Interesting, so they already had revenue before they even applied to Y Combinator. I wonder: how much was Y Combinator part of their success? Would they have been successful without being part of the program as well?
It was the hot insights at it's time. When looking back and depending on what you already know these insights have either been chewed upon for a long time and aren't that fresh any more or are still quite interesting. Thanks for the short summary of something, which is rather common knowledge today in our circle and thus makes perfect sense to wrap up in a short sentence instead of going into the full length article. Though it is also about opportunity and where I live (somewhere in Europe) there mostly is only the chance to work a decent job and paradoxically with that keep "the old big industry further afloat" - sideways and to the right on a high level (stock / revenue), locking everyone in this world and maybe/probably watching Silicon Valley disrupt it.
>What was special about the Airbnbs was how earnest they were.
So earnest. Their inability to police fraudulent/scam listings. It comes from a place of earnest conviction. Their blatant attempts to circumvent and disregard local laws about illegal hotel listings. It comes from a place of earnest conviction.
Why is there always a need to sugarcoat these bio pieces like they're describing somebody in line for canonization?
Why? I think AirBnb, Uber, and DoorDash have all succeeded primarily due to flaunting of social norms and fair employment regulations, treating them as externalities to be exploited, rather than social fabric that we can rely on. Why would a piece about why they succeeded necessarily forgo these critical parts to their immorally obtained success?
Illegally, "allegally", of dubious concordance with the spirit of the law, maybe. But immorally? That is very much a matter of opinion don't you think?
Damn right it's a matter of opinion. My opinion is that the deliberate abuse and exploitation of social niceties is immoral. What I don't see is how it being an opinion does anything to invalidate it, nor how pointing it out is an opinion is expected to convince me against holding it.
Edit: Perhaps I am a bit harsh here. I am frustrated overall at the general idea that nothing can ever be condemned, and morals may not be discussed, merely because they include a subjective value judgment. Those value judgments occur at all times, and are what give importance to the facts.
I totally agree that it's perfectly fine to discuss morals, even condemn them, it's a valid conversation and it should be explored.
Your point about the morality of their actions is totally valid in itself. A valid and well supported opinion.
However what I refer to is that you question how a piece like this article can go ahead and not point out the immortality of their ways. And I really think that from their business-centered, libertarian point of view, there just isn't any immortality here. In their opinion, they did things right. Therefore they could not point it out.
Fair enough, I need to be more specific about what I believe is the point of the piece.
It's intended to give would-be entrepreneurs insight into traits of previously successful entrepreneurs. In particular traits the writer believes should be emulated.
Those will naturally be positive traits, because the entire point of the piece is to give readers something to aim for.
I don't think Airbnb is in the same boat as the latter two in regards to fair employment regulations.
> Flaunting social norms
In the case of Airbnb, what was the social norm? Staying in a hotel? Wouldn't all disruption be flaunting social norms??
I think applying your own moral standards to a company in this way can get precarious. Beside the outlier cases of trashed rentals or someone left in the cold (which is harmful, but again, a very small percentage of their volume), the majority or Airbnb hosts and guests seem to find value in their service and choose to use it. How immoral is that, in reality?
"What Airbnb did in 2010 and 2011 was to use a bot to spambot to email who had posted short term vacation rental ads on Craigslist. The emails claimed to be from women who liked their listings, suggesting that they try Airbnb. "
Interesting. Craigslist uses an anonymous email routing mechanism, in order to allow people to contact the ad poster. And vice versa.
Does Craigslist actively monitor the messages being passed through?
Edit: Why did I get downvoted? It was a legitimate question. It may have deviated from the article subject, but that’s how conversations flow, and how you learn of new things.
The hosts and guests find value. The neighbors of the hosts often have a miserable time, which is why usually zoning laws stop people running hotels wherever they like.
Have you lived in a city or a building infested with Airbnbs? It's a hell for a person to live in a building infested with Airbnbs. Also, not to mention that Airbnb was one of the major factors in driving rental and apartment prices up for long term renters/buyers. I would say Airbnb did more harm to actual people living in the city than Uber ever did. Airbnb willingly allowed people to own multiple properties and just rent them out on short term. There is a reason a lot of major cities in the world had to pass laws that would restrict people from listing their secondary properties on Airbnb and even then, I don't think Airbnb enforces those laws at all. But hey, they are a YC company and care about how people travel, so people eat that bullshit up. At least hedge funds don't pretend to be noble and tell us upfront that all they care about is making money.
Yeah. I also recently had an Airbnb host write a negative guest review with a bunch of false information. First time this happened. Airbnb refuses to remove it, refuses to let me edit my response, and there is no concept of due process.
Leaves a bad taste in my mouth to ever use Airbnb again.
What, really, do you think makes people act a certain way? Do you think they're like "I sit on a throne of dead hotelier skulls! What is will be no more! Now is the season of EVIL!"? Or do you think they earnestly think "Reducing the barrier to short-term rentals will make many people happy and make us probably very wealthy".
Personally, I think AirBnB is earnestly happy to cash in on the situation where the apartment next to mine that I'm paying $1600 a month for is rented out to people who are there to loudly party until 6AM on a Wednesday night-Thursday morning while I have to get up and go to work and try to have some semblance of an intellect available. Fortunately I've since purchased a modest house in a quiet neighborhood but gorram!
People are really good at rationalizing things that make them rich. A founder’s earnest feelings about their business’s externalities should never be taken at face value.
> A founder’s earnest feelings about their business’s externalities should never be taken at face value.
Maybe that's your strategy to VC investing. I don't think it's particularly good to apply a zero or negative coefficient to this trait. But that's okay, the market shall speak on this one.
Yes, exactly. And determining leading indicators of what will make money is hard. I think smart people will put non-zero positive coefficients on the earnestness that YC is talking about here.
Given the number of regulations ignored or just outright broken, given that I expect to live next to neighbors and not a hotel in my suburban neighborhood, given that it is "terms-of-service for thee but not for me", I'd go with your first choice. 'cuz is sure is hell isn't "let's make the world a better place" if that means spamming Craigslist and ignoring local zoning laws.
>So earnest. Their inability to police fraudulent/scam listings. It comes from a place of earnest conviction. Their blatant attempts to circumvent and disregard local laws about illegal hotel listings. It comes from a place of earnest conviction.
I don't think that's really fair. AirBnB as originally conceived is something that would make the world better for a lot of people. Something you can be proud of building. What it's turned into is far more of a mixed bag, of course, but that doesn't change the earnestness of how it began.
Glorifying the binder full of maxed out credit cards here without even a hint of a mention of survivorship bias seems irresponsible. I'll happily believe that most successful high growth startups have a "never give up" attitude but it's human psychology for readers to ignore the thousands or millions of similar people who failed and had to deal with that binder in spite of the same attitude and energy.
Upper middle class is the sweet spot for these things. Not spoiled rich, but definitely no existential worries, probably some/mostly private schools. 'Good' parenting.
I don't feel any of these successful founder kids had anything handed to them, however, they generally have a 'nice, clean journey' from birth to founding whereas most people face bumps, barriers etc..
But it's also a little unfair to generalize and there are absolutely opportunities for all types.
A good opportunity for education is not 'spoiled' , it's fortunate.
'Spoiled' is the Lambo in high school for the kid with bad grades.
Moreover, most private HS are not considerably better than good public schools, there are advantages but not giant leaps there.
Much more advantageous is private College, but it's somewhat more competitive and at least partly meritocratic.
These kids are not from massive homes, with baller cars and 1M follower instagram accounts. They don't have chefs, their Uncles are not Senators. They live in the suburbs in slightly better than normal homes, their parents drive Audis and they do their homework. They had braces as kids, and never had to worry about healthcare. Their 'Dentist' father is not 'connected'. They are really not that different from most kids, other than they never have to worry.
The private HS advantages are rubbing shoulders with other kids whose parents can afford private HS. You're much more likely to meet friends whose parents are in a position such that your friend can max out their credit cards.
Same is not true of any private college, since the government hands out loans without discretion to anyone. A selective college, however, offers you similar benefits.
Does it matter if there are bad grades? Is the difference between bad grades, and exceptional grades, a good reason to set a kid up with Lambo-grade back-up as far as resources and access to capital?
I think it's pretty natural, if your resources are exceptional, to treat that as extending to your immediate family. Therefore it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit.
I don't see a special moral dispensation for, 'this kid APPLIED himself and therefore it's okay that he never had to worry'.
"it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit."
Just because you love your kid doesn't mean you give them everything.
In fact, being superlatively rich probably comes with a whole bunch of extra challenges in raising a kid.
No matter how many 'resources' a kid has access to, doing a 'good job' and having a little bit if self discipline are essential to having a good character, being civic, and also creating a positive future for oneself and ones community.
Having a 'Lambo' is a very exceptional thing it stands out definitely more than one's peers. A poorly behaved, entitled kid who'll use that Lambo to rub it in the faces of his peers, who accomplishes little doesn't deserve it.
Of course not everyone 'get good grades', it's entirely possible a kid is deserving in some way, by grades are at least some crude measure of applying oneself.
Frankly, however much money I had I wouldn't even give my kid a Lambo, it's way too much attention and ostentatious luxury, children are not good at handling that. It's excessive and materialist.
'Access to capital' is an entirely different story as investing for the prospect of value creation is difficult than conspicuous consumption of luxury items.
Two were middle class and attended RISD and the third came from wealth and attended Harvard. I'm sure they all could've fallen back on parents to some extent (the wealthy one especially) but it's not like that's a atypical distribution of wealth among a group of three college educated people (which is I'm guessing the typical start up demographic).
I've done the scary fistful of personal credit cards twice, while starting businesses, in addition to burning through personal savings, and strongly disrecommend it. I had no family safety net as a fallback, and had to pay off the cards in full, Lanister-style, including all the predatory 29.99% APR interest that kicked in on one when I was accidentally late on a payment.
Funny: Sometime after paying off the first time, I was talking with a CSR at one of the credit card companies, and she looked at my account, and said, kinda awkwardly and with surprise, "You've been a very profitable customer...". I'm pretty sure that's not in any script. :) But I did have a stellar credit score by then.
One of my businesses did some great and beneficial work that I feel really good about, but I should've used angel/seed investors from the start. That would've made things a lot less painful, helped me formulate a more profitable business, and helped the second business actually get all the way to launch before I couldn't stomach any more fistfuls of personal debt.
How I see it now: no matter how much I'd prefer to focus solely on product and engineering, and not having to play business-person with investors, investors are so much more preferable to self-funding a startup as a non-wealthy person. If you can't convince investors, I'd advise being very skeptical of a survivor bias story from Airbnb, and instead find a way to modify or explain the business to convince investors. (You could just tell them: "we'll make money by disregarding existing regulations for a market, undercutting the competition." :)
Unless you're already known in your industry investors aren't exactly lining up to write checks.
For my current passion project, a video game , I plan on dumping between 10 to 20k in before trying to pitch it to publishers. When that likely fails I'm going to self publish , I really really enjoy programing with Unity so I'm not too worried about making my money back.
I can't imagine anyone who's not well connected can walk into an industry conference and walk out with a seed round
A bit of unsolicited advice: before putting money in or pitching to publishers, make a simple static site with a mailing list sign up form, then promote it and run some ads for it.
If you get positive feedback and a bunch of sign ups, proceed. Otherwise iterate on the concept/website/marketing strategy until it clicks, then continue with your plans.
The point is just to get some traffic somehow so you can check whether anyone wants to play the game you’re about to spend tons of time and money on. Ads are a simple way to drive some traffic. If you can’t get clicks or sign ups, you will save yourself a really bad time by figuring that out before starting to build, and iterating to a better concept/pitch that is validated by real potential users.
And yeah a prototype video sounds like a great way to test people’s enthusiasm.
Okay, I really need to spend a bit more time before I'd feel comfortable doing that but I'll definitely take your advice to advertise it sooner rather than later.
From reading his comment the goal of the ad spend isn't to get a lot of visitors, but to get enough visitors that you can measure impact. So you don't need a big push, just enough that you can check if people want what you are building and compare again later after you make changes.
Like the other user said. Make a landing page and accept emails for sign up and updating followers on news. This does two things: you sort of validate the idea and you also get some followers who provide a little bit of motivation (or pressure) to get you to deliver sooner.
> I’d be interested to see how “normal” the kind of fall back options these founders had.
My history in SF weirdly intertwines with AirBnB. I first met them in 2007, at an "unofficial startup school afterparty" (this was before they were funded by YC). The party consisted of Brian and (IIRC) Joe, and a couple of bottles of booze and some soda in their apartment (the one they rented out to the first guests). Let me just say that they weren't living in luxury: there were mattresses on the floor. The only notable piece of furniture in the place was a table, and a bookshelf filled with white, blank-covered book galleys that Brian had gotten for free from some print-industry connection.
I then worked at Justin.tv when these guys were getting advice from Michael and eating lunch with us on a regular basis. I bought them drinks because they were broke. The unsold Obama-O's boxes were sitting around the office.
I'm as cynical as the next guy about the relative well-off-ness of a lot of startup founders these days, and I don't have any personal insight into their finances at that time. That said, as much as anyone in SF in 2008 had no fallback plan, the AirBnB founders seem to fit the bill.
I'm sure they might not have had silver spoons, but maxing out your credit cards is a luxury that people have when they don't have families to support (not to mention moving to SF). I'm not just referring to your own children, but if you have parents that need help, or siblings that need help.
