google has a higher market cap than the top five content-based web sites. Sure, but... that kind of misses the point, doesn't it?
As others have said, you need to look at growth. You also need to look at margins. Another big difference is a lot of hotel chains are a mix of franchised-out locations and owned-and-operated locations. Airbnb is effectively "franchised," but I'm not sure how different their take is compared to a Motel 6. There's also a question of how much pandemic behaviors will stick.
I have no idea. 8 years ago I liked Airbnb but now with the stupidly high cleaning fees despite having some boomer host tell me that I'm "disrespectful" for not leaving the place spotless I've switched back to hotels.
The reaction of the markets to Airbnb's IPO is definitely an echo of the dotcom days.
The only question is, is Airbnb's IPO equivalent to Netscape (ie. near the beginning of the boom) or Pets.com (near the end). Only time will tell I suppose.
As someone whose main exposure to stocks is investing via retirement accounts, can someone explain if they're really leaving $4 billion on the table? Can't they just issue/sell more stock to drive down the price to their originally targeted price? Or is that some kind of breach of fiduciary duty (or something else)?
Yes, the company can do a secondary offering after its IPO, and it's pretty common. I think the hype around the IPO will help them do a secondary next year, so in that sense the low initial price is like a marketing tool for future stock.
Also, Airbnb (like other tech companies) is issuing quite a lot of new stock in the form of RSUs used to pay employees. This constant dilution benefits from the high stock price.
You don't leave billions on the table to generate hype. You could just as easily raise the extra billions in the IPO and then spend $100 million in ads to generate hype (and it would be much cheaper).
They sold X number of shares in the IPO at at $68 per share price and then the next morning, shares were selling at >$130 per share. The money left on the table is due to them selling at $68 when they likely could have sold for high (given the pent up demand).
Some people argue that they wouldn't have been able to sell all X shares at $130 per share. That may be the case, but it's really hard not to think the $68 price was way too low.
You can issue more shares to raise more money and drive the price down, but you never can undo the discount you gave the IPO investors.
When they issued shares in the IPO, that diluted existing shareholders. The only way to un-dilute them would be to buy back those shares (at current inflated prices). They could sell more shares, which would mean further dilution.
It is a misconception that when a company IPOs and the stock pops, that the delta is money left on the table. The vast majority of the shares are sold to institutional investors. There are explicit or implicit lock-up periods in place. And most of the pre-IPO investors will typically have a 6-month lockup. So if 10% of shares are sold in the IPO and 10% of those shares are actually trade-able, only 1% of the total stock is liquid. That can lead to very large price swings (i.e. the pop).
I imagine cancellations skyrocketed and bookings halted for a few weeks in the spring, but by summer they started to publicly reveal trends were working in their behavior. The number of bookings was a bit depressed, but the number of nights booked had actually increased. In covid times, people seem to prefer staying in a private home for 1-2 weeks over sharing hallways with other guests at hotels for a few nights. With WFH, you can even relocate to an airbnb for a month or more.
I was going to uncharacteristically rent an AirBnB in January because I wanted my own place I could cook in rather than have to go to restaurants, at least for every meal. (As a base for hiking.) I ended up canceling because the situation is so fluid/crazy but it made more sense than staying in a hotel.
But also due to covid, many people have relocated to temporary accommodation out of the cities - booking through Airbnb. I heard somewhere they saw record bookings in one of the past few months.
I assume most investors are smarter than that and are hoping AirBnB will build a monopoly similar to how google did with search and Wikipedia did with online encyclopedias.
A 5% monopoly tax on most rentals/hotels does give you a huge profit eventually.
Is there any paid service with actual monopoly yet? Amazon has market share, but also competitive prices. To me all of these big markets like taxi, food delivery and online booking seem rather low barrier of entry. And that the customers will be price aware. That can't be really compared with free services like Google, Wikipedia or Youtube...
The optimal shape for most markets is a duopoly. Both competitors get a large enough stake to continue growing, but don't really meaningfully compete, and don't have to worry as much about antitrust.
To be fair... you can stay at an airbnb and still be completely distanced from the owner of said airbnb. Yeah, you have to travel, but for many this is also possible without any close contact.
I can't guarantee, but my bet is the majority of people vacationing in Airbnbs aren't being distant. The marginal impact on deaths now is probably lower than it was in March, but only barely.
I'm not talking about interaction with the host, I'm talking about the general risks of traveling and then going to a new place where you are interacting with the people shortly after traveling.
My claim is that most of these people are not going on exclusively nature-exploration vacations, they are going to see people or to patronize their businesses.
Maybe ease up on the costal holier than thou sentiment. I’m in Miami right now and 90% of the people I’ve met are tech / finance types from NYC doing blow inside of clubs until 4am.
So, I can't criticize the interior of America for generally failing to distance because of some rich finance people you met at a high-end dinner and somehow know their drug habits?
Sorry, I really don't see the relevance to the original claim.
I bought at $146 and feel ok at that price for a long play.
I see regulation as the major risk.
But getting millions of people to trust you with their homes is one hell of a moat.
Everything about the post-pandemic world favors AirBNB.
- Remote/Mobile workers. That alone is gonna make them an incredible amount of money. This isn't ever going to change.
- Pandemic housing boom. People are buying at unprecedented rates. This is money leaving cities. This is a generation of global-minded, young internet-savvy buyers. AirBNB wins here.
