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!

 

 

 

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.