For example, if I was in these 3 gentlemen's shoes, I would have not maxed out my credit cards, because my parents were entering their 50s and they didn't have gold plated health insurance from government or a F500 company, so I knew I had to play it safe and be ready to be there if and when they need me for assistance with healthcare expenses.
I don't mean to detract from any of their achievements, surely they put forth effort into getting into the right schools, studying the right subjects, and focusing their energy on something that netted them a very high ROI.
The purpose of my comment was to shine a light on how being in a position to max out credit cards in SF in the first place without greatly negatively altering your family's trajectory qualifies you as "normal" in a very restricted sense of the word "normal".
Please people, do not max out your credit cards, at least not until you are as good as what you do as they Airbnbs were in 2008.
I think there's a cognitive bias at YC where they don't realize that most people (especially 20 year olds) are not very good at making things, and so on average the best advice you can give the general public is just to get better at making things.
The Airbnbs were exceptionally skilled and hard working people. They made all sorts of weird stuff—and did it well. The cereal boxes were the tip of the iceberg. Brian and Joe could design (and throw a good party!). Nate was a terrific coder who did CS at Harvard.
I would absolutely say they had the best fallback plan—they could make things. They could've gotten other jobs. That takes decades of hard work (I'm sure they started building things when they were very young).
So if you can't make good things, DO NOT max out your credit cards. You will be setting yourself up for disaster. Instead invest in your skillset. If you aren't good enough to build something great, go out and get a job(s) and keep working on it.
Chesky - Both parents are social workers, probably would have been in a rough spot taking on that debt. Would have moved somewhere else and gone back into industrial design.
Gebbia - Father is/was a successful businessman in the Atlanta area, currently a city councilman. Probably would have been better off than Chesky, but the debt probably still would have stung. Would have gone back into industrial design.
Blecharczyk - Upper middle class family + Harvard alum. Taking on the debt might have been painful, but he probably would have been fine eventually, especially with his technical background.
I don't think their fall-back options were great. If they had "rich uncles" or something, I don't think they would have needed to max out credit cards in the first place. I think Chesky's level of conviction was simply unwavering. I'm certain there are much more affluent people who would have given up sooner.
Wait, why don't you think those were great fallbacks? You described them all as being solidly at least middle class. What would you consider a good fallback option?
There is a big difference between burning through your money knowing that your dad can eventually save you vs ending up complete broke and needing years to recover if you fail. My observation that a lot of startup founders who burn through credit cards and eat ramen noodles still have the knowledge that their well off family has the ability to save them. They work hard and sacrifice a lot but they aren’t risking their livelihood for years to come and won’t go homeless.
Everyone wants to be that 1 in 10 lottery winner :) Every hero needs to conquer some villain (e.g. credit card debt). It makes the victory that much sweeter.
It's pretty obvious that collecting a binder full of maxed out credit cards is a bad idea that most would avoid. The point PG is making is one of contrast - despite how dumb this is, they did it anyways (and it happened to pay off). He's not endorsing this action.
Why can't we get back to a place of finding the good in every story/person instead of trying to tell everyone that they're doing something wrong?
Also, holy cow! From credit card debt to billions. It makes the story that much better!
I struggle to understand how their expenses are so high. Or why investors are happy to keep buying into a company that has failed to ever be profitable. Look at the cap tables. They've gone into massive deficit every year running an app. A $3B/year app.
Would you rather invest in a $1B / year company that has a 10% profit margin and is growing 10% YoY
or
A company that is doing $1B / year with a 10% loss due to investment in growth but is growing at 30% YoY?
Both options are reasonable investment strategies but for folks who will take a gamble to have a bigger pie, #1 is pretty reasonable. Especially if you can later cut costs and still have that 10% profit margin.
When Amazon spent years and years not making a profit, I understood: They were investing in infrastructure and taking on new industries. They could make a profit any time they wanted by simply not re-investing any further.
Tesla, SpaceX, and many other companies necessarily have to invest heavily in the early days to build out their infrastructure and capabilities. I understand completely why they might not be profitable for years and yet still be good long-term investments.
With Airbnb, I struggle to understand what they're investing in. There's no inventory. They own no real estate. That's supposed to be the genius of the business model. And yet they keep losing hundreds of millions each year.
When you say they're investing in growth, what exactly are they investing in? What am I missing? What are they doing that costs $3B a year, and how does their cost-to-revenue ratio improve as the business scales?
From where I'm sitting, it looks like the more business they do, the more money they lose.
Good points. The most direct answer is that in the last 2 years they invested heavily in Airbnb Experiences. If they skipped this, they would probably be profitable.
But it’s hard to really disconnect execution from the insanity of our monetary system this year...trillions in dollars pumped into our economy, 0% rates, and a retail options frenzy has created the perfect environment for speculation on growthy tech stocks.
If you're wondering why it's been such a bad year to be in cash despite the economy crumbling around you, it's because no one knows where else to put their money. Stocks and houses are being bought with inflated dollars.
The underlying idea here is that the velocity of money has dropped significantly; each dollar is changing hands less often than usual, so you need more money in the system to facilitate the same amount of commerce.
Although people think that the Fed buying bonds is "printing money", it is actually mistaken for liquidity events. If you provide cash to someone for an asset, the second party loses an asset and gains cash. Its a zero-sum trade, assuming the asset is worth its price (which with a corporate bond is undeniably true). Banks are the ones who create money, by creating loans to multiple parties and using leverage.
Both banks AND the Fed create money. The Fed this year has also directly made loans (from newly printed money) and purchased ETFs on the open market (from newly printed money).
If you think the Fed isn’t doing anything when they QE, then ask yourself why they do it.
Renting an entire ABNB is considered a "safe" travel option by many. E.g. you live in the city but are sick of your 4 walls, so you rent a cabin in the woods for a long weekend. I suspect whole-home ABNB bookings are through the roof, mainly in the summer.
I agree with you. I was on Airbnb yesterday, looking for a cabin in the woods for the weekend. I couldn't find a good option, why? The good ones were already rented.
Travel will rebound and their last quarter bookings while down are recovering well.
They also have more “rooms” and any hotel chain without any of the capex or infrastructure costs so it’sa fantastic model that is light on cash and creates tremendous scale.
The pandemic forced them to cancel advertising, save a ton of cash, and realize that their brand is strong enough that advertising isn’t really needed in the traditional sense which improves their balance sheet for 2021 and 2022 and future years.
Personally I’ve taken advantage of not having to be in the office to move out of SF and do airbnb hopping (stay a month here, a month there). It’s been great.
I used AirBnB for the first time this year to rent a cottage. The experience is stellar. For many years I used outdated sites like cottagesincanada.com or cottagesquebec.com, it was a nightmarish experience of looking for available cottage during the pandemic. I just gave up and used AirBnB. Sure I paid hundreds of dollars in fees and whatnot but it's just so much better experience (searching,reviews...). (And yeah, no hotels for travel so no Expedia in pandemic)
It works when it works, it doesn’t when it doesn’t.
Meaning that the company has very little insight or control into the quality of any of their listings. So it’s always a dice roll. If the listing ends up looking nothing like the pictures, or is dirty, or you’re locked out you’re on your own, and the best you can hope for is not getting the run around from customer service and they refund you fully and/or put you somewhere else.
Yes, but there is no reputation system attached. Having a strict reputation/review system for both hosts and guests creates strong incentives on both sides for quality rentals and well-behaved guests. No one wants a bad review.
Airbnb is fine, but the issue that you can be left hanging without apt if host fucks you over is a real one. Abnb gives you money back, but what's the point if this money is tiny compared to emergency booking prices.
If I understand right, Booking.com gives you another room in such case, not just money back.
A friend had her Christmas ruined by this shit last year. Host cancelled less than 48 hours before the date, and the refund for the original price was nowhere near enough to book another place on that short notice.
This is only the tip of the iceberg, though. AirBnB hosts are doing hospitality business without having to obey any hospitality law. Also there are a lot of black sheep that occupy multiple flats in best locations so people that actually want to live there don't find a place to live. And the company AirBnB doesn't do anything about that as they only see the money rolling in.
eh, I had an AirBnB in Houston, TX in the summer with no AC. We left before the first night, and AirBnB wouldn't even give me my money back, much less a suitable place to stay.
They aren't an honest company, they're just burning through goodwill.
> Airbnb’s goal during YC was to reach what we call ramen profitability, which means making enough money that the company can pay the founders’ living expenses, if they live on ramen noodles. Ramen profitability is not, obviously, the end goal of any startup, but it’s the most important threshold on the way, because this is the point where you’re airborne. This is the point where you no longer need investors’ permission to continue existing. For the Airbnbs, ramen profitability was $4000 a month: $3500 for rent, and $500 for food. They taped this goal to the mirror in the bathroom of their apartment.
I wonder what the calculation for ramen profitability would look like in a fully remote-work environment, in a place where rent isn't $3500 a month... Anecdotally I've seen a few people renting pretty nice places in Phnom Penh, Cambodia for $500 a month. Some stayed there through the entire duration of the covid19 crisis due to travel shutdowns and have been working on various things.
Indeed so, and the calculation for that as something feasible will only get better as rural broadband improves. Cautiously optimistic for starlink based on beta test results I've seen. There's lots of places I can think of in the western US states (and BC, AB, SK) that would be ideal for remote work if the network access wasn't presently slow or flaky.
You can get free or very cheap health insurance in most of the US if you have low or no income, including if you're bootstrapping a startup. "Most of the US" means the dark blue states in [0] plus Wisconsin.
Many digital nomads do this throughout Southeast Asia.
I’m not sure I would recommend it, though. Proximity to customers (assuming US/EU market) and angels/VCs is worth something, and I would suggest that it is worth a lot.
I will also add that when you factor in plane tickets, visa runs, etc., it is probably easier and just as affordable to find a cheap place to stay in your home country.
If you’re bootstrapping a business, especially if you have some tie to Asia like manufacturing or labor (e.g., “virtual” assistants), then the digital nomad option may be better. But for a VC-trajectory business, I somehow doubt it.
If you have US-based clients the time difference makes it hard to be “available” from Asia. It’s much easier to go south: Belize, Costa Rica, Ecuador, Chile, etc. The cost of living is about the same but you’re still in a time zone where it’s easy to keep in touch. If you have clients on the west coast then working from Guayaquil isn’t really any different than working from New York City.
this is not a particularly scalable advantage. if you plan on reaching every single corner of the global market, what does customer proximity mean? if you have to have an office everywhere you do business in, is it really a tech driven business or are you just doing bespoke sales? what's the cost of every additional dollar of revenue?
The context of the discussion is ramen profitability and potential very early investment (angels, yc, etc.), and the commenter seemed to be looking for an inexpensive place to live.
Early start ups are typically going from zero to one, so they really need to find a small and passionate customer base somewhere. As many folks have said before, often times it makes sense to do things that don’t scale early. This might mean in-person visits. YC has many stories of this working, like Airbnb and Stripe.
I will also add that if you are looking to go down the VC path, being near VCs is important. You can raise VC being far away, but it is more difficult, and the associated costs will eat away at what the original commenter seems to be looking for, which is a cheap place to live.
Yes. It doesn't make sense. The prices (rent) adjust so that "if you can't very cleverly combine it with something else", which probably most people can't, then it makes sense to "stay where you are" and pay the premium compared to travel(-expenses) and a cheaper deal. If a significant amount of people would find feasible ways "to arbitrage (between locations)" the market would adjust (and prices in SV would drop). If you manage a setup in which you can profit, it is a special one and not the norm.
What ramen profitability doesn’t include is health insurance. I did a gig earlier this year. Baby had a small incident and I paid $700 out of pocket. My wife was not happy with my venture, I started looking for a job very soon after.
I think it's evidence for "Billionaires Build", which is an apologia for billionaires. pg seems to think we are in a moment where billionaires don't have enough cultural respect.
I think pg is trying to show us that billionaires, at least the kind he funds, are just better people, or are at least more tenacious. The binder of credit cards is supposed to inspire admiration for their dedication (rather than horror).
And I think he's congratulating himself for being able to spot them. By extension, spotting billionaires (helpful, tenacious, people who love to build) and helping them - well, is he saying that he's a great person, squared?
Several of my ex employees have become millionaires. I'd rather not take credit for their hard work, and I can't take credit for spotting them either, they took every opportunity life threw at them, including working with and for me, learned what they could and moved on.
I wish they would also write articles about the founders spending 5+ years on ideas that never pan out and the emotional, financial and social toll of that. If YC actually wanted to teach people about entrepreneurship, that's a pretty important part of the story.
I tend to agree, and have always made a point of telling founders that their startup will most likely fail, because that's what startups do. Here's a good thread: https://twitter.com/immad/status/1335669459705458688
Everyone is aware that businesses mostly fail. Without the nerves to try to succeed despite that, you're sure to fail too. That's not inspirational bs, humans only do well when they think they can (also known as why people who "aren't maths people" can't do maths).
Why? The sort of people who would read those articles are not going to be entrepreneurs anyway. People who would actually have the determination to succeed wouldn't be deterred.
Not in anyway an authority on this, but I don't think so. They have to price the stock based on fundamentals and make a best guess. Would a different bank have priced it higher? Maybe marginally, but probably not double or more.
Maybe someone with a better understanding can say something here but it seems like the way we do IPOs is not great. I'm not sure how to do it better, but I'm sure that there is a better way to do it. I guess this should be the next yCombinator startup. Disrupting the IPO landscape :P.
Yes, if a company gains significantly (or drops significantly) in an IPO, the underwriter royally fucked up.
In the old days, there would have been recriminations. These days, people just shrug and think it's acceptable that the financiers lock up most of the gains for economic value created (or, depending on your thoughts of Airbnb's business model, acquired) by others.