- Economic recession / unemployment. Everyone who _does_ own a home and finds themselves in financial trouble is going to consider renting a room. It's an obvious move and I think the job market will have at-risk homeowners considering this move en masse.
Assuming their costs are about 50%, and that they need to make ~$8B profit / year, they'd need to collect $16B to make $8B, so that's about $100B in rentals at 15% take. Plausible, because the USA alone is ~$90B, but why does it seem stable? If AirBNB starts to charge enough to make $8B profit per year why wouldn't you rent your suite with VRBO?
The margins can get paper thin because nobody seems to want the profitable extras - just CC processing and a listings site. I know people who rent vacation property and they do not lack for potential customers. They're on all the services, but also Craigslist, etc. They value the services for easier money handling, slightly less customer service required, and a few smaller things. But certainly not enough to warrant more than a 5% cut, but ~15% seems more common. This seems to usually be obfuscated by charging the guest, not the host, but it's still money that's not on the table for them.
They often break the rules to deal with this by suggesting customers contact them directly and pay by money transfer, so the industry is already price conscious and willing to undercut partners. Not a friendly place to expand into. And customers tend to price conscious and shop around, so it seems likely to stay this way.
Uber, to contrast, benefits from their network effect because most customers are time, not price, conscious and thus only check one service. For AirBNB you have months to shop around and contact the host out of band.
2x IPO strike price in first day of trading after $613M recouped stock options after the layoffs. Stock consolidation and 180 day lock up period creates a big risk for when employees sell. Lots of them probably have tens of thousands of shares, exercised them very cheaply, and will want to offload them. I'm not going to touch this stock with a 10-foot pole. I do wish I could short this stock but options aren't available for it yet.
Everyone says this about the lock up and it makes sense intuitively, but it doesn't really match the data. I saw a presentation by a major investment bank that showed that in most cases there is not a significant drop following the lock up expiration -- I'm sure there are examples either way, but this was a compelling basket.
If the effect of early employees and investors selling after the lockup is significant, it wouldn't manifest itself as a drop after the lock up, it's a known date and it would be anticipated ahead of time by other investors and traders with the stock price reflecting this.
Fair point -- I should have been more clear, this analysis was based on comparing the post-lockup price to the first trade, and also to the primary offering price (not 180 days to 179 days). You'd sometimes see a drop from the "pop" price, although not always, and it would almost never fall below the primary price.
there is a 7 day exercise window currently in effect in which 15% of pre-tax awarded shares can be sold. early employees are able to sell, today through thursday. things look alright from here. there is another window for 25% after Q1 subject to performance. im not expecting a massive movement on the actual lockup expiration in may
They already priced well above the expected range. It's highly unlikely they would have been able find subscribers for the 51,551,723 shares of the offering at the post-IPO price, before the IPO.
> It's highly unlikely they would have been able find subscribers for the 51,551,723 shares of the offering at the post-IPO price, before the IPO.
I don't believe that. They opened at $140 but couldn't have found subscribers for anything more than $68? I don't think they're that bad at modeling the markets.
Not necessarily. I personally think it closed way too high yesterday . If I’m right, then they’ll avoid headlines of “Airbnb closed today at 30% below their IPO price” by setting a more long term reasonable price. No idea how much the “narrative” really matters in the public stock market, but people sure talk about it like it does. It might matter for employee satisfaction too?
that isn’t how an IPO works. just because your stock pops doesn’t mean you handed over money to “wall street” if you’ve raised the money you sought at the set IPO price.
the investors who bought the IPO allocation got an immediate 100% return but that is not at the expense of the company.
No one could’ve predicted Airbnb would be bid up to $100B. We are in a massive speculative bubble that not even wall street can make sense of.
you’re giving too much credit to investment bankers if you think they would know a travel company that has $2 billion in debt on their balance sheet, losing money, and in the industry most hurt by covid should’ve obviously been set at $100B when that was no where near where the company thought it was valued.
We’re in a market where Tesla is a $600B company selling 500k a year.
No. Airbnb can sell more shares tomorrow at $150 if they wanted to. OTOH if they gambled and set their price at $150 and the stock tanked it would screw over shareholders who are taxed based on the IPO price and would be underwater immediately.
The IPO is just one transaction in one point in time. They aren’t losing sleep over this.
I guess that's the root of our disagreement; I would give an emphatic Yes to my question above, and I think all our other differences of opinion stem from there.
Decisions are best evaluated in the context in which they were made. If you, after best-effort due-diligence, concluded that a sale for $1 was an okay/good deal, then $1 is great.
It is much easier, in the long run, to be happy for the person who unlocked $499 in value on that baseball card than it is to turn inward and feel awful for the $499 you "missed out on". If you had no idea that such a thing was possible, why feel bad?
I missed out on buying AMZN at IPO prices, as did most of humanity, but I don't feel bad about it. The company could have easily failed. It didn't plan to turn a profit ... ever. AirBnB's price could fall far below the IPO price in the next few months. If so, the IPO-pricing will look like genius in retrospect.
all he said was it makes the stock market look bad when some people double their money in a day.
has nothing to do with whether Airbnb was screwed over by wall street.
no one can predict the public market appetite in this environment. Airbnb was arguably richly valued at $50B as is and is richly valued at $100B. Setting your price too high and then crashing your stock is worse for the company due to tax implications and overall investor sentiment.
> Setting your price too high and then crashing your stock is worse for the company due to tax implications and overall investor sentiment.
