Meet Our Newest Portfolio Company, Airbnb

Talk about a business with humble roots. Brian Chesky and Joe Gebbia met at the Rhode Island School of Design and became roommates in San Francisco in 2007. A prominent design conference was coming to town and the nearby hotels were sold out. Joe and Brian thought it might be both fun and lucrative to rent out space in their apartment to conference guests looking for lodging, but alas they lacked the requisite beds. Turns out that Joe had a few airbeds in the closet. They threw in a morning meal and “airbedandbreakfast” was born. Three lucky conference attendees enjoyed good accommodations, food and hospitality while Joe and Brian enjoyed the company of their guests and some very welcome income.

Joe and Brian resolved to make a run at transforming this experience into a business.  They were joined by a third co-founder, Nathan Blecharczyk, who brought programming expertise.  The name was shortened to “Airbnb” and they launched their website in 2009.

The Airbnb service quickly struck an extremely powerful chord with consumers. Growth has been flat-out explosive, with over two million room nights already booked. The site now features spaces in 186 countries and over 16,000 cities around the world. Hosts can earn substantial sums of money—one has even used Airbnb earnings to pay off his mortgage—and their community of users is passionate about the service, enjoying the social aspects of Airbnb travel.

The community has substantially expanded the type of spaces offered on the Airbnb platform, moving well beyond a room in a house or apartment. You can now use Airbnb to rent apartments, homes, cabins, tree houses, boats, parking spaces, castles, sublets… and even a country (for the bargain sum of $70,000 per night, you can rent out the country of Liechtenstein like rapper Snoop Dog).

I first came across Airbnb in March, when Brian presented the business at an investor conference I was attending. For me, it was a true déjà vu experience. I joined eBay in 1999, early in its life, and had the privilege of witnessing and contributing to the development of one of the most iconic e-commerce businesses. Airbnb reminds me more of eBay in its early days than any other business I have ever encountered. Both are:

Marketplace models, connecting buyers and sellers

Community-driven, populated with passionate users who evangelize the service

Providing economic opportunity and empowerment to their sellers/hosts, enabling them to earn meaningful income

Platforms upon which their community of users continually expands into new verticals

Helping to make inefficient commerce efficient

Not coincidentally, Brian, Joe and Nate also see these same similarities. They believe Airbnb is to spaces what eBay is to products.

We have been extremely impressed by the execution of Brian, Joe, Nate and the rest of the Airbnb team.  The website is clean and very intuitive—not surprising, I guess, when two of the founders are designers.  They have built and motivated a vibrant community of evangelist users.  They are extremely scrappy marketers, and have executed brilliantly to acquire hosts/properties and renters.  And they have been ably managing the operations amidst simply explosive growth.

And while the company has accomplished a ton in just a couple of years, we believe that they’re just scratching the surface of their potential. They have opportunities to go much deeper in their current categories, broaden into new categories of spaces, and build out their global footprint.  They are truly pioneering a new marketplace, where access to spaces is more valuable than ownership.

Andreessen Horowitz led Airbnb’s latest financing round, investing $60 million of the total raise of $112 million.  We’re thrilled to be partnering with the Airbnb team, and look forward to supporting them in building an iconic e-commerce franchise!