It's one of the reasons Wall Street has fought so hard to prevent become fiduciaries again. If they were fiduciaries they couldn't get away with crap like this.
I think we can safely not blame the bankers for failing to assign a $100B valuation to a travel sector company that was valued at $31B before the pandemic.
Yes. In the past, mispricing this badly would lead to recriminations for the underwriters, including lawsuits and lost business.
For some reason, the financiers were able to convince the gullible tech founders that giving up 50% or more of the IPO to the financier's best buddies was a good thing. And in their greed, the founders gladly went along, screwing themselves and their employees in the process.
(Theoretically, the underwriters are granted a pop because of the risk they theoretically undertake. But by the time the IPO occurs, the underwriter has already lined up sufficient buyers and there is no longer much if any risk, certainly not a level of risk justifying most of the gains of the IPO).
I had the incredible good fortune to not only be in the same YC batch as Airbnb, but also be the only other founder in SF, which meant I just happened to carpool a lot with them and hang at their place a lot.
I still remember when Nate first told me the idea at our first batch meeting and I immediately loved it—at the time I lived in a 4-br house with ~10 people, and we constantly had people on the couches or in a tent on the roof. I would go on to make more money thanks to the Airbnbs during my YC year than I would from my own startup.
But a million times more valuable than money was the path that those guys sent me down. Sure, we both had gotten into YC, but I could immediately sense there was a huge gap between us. I think I've always had a strong work ethic and desire to serve others, but I didn't have the craftsmanship or teamwork skills that these guys had—and they had it in spades. Everyone talks about the cereals, but their apartment had more impressive things they designed and built than that (IMO). Nate was a no non-sense engineer who took software seriously and built great things. His code was far beyond mine at the time. And the team work was incredible.
I dabbled with joining Airbnb early, but never went down that path. I like to joke with my friends that I turned them down, but in reality it wasn't because I had better options, the truth is I knew they were out of my league skills wise, and I had a long way to go to catch up.
The lesson that I learned from the Airbnbs that I think isn't always stressed enough in the "power law startup world" is that you need to be building many, many things—with other people—, and get really, really good at that, before you can go on and "make something people want" and do something world changing, like these guys have done.
I'll never forget driving home in the dark after our Tuesday night dinners in a rental van, the 3 airbnbs and me. After hours of loud demos about their new stuff and listening to everyone in the room about how they could build things better, the drive home would be quiet. You could tell that they were utterly exhausted, but also quietly determined. I doubt that they will stop and rest enough to celebrate this moment, but they "earned this" moment.
They're the real deal. To this day continually inspired by them.
Thank you so much for sharing this post. I admit that I'm a bit dismayed that so many of the top comments on this thread (on a website that's all about sharing ideas re: technology startups, no less) are basically just a gripe session.
Virtually everything I've heard from people who have actual, personal interactions with the AirBnB founders is positive, and especially that their interactions were inspiring - that is, the AirBnB founders inspired people around them to do better work. I just think that's an amazing quality and something I'm so grateful for when I find it.
Sure, I may have my own gripes about AirBnB, but I can certainly appreciate the unique combination of talent in the founders that made their success possible.
I had similar feelings about a lot of top comments in here, and more generally about this place recently. I don’t know if it’s just an influx of users but things feel different these days.
There's a bit of the echo chamber, too. I for one don't read enough positive posts, and yet it is these remembrances and positive feelings about the work so many of us do that makes it feel worth it. If HN was all positive, it wouldn't work, but it seems at its best (to me) when it is equal parts enthusiasm, optimism, and criticism.
I figured it was some kind of COVID effect. Also, tastes are probably changing just as many users get the hang of the previously popular house styles of commenting, so patience from more established, better read or experienced users is extra short.
Given how many discussions revolve around the big tech companies here, it might just be a matter of more people souring on them. Unfortunately it's often easier for a company that dominates a market to use that leverage to squeeze out more revenue than it is for them to produce exciting innovations; something we're seeing play out a lot these days. I still see a lot of excited comments about companies I have little to no knowledge of, and have found some neat products through those discussions.
Tech companies are no longer underdogs, and entrepreneurs are no longer plucky heroes. Our actions have consequences -- outsized ones, at this point -- and things feel different because they are different.
It's true that a lot of the optimism around tech startups has waned over the past few years, and this trend has accelerated during 2020. Not just here on HN but in the U.S. more broadly.
I think a big piece of it is that current the crop of tech startups going public are largely unprofitable companies whose only "innovation" in many people's eyes has been skirting laws and foisting negative externalities on the broader public. These companies have also risen while the cities in which they are based (i.e. San Francisco) have deteriorated substantially.
All in all, the perception is that the current startup ecosystem isn't producing the same innovative, profitable companies that "lift all boats" the way it used to, and the increasing negativity and cynicism here likely reflects that.
I think it's that a lot of us are older and wiser now and having lived through 30 years of VC driven hyper capitalism now look around and see that actually it's made life significantly more insecure and just generally shittier for most people except billionaires and FAANG drones. Of course if you're a billionaire or FAANG drone you probably don't want to acknowledge this.
Hang on, isn't it simply: "the AirBnB founders were great entrepreneurs" vs "yes but look at what the actual impact of AirBnB has been"?
It's fine to acknowledge they are remarkable people, but it's also ok to say that the success of AirBnB has had huge negative consequences for many people. And it's hard to see how the former can outweigh the latter.
> the success of AirBnB has had huge negative consequences for many people. And it's hard to see how the former can outweigh the latter.
'Capitalist realism' has us trapped. Many seem to believe no alternatives are possible.
No wonder we have a global mental health crisis:
"Depression is the shadow side of entrepreneurial culture, what happens when magical voluntarism confronts limited opportunities. As psychologist Oliver James put it in his book The Selfish Capitalist, "in the entrepreneurial fantasy society," we are taught "that only the affluent are winners and that access to the top is open to anyone willing to work hard enough, regardless of their familial, ethnic or social background – if you do not succeed, there is only one person to blame." It's high time that the blame was placed elsewhere. We need to reverse the privatisation of stress and recognise that mental health is a political issue.
[...]
The radical therapist David Smail argues that Margaret Thatcher's view that there's no such thing as society, only individuals and their families, finds "an unacknowledged echo in almost all approaches to therapy". Therapies such as cognitive behaviour therapy combine a focus on early life with the self-help doctrine that individuals can become masters of their own destiny. The idea is "with the expert help of your therapist or counsellor, you can change the world you are in the last analysis responsible for, so that it no longer cause you distress" – Smail calls this view "magical voluntarism"." [1]
In many cities the choice for long term rentals is very narrow therefore expensive because most flats are AirBnBs for tourists. This has a detrimental effect on the locals. Pre-COVID that is.
Why not both? Just because you can, doesn't mean you should.
Airbnb being a company, and a company seeking profits over everything else, one could argue that it's not their job to care about how they affect people. Doesn't mean we can't criticize it for it.
We could go even further and say it's by criticizing Airbnb that we will push governments to regulate this new market.
Most cities have laws against individuals running unlicensed hotels out of their apartments. AirBnb chose to ignore those laws and encourage others to do so as well.
Yes, of course. That's part of the cycle. Democratically elected officials are not proactive, they respond to pressure. Calling out corporations that are acting irresponsibility creates enough pressure to have democratic governments act upon those corporations.
No, it's blaming AirBnB for making a bad situation much worse. Local governments worldwide may be inept at securing enough housing for people (perhaps because it turns out to be a hard problem), but it's not helpful to sabotage the allocation of whatever housing that was made available.
1. They disrupted the hospitality industry, which used to be much more powerful than it is today, as it now weighs less in tourism numbers.
I don't necessarily think this is bad, disruption is often a sign of optimization.
2. Then there are markets where airbnbs have caused apartment buying and rental prices to go up much faster than what they should have, bringing millennials further away from home ownership. (not going to go into people getting evicted for landlords to open airbnbs, but deserves a quick mention)
This one is more tricky, as it is not strictly bad, but definitely not good. It tends to be good for some sectors of the economy (i.e. tourism, restauration, culture, etc.) As a whole(and in theory) it should drag -with some delays- the construction industry into building more housing units at a faster pace. Now, considering the economy as a whole was very good pre-pandemic and we were near full employment, construction companies likely had trouble finding more qualified workers to fulfill the demand. Government incentives were also either not present or not strong enough for new 'affordable' housing to be build in cities.
I know I went up fairly quickly over these issues, there is so much more going on, I strongly suggest reading/researching more about the various issues as there are definitely valuable startup ideas hiding in there.
Overall, I have no doubts the balance will be reached in the following decades:
(i)Regulations to limit the numbers of airbnbs, coupled with permits and taxes.
(ii)Strong government incentives to build more housing as I doubt people leave the cities for good following the pandemic, let alone remote working remaining the standard.
(iii)Airbnb modifying it's business model. i.e. keeping the actual airbnbs, but potentially acquiring hotel chains amongst other things.
"it should drag -with some delays- the construction industry into building more housing units at a faster pace".
But how? How can you build more apartments in Lisbon or Amsterdam, where every inch is already used? Houses can be build in more distant areas but this forces people to commute longer making their live much worst.
The demand gets higher, therefore a healthy market will move towards a supply/demand equilibrium.
There are creative ways to go around most problems, given the incentives are strong enough. i.e. we all live underground /s
On the other side, too much regulation can prove to be a strong disincentive. In this case I expect architecture or density requirements, amongst other things, in cities like Amsterdam to cool down the market, maybe a bit too much.
Short term rentals being more profitable than actual homes for people, this means that (i) rents, already a grueling expense for many people, are pushed up, the consequences being (ii) people either cough up and become even poorer, or more likely move away from the city centres and spend time and money commuting, meaning (iii) popular destinations become hollow theme parks for tourists, while actual residents are shafted in every possible way.
In short, in a city like Lisbon, good luck being a student for example. Pay upwards of 500$/mo (or for perspective, 75% monthly minimum wage) for a room in a shared house, or live a 1h30 commute away from campus.
So I've heard this argument before, but I'm not sure I entirely get it. Wouldn't people coming to Lisbon just stay somewhere else if short-term rentals didn't exist - like a hotel that is likely owned by a massive corporation? How would that be better?
I guess that way I look at it is that people want to visit cities for a variety of reasons. Those people need to stay somewhere. Wherever they stay will take up space, thus driving up rents through land scarcity. I am not really sure how people staying in someone's apartment is much worse than staying in a hotel.
If rents are going up, it's because there is more demand than supply. Unless Airbnb is actually increasing demand (perhaps?), I don't see how it is really affecting this equation.
Of course they are increasing demand by being cheaper (because they can ignore fire safety regulations and a ton of others that hotels have to follow, therefore having an unfair advantage).
They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic. This paradox is well-known among city planners (but often ignored by those who make the decisions because it is counterintuitive).
In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
> Of course they are increasing demand by being cheaper (because they can ignore fire safety regulations and a ton of others that hotels have to follow, therefore having an unfair advantage).
This seems like a regulatory arbitrage that shouldn't exist to begin with. Why should the fire safety regulations for a hotel be dramatically different in expense than the ones for the equivalent apartment complex?
> They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic.
People consistently get this wrong. Bigger roads don't increase traffic. Congestion suppresses traffic. If there is a congested two lane road because it's carrying traffic that would require a four lane road, so then you build a four lane road, you then discover that the four lane road is still congested. Because once you remove some of the congestion, the demand it had been suppressing comes back and you still don't have enough capacity.
The distinction is important because there is a point at which you actually have enough road capacity to satisfy the demand that exists when it isn't being suppressed by traffic congestion. It's just more than you might have expected based on the amount of traffic observed when the road was congested.
> In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
The solution to which is to eliminate restrictive zoning like that, so that supply can respond to demand.
The primary reason that short-term rentals are zoned differently is local regulatory capture by hotels to limit competition and keep prices high. Without restrictive zoning, short-term rentals don't have to come at the expense of long-term housing because you can build more housing and have both.
The idea that if 4 lanes are not enough we just have to add more lanes, ad infinitum, until we eventually hit the upper limit were traffic won't increase anymore, has, to my knowledge, no empirical foundation.
Current knowledge says that "on average, a 10 percent increase in lane miles induces an immediate 4 percent increase in vehicle miles traveled, which climbs to 10 percent – the entire new capacity – in a few years." https://en.wikipedia.org/wiki/Induced_demand
On the other hand, taking existing empirical data and extrapolating linearly from it seems like a bad idea in this case. There are obvious limits to how much latent demand is there. IIRC, we never did a proper experiment of suddenly e.g. quintupling the capacity of some major congested road.
That said, I think the source of this paradox is ultimately not in the road one is thinking of expanding, but in all the connections between it and other roads. It buys you little to turn one lane into five if all the exits are still the same capacity.
While there obviously has to be an upper limit somewhere, this isn't (only) about latent demand, but induced demand: People actually drive more because they have to. More lanes have more consequences than wider streets alone, they enable sprawl, funnel funding away from other transport options etc. That has consequences for the housing market, average distances between work and home etc.
Your second point is very important though, and IIRC is the main reason why so many city planners are so critical of the boring company idea of underground car tunnels: It tries to solve an aspect of traffic that isn't the problem.
> People actually drive more because they have to. More lanes have more consequences than wider streets alone, they enable sprawl, funnel funding away from other transport options etc. That has consequences for the housing market, average distances between work and home etc.
You're really just saying the same thing as I did -- congestion suppresses demand.