Raising double the money is a bad thing due to "investor sentiment"? What tangible negative impact does that have on Airbnb. You're gonna need to explain this one. Because it really sounds to me like repeating a talking point told by a counterparty.
you don’t raise double the money because you set the price 2x unless that was your plan. you would sell half the shares if you had a fixed goal eg $3B.
you decide on how much you need and then decide the number of shares you sell at what price. it isn’t like they would’ve raised twice the money if they upped the share price.
> you don’t raise double the money because you set the price 2x unless that was your plan. you would sell half the shares
You keep throwing out assumptions without anything backing them.
They at a price and amount for sale. Absent an auction set price it's almost certain that price is inefficiently set. And you're arguing that it was efficiently set when we have tens of billions of proof it wasn't efficiently set via yesterday's stock move.
I said nothing about efficiency. All I am arguing is that Airbnb didn’t screw themselves. No money was taken from them. They raised the money they wanted to raise at a price they thought would be tolerable by the public markets.
And handed all the gains on the first day over to the private allotment that was distributed from Wall Street banks to their top clients because no one else could buy shares. It’s total Wall Street bs.
Bill Gurney talking about the inefficiency of the ipo process on Wall Street and the inherent conflict of broker-client problem the banks carry with them.
They handed over boatloads of money because that is the toll that Wall Street firms exact in illiquid markets and that is how Wall Street firms make money.
I'm not saying that they were screwed over.
> all he said was it makes the stock market look bad when some people double their money in a day.
That is one part of what he says, very misleading. He describes it as an "error" that is due to a flaw in the "way Wall Street is organized" (ie. around capitalizing on IPOs). That's more than just saying the markets "look bad".
No one could’ve predicted Airbnb would be bid up to $100B.
Just because you’re Goldman does not mean you can predict where a share price will go on day 1. we are in a massive speculative cycle that isn’t just impacting Airbnb’s IPO but a lot of tech stocks, many up 1x-10x in a year.
So to try to argue that wall street purposefully set the price too low when $50B is already high given travel hasn’t fully recovered yet is makes no sense.
> Just because you’re Goldman does not mean you can predict where a share price will go on day 1.
The EMH doesn't apply if there wasn't a previous market price. This was an absolutely massive move, and I'm supposed to believe there was no indication of that ahead of time.
You can definitely model supply and demand if you're Goldman - I'm not saying that you can predict market moves, but this wasn't a move from a previous efficient market-determined price.
> $50B is already high given travel hasn’t fully recovered yet is makes no sense.
$50B is not high by definition given the current market pricing.
I don’t really know why you’re so caught up in this.
Airbnb could take advantage of their stock price and issue more shares in a secondary offering tomorrow if they wanted to and “screw” the investors who doubled their money in a day by diluting them. It’s not like this was their one shot of raising money ever again.
There’s really nothing for Airbnb to be mad about.
No one really knows what is tolerated by public markets right now. Tech stocks are in a speculative bubble caused by zero rates and a flood of money from the Fed.
It isn’t as if Airbnb can’t sell more shares at $150 now in a secondary offering if they wanted to. The IPO is just one point in time.
They can raise more more at $150 in a secondary if they wanted to.
The consequence of setting too high and cratering your stock the first day is that employees are taxed based on IPO price. Imagine if you owed taxes at $150 and six months later it was at $70. That would be a nightmare.
And I think you’ve been reading too much Bill Gurley.
This is a market with a lot of froth and if they listed the price at $1 trillion, speculators would have bid it up to $2 trillion just because they want to sell it to a greater fool.
All my experiences using Airbnb have been terrible and their apps/website are the slowest I've ever seen in a tech company.
But I think the price is reasonable because the Fed printing machine won't stop and US has long lost the opportunity to ever increase interest rate so everything will just pop up like end of world, e.g. what has Apple done this year so they are now worth 1 trillion more than last year? Thus 60b for Airbnb is basically the same as 30b last year.
tl;dr: if your asset doesn't pop 100% this year, you are a fool.
I hear a lot of talk surrounding their "moat" and many skeptics are questioning whether or not they will be able to maintain their competitive advantage. However, it feels like Airbnb has solved a truly hard problem: how to make people trust your service.
People are using this app to go stay in random people's homes. How often do you hear people talk about being murdered in uber? I still hear it. How often do you hear it for Airbnb? I haven't heard someone express that worry yet.
They've solved the trust and the brand issue, and _that_ is their moat.
I’ve had nothing but bad experiences with Airbnb and hosts who are basically trying to rinse as much money as possible for as little effort as possible. I’m not sure after a long journey I want to wonder around the Edinburgh fringe again, trying to decipher Scottish, while the wind is going crazy and there are millions of people floating around just to get keys. I think Airbnb is great if there are 15 of you sharing a flat but a lot less good if you’re a couple who want their lives to be simple. I really do not get why it’s so popular, it’s barely cheaper than a hotel after cleaning and service fees - and 100% less convenient.
Most of the time I get a good experience in an environment that I prefer over a hotel. It is wonderful.
But then there are times like the time we went to NYC, the host was lying about their address to avoid getting in trouble with the city, and expected to contact us on our way to correct that. However we were on an airplane, and when we arrived the host was asleep.
Ever shown up at a stranger's house, past midnight, with 4 kids expecting to go to sleep there? With them having not a clue why you are trying to break into their house?
Because I've had the opposite experience would you be willing to share how you pick places?
