The one that got away - AirBnb valued at $1bn

[cc976a]

Browsing through the net tonight I came across a story about AirBnb.com , a silicon valley startup now rumoured to be worth (a very American and very paper) $1bn

I had heard of the site but didn't too much about it, or what they sold or did. I went across to their website and after watching a very 'now' video (very well put together and perfectly suited to their target audience) saw an idea. Simple in nature but only possible with the Internet and one personally I would have had too many doubts about if I had come up with a similar idea.

For those of you not familiar with the site it basically allows people, like you, with spare rooms / houses / apartments anywhere in the world to allow anyone else in the world to stay there for a fixed fee price. Booking can be done 24/7 from anywhere. You simply pay, show up at your destination, stay, leave and write a review of your 'host'. Simplistic.

It got me thinking of all the ideas I have had, and dismissed, because of the negative questions I had. For AirBnb.com I was surprised in the number of people already listing out their accommodation for rent. Then there are the safety concerns. I know house-swapping and the like are not new but for someone like AirBnb to come along and steal the show, as they seem to be doing, must mean the have something unique to offer to the market. Also shows all the obvious negativity around the idea was not only dismissed by the founders and VC's but also by it's growing number of users.

For those in the, so-called, Silicon Valley, I assume funding and VC must be high - probably like it was in the UK in the early '00's when millions were available (and most lost) on startup ideas. In the early days of course much of this funding went down the drain and most ideas had no longevity in such a strange new world.

Would love to hear people's thoughts on the way these American companies are finding their feet so quickly with basic ideas and concepts and why funding seems so more readily available (is it the American's big and brass way of thinking) - or even experiences on your own simple ideas that you turned your back on only to find it was done (and well) or because too many (UK culture) negativities set in..........

 

[GreyWing]

I remember watching one of the first ones to do it on BBC click, about istopover.com which did a similar thing. That was about 2-3 years ago, not sure how well they are doing but seems some good money in it.

 

[dougs]

great idea and business

Airbnb is awesome and it works because they actually gaurantee that the house won't be trashed.

It's a sector that needed revelutionising and that is what they have done.

I was recently out in California meeting people and the view from an investor view is simply this:

is this a product that is good in principle
are the people good
can it scale

If so they seem to invest in it and keep investing fast

Doug

 

[philipp]

I first read of it back in July:

http://techcrunch.com/2011/07/27/the-moment-of-truth-for-airbnb-as-users-home-is-utterly-trashed/

P.

 

[newguy]

I think Americans have long been more inclined to invest in tech companies, and accept that their investment might come to nothing or could be really profitable. It's what silicon valley is built on really. Over here people don't seem as inclined to invest in startups. It's unfortunate really, since it's the idea that should matter, not your location.

 

[Blossom]

Would love to hear people's thoughts on the way these American companies are finding their feet so quickly with basic ideas and concepts and why funding seems so more readily available (is it the American's big and brass way of thinking)

I find this topic fascinating. One of my friends has an investment-style start up (London), and it's a online groups thing which is obviously never going to make any decent money, yet it's had literally millions of dollars poured into it. I know that investors only need one of X many investments to make a decent return, but it still seems crazy to me.

Another odd one is Groupon. Huge, public widespread flaws, extremely easy to replicate, very money- and marketing-orientated, yet has a crazy high valuation (even after recent drops).

I can imagine with these types of sites that there are competitors who launched at the same time or prior to these, and yet they are completely ignored. In Groupon's case the idea is extremely simple yet works. In my friend's, the idea isn't original at all and I think it's simply part of the 'who you know' culture. I wonder how much TechCrunch and Mashable contribute to this by choosing their features and who they write about multiple times.

 

[GreyWing]

But sometimes people with good ideas don't go looking for finance because they want to stop others from stealing their ideas.

If I had a decent idea with no barriers to market, would I go about asking for investment? Nope I probably wouldn't, so I wonder if the really good ideas are kept quiet at the beginning. Maybe not until the idea has got some momentum would someone with a really good idea go for investment or investment would find them.

I bet the investment guys see some crack pot ideas as well,

 

[dougs]

Groupon easy to replicate

sorryyyyyyyyyy......it's hearly impossible to replicate:

10,000 staff
1000's of merchants that have heard of it and used it
1000's of punters who have used and it and trust it
spent billion dollars

Thats one hell of a business to copy

Doug

 

[Blossom]

sorryyyyyyyyyy......it's hearly impossible to replicate:

10,000 staff
1000's of merchants that have heard of it and used it
1000's of punters who have used and it and trust it
spent billion dollars

Thats one hell of a business to copy

Doug

Not if you're already Facebook or Google. I know they tried very low-key ones, but they could have done a lot more with them. There's still a huge market for Groupon niches, and let's face it, at the height of MySpace no one thought that a competitor would come along and smash it down and do a better job. If Google's deals were combined with Google Maps and reviews, and linked in on Google+, there would be no need for Groupon.

It's more about the people who get involved than the money I think. MySpace is a classic example of pouring millions in - if no one uses it, it's worthless. And a lot of people are turning or have turned against Groupon, and it only works for some businesses and in specific situations. I don't think Groupon itself is sustainable, I think it grew way too fast without perfecting either its business model or services.

 

[cc976a]

Airbnb is awesome and it works because they actually gaurantee that the house won't be trashed.

Reading Philips link I'm not sure they do. The post is about someone's house which was trashed but although AirBnb 'helped' the authorities find the culprit they will not offer any financial compensation to their customer.

I assume cases such as this are rare but it will only take a few high profile cases to send their business and customers crashing.....does seem a risky venture especially as they have secured over £100m of financing (?)

Like Blossom I love and am very intrigued by this nature in Silicon Valley to keep building and piling them high. Billions on offer for basic ideas that may not be very far advanced and radically change during formation showing the instability of the original business plan and model.

Twitter and Facebook have become mainstream in the UK and anything social is quite in demand yet still UK investors are shying away from the same passionate individuals who can create something magical here too. Would be nice to have something home grown without having to have another hand-me-down created by another billionaire celebrated in the good ole US of A

Perhaps if there was more thinking this way over here not only would an increasing number of young individuals have more of an opportunity but can also be good for our own economy - although I'm sure they would be looking at offshoring operations to tax havens before the ink on their business plan dries.

Lastly how has Groupon already spent $1bn (??) the core fundamentals of their own business would not have required millions to create, their business model is simple, surely this wasn't all thrown at marketing efforts and deal getting?

 

[Pred]

problem with this idea is if you're unlucky the first 'booking' you get turns out to be a serial killer out on licence and you just sent him to stay with that nice young lady in south ken with the spare room!

seems like fb thrives on negative publicity
all the bad stuff that has come out of fb and bad deeds happening to people seems just to have helped them and zuckenbergs bank balance

not sure every site can survice that sort of negative pr


i think theres some ideas to be taken from it though that can work

 

[dougs]

airbnb and groupon

Hence the now gaurantee upto $1 million I believe with airbnb

Groupon/airbnb are both disruptive companies....that why they are so interesting because they are changing the way people think. Hence the huge valuations. It's a bet but both of those industries will never be the same and someone will be a dominant player, the investors are betting that Groupon/Airbnb hold the dominat position now and will continue to do so.

There are lots of companies that have crashed and burnt, but there are many who were disruptive, were valued at stupid valuations and now are mainstream.

Not long ago people were valueing Google and Facebook at a billion and saying tehy were daft value.

Doug