Suppose you have an uncongested two lane road. Making that a four lane road is not going to induce anything, because the widened road has more capacity than the original one, but you weren't even using the full capacity of the original one. It doesn't encourage anyone to do anything they hadn't already been able to.
The reason it "enables sprawl" is that if the original road was congested, people wouldn't want to travel it to commute, so buying a house in the suburbs and commuting via that road is suppressed. Congestion suppresses demand. If you reduce the congestion by widening the road, some of the demand comes back. And notice that the same thing happens if you alleviate congestion in some other way -- if you somehow make it more attractive to take the subway and then more people do, there is less traffic on the roads and it becomes more attractive to drive.
But you don't actually want the congestion. Traffic congestion sucks. You want to get rid of it somehow.
Part of the solution could be expanding the road, but you could have to expand the road a lot to satisfy all of the demand that would exist with uncongested roads, if you want to use that as the only solution. Which is why you shouldn't. There are other things that reduce congestion.
Like building higher density housing, so that more people can live closer to where they work and have a shorter commute, which in turn makes mass transit more viable. Then that in combination with widening some roads relieves the congestion.
The real problem here is the politics of it. Increasing the housing stock sufficiently to satisfy the demand would tend to reduce housing costs, which existing property owners don't want. So they fight high density construction with restrictive zoning rules and then the high cost and low supply of housing in the city pushes people into the suburbs, which increases the demand for roads.
> Current knowledge says that "on average, a 10 percent increase in lane miles induces an immediate 4 percent increase in vehicle miles traveled, which climbs to 10 percent – the entire new capacity – in a few years."
There is an obvious confounder here, which is that anywhere they add lane capacity is going to be a place undergoing growth, which is why they felt the need to add lane capacity. But if the growth the continues, the new lane capacity once again becomes insufficient at some future point.
I would expect to see the same pattern with electrical transmission capacity. Where they add more capacity, you then see an increase in consumption. Which is to be expected, because why else would they add the capacity?
The difference with roads is that they don't catch fire if you want until after you're over-capacity before expanding them, which makes it more likely that the demand will consume all of the new capacity, since you're starting off from the point of already being underwater.
I have market knowledge in this sector and can confirm the impact. Once the pandemic hit, Airbnb's from private landlords flooded the market due to travel nosediving.
Without AirBnB you would need to convert a house into a hotel in order to use residential real estate to tap into hotel demand. And regulations typically make that hard and expensive. Plus you would need to do some construction work, which also adds to the expense.
So strong hotel demand certainly does push up land value overall over time, but it happens much more slowly and to a lesser extent than with AirBnB.
AirBnB gives investors a way around hotel regulations and construction costs. You can buy an existing house and with very little friction or cost start generating revenue from tourism demand.
> Wouldn't people coming to Lisbon just stay somewhere else
No. They just wouldn't come. AirBnb and discounter-airlines has turned the tourism industry upside down.
Now, I do believe, that it's NOT AirBnb "fault" - AirBnb just accelerates the inevitable (like most technologies do) but the impact is still huge.
I have friends who live in Lisbon and Barcelona and from their eyes: tourism, that used to be a profitable "fancy" industry - with middle class people bringing their money to spend it - has turned into something different. These days "tourists" can be a group of 12 football fans, who've spent £18 on a RyanAir ticket and all stay in the same Airbnb room (as a group), getting drunk and vomiting on the streets.
I'm not saying that's definitely a bad thing (everyone deserves the right to experience travel) I'm just saying I can relate to (many) EU cities opposing this, claiming they're not getting any value from these crowds.
Lack of affordable housing in Lisbon is not some private company in America's fault, it's Lisbon's government's fault. That's like blaming the tech industry for housing shortages in San Francisco.
Some people like myself (eg. digital nomads) prefer short term rentals, and AirBnB has changed our lives.
> Some people like myself (eg. digital nomads) prefer short term rentals, and AirBnB has changed our lives.
Good for you but AirBnB has a proven impact in increasing rent prices for long-term rentals in any touristic city, be it Barcelona, Lisbon, Amsterdam, lots of cities in Europe have suffered from AirBnBs pushing units out of the long-term rental market and being available for people like you. And people like you aren't the majority of the inhabitants of a city, when people that are born and raised in a city are pushed out by pricing due to 10+% of the stock of possible rental units being used as short-term just so landlords can make a bigger buck it's sad and inhumane.
Great that from your perspective it's helped you, it's definitely impacted the lives of a lot of young people that were born in the cities you like to live, AirBnBs are eroding exactly what made them attractive: a good city neighbourhood.
Sure, if it was that simple I believe it would have been solved already. Ignoring the whole political and social aspects of a complex problem is hand-waving a lot, there are different pressures to be considered, different avenues of solutions and even more with housing that is: expensive and has a long turnaround from permit -> completion.
But sure, tell every single young person that the solution for them on the next 5 years is to sit down and demand more housing built. What do people do while that's happening? Allow AirBnB to extract money and rent-seekers to gouge prices for the population?
The real world is dictated by supply and demand. When demand is high and supply is low, prices rise as competition pushes them up. The increase in housing prices is a huge incentive for developers to build new housing. And it also increases the capital necessary to build more housing. Obviously the political situation will need to allows for new housing. Otherwise prices will just continue to increase.
Then why is that not happening? When your theory postulates some conclusions and those conclusions don't verify, then your theory is wrong? At least that's how it works in every science.
Is the Lisbon political situation allowing new construction? It's the political situation in the Bay Area (California) that's keeping prices high by not allowing new construction.
It's the same reason developer salaries are high. Demand is high and supply is (currently) low. My company is struggling to find people to hire right now and are offering cash incentives.
No, the real world is affected by supply and demand, not dictated by it. The real world is dictated by a complex network of social and political pressures, each trying to achieve their own agenda, finding the balance in this environment in how to minimise damages while maximising benefits is the game that any government and, to a lesser extent, corporations try to play.
Believing that the world is dictated by a reductionist model of supply-and-demand is either myopic or ignorant, the world doesn't work like that, that is a model that works well for a diverse set of markets, not all and not at all if you start to include the social aspects into it.
You can't just start building anywhere and anything, that will kill cities, it's a shallow analysis of a broader scope of issues such as: maintaining livable conditions (as defined by the society and culture of that city, not by some metric of "available units per inhabitant"), maintaining harmony of urban planning, maintaining the cityscape, and so on. Devising the master plan for building is exactly the kind of aspect that a simplified worldview of pure supply-and-demand does not take into account, it's simplistic and unempathetic.
Prices will continue to increase if building new units doesn't take place. AirBnB and greedy landlords shouldn't have the power to increase this damage for short-term profits. And worse: doing that in a rent-seeking way, with little to no benefit to the society of that city apart from some tourism money and "digital nomads" income passing by, rent-seeking behaviour is disgusting, it's pure extraction by virtue of you accumulating enough capital to be able to own a piece of land, that's all, there's no productivity increase for society through this form of extractivism.
I don't think you understand what "rent seeking" actually means.
The NIMBY'ism of preventing new housing is the very definition of rent seeking. By legally locking in, the existing owners prevent others from entering the market due to artificially constrained supply. Airbnb doesn't create the demand; they are just a marketplace and one of many.
"Rent seeking (or rent-seeking) is an economic concept that occurs when an entity seeks to gain added wealth without any reciprocal contribution of productivity."
What contribution to productivity do corporations or people who have enough spare cash to buy available land provide to a society?
AirBnB can be just a marketplace, that doesn't mean it isn't damaging to society at large. Excluding the moral aspects of that is an ideology based on capitalism, it doesn't mean it's right.
So tell your local government then to pass laws that make short-term rentals via AirBnB illegal, or to increase taxes on rental properties, or to build more housing, etc.
People in the comments are acting like AirBnB is some villain, when in reality it's just a website that facilitates supply and demand of housing. If not AirBnB, it will be some other site (eg. many AirBnB listings are on other websites as well). So long as that market exists, platforms will come up to cater to those needs.
Everybody loves a good villain. But really the problem and solution are not as simple as AirBnB = bad. You guys sound like taxi drivers bashing Uber/Lyft.
Yeah, of course it comes with some benefits of added convenience & simplicity. But this is a narrow minded point of view in my opinion.
Digital nomads building some pointless SaaS products with inflated egos working remotely in far flung places of the globe, getting to sample the delights of the worlds great capital cities are not an important consideration in the impact of AirBnB globally.
The ability to live a lifestyle like that already comes with so much opportunity and privilege which is either denied or impossible for so many people.
And so when AirBnB ravages communities by driving prices up and forcing people out through their carefree regard for local rules and regulations, then yes, I would say that part of the problem also lies with AirBnB, unless you simply believe that any company should be able to bulldoze whatever comes in its path with zero repercussions?
There is a reason that cities like Lisbon are desirable to visit and spend time in. It's not because its increasingly filled with tech-nerds who talk about "Ramen profitability" and play on slides in offices at lunchtime. Its because of the rich history of the place and the communities + people which make it up. And much like gentrification has done, this easy carefree tourism dilutes that and risks turning everything into more of the same playgrounds of the world.
> Digital nomads building some pointless SaaS products with inflated egos
Look we get it, you hate digital nomads and SaaS products. I couldn't really care less, and that has nothing to do with anything I said, which is that local governments are responsible for their citizens. Whether it's AirBnB or Craigslist or Couchsurfing or some other website, there will always be a demand for people to find housing and to rent out spare housing. Villainify digital nomads or AirBnB, that's never going to solve the problem. (though part of me thinks you're more interested in venting about how much you hate "digital nomads" then actually thinking about the problem of affordable housing and what would could realistically be done to fix it).
I don't really hate digital nomads, it was a deliberately flippant response to your comment in which I felt you expected the whole world to be your personal playground.
I don't think it's really useful to put the blame squarely on the local government in Lisbon for example, sure perhaps they should take a share of it, but that doesn't exonerate exonerate Airbnb - far from it in fact. We're not "villainifying" Airbnb with baseless accusations - I've seen you comment elsewhere that if it wasn't Airbnb it would be some other company, that is terrible way to justify things.
I do believe we should villainify them for circumventing and bending local laws (especially in a country which is in a different continent to where Airbnb is based...) to their advantage and to the detriment of the cities they're "disrupting". Just because something is not technically illegal or you can get away with it doesn't mean it's justified.
I don't hate Airbnb either, though I am inherently distrustful of fast growing, power hungry & greedy "tech" companies and in fact have personally had positive experiences with it. I just don't think its as black & white as you're suggesting. Airbnb should be (and thankfully is) being held accountable for the damage its wreaked around the world. Local laws & regulations were perhaps not well enough equipped to deal with this new kind of tech behemoth and have been slow to adapt, but Airbnb didn't have to play the bad guy in violating zoning & short term stay regulations that the rest of the hospitality industry have to follow. But they did... knowingly.
Someone else made the point that Airbnb was kind of like Trump, exposing & exploiting the existing weaknesses in a system to their own personal advantage. We don't point the finger squarely at the the system, yes it clearly failed under Trump and he is in some way just a symptom of more fundamental problems. But it doesn't let him off the hook. Neither should it for Airbnb
Of course the aims of any private company are to maximise profits through whatever means necessary. That's just the world we live in unfortunately. But even if we accept that as a fact of life, it doesn't mean that on an ethical & moral level we should overlook the harm caused.
Perhaps it would be good for you to be aware of how crushingly privileged and tone-deaf this comment sounds. Arrogant even. Good for you that you get to travel the world with a laptop in your backpack, typing away lines of code for some inane web company for luxurious pay, all the while taking in the sights and culture of dozens of amazing places. That is a privileged lifestyle only a fraction of people can enjoy. Excuse me if the people whose lives are dramatically impacted by this economic squeezing don't give a damn that "you quite prefer short-term rentals".
You don't get to evade responsibility for the your actions and the consequences of your lifestyle, while advertising "worker rights" and "anti-poverty" in your bio.
Ironic how the keyboard warriors who accuse others of being "arrogant" tend to themselves come off as the most arrogant.
Again if you actually read my comment, the point is that governments are responsible AND the only entity capable of fixing affordable housing problems.
But sure feel free to villainify AirBnB and AirBnB guests/hosts if that makes you feel better. I was living off AirBnB and short-term rentals in NYC/SF too, I guess that means it's my fault that NYC/SF has expensive housing? Lol ok.
You should actually write a bio so I can anonymously insult your existence from the comfort of my keyboard. /s
> in a city like Lisbon, good luck being a student for example. Pay upwards of 500$/mo (or for perspective, 75% monthly minimum wage) for a room in a shared house
Data point: around 25 years ago, I was paying GBP225/month - so that's ~USD300 - for a (tiny!) bedroom in a shared house in Cambridge, UK.
I'm not sure what approach one would best use to adjust for 25 years of house price and/or general inflation, but isn't that in the same ballpark as your '$500' in Libson now?
FWIW, we thought housing was expensive back then, too.
16 years ago I paid £270/month to live in a sharehouse in Bristol (not generally as expensive a place to live in as Cambridge) in a boiler cupboard that had been converted to a bedroom.
225 GBP wasn't 75% of the 700-800GBP minimum wage at that time. And ignoring completely inflation to help your point.
Students are broke, but parents can help, and if your "room" costs half of one your parents wage, that help is less likely to happen. Or make the poorer even poorer.
That situation is totally different if your room costs a quarter of one of your parents wage.
> 225 GBP wasn't 75% of the 700-800GBP minimum wage at that time
Q: Do "minimum wage" rules apply 1) in theory, 2) in practice to postgraduate students?
Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
> Students are broke, but parents can help
Q: Do we really think postgraduate students should expect their parents to still be funding them?
> BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter
> £225 per month
Apparently, yes. We do expect parents to still be funding postgraduate students if they don’t want them to starve. £702 pounds per quarter seems kind of hard to live on. That’s like £8 a day to pay for everything except rent.
> Q: Do "minimum wage" rules apply 1) in theory, 2) in practice to postgraduate students?
If you have to find a part-time to pay some of your expenses yes. In that case a part-time in Lisbon will pay you slightly more than half of your room and in "your case" it would pay the whole room. It's a BIG difference if you have to go down that road.
> Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
I do agree that post-grads are very badly paid. But that's another issue.
> Q: Do we really think postgraduate students should expect their parents to still be funding them?
Not really, but if there's an emergency I think parents will not let their kids starve.
And this hackernews rhetoric of 'if I suffered everyone has to suffer as well' needs to end. That's not how you move forward.
> but if there's an emergency I think parents will not let their kids starve.
Subject to ability to do so. I knew many grad students who took part time jobs to send money in the other direction. Their earning power was greater than their family's.
I understand that you're talking about postgraduate studies. I was thinking more about undergrad: where the parents are expected to pay for their kids studies.
Tuition is already 80€ per month, and even that is waived if you come from a low-income family. But how is someone earning 600€/mo supposed to send someone to college when rooms cost at the very least 350-400€/mo? Plus living expenses, 150€ the bare minimum. Even if you apply for financial aid (which you will get) the amount is woefully inadequate to face this rising costs. The result is that poor families cannot send their kids to uni. That's not democracy, freedom, or equality.
Also those 225£, what fraction is that of the minimum/median household income?
It's yet another contributing factor to people thinking that they need to own 10 properties as an investment while significant chunks of the population are forced into sleeping on the streets.
Of course it's not AirBnB's fault that there's no regulatory oversight on the hoarding of basic life necessities, and the original pitch ("couchsurfing but for money") clearly did not have that intent, but at this stage they're going to push back pretty hard against any restrictions on that kind of behaviour.
> people thinking that they need to own 10 properties as an investment
I wonder what would happen if housing were not an investment but construction would be legalized that turned housing into a commodity. Right now many attractive cities are often captured by home owners who collude against against new housing because that pushes prices down.
I hope the company that comes after Airbnb disrupts the construction industry, allowing cheap but high quality housing for everyone, and not just anywhere but in places of demand.
The big problem is that land value tends to fill any void created by lower construction costs. If buyers are willing to pay $100 for a home in a given location, then land will typically sell at 100 minus the cost of construction (and a small risk/profit premium). So even if you lower construction costs you’ll just increase what people are willing to pay for land.
That said, that kind of balancing takes time in practice, so if you did find a way to deliver a lot of housing at a much lower cost you could exploit the delay and build a lot of housing quickly, which would increase supply, which would lower what buyers are willing to pay. Basically you’d have to flood the market with so much cheap housing that buyers willingness to pay goes down.
I think a better approach to fighting high housing prices is to make more different cities and towns appealing places to live. There already is a ton of housing in this country but it’s in places where not many people want to live.
Airbnb, backed by VC money, were willing to enable the breaking of local laws on a mass scale. These laws, about the standards that bed and breakfasts and other short term lets must meet (things like meeting fire and health and safety regulations) and also limiting the number of short term lets in an area to retain actual, functional cities people can afford to live in rather than tourist traps were and are intentionally bypassed by the Airbnb founders and their funders as part of their business plan. Airbnbs, contrary to the "ooh its helping people meet their rent" narrative pushed by PG are often owned by rich multiple property owning rentiers who are profiting off rich tourists by driving out poorer people who would like to actually live in these areas. Airbnb is a blight in cities all over the world.
It sounds like what you actually mean is that there is not enough housing supply to meet the demand. Demand which has been augmented by AirBnB. This is a zoning and infrastructure problem, and it was not created by them, nor can it be fixed by them.
No it was created by them because they ignore those zoning laws and are willing to go to court to fight attempts to enforce them against their clientele. Finding a creative way to help people break laws with little chance of their being any consequences for yourself because you are a) in another jurisdiction and b) backed by billionaires like PG who believe they have a divine right to "disrupt" societies against the wishes of the people who live in them in the name if profit, is not something to be applauded. There is nothing "natural" about the creation of demand by Airbnb and it has brought little but misery to the poorest members of society while enriching those at the top.
There's indeed not enough housing supply to meet the total demand. There are various reasons for that, but that's the ground state. What AirBnB does is add to this an incentive for existing supply to further shift from serving city residents to serving tourists. Since housing supply isn't limited by low demand but by external and difficult to change factors, what AirBnB does is just making a bad situation much worse for cities worldwide.
Not really, land is fixed, you cannot create more land out of nothing. It is not yet another startup that can be created because VS has a lot of money because many government all over the World think that printing money (named nicely QE) is a good idea.
I live in Amsterdam where there’s a lot of AirBNB and I see and hear two big negative consequences: (1) rent and house prices have gone up because people can make more money with AirBNB than regular renters and houses being bought as investments. (2) I know some people in the center of Amsterdam that see (before the pandemic anyway) a lot of trash on the streets (discarded mattresses) from “homes” that are being AirBNB’ed. And lots of noise complaints as well.
The core problem is the same as with Uber: they are playing on a field where other players have to play by strict rules (just think about what regulations apply to a hotel, for example), but they do not.
In other words, it all started as an opportunity for private people sharing their rooms, now there are more and more businesses operating in this space, reaping all the benefits, but giving nothing back in return, paying no taxes, ignoring all safety measures etc. Give people the opportunity to abuse the system, and abuse they will.
Local rental prices skyrocketing is one side-effect, destroying the neighbourhood is another.
There are positives too, like I now have the opportunity to easily rent a room or flat with a kitchen so I can cook myself (with various food intolerances/allergies this is important), this would not have been possible - or would have been really expensive - in the pre-airbnb world.
I'm not sure what strict regulations cabs have to follow, but for safety I'll take an Uber over a cab any day.
The yellow cab industry might be tightly regulated, but It doesn't seem to benefit the consumers. Cabs suck, plain and simple. Even the worst uber I've personally had was far better than a cab
In general the yellow cab monopoly got smashed apart with a sledgehammer.
I agree with you about cabs in the US compared to ride hailing apps. But AirBnB is very different, and worse. The hotel industry is nothing like the cab industry. And residential real estate is nothing like roads.
Hotels face lots of regulation not only on how they operate (fire safety, egress, food safety, etc) but also where they can operate. AirBnB lets investors get around all these regulations and tap into tourism demand at a much lower cost.
Honestly I'm a bit shocked as well. It's in these kinds of threads that it comes out how out of touch a lot of people on HN are with the impacts of their money, and actions. Praising airbnb founders reads like praising Trump to me. Sure, successful in the literal most possible sense, but they have no idea all the harm they are inflicting on those who live different lives than them, in places and cultures they don't understand.
Trump is the worst example possible. He's failed everything since the plaza IIRC. He could've left his inheritance in an index fund and had 10x what he has now.
I agree with your comment and find it a shame you're being downvoted for expressing that opinion. I think people can't bear to have a mirror held up which exposes the naked & ugly truth.
We all have individual stories about the convenience of AirBnB when visiting a new city, but I feel a lot of us are unable to see the bigger picture beyond our own selfish need for slightly increased comfort levels. We either deliberately overlook or are blind to the damage AirBnB and similar tech companies have wreaked on society.
Flimsy, selfish delusions of grandeur from tech wankers who just want to print money in fastest way possible with total disregard for the destruction they cause along the way but don't worry, its "disruptive"! All to be lapped up and praised by people who were brainwashed into the Randian mode of thinking
I also find it quite amusing that some people come back with these replies of "you're just bitter" "jealous of the fact that they're rich and you're not!" just continuously beating everyone over the head with this idea that there's only one true way to measure success. As if, in questioning how that success was reached and the societal, ethical and moral issues it brings up are somehow not acceptable. I guess in pursuit of the American Dream no has no time for such trivial issues.
hn_throwaway_99, I don't think it's mere griping to point out that companies like AirBnB trampled the rights of others in the communities it serves, because they literally ran an an illegal hotel business. It is roughly analogous to my setting up tents on the sidewalk in front of your house and renting them to my "customers", or charging people to come to noisy parties right outside your front door. Maybe the AirBnB are incredible business people, but they crushed neighborhoods and competing businesses in an illegal and, to me, hideously unethical manner.
You don't own the sidewalk. If a foodcart pulled up and your office cafe started to lose money many would suggest they offer better products or prices.
Those noisey parties happen at my neighbours house all of the time. It's the price of living in a city.
That's why the GP used the example of tents and parties, and not selling food. You actually do own the sidewalk to some extent - there is a set of regulations in each city that tries to balance citizens' needs for beauty and comfort with the needs of healthy economic activity.
AirBnB - and Uber - just went and ignored these laws wholesale, essentially showing everyone a huge middle finger.
> Those noisey parties happen at my neighbours house all of the time. It's the price of living in a city.
So you talk to your neighbours and you come to an understanding. Since you have a long running relation with them (you live next door to each other) you can improve living conditions for both parties by communicating. If you have different party go-ers every week next door you can't do that.
Housing area's should primarily be liveable. They are not there to provide real estate for someone to speculate with or to rent out to party go'ers. Though I guess this might be a too socialist view for you in which case we'll probably never agree with each other.
A socialist or communist society kinda works a little differently at least in eastern europe. Depending on how close or connected you are to the party leadership you get an apartment you throw as many parties if anyone disagrees they get thrown in jail. If someone more important complains you get thrown in jail.
Your view sounds more republican. All of the home owners create a gated community with rules. Those who break the rules are kicked out.
That just seems like such a weak argument. People are really furious with Airbnb for violating zoning and hospitality regulations? Really? Did they also jaywalk on the way to their YC demo?
I think people are mad that the Airbnb founders are rich (fair, but there are a lot of rich people) and that they have arguably raised rents, though I'm not 100% convinced of that.
EDIT - There is some good data out there suggesting a correlation between airbnb activity and rent increasing. Still researching.
You seem to think I know why people are furious. I don’t know what is in other peoples’ minds. I’m just telling you how I look at things. I‘m already rich, but even when I wasn’t I was never motivated by envy or hatred of those who had more than I did.
As far zoning and hospitality regulations: it is scarcely exaggeration to say that a municipality can come close to ruining your life, and certainly your personal fortune, through whimsical application of them. Perhaps you live in a place where these things don’t matter, or, more likely, perhaps you’ve never been in business for yourself. I live in Seattle, where they will cheerfully shut down your business for weeks because you have an electrical outlet 6 inches too close to the wall.
I think part of the critique here is that at a certain point you get big enough to where both positive and negative externalities created by your product become self evident, but often companies just settle on ignoring it unless they are called out to the point where they have to act. I feel like Airbnb hasn’t been proactive enough in addressing the negative issues created by their product at all.
For ex I’ve personally not heard anything much from Airbnb w.r.t impact on local real estate markets eg higher prices or low rental inventory. I’ve only heard them actively deny that they put pressure on real estate prices.
And they’ve only recently invested more in safety and have said they are trying to ban house parties after the shooting in Oakland last year when that has been a problem for years.
I believe you that they had their pitch fleshed out once they got moving, but from someone who, in a way, wished someone would invent AirBNB for years, I can't imagine the original inspiration was any more complicated than "VRBO's website fucking sucks, and has, for a long time."
Let me know if I interpreted you incorrectly, but I think you mean that VRBO has existed for longer and has a poor product/UX so they needed to be disrupted.
I think it may be easy to compare the two now, but back in the days they were fairly different. I was a fairly early user of Airbnb (they opened at a time when I was young and traveled a lot, especially solo). During those days, Airbnb was truly about renting out extra space in your own home. (Maybe not an "airbed" every time, but just a room in your house/apartment, nonetheless) All of my early usages of Airbnb (as a guest -- I was never a host) were actually renting rooms in these strangers' apartments, that they live in themselves. This was in France, Italy, Brazil, etc. It's not about vacation houses in popular resort places (Lake Tahoe etc.). In fact, I remember back in the days there was a lot of comparison of Airbnb and Couchsurfing. One is paid and one is free, sure, but both were very much about meeting folks locally.
This is true I remember as much as I wanted to like the concept, Airbnb never resonated with me personally until they became more like vrbo. It’s because I’m firm on not wanting to befriend my hosts. I want the whole house to myself. Now I like it because I can get into a neighborhood and “live” in my host city.
>Let me know if I interpreted you incorrectly, but I think you mean that VRBO has existed for longer and has a poor product/UX so they needed to be disrupted.
Correct. I first used VRBO sometime around 2002. They were the only game in town for this kind of thing for a long time.
Yes, you could rent out space in peoples' homes, but if you wanted a vacation spot that wasn't a motel, they (eventually) did that better than VRBO did. I'm pretty sure VRBO didn't change their vintage 1996 website until well after AirBNB was a competitor. Multiple years. I could be wrong on that, but suffice it to say that AirBNB also filled a vacation house need that VRBO had been limping on.
Yes, and if they required the host to live in the space too, 90% of the issues they caused would have been avoided. But “disrupting” VRBO’s market by making it hip and ignoring all those pesky regulations (BnB licensing) made them realize that real estate arbitrage was _much_ more profitable. And their fault was the same as google’s: our motto is “don’t be evil”, but it’s so profitable so I guess we just forget the motto.