I rent: "Whole places", with a strong bias towards detached buildings, that rate 4.7 or higher on their scale, and have glowing reviews that mention how nice the host is. These are almost always $90/night or more, with an average of $120/night.
This is basically how I rent and I've also had great experiences.
I have rented a "non-Whole place" and I would say that was a pretty bad experience. Our room was supposed to be the only Airbnb, but two nights in, they rented out a room with a frosted glass separator next to us as "420 friendly" and the couple that moved in proceeded to have quite loud sex. We gave them pretty scathing reviews, which I am not wont to do.
Ha, that may beat my weird one. I was with an ex, and we rented a room in a home across from Golden Gate park. We cleared with the resident that we would be back around 2am, and that it would be fine.
At 2am, they got mad at us for making so much noise. THEN at 6am, they start blasting some ethnic music as they proceeded to fry food for hours and party. Turns out they were VERY Jewish and were celebrating the Sabbath being over. Surreal.
Exactly, I think sharing homes with the whole population is very problematic as on average you’ll get a lot of people who aren’t really into Airbnb as a concept and don’t really care.
Getting home at 2am happens, if you don’t like it don’t rent rooms for money. In my head I edited out the expletives from that sentence :-|
I’m not sure, now that I can afford a nicer place I usually book a hotel due to my previous experience. Maybe I should increase my price ranges and try again, but the key problem just means I really cannot be bothered. If they had places around town to get the keys from I’d be much more likely to use it again.
Having said that places usually are over £90 per night but this is very place dependant.
I've rented about 20 whole places. 50% had issues. 50% were good. Prices were almost always is the $120-$150 a night range. Examples of bad: claiming to have reserved parking but not having parking. Claiming to be one place but being another. Claiming to have usable internet but not. Claiming to have a bed but just having a cot. etc...
At this point I'd mostly choose hotels over AirBnB because generally a hotel will try to fix an issue but AirBnb never will. Their position is effectively "sucks to be you, you shouldn't have chosen that listing".
They policy is basically "unless it's life threatening shutup!" and the worst part is either you suck it up or you're out a day of your vacation travel etc as you try to scramble to find another place. It's not fun.
Most of the time when I travel, it's the city etc. that's the experience I'm looking for, not the accommodation. I have no doubt there are, even many, AirBnBs out there that are quite nice. But I'll usually go for predictability, as well as other amenities, like being able to leave my luggage for the day after I check out.
The issue is that when you do this via AirBnB you're actively participating in driving out the people who actually need to live there and who make up the city and give it part of its character.
I've had many bad experiences with airbnb. Also some really great (esp in the beginning), but usually those were huge places.
AirBNB is often more expensive, is a hassle with getting a key some times (other side of the city wtf), NO support in case electricity fails, some had dirty laundry. etc etc.
I have stayed at "conventional" B&B's that I've noticed apparently also list on AirBnB and they've been fine. I think a general point whether we're talking renting a room/apartment, ordering online FBA, etc. is that a lot of people bargain hunt. While that often works out, there's also a reason for the saying that if something looks too good to be true, there's a good chance you're going to get burned.
I've had OK experiences, but I've acutely aware of how close I am to a bad experience, and it makes me uncomfortable. When I'm in a hotel, I'm never thinking "what if I can't get a key to the room," "what if a neighbor asks what I'm doing," "is there a hidden camera," etc.
AirBnB is on the long list of very successful startups that I absolutely don't get at all. Staying in some randos house feels so incredibly awkward and unpleasant to me. I'm genuinely surprised how many people are fine with it and even more surprised at how many people are willing to rent their homes to strangers. The whole thing just feels like a giant scam to dodge hotel tax.
I have a lot of good things to say about AirBnB, it's beautifully designed, the one time we used it, it was great. Awesome host and at that time, much cheaper than a hotel.
However I can't get over the service and cleaning fees, especially as they are added on the second page. I don't mind them, but why not include them on the listing page?
Not sure if it's an US thing or if it's something people actually falls for? This is a practice that is prevalent throughout industries, but one standing out of course is restaurants.
The menu price: 20USD BUT + SF mandate + service fees + sales tax + mandatory tips, the dish is actually at least 30USD ? Why not just put that on the menu? In Sweden for instance (and most of Europe) the price you see in stores and on menus is the price you pay. Someone starting the next AirBnB and just shows you the actual price on the front page that is on your statement of your credit card in the end, will be very successful (I hope!)
I never used AirBnB for that reason: The hotel was mostly the same price. But I guess if I were with 2-3 friends, the equation will change. AirBnB is bad deal if you are traveling alone.
If you pay at the higher end of rates and go with Superhosts, your experience will largely be flawless. I've never had a problem and my stays have been amazing, but I'm also spending hotel-equivalent prices or higher.
I feel like this is not some great engineering feat with Airbnb and has much more to do with classism and the type of person who typically owns that beautiful vacation home you want to stay in.
You're right but I think that's an unfair way to put the fact that two rich people can get a remedy from each other without the law, but a rich person only gets remedies from poor people through the law.
The better comparison is Airbnb versus CouchSurfing or TrustedHouseSitters. All three use unused space in your home in exchange for something of psychological and monetary value, including some things Paul Graham said were important to Airbnb - like the psychic pleasure of having guests over.
The difference is that TrustedHouseSitters sitters and CouchSurfing surfers are disproportionately completely broke, so if they go and they break your rich person coffee machine, what are you going to do? Get money from the guest?