Sibling comment conductr is part of the problem, the same blindness as Airbnb: I want what other people have (private pads in cool locations, rented by the day), and I don’t care if that’s unsustainable in the long term, I will just take advantage of it now.
Hey Breck, I was one of those staying on your couch. Had a great time and yes, without AirBNB wouldn't have been able to connect to great people around the Bay Area.
"For the Airbnbs, ramen profitability was $4000 a month: $3500 for rent, and $500 for food."
As a silicon valley outsider, blood drained from my face after reading this. Do you have to starve or raise money only to pay rent? I have a profitable business and it scares me to apply to YC after reading this.
> But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they’d all had a great experience… That experience was why the Airbnbs didn’t give up.
It seems safe to say that the majority of Airbnb use now is not a delightful experience of being hosted in someone else's home, but whole-apartment/house rentals or other circumstances with not much interaction between host and guest, feeling very business-like. No? I don't it's common to especially enjoy it as an experience anymore, it's just a way to make money or a way to find a nice place to stay at a good price.
If that delightful hosting experience is what inspired them to keep going... it's still not what the company mostly ended up providing to the world. If we were to weigh the pro- and anti-social aspects of airbnb, that pleasant human relationship between host and guest would barely weigh on the scale, because it's mostly not what happens there anymore. The founders don't seem that concerned about that though, do they?
So what do we take from all that? It seems odd to me to highlight that aspect of the founders initial motivation without even mentioning whether that's what the company actually does now.
Well, that would be even worse, as far as why Paul Graham chooses to tell the story this way, even make it the center of the story. I guess that's how he remembers it.
Either way, it's not what it is now, and he's choosing not to mention that, while leaving it at the center of the story...
What AirBnb did was not find a grey area; unregistered bnb's were already illegal at the time. They simply relied on their hosts facing the primary brunt of the legal and fiscal penalties.
Before the pandemic, Manhattan was filled with apartments that had every room turned into bedrooms that were rented out on AirBnB and that violated fire code. Now cities are filled with literal flophouses.
That was poor wording on my part. I put the "before the pandemic" in as a disclaimer, because I haven't looked at the Manhattan housing market since the pandemic began.
To truly cater to the broad range, they should make it easier to filter out slumlords with a toggle to find listings that retain the classic feeling, so that the people who prefer a hotel feeling but with less regulations can also filter out personalized experiences.
If you say you started a grocery store because you wanted to sell organic food and help people buy organic food, so you are very pleased with how it's went since now 3% of the food you sell is organic, I'm going to wonder about your story, or your evaluation of success. If you are making lots and lots of money selling 3% organic food, but everyone keeps talking about the organic food, I'm going to wonder if you switched to prioritizing making lots and lots of money instead of selling organic food (which you are allowed to do, nobody's going to stop you), and if the organic food is just a story, and if maybe we should stop telling that story like that, and at any rate when telling the history of your endeavor it seems worth mentioning.
Look at Dr. Bronners soap -- it was for spreading religion. Turned out the soap was more popular than the religious message. But every bar and bottle is still chock-full of the religious stuff.
Or how people start movie theaters to show movies they love, but that's not profitable, which is why they have overpriced concession stands that actually make the entirety of the money.
If someone wants to bring organic food to a town, but the only way that's a sustainable business is to make it a small area of a large conventional supermarket... that's entirely normal.
I don't know why anyone would wonder about it at all?
Ive used AirBnB in multiple countries. The disconnect between guest and host exists in many places, but it's especially true in the US. However, several of my trips to Japan have produced meaningful long term relationships with hosts. It really is dependent on the country and what you're looking for.
I have multiple vacation rentals and use several sites including AirBNB to list them. I've also spent a month in Japan traveling and gotten to know hosts who were on AirBNB. One host we talked deeply with after she lost all of her other bookings from a massive typhoon.
The problems she has with guests and the problems Japanese people face as a country are very different. She has had to stop taking specific types of guests because of rude behavior like flushing food down the toilet and damaging tatami mats. When in Japan, a person described their culture as, "having a very specific way of doing things and becoming very upset when people get in the way of that." With so many people having that mentality, hosting is a more friendly sort of thing.
We have different issues. We've become friendly with several of our guests, and even see some past guests once or twice a month to spend time together. When the guests come from AirBNB, we have to maintain a lot of vigilance. We've had multiple drug dealers, a large number of people smoking weed in our rentals, child endangerment, and a few parties. AirBNB has a hands-off policy and there are a lot of pieces of shit who have learned they can abuse AirBNB's system to do what they want, and we don't quite have the same culture of empathy anymore.
When "one person and her kids" turns into 6 grown adults who are constantly coming and going and I can smell the weed from outside, it's obvious. When they are dumb enough to leave an unlocked iphone after their stay with their signal account open and the details of their dealings, it's also obvious. Drug dealers aren't a bright bunch.
I am an AirBnB host myself since about 5 years and with 3 units today and there is a rating of your guest at the end, which basically prevents all of this. You can also just allow guest with (good) ratings to book your apartment (at all). So you have quite a good control over this. People are not dumb and will try to get value out of their investment (also guests - their investment is the booking of the accommodation), but I think your anecdote is not representational. Your home might be cheap and in a "bad" neighborhood, where you are forced to rent out to "problematic" people, since only those are interested to stay there. Though initially you probably bought the house cheaply and now -maybe- conveniently ignore this and complain about the problems in the neighborhood.
I am not saying that there are no problems. But it's kind of possible to get them under control and also have a good value proposition as a host. If you don't have this, then switch back to classical long-term renting. If you keep renting (rather short term) via AirBnB, then the value proposition for you (the host) must also be good enough considering all factors. It kind of does not make sense to be an AirBnB host and be unsatisfied - only temporarily.
You assumed what our properties neighborhoods are like incorrectly. You used your faulty assumption to create a story inside of your head so it would be easier to be patronizing. Your unsolicited advice was a waste of my time and yours, but I do hope it gave you that dopamine hit you seem to desperately need.
> not a delightful experience of being hosted in someone else's home, but whole-apartment/house rentals or other circumstances with not much interaction between host and guest, feeling very business-like
That's what I actually like about Airbnb. I get a whole house to myself and no one is there. I can go to a new country but still cook food and travel with a family, something that can be annoying in a hotel.
>It seems odd to me to highlight that aspect of the founders initial motivation without even mentioning whether that's what the company actually does now.
If you feel like being cynical, you can see ycombinator as analogous to a ram pump[0] that raises a small amount of water to a large elevation by dumping a large amount of water from a lower elevation. The way they get that flow is from what inspired people to keep going. So why not promote that? It's only logical.
> They’d been funding the company with credit cards. They had a binder full of credit cards they’d maxed out.
In my opinion, this kind of behaviour needs to stop being glorified. 99 out of 100 times this does not end with a billion-dollar company, but rather with someone drowning in personal debt.
The only "acceptable" time you can really run up a literal binder full of credit card debt is when you have a very easy safety-net to fall back in to, which again, does not apply to the large majority of people who would find this "came from nothing" story inspiring.
Exactly. It's a very pure case of survivorship bias. If you go down the route of collecting a folder full of maxed out credit cards your likely future is foodstamps or living on the street, not being a billionaire.
Honestly, I was in high school. So, no, not really. There were other reasons that no one would give me a credit card.
> It took a credit management service and ten years of steady payments, but I'm now out of (consumer) debt. Thankfully.
Wait, you mean the binder full of credit cards didn't work out to a billion-dollar company for you?!? That sucks. I guess we're 1 for 2 on that one today.... 50% chance of success. /s
I had income, and I wasn’t like a million dollars in debt, just $100,000. But I was barely making my mortgage payment and I was getting new credit card applications in the mail every week.
How do you even get a binder full of credit cards? Isn't the point of credit checks that you can't get a "binder full" to circumvent the credit risk you pose?
A lot of founders have a well off family that bails them out if they fail. This is something I learned only after my self financed startup failed and left me with debt for more than 10 years.
Airbnb: the biggest transfer of wealth from the renters and low-income folk to homeowners and wealthy in a generation.
Just like Facebook, etc, people who support/work for it are not without blame. Bankrolling huge political efforts to overturn regulations. Nonsense rules that allow corporate owners to buy up low-income housing turn it into vacation homes. Simply terrible company.
I've heard this before - can you articulate or link the reason why? It seems like the fundamental issue is housing and accommodation were wildly mis-priced and a fairly opaque market.
"Just like Facebook, etc, people who support/work for it are not without blame."
I'd hate to hear what you think of people who work in the energy sector, or textiles, or agriculture, or any of the other dozen industries that cause farm more social and environmental harm than AirBnB could ever hope to.
The comment was about workers and their relationship to the companies they work for. I expanded the conservation directly along those lines. Refusal to do so simply shuts down the conversation.
I always find it odd that Couchsurfing is never mentioned when it comes to AirBnb. In my mind, they laid down the cultural practice and AirBnb swooped in to capitalize on it. After all, why do something for free when you could get paid instead? Unfortunately it was yet another nail in the CS community and as far as I know, the couchsurfing concept is mostly dead in the water.
The analogy could almost be equivalent to MySpace and Facebook; the former created the mindshare and made the big first mistakes, while the latter learned from them and expanded the concept.
Yes but not originally. The description from PG’s post sounds exactly like couch surfing, which had been going on for at least five years at that point.
You don't really need to be any fluent in esperanto, just be able to arrange (by email), your stay. The esperanto community is extremely open, and simply by showing a minimal interest in the language you are very happily accepted.
In the early 2010s, I used to be an Couchsurfing user - as a host, guest, and even just meetups for tours/recs while traveling internationally.
> After all, why do something for free when you could get paid instead?
I really doubt the Couchsurfers were the ones who were converting their listings to Airbnb spots initially. Rather I think Airbnb enabled previously unwilling (or unmotivated) people to start hosting others for a cost.
The type of people I would meet were from a different cut of cloth than Airbnb folks. One picked up my friend and I from a Megabus stop and later we ended up going to our host's second home on Martha's Vineyard. One let us try out his expensive cycling bike out for a bike ride. I've attended a yoga session with my Couchsurfing host before on a trip. When I hosted, I took my guest (a cadet at West Point who hadn't had drinks in forever) on a spontaneous bar hop with my group if friends.
There was always a mentality of paying a good experience forward and a sense of community - which is tough to preserve when it becomes a transactional experience.
That being said, I agree Airbnb likely led to the downfall of the CS community. There were some sketchy ppl in that world. After running into one of those, I slowly found myself preferring to pay for the security and safety although deep down I knew I was going to miss out on all the fun that I couldn't simply pay for. As for hosting, I just wasn't interested anymore knowing that if someone were paying to crash at my place, it would be less about hanging out or getting recs but more about just needing a reliable roof to cover... where's the fun in that for a host?
"It all (already) exists in some way or another"... which makes it all about changes in opportunity, which mostly are uncertain/unclear over something like 10 years (AirBnB was founded in ~2008) and superior/excellent execution. So its all about execution, adjusting trajectories and being lucky, that the wind of change blows your way.
Eg. I absolutely don't want to downplay Mark Zuckerberg's contribution/genius, but Facebook comes to my mind, which certainly wasn't the first (attempt) at a social network. And: What are they today?! - Kind of the "web" (on phone/mobile) in India for example. With all the social integration and native (applications) first on (Android) phones, they became a better version of the WWW in less developed regions of the world.
CS concept still lives on in communities like Trustroots, it wasn't beaten by AirBnB, it killed itself after adding membership fees, prior to that they served different, even if slightly overlapping, groups.
> Why hadn’t they given up? As a money-making scheme, this was pretty lousy: a year’s work and all they had to show for it was a binder full of maxed-out credit cards. [It was] because of the experience they’d had as the first hosts.
While I agree that grit and persistence eventually lead to success for most smart founders, I think PG's explanation for why the founders didn't give up is misguided. If the explanation for their persistence was the great experience they stumbled upon, why didn't they quit in the preceding 3 years?
My guess is that Brian, Nate, and Joe are naturally stubborn (read: persistent) and have a high degree of self-belief. They eventually hit the lottery with their idea for Airbnb. Had they not founded Airbnb, I bet they would've kept trekking along and stumbled upon another (less) successful idea.
Persistence is a double-edged sword. It'll eventually lead you to success but at what opportunity cost? I'd be interested in seeing studies that help quantify the downside of grit by studying founder failures.
I wonder if there's ever a successful company that upsets the status-quo that does not have people vehemently against them.
It's also kind of strange for me to see this level of conviction against a company that rents out rooms while barely commenting on others that are involved in so much worse ranging from human trafficking and modern slavery to global warming, corruption and extreme waste.
The contrast between the article and the comments here is absolutely striking. And it all comes down to attitude.
Some people look at life and see the opportunities. Others look and see the obstacles. Some take the hardship they encounter and use it to grow. Others use it as an excuse for their failures.
The older I get, the more people I know, the more I arrive to the conclusion that it’s all about attitude, more than anything else.
It’s our attitude that decides if we end up as winners or losers. It’s our own responsibility and merit, not others'. But pushing a victim mentality, a loser attitude on others - is criminal.
The older I get the more I empathy I have for people who aren’t as successful financially and the more I realize that I owe the majority of my own success to factors outside my control.
I'd rather have a single entrepreneur, building businesses, creating jobs, creating value and chasing success for his own selfish reasons than a thousand empaths busy telling people they are victims and there is nothing they can do help themselves.
Yes sir, damn empaths, coming together to take care of the children and the tribe and hunt for prey. Let every person go out there and hunt for themselves.