You'll never use THS again. Retention is 0% after the first incident. The private equity firm that owns THS isn't going to make you whole, the insurance they give has a $1,000 minimum, the requirements are onerous, etc.
When I break something in an Airbnb, I pay every time. When they fuck up the parking and I get towed, the Airbnb paid. So we both keep using the service.
Michael Sandel talked big talk about Airbnb monetized something that used to be generously gifted, but he omitted the special math of how rich people exchanging stuff with each other results in that thing being utilized 10,000% more, simply because it is sustainable in the sense of people retaining and not hitting the home button, and he never really talked about, ironically, the lack of justice when people break or steal your shit and there is simply no remedy.
> When I break something in an Airbnb, I pay every time. When they fuck up the parking and I get towed, the Airbnb paid. So we both keep using the service.
This seems very orthogonal to concerns about being murdered.
> Michael Sandel talked big talk about Airbnb monetized something that used to be generously gifted, but he omitted the special math of how rich people exchanging stuff with each other results in that thing being utilized 10,000% more, simply because it is sustainable in the sense of people retaining and not hitting the home button, and he never really talked about, ironically, the lack of justice when people break or steal your shit and there is simply no remedy.
I'm sorry, I honestly don't really understand. I'm assuming you're discussing Sandel's recent work on what he sees as the moral limits around markets.
You're saying that markets provide a recourse for property damage, which makes them more just? That, again, seems unrelated - no reason you can't have recourse for property damage even if you are letting someone stay in your house free of charge.
I also just think the narrative you're spinning is sort of misleading. Rich people overwhelmingly do have remedies for wrongs and have the capacity to pursue legal action.
Also you're unlikely to see the owner, they certainly won't be inside with you, you can leave any time, you're likely to be with others, and they can't change your location.
Contrast that with an intoxicated young woman climbing alone into a stranger's car where he has a lot of control - including being able to lock the doors or take her to a remote/unfamiliar location. Even with all the checks and measures in place, assaults are not uncommon; I'm not familiar with any AirBnB type assaults (far more frequently, it's the guests victimising the owner via property damage).
Not true, we once stayed in Pisa, Italy, and the (absolutely messy) appartment was shared with the host and her son. It was quite awkward at times but we still enjoyed the stay
Many years back I stayed in Melbourne, Australia with a lovely Chinese speaking elderly couple. They made me lunch, I have no idea what it was but it was delicious! I think it was much more common to rent an extra room back when Airbnb was relatively new.
My best Airbnb experience was my first one 4 years ago, when with a partner I booked a room in a house with the owner living in. We had a tremendous time, we had bbq one night together, it was an enjoyable not planned semi-communal experience.
Nowadays, the experience Airbnb offers is mostly that of a poorly managed hotel that has properties all over the world. It can be worthwhile when traveling in groups, but otherwise I tend to prefer hotels.
Still very common. My parents are AirBnB "super hosts" and they live in the basement due to regulatory requirements that are common in pricey American cities.
> How often do you hear people talk about being murdered in uber? I still hear it. How often do you hear it for Airbnb? I haven't heard someone express that worry yet.
Only in the US: They've solved one of the hardest problems, not being murdered while using their service....
British person here: I get where you're coming from, sorta, but it's a pretty bad take...
Uber has had their license revoked and returned repeatedly in London for the last few years because they have such a terrible reputation for consumer safety - instances of girls being assaulted by drivers, and insufficient protection by Uber after that.
I’ve been running two airbnbs for two years, with over 1000 nights hosted, and I’ve had none of those things. The worst that’s happened is a guest broke a chair, which they apologised over and paid for.
Some evidence of that would be that AirBnb has been growing for almost 15 years. If people were not generally decent, the business would never have scaled to this level.
My neighbor let his apartment out on AirBNB and the people who stayed there started a fire in the fireplace and didn't open the flue. I had to crawl out a smoke filled hallway.
I've had the displeasure of going through AirBnb dispute resolution process more than once, which was resolved in my favour once and not the other. Neither time did I think they did a good job of hearing the sides of the case and deciding on solid principles or written foundations. It's pretty much a matter of who sees it and makes a subjective call. It's also shocking that the first several tiers of customer support is seemingly run by volunteers (or otherwise ill-equipped people).
The success of the trust and brand issue is largely due to the number of well meaning hosts far outnumbering the bad and AirBnb keeping the bad stories not get viral too often.
The 'keep your rating high' has been around since eBay and could easily be copied. I wouldn't have a problem using a service that competed with AirBnb. What they have is a volume lead. People look there because that's where the listings are. Hosts list there because that's where people look.
Their dispute process reminds me of credit card chargebacks. They don't read the info you produce most of the time and make a call based on what's best for the company. I hate it.
There are plenty of horror stories, even if not directly murder. Rending out a nice, luxurious/novel holiday home is the story they sell, but that's far from the bulk. They enable a secondary, dodgy market in a lot of towns around the world.
> They've solved the trust and the brand issue, and _that_ is their moat.
I think they've solved it better than their competitors, but I'm not sure that they've solved it broadly for people using hospitality services.
For better or worse, one bad experience tends to sour people that I've talked to on the overall host-driven places to stay. Whereas for hotels and other more traditional forms, that seems to be compartmentalized to specific locations ("ugh, the hilton in boston") or chains ("I'm avoiding all Marriots from now on").
> How often do you hear it for Airbnb? I haven't heard someone express that worry yet.
I think the "not getting murdered" but is more to do with the demographic of people who are "hosts" with the service that they offer (which are mostly whole-homes). It is just at a higher price point that doesn't match the stereotype of "murderous Uber driver". If someone did "something" it's a lot riskier to kill someone in a property that you own vs a moving vehicle. I'm not saying that stereotype is valid in any way, Uber<->Airbnb isn't really a valid comparison there.
That being said, I have 100% heard both stories and concerns about people's privacy being violated in Airbnb's. Hidden cameras, nosey "hosts", etc. That's not even including the trust issues around "I showed up and the host won't let me in and Airbnb is not being helpful, what am I supposed to do now?". Those trust issues definitely still exist.
Agree, largely because AirBnB tends to have higher platform and cleaning fees.
I also have a hard time understanding why AirBnB is treated as crown jewel of success for using $6 billion in raised capital and more than 6,000 employees to copy what VRBO already did well (and with substantially less resources).
(Honestly, I would like to understand this, if someone can explain it to me).
There was a very big story last Halloween about an Airbnb house party in Orinda, CA that resulted in a mass shooting and 5 deaths. That started their crack down on house parties.
> I can’t say I’ll be leaving the platform, either. Dealing with Airbnb’s easily exploitable and occasionally crazy-making system is still just a bit cheaper than renting a hotel.
And also dicking around renters when shit does go bad? (Typical example: host says $2000 in damages. AirBnB offers $200. Deliberately frustrate host with weeks/months of back and forth "negotiation". End with an offer of $500, host gives up and take it. Hey hey, $1500 saved!)
Is it though? There are plenty of other platforms that people don't think twice about booking on. Booking.com, Trivago, etc.
Their real value is that when a lot of people think "I'll book somewhere", they now go to Airbnb first, much like when people think "I'll buy something" they go to Amazon first. But I think that's a fairly weak "moat" on the scale of things.
My friend had her whole house ruined with everything stolen (and then only received a fraction of the cost back because of bad record keeping). I don't think she'll be recommending hosting to anyone.
Jim Cramer was hilarious when talking about Tesla stock during Doordash's IPO. He said he was talking to a young person about Tesla and was asking them why they bought the stock. And they said "because it goes up! and I want to be rich!". He threw up his hands and said "how do you argue with that?".
> I hear a lot of talk surrounding their "moat" and many skeptics are questioning whether or not they will be able to maintain their competitive advantage.
Why do they need a moat? What happened to all the free market capitalism everyone believes in? Let the better company win out in true competition?
Or is that just a taking point, and everyone actually believes in building moats to avoid competition?
A moat is what enables you to avoid being in a race-to-the-bottom commodity business. In a commodity business you get just enough returns to cover cost of capital plus a little bit. With a moat you can get 20% - 30% profit margins: Coca-Cola, Apple, Google. A moat is also what builds an enduring business. The moat is what prevents other people from just doing that same thing you are doing but at a lower price. A moat isn't rent seeking, it is (or at least can be) out-competing. The iPhone was a huge moat for Apple for many years; they were 2 years ahead of everyone when it came out, so much so that engineers at Microsoft and RIM both thought that the announced product was impossible. The M1 is similar, everyone is probably two years behind, if they can even catch up. (Eventually they will, because Apple probably can't ride the process improvements that long)
A commodity business is the essence of free market capitalism.
Every time you say you don't want to be in a commodity business, you're saying you don't believe in free market capitalism. You don't want competition.
I think the unstated context is that “moats” might justify a higher stock valuation than otherwise, which is relevant because of the behavior of the stock on IPO
I decided I'd had it with Airbnb a couple of years ago now and mostly haven't looked back. I prioritize more traditional hospitality options now.
I'll save a long diatribe and instead say that when I added up the little details I didn't like about the platform, and the ways I'd fix them, I'd "invented" ... a hotel.
It may be my age now (over 30), but I've come to value knowing that Hilton uses a certain type of bedsheet in all their rooms over "Alfred's converted garage looks like it has a quirky sense of style!"
I'll hand it to Airbnb on this though: the "experiences" feature they introduced right as I was getting fed up with them is pretty neat.
I assume it's probably in part an increase in wealth as you've gotten older. I think a Hilton is normally upwards of $200 a night, plus $50 per night for parking ($1400-1750 depending if you have a car). The average American earns $900 per week and is probably not dropping that kind of money on a hotel.
They're also pretty geared towards business travelers, with lots of premium conveniences that aren't needed by someone traveling to visit friends or something. For example, I usually prefer a basic kitchen with a fridge rather than room service for $40 per meal. I'll happily take the room service if I have work to do and my employer is paying, though.
> The average American earns $900 per week and is probably not dropping that kind of money on a hotel.
The average American making $900 per week doesn't normally go places that charge $50 a night for parking. Apparently parking at the Omaha Hilton is $15 per night.
If I'm price-conscious, all else being equal, I'd still prefer a Super 8 to an Airbnb because it might not be nice, but it won't be bad, and the variance between room and service quality across all their properties is pretty small, so I won't be surprised by anything. That, and if you're price-conscious, a bad Airbnb experience is expensive to fix; you just finished traveling, you want your room now, 3 hours and 4 phone calls later. Don't book an Airbnb unless you have a backup hotel to go to.