If it weren't for the "empaths" your would be indentured to a warlord at best. Ayn Rand world does not exist, have never existed and it will never exist.
In the article I a see a success story for the people behind the company. The results (valuation and whatever) speak for themselves and how they got there is irrelevant if the only question is whether the company is successful in dollars and cents.
Here in the comments I see concerns not just about whether the company is successful or not, but whether it has done any good. That is, _good_ for people other than the owners of the company.
That is not about “attitude”, or some other self-help slogan. You can’t evaluate the outside world based on what you read in Think and Grow Rich.
100%. While the story certainly is embellished and deserves some critique, it is still a very inspirational piece for the current and next generation of entrepreneurs.
Is there any way to be really successful without being some kind of disingenuous sociopath or at least blithely unaware of the broader context of your success and the suffering it's built on?
No, not really. And if that makes somebody bitter, then I think that makes them sane.
This is story is the perfect example of the above. PG is selling us same old story that these two made it through hard work and attitude, while they really made it by opening up residential housing to rent-seeking speculators to use as hotels.
Get your gist but the indiehacker and bootstrapping community are absolutely full of counter examples, and plenty of YC companies have not made the world a worse place: Stripe, Dropbox, Gitlab, Twitch, etc.
I agree that all of those have much fewer obvious negative externalities, and do provide very useful services. But I can't help but think that work in general is a hostage situation for most workers: "sell your labour for less than it's worth or die. Also you will have to simply accept a host of petty tyrannies (in the best case) or abusive behaviour (in the worst)." You have to accept because most people don't have enough capital to make it on their own, and are prevented from accumulating that capital because they are exploited in the first place. Then the CEO's/founders/funders will turn around and say "Look at this amazing thing that I personally built." The value extracted from workers (and the real suffering that entails) is ideologically erased in the narrative about why the company was successful.
I think this dynamic is generally less recognized by software developers because we're frequently comparatively well paid and well treated at work, and can occasionally accumulate enough capital to break out of this vicious cycle (though we're still paid less than the value of our labour and still deal with much of the BS noted above). However the same can't be said for the people making our computers.
These types of naïve worldviews usually tend to come from a position of privilege. While we might all be running the same race - some of us are lucky enough to be equipped with Nike racing shoes, but there are a lot of people born with flip flops. Attitude is not nearly enough.
This is also why the expression “you can do anything you set your mind to” is a naive saccharine pile of oliphaunt excrement. Frankly, this overwrought phrase sounds like something an early 20th-century Gilded Age industrialist would have coined as a means of motivating the common man to toil even harder in a world extolling unbridled capitalism as its loftiest ideal.
This is an outlier and painting it in retrospect as "we knew they're gonna make it from the first time" is just ludicrous. This stocks are full of money from the government and wouldn't stand a chance in a different stock market.
Also there are not tech companies at all. They are marketing companies fueled by cheap money.
You seem to be making an unfounded assumption. It's entirely possible GP has a balanced view that accounts for both Airbnb's positive and negative impact.
It's not looking for a way to tear them down, it's having a critical eye. For example, read this paragraph:
> they said the biggest surprise was how many of the hosts were in the same position they’d been in: they needed this money to pay their rent.
Twelve years later, Airbnb has been a very relevant factor in the increase of prices of rentals in a lot of major cities. People still can't pay their rent, although this time Airbnb is not precisely helping. You can also take a look at this other paragraph:
> But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they’d all had a great experience.
Most listings you find now on Airbnb are full rentals, no sharing experience at all. Basically a page for booking hotels and apartments, only they don't care if you're doing it illegally.
So no, for a lot of people they are not an inspiration. In fact, for me, it is the perfect representation of what is wrong with the current tech world: capable people with good ideas and good intentions (let's assume) who just abandon those ideas and intentions in the road to making absurd amounts of money, and who will take advantage of morally grey (and even morally wrong) areas with no regard for real world consequences.
There's no "looking for a way to tear them down" - there are plenty of reasons that AirBnB should not be allowed to exist in its current form in a civilized society, and the arguments have been established for nearly a decade now. Same case with Uber.
- Grit and formidability. "They did nothing half-way, and we could sense this even in the interview." If one doesn't feel so strongly about the problem they're trying to solve, it is going to be hard to sustain the energy needed for the effort required.
- The founding team is key. "We didn’t even like the idea that much. Nor did users, at that stage; they had no growth." Despite the "startups = growth" truism, it is refreshing to see that one of YC's biggest exits had no such trait even after a year of work (when they decided to fund them in W09) apart from the fact that the founding team was relentless.
- Momentum is everything. "No one ever worked harder during YC than the Airbnbs did. If you suggested an idea to them in office hours, the next time you talked to them they’d not only have implemented it, but also implemented two new ideas they had in the process." This may sound easy but it is so hard to do in practice (speaking from experience) because of the discipline and focus it requires to keep moving the needle a bit more every day.
- Don't let rejections break you [0]. "One investor they met in a cafe walked out in the middle of meeting with them." Again, it so very easy to let rejections get to you despite trying your hardest to not be bothered by them. You start to question all kinds of things which isn't a healthy thing to do but it is kind of inevitable because the disillusionment hits so hard.
- Live in the future. Care enough to make it happen. "When they first tried renting out airbeds on their floor during a design convention, all they were hoping for was to make enough money to pay their rent that month. But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too... That experience was why the Airbnbs didn’t give up. They knew they’d discovered something. They’d seen a glimpse of the future, and they couldn’t let it go." The Airbnbs weren't the first to realise this [1] but they cared enough about making this work at a scale never done before [2].
- Know your metrics of goodness and identify how to hit them [3]. "They knew that once people tried staying in what is now called 'an airbnb,' they would also realize that this was the future. But only if they tried it, and they weren’t. That was the problem during Y Combinator: to get growth started. The way to get growth started in something like Airbnb is to focus on the hottest subset of the market. If you can get growth started there, it will spread to the rest. When I asked the Airbnbs where there was most demand, they knew from searches: New York City. So they focused on New York." If I take the liberty to draw parallels with Amazon's founding [4], Jeff Bezos (who incidentally is an early Airbnb investor himself) chose Seattle for a reason (taxes and tech talent). He chose Books for a reason (warehouse-ability, shippability). He chose to be online-only for a reason (low costs and reach). Again, easy in retrospect, but requires non trivial amount of insights and delibration when starting up. And it is all too easy to overthink this and get lost in a quagmire. Drinking the kool-aid, as it were.
Survivorship Bias or not, I think Paul would be the first to point out that every startup is different.
I love this story, I never knew how close to failing airbnb was, it just shows that with enough hard work, a decent business plan, intelligence, and some optimism anything is possible. Also, alot of luck, airbnb is one company that did make it, what isn't being said is the graveyard of thousands of companies that were not so lucky in similar situations.
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This is from the Harvard Business School case study on Airbnb.
Be clever.
So earnest. Their inability to police fraudulent/scam listings. It comes from a place of earnest conviction. Their blatant attempts to circumvent and disregard local laws about illegal hotel listings. It comes from a place of earnest conviction.
Why is there always a need to sugarcoat these bio pieces like they're describing somebody in line for canonization?
The Doordash piece was even worse.
It's a post specifically focused on why someone thinks a certain team succeeded.
Given that, of course it's about positive traits.
Edit: Perhaps I am a bit harsh here. I am frustrated overall at the general idea that nothing can ever be condemned, and morals may not be discussed, merely because they include a subjective value judgment. Those value judgments occur at all times, and are what give importance to the facts.
Your point about the morality of their actions is totally valid in itself. A valid and well supported opinion.
However what I refer to is that you question how a piece like this article can go ahead and not point out the immortality of their ways. And I really think that from their business-centered, libertarian point of view, there just isn't any immortality here. In their opinion, they did things right. Therefore they could not point it out.
It's intended to give would-be entrepreneurs insight into traits of previously successful entrepreneurs. In particular traits the writer believes should be emulated.
Those will naturally be positive traits, because the entire point of the piece is to give readers something to aim for.
> Flaunting social norms
In the case of Airbnb, what was the social norm? Staying in a hotel? Wouldn't all disruption be flaunting social norms??
I think applying your own moral standards to a company in this way can get precarious. Beside the outlier cases of trashed rentals or someone left in the cold (which is harmful, but again, a very small percentage of their volume), the majority or Airbnb hosts and guests seem to find value in their service and choose to use it. How immoral is that, in reality?
The social norm is the expectation that your neighbors won’t be running a hotel next door.
https://www.quora.com/Did-Airbnb-get-sued-for-running-a-robo...
"What Airbnb did in 2010 and 2011 was to use a bot to spambot to email who had posted short term vacation rental ads on Craigslist. The emails claimed to be from women who liked their listings, suggesting that they try Airbnb. "
Does Craigslist actively monitor the messages being passed through?
Edit: Why did I get downvoted? It was a legitimate question. It may have deviated from the article subject, but that’s how conversations flow, and how you learn of new things.
Paying your taxes. AirBnB has managed to avoid VAT by pushing that responsibility onto hosts. UK is looking to changing this arrangement.
Leaves a bad taste in my mouth to ever use Airbnb again.
Come on, dude.
Maybe that's your strategy to VC investing. I don't think it's particularly good to apply a zero or negative coefficient to this trait. But that's okay, the market shall speak on this one.
I had multiple break-in attempts, attempted physical altercations and loud parties on weeknights.
Airbnb ignored complaints, my landlord ignored complaints, it took Covid-19 to get rid of the parasitical infection on my peace of mind.
They certainly are wealthy, but I was not happy. Well-intentioned residential zoning laws were ignored at my expense.
I don't think that's really fair. AirBnB as originally conceived is something that would make the world better for a lot of people. Something you can be proud of building. What it's turned into is far more of a mixed bag, of course, but that doesn't change the earnestness of how it began.
Like Couchsurfing before AirBNB destroyed it.
> Any normal person would have given up already.
I’d be interested to see how “normal” the kind of fall back options these founders had.
I don't feel any of these successful founder kids had anything handed to them, however, they generally have a 'nice, clean journey' from birth to founding whereas most people face bumps, barriers etc..
But it's also a little unfair to generalize and there are absolutely opportunities for all types.
'Spoiled' is the Lambo in high school for the kid with bad grades.
Moreover, most private HS are not considerably better than good public schools, there are advantages but not giant leaps there.
Much more advantageous is private College, but it's somewhat more competitive and at least partly meritocratic.
These kids are not from massive homes, with baller cars and 1M follower instagram accounts. They don't have chefs, their Uncles are not Senators. They live in the suburbs in slightly better than normal homes, their parents drive Audis and they do their homework. They had braces as kids, and never had to worry about healthcare. Their 'Dentist' father is not 'connected'. They are really not that different from most kids, other than they never have to worry.
Same is not true of any private college, since the government hands out loans without discretion to anyone. A selective college, however, offers you similar benefits.
But it's probably a much bigger advantages to have 'Harvard' on your resume.
And FYI it's not 'the money' quite as much as the 'stability, support and fallback cushion'.
I think it's pretty natural, if your resources are exceptional, to treat that as extending to your immediate family. Therefore it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit.
I don't see a special moral dispensation for, 'this kid APPLIED himself and therefore it's okay that he never had to worry'.
"it doesn't matter what grades the kid gets because there is nothing they can possibly do that's more important than being your kid, and so they'll automatically be your kid and have access to the resources of your family unit."
Just because you love your kid doesn't mean you give them everything.
In fact, being superlatively rich probably comes with a whole bunch of extra challenges in raising a kid.
No matter how many 'resources' a kid has access to, doing a 'good job' and having a little bit if self discipline are essential to having a good character, being civic, and also creating a positive future for oneself and ones community.
Having a 'Lambo' is a very exceptional thing it stands out definitely more than one's peers. A poorly behaved, entitled kid who'll use that Lambo to rub it in the faces of his peers, who accomplishes little doesn't deserve it.
Of course not everyone 'get good grades', it's entirely possible a kid is deserving in some way, by grades are at least some crude measure of applying oneself.
Frankly, however much money I had I wouldn't even give my kid a Lambo, it's way too much attention and ostentatious luxury, children are not good at handling that. It's excessive and materialist.
'Access to capital' is an entirely different story as investing for the prospect of value creation is difficult than conspicuous consumption of luxury items.
Funny: Sometime after paying off the first time, I was talking with a CSR at one of the credit card companies, and she looked at my account, and said, kinda awkwardly and with surprise, "You've been a very profitable customer...". I'm pretty sure that's not in any script. :) But I did have a stellar credit score by then.
One of my businesses did some great and beneficial work that I feel really good about, but I should've used angel/seed investors from the start. That would've made things a lot less painful, helped me formulate a more profitable business, and helped the second business actually get all the way to launch before I couldn't stomach any more fistfuls of personal debt.
How I see it now: no matter how much I'd prefer to focus solely on product and engineering, and not having to play business-person with investors, investors are so much more preferable to self-funding a startup as a non-wealthy person. If you can't convince investors, I'd advise being very skeptical of a survivor bias story from Airbnb, and instead find a way to modify or explain the business to convince investors. (You could just tell them: "we'll make money by disregarding existing regulations for a market, undercutting the competition." :)
For my current passion project, a video game , I plan on dumping between 10 to 20k in before trying to pitch it to publishers. When that likely fails I'm going to self publish , I really really enjoy programing with Unity so I'm not too worried about making my money back.
I can't imagine anyone who's not well connected can walk into an industry conference and walk out with a seed round
If you get positive feedback and a bunch of sign ups, proceed. Otherwise iterate on the concept/website/marketing strategy until it clicks, then continue with your plans.