In Seattle (last city I stayed at a Hilton) it's $45 after tax. It's entirely possible that not many people making $900 per week go to Seattle, and when they do I bet they don't stay at the Hilton.
Agreed though, it's hard to price in the potentially massive hassle of a bad Airbnb. I think most people treat the probability as zero until it happens to them personally.
Yeah I pulled "Hilton" out of a hat - didn't mean to convey "I only stay in pricey places now". I'll take a Super 8 or a local inn pretty much any day.
Some of my experiences with airbnb, always a guest not an owner:
Bads - Had a really bad house with cabinet doors torn off the cabinets, trash in the garage, place was a total dump. Stayed one day and got the rest of my money back. Another place had a bad mouse infestation, this was dealt with by the owner but it was still pretty shocking as I have never lived or stayed in a place that had a single mouse my entire life.
Goods - Right before the pandemic hit had a really good string of excellent airbnbs that were all cancelled last minute, the thing with airbnb is, great places are always booked, we just got lucky as people were scared and stopped traveling(early march).
Ugly - Alot of owners now are pulling a perfectly legal scam of listing a place at a certain price point and then charging an extremely high cleaning fee. When booking it, you are then shocked by the extreme fees, one place (5 days stay) was charging $400 for their cleaning fee.
Takeaways - If you do your own cooking and don't mind cleaning up airbnb is great for you. As a parent its great as I don't have to deal with a hotel lobby or elevators(I always book standalone houses). As for price its roughly even with hotels, a few years back it was typically 40-50% cheaper.
> Ugly - Alot of owners now are pulling a perfectly legal scam of listing a place at a certain price point and then charging an extremely high cleaning fee. When booking it, you are then shocked by the extreme fees, one place (5 days stay) was charging $400 for their cleaning fee.
I'm not sure I follow here, the cleaning fee is announced before you confirm the booking isn't it?
In a way it's similar to airlines having cheap tickets to then adding seat-choosing fee, bagage fee, etc. The initial low price is slightly deceptive to appear cheaper on aggregators, isn't it?
Here the "scam" is they use same deceptive practice to appear cheaper on the Airbnb map?
For any serious booking, people explore their options and open a few tabs of different listings to pick, since they have to check other things (smoker/non-smoker, pets/no pets, etc). The cleaning fee for the trip is listed there.
Some owners prefer long term stays, so putting a flat higher cleaning fee is a good mechanism to incentivise longer stays imo, as yes, cleaning is time consuming.
Maybe the Map itself could improve to show the total price for the trip instead of base-rate-per-night.
> They should be included in the price shown on the map.
Completely agree, that would make the experience more user-friendly for the person looking to rent.
This is an AirBnb platform issue, not necessarily a owner "scam".
Not a trivial engineering problem as the dynamic price based on length of your stay can't be cached easily as base-price-per-night, and I assume caching prices per listing is what makes the map quick to load and responsive, but it'd be a welcome change!
This is not a platform issue, it is done on purpose to deceive the customer, especially the less tech- or financially savvy customers.
People have been complaining about the cleaning fee ridiculousness forever. Airbnb could and should limit the total allowable cleaning expenses (for type of house, room, location etc., in one word: localization), but they don't do it because it would decrease revenue, not because of technical difficulties, please.
The base price could be cached and then multiplied by the number of nights plus the cleaning fee before the map is rendered. I can't imagine that would be too expensive to calculate on the front end.
> the cleaning fee is announced before you confirm the booking isn't it?
That is correct, my issue is I am looking for places in a certain price point per day, say $200, so in my example I see a place for $200 a day I want 5 days, so $1000 plus a small cleaning fee and other fees(maybe $100 or slightly more). This place after I click on it and prepare to book then totals it up before I reserve, then comes to $1600. It has a $400 cleaning fee and there were also other fees attached. So an unsuspecting person could then get taken by this nonsense.
A possible fix is airbnb could add in all the fees and add that to the daily price, a simple UI fix that would stop this unscrupulous behavior by hosts. So instead of showing as $200 a day it now shows as $320 a day.
Exorbitant fees not shown in the search function is the most annoying part about searching Airbnb, because it makes the prices in the search page prices look artificially low. I think it's designed encouraging owners to do so, since it makes it seem like airbnbs are way cheaper than hotels.
Yeah the particularly annoying thing about the cleaning fee is that it isn't included in refunds. They advertise a 50% refund if you can't go on short notice. But actually it doesn't include the first night or the cleaning fee so it's more like 10-20% in practice.
the most annoying thing to me about airbnb is that for some reason there is no way to search by bed size. last time I used airbnb I had to resort to using a scraper library to search keywords relating to king beds. I felt like a hacker but it was still far from easy or clean
As a great fan of airbnb having stayed 10 times in Denmark in different ones, I was suddenly burned by a fake review from a first time host ( she got into trouble with her housing association I think ). She destroyed my feedbacks "image" with made up statements in her statement.
After several appeals airbnb did not help at all.
I got so burned that I still don't quite understand whether I was unlucky or failed to reach the right person, but Ive been too taken aback to start again with a new profile.
Dispute resolution at most marketplace and social media companies is pretty hit or miss in my experience. In general, you're not going to get a big time slice from whatever low-paid customer service rep you get assigned to. Maybe they'll make the right call and maybe they won't but any investigation is going to be pretty cursory.
That's not to say stuff never gets fixed. A few months ago I had a random blog on posting to Twitter. No idea why and they did clear it after a few days. So things got fixed but it was very opaque.
ADDED: And, to be fair, a lot of disputes can be a combination of he said/she said and different expectations. "My cheap Manhattan hotel room is tiny!" You don't say.
I had another fun experience like that, but triggered by the guest reviews. I booked a place for my parents to stay which suddenly disappeared. All I was told by AirBNB is that the host cancelled and the user nor the place was no longer to be found on the site.
Turns out some other guest reported the host for having a hidden camera (which was really the standard Danish fire alarm). The AirBNB messaging made it out to be the host's fault.
My gf has had two shitty experiences with AirBnB's "community leaders" in response to two completely unjustified reviews of her place. Anybody can just suddenly decide that they had a terrible time and that it's the fault of the property, and AirBnB seems predisposed to take the visitors word for it. If they keep that up they're not going to have any renters.
To be fair though, at least depending upon the details, what is AirBnB is supposed to do? If they remove negative reviews because they're outliers, that sounds like what people accuse Yelp of doing. A lot of complaints can be pretty subjective. It's also pretty common for marketplaces to take the side of buyers in general.
Airbnb is great until you get a bad experience. For hotels, there is a floor for bad experiences - it can only get so bad, and the customer service is usually decent. I used airbnb until I had a single terrible experience and worse customer service that did not help me because I had no proof of the incident. Been using hotels ever since.
They will churn through new customers who get bitten by this until they come up with controls/features that prevent it. Instituting those will increase the price making them less competitive and opening the door to others.
Its quite amusing how much the gig economy is hyped up but besides the initial surge of excitement, it just settles down and looks like the industry its trying to replace.
But I'm a pessimist. Maybe they will use the infusion of cash to invest in something truly groundbreaking. But I'm staying far far away from making any investments in them.
It's often worse than what it replaced, too. Uber did well because the Taxi industry already had gone to such low low's, but the gig economy feels synonomous with an excuse to pay less than minimum wage to me.
I pretty much stopped using Airbnb after getting a bad review from a host for “not tidying up” - what exactly is the large cleaning fee for? So paying almost hotel prices for less than hotel level service seems like a pretty bad deal. Particularly when the host wants you to also jump through hoops to avoid getting busted by the homeowners or tenants association...
I absolutely hate that. I've had AirBNB's tell me to take out the trash and the full gamet before leaving while still charging me $30 to clean. I refused.
All of whom got very generous severance packages that may extend through the end of the year and all of their vested equity is now worth a lot. I don't think they need your condolences.
For some reason, I just feel this price is too high for them and that it will fall in the coming 2-3 months. Then again, I think about their business model and there’s a lot to like: the don’t own any real estate and if they really wanted to, they could likely let go most of their staff and have a team of maybe 60 - 100 people run the bussiness as it mostly revolves around simply managing the app and keeping it running. I’m curious how “Moated” their bussiness will turn out to be. I don’t really see competition will cut in that much as Airbnb has such an head start and established brand. The only big question I have left is legality. My family works in the hotel bussiness and is required to do fire alarm checks and all sorts of other checks to prove that he is safe to customers. Will Airbnb one day be required to do this? Only time will tell.
60-100 staff? Sorry but that's very naïve. Think about how many core services this takes:
-finance
-payment
-HR
-management
-verification of hosts / properties
-scam detection and moderation
-legal
-dispute arbitration
-programming
-infrastructure
-projects
-building management for properties like HQ they own
-customer service
-etc.
They'd be lucky to get away with a couple multiples of your guess. This isn't netflix, there are far more facets to operations.
Netflix is complex and they also have entire teams whose effect on the product or business is zero or negative. Almost all companies are inefficient in different ways.
> 60-100 staff? Sorry but that's very naïve. Think about how many core services this takes:
I agree, but the engineering department could be handled with less than 50 people. Most of the work they do is linked to operation stuff and not engineering
the parent explained how it was impossible to get to that low of a number:
-finance -payment -HR -management -verification of hosts / properties -scam detection and moderation -legal -dispute arbitration -programming -infrastructure -projects -building management for properties like HQ they own -customer service -etc.
polote said "engineering". You responded by listing a bunch of non-engineering jobs that need done. OK, but you're arguing with something that is not what polote said.
This comes up a lot (ohh it is a just a crud app and you just need a couple of people)
This is fine and it is common misconception about how large app businesses work. (kudos to airbnb for making complex things look so simple)
Here is a great post about Uber and why Uber gets complex (once you have many product lines across hundreds of cities, each with their own subtleties and rules/regulations)
https://news.ycombinator.com/item?id=25376346
>For some reason, I just feel this price is too high for them and that it will fall in the coming 2-3 months.
They've got a lot going for them they are:
A verb now like Google or Zoom.
The dominant player in a global 2 sided market
Potential major competitors (i.e. AirBnB by Marriott) are blocked by legal complications
They're going to be very profitable for a long time. A 100billion valuation is a tall order as it implies that, at some point, you start generating 10 billion a year or so in cash flow. But I can see them doing that.
Becoming a verb can be hit or miss. Take for example Kleenex. If I say to you, "can you grab me a box of Kleenex at the store" you don't instinctively buy Kleenex brand, you buy whatever is on sale/stands out/is your regular brand.
Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return.
It's just my opinion, but ABNB missing by more than 100% ($140 close vs. $68 open) is a major fail on the part of their CFO.
https://www.businessinsider.com/facebook-stock-price-ipo-6th...