I guess you can see a YouTube video of my prototype on the static site ?
And yeah a prototype video sounds like a great way to test people’s enthusiasm.
https://www.indiehackers.com/post/how-to-brainstorm-great-bu...
My history in SF weirdly intertwines with AirBnB. I first met them in 2007, at an "unofficial startup school afterparty" (this was before they were funded by YC). The party consisted of Brian and (IIRC) Joe, and a couple of bottles of booze and some soda in their apartment (the one they rented out to the first guests). Let me just say that they weren't living in luxury: there were mattresses on the floor. The only notable piece of furniture in the place was a table, and a bookshelf filled with white, blank-covered book galleys that Brian had gotten for free from some print-industry connection.
I then worked at Justin.tv when these guys were getting advice from Michael and eating lunch with us on a regular basis. I bought them drinks because they were broke. The unsold Obama-O's boxes were sitting around the office.
I'm as cynical as the next guy about the relative well-off-ness of a lot of startup founders these days, and I don't have any personal insight into their finances at that time. That said, as much as anyone in SF in 2008 had no fallback plan, the AirBnB founders seem to fit the bill.
For example, if I was in these 3 gentlemen's shoes, I would have not maxed out my credit cards, because my parents were entering their 50s and they didn't have gold plated health insurance from government or a F500 company, so I knew I had to play it safe and be ready to be there if and when they need me for assistance with healthcare expenses.
I don't mean to detract from any of their achievements, surely they put forth effort into getting into the right schools, studying the right subjects, and focusing their energy on something that netted them a very high ROI.
The purpose of my comment was to shine a light on how being in a position to max out credit cards in SF in the first place without greatly negatively altering your family's trajectory qualifies you as "normal" in a very restricted sense of the word "normal".
Please people, do not max out your credit cards, at least not until you are as good as what you do as they Airbnbs were in 2008.
I think there's a cognitive bias at YC where they don't realize that most people (especially 20 year olds) are not very good at making things, and so on average the best advice you can give the general public is just to get better at making things.
The Airbnbs were exceptionally skilled and hard working people. They made all sorts of weird stuff—and did it well. The cereal boxes were the tip of the iceberg. Brian and Joe could design (and throw a good party!). Nate was a terrific coder who did CS at Harvard.
I would absolutely say they had the best fallback plan—they could make things. They could've gotten other jobs. That takes decades of hard work (I'm sure they started building things when they were very young).
So if you can't make good things, DO NOT max out your credit cards. You will be setting yourself up for disaster. Instead invest in your skillset. If you aren't good enough to build something great, go out and get a job(s) and keep working on it.
I like a poem written in 1916 about being someone who "delivers the goods" (https://breckyunits.com/deliver.html)
Chesky - Both parents are social workers, probably would have been in a rough spot taking on that debt. Would have moved somewhere else and gone back into industrial design.
Gebbia - Father is/was a successful businessman in the Atlanta area, currently a city councilman. Probably would have been better off than Chesky, but the debt probably still would have stung. Would have gone back into industrial design.
Blecharczyk - Upper middle class family + Harvard alum. Taking on the debt might have been painful, but he probably would have been fine eventually, especially with his technical background.
I don't think their fall-back options were great. If they had "rich uncles" or something, I don't think they would have needed to max out credit cards in the first place. I think Chesky's level of conviction was simply unwavering. I'm certain there are much more affluent people who would have given up sooner.
Being independently wealthy or being able to take a high-paying job (FAANG+) would be a good fallback. Seems more founders these days have those.
Why can't we get back to a place of finding the good in every story/person instead of trying to tell everyone that they're doing something wrong?
Also, holy cow! From credit card debt to billions. It makes the story that much better!
...of also debt. 2.2 billion.
I struggle to understand how their expenses are so high. Or why investors are happy to keep buying into a company that has failed to ever be profitable. Look at the cap tables. They've gone into massive deficit every year running an app. A $3B/year app.
Both options are reasonable investment strategies but for folks who will take a gamble to have a bigger pie, #1 is pretty reasonable. Especially if you can later cut costs and still have that 10% profit margin.
When Amazon spent years and years not making a profit, I understood: They were investing in infrastructure and taking on new industries. They could make a profit any time they wanted by simply not re-investing any further.
Tesla, SpaceX, and many other companies necessarily have to invest heavily in the early days to build out their infrastructure and capabilities. I understand completely why they might not be profitable for years and yet still be good long-term investments.
With Airbnb, I struggle to understand what they're investing in. There's no inventory. They own no real estate. That's supposed to be the genius of the business model. And yet they keep losing hundreds of millions each year.
When you say they're investing in growth, what exactly are they investing in? What am I missing? What are they doing that costs $3B a year, and how does their cost-to-revenue ratio improve as the business scales?
From where I'm sitting, it looks like the more business they do, the more money they lose.
But it’s hard to really disconnect execution from the insanity of our monetary system this year...trillions in dollars pumped into our economy, 0% rates, and a retail options frenzy has created the perfect environment for speculation on growthy tech stocks.
If you're wondering why it's been such a bad year to be in cash despite the economy crumbling around you, it's because no one knows where else to put their money. Stocks and houses are being bought with inflated dollars.
How do we know the number of dollars is inflated? Maybe there were too few before?
See: Taper tantrum.
If you think the Fed isn’t doing anything when they QE, then ask yourself why they do it.
AirBnB didn't benefit in any way. It just seems insane that we will see such a pop in their stock price.
Or am I missing something here? Does remote work means more business for AirBnB properties in the future?
They also have more “rooms” and any hotel chain without any of the capex or infrastructure costs so it’sa fantastic model that is light on cash and creates tremendous scale.
The pandemic forced them to cancel advertising, save a ton of cash, and realize that their brand is strong enough that advertising isn’t really needed in the traditional sense which improves their balance sheet for 2021 and 2022 and future years.
Meaning that the company has very little insight or control into the quality of any of their listings. So it’s always a dice roll. If the listing ends up looking nothing like the pictures, or is dirty, or you’re locked out you’re on your own, and the best you can hope for is not getting the run around from customer service and they refund you fully and/or put you somewhere else.
They aren't an honest company, they're just burning through goodwill.
I wonder what the calculation for ramen profitability would look like in a fully remote-work environment, in a place where rent isn't $3500 a month... Anecdotally I've seen a few people renting pretty nice places in Phnom Penh, Cambodia for $500 a month. Some stayed there through the entire duration of the covid19 crisis due to travel shutdowns and have been working on various things.
[0] https://www.kff.org/medicaid/issue-brief/status-of-state-med...
I’m not sure I would recommend it, though. Proximity to customers (assuming US/EU market) and angels/VCs is worth something, and I would suggest that it is worth a lot.
I will also add that when you factor in plane tickets, visa runs, etc., it is probably easier and just as affordable to find a cheap place to stay in your home country.
If you’re bootstrapping a business, especially if you have some tie to Asia like manufacturing or labor (e.g., “virtual” assistants), then the digital nomad option may be better. But for a VC-trajectory business, I somehow doubt it.
this is not a particularly scalable advantage. if you plan on reaching every single corner of the global market, what does customer proximity mean? if you have to have an office everywhere you do business in, is it really a tech driven business or are you just doing bespoke sales? what's the cost of every additional dollar of revenue?
Early start ups are typically going from zero to one, so they really need to find a small and passionate customer base somewhere. As many folks have said before, often times it makes sense to do things that don’t scale early. This might mean in-person visits. YC has many stories of this working, like Airbnb and Stripe.
I will also add that if you are looking to go down the VC path, being near VCs is important. You can raise VC being far away, but it is more difficult, and the associated costs will eat away at what the original commenter seems to be looking for, which is a cheap place to live.
I think it's evidence for "Billionaires Build", which is an apologia for billionaires. pg seems to think we are in a moment where billionaires don't have enough cultural respect.
I think pg is trying to show us that billionaires, at least the kind he funds, are just better people, or are at least more tenacious. The binder of credit cards is supposed to inspire admiration for their dedication (rather than horror).
And I think he's congratulating himself for being able to spot them. By extension, spotting billionaires (helpful, tenacious, people who love to build) and helping them - well, is he saying that he's a great person, squared?
Well, this is true. Compare the average self made billionare to others and yes - they are more tenacious.
But that's obvious.
Maybe someone with a better understanding can say something here but it seems like the way we do IPOs is not great. I'm not sure how to do it better, but I'm sure that there is a better way to do it. I guess this should be the next yCombinator startup. Disrupting the IPO landscape :P.
In the old days, there would have been recriminations. These days, people just shrug and think it's acceptable that the financiers lock up most of the gains for economic value created (or, depending on your thoughts of Airbnb's business model, acquired) by others.
It's one of the reasons Wall Street has fought so hard to prevent become fiduciaries again. If they were fiduciaries they couldn't get away with crap like this.
VCs + founders would have been diluted a bit by that (~8% I think?) but they typically[0] still own all of the shares that they did previously.
[0] In some situations founders + VCs + early-employees can sell as part of the IPO itself. I do not know if that applied here.
For some reason, the financiers were able to convince the gullible tech founders that giving up 50% or more of the IPO to the financier's best buddies was a good thing. And in their greed, the founders gladly went along, screwing themselves and their employees in the process.
(Theoretically, the underwriters are granted a pop because of the risk they theoretically undertake. But by the time the IPO occurs, the underwriter has already lined up sufficient buyers and there is no longer much if any risk, certainly not a level of risk justifying most of the gains of the IPO).
I still remember when Nate first told me the idea at our first batch meeting and I immediately loved it—at the time I lived in a 4-br house with ~10 people, and we constantly had people on the couches or in a tent on the roof. I would go on to make more money thanks to the Airbnbs during my YC year than I would from my own startup.
But a million times more valuable than money was the path that those guys sent me down. Sure, we both had gotten into YC, but I could immediately sense there was a huge gap between us. I think I've always had a strong work ethic and desire to serve others, but I didn't have the craftsmanship or teamwork skills that these guys had—and they had it in spades. Everyone talks about the cereals, but their apartment had more impressive things they designed and built than that (IMO). Nate was a no non-sense engineer who took software seriously and built great things. His code was far beyond mine at the time. And the team work was incredible.
I dabbled with joining Airbnb early, but never went down that path. I like to joke with my friends that I turned them down, but in reality it wasn't because I had better options, the truth is I knew they were out of my league skills wise, and I had a long way to go to catch up.
The lesson that I learned from the Airbnbs that I think isn't always stressed enough in the "power law startup world" is that you need to be building many, many things—with other people—, and get really, really good at that, before you can go on and "make something people want" and do something world changing, like these guys have done.
I'll never forget driving home in the dark after our Tuesday night dinners in a rental van, the 3 airbnbs and me. After hours of loud demos about their new stuff and listening to everyone in the room about how they could build things better, the drive home would be quiet. You could tell that they were utterly exhausted, but also quietly determined. I doubt that they will stop and rest enough to celebrate this moment, but they "earned this" moment.
They're the real deal. To this day continually inspired by them.
Virtually everything I've heard from people who have actual, personal interactions with the AirBnB founders is positive, and especially that their interactions were inspiring - that is, the AirBnB founders inspired people around them to do better work. I just think that's an amazing quality and something I'm so grateful for when I find it.
Sure, I may have my own gripes about AirBnB, but I can certainly appreciate the unique combination of talent in the founders that made their success possible.
I think a big piece of it is that current the crop of tech startups going public are largely unprofitable companies whose only "innovation" in many people's eyes has been skirting laws and foisting negative externalities on the broader public. These companies have also risen while the cities in which they are based (i.e. San Francisco) have deteriorated substantially.
All in all, the perception is that the current startup ecosystem isn't producing the same innovative, profitable companies that "lift all boats" the way it used to, and the increasing negativity and cynicism here likely reflects that.
It's fine to acknowledge they are remarkable people, but it's also ok to say that the success of AirBnB has had huge negative consequences for many people. And it's hard to see how the former can outweigh the latter.
'Capitalist realism' has us trapped. Many seem to believe no alternatives are possible.
No wonder we have a global mental health crisis:
"Depression is the shadow side of entrepreneurial culture, what happens when magical voluntarism confronts limited opportunities. As psychologist Oliver James put it in his book The Selfish Capitalist, "in the entrepreneurial fantasy society," we are taught "that only the affluent are winners and that access to the top is open to anyone willing to work hard enough, regardless of their familial, ethnic or social background – if you do not succeed, there is only one person to blame." It's high time that the blame was placed elsewhere. We need to reverse the privatisation of stress and recognise that mental health is a political issue.
[...]
The radical therapist David Smail argues that Margaret Thatcher's view that there's no such thing as society, only individuals and their families, finds "an unacknowledged echo in almost all approaches to therapy". Therapies such as cognitive behaviour therapy combine a focus on early life with the self-help doctrine that individuals can become masters of their own destiny. The idea is "with the expert help of your therapist or counsellor, you can change the world you are in the last analysis responsible for, so that it no longer cause you distress" – Smail calls this view "magical voluntarism"." [1]
[1] https://www.theguardian.com/commentisfree/2012/jul/16/mental...
It’s not clear to me what these are. I really don’t mean to be obtuse, but what are the ‘huge negative consequences for many people’?
Airbnb being a company, and a company seeking profits over everything else, one could argue that it's not their job to care about how they affect people. Doesn't mean we can't criticize it for it.
We could go even further and say it's by criticizing Airbnb that we will push governments to regulate this new market.
I don't necessarily think this is bad, disruption is often a sign of optimization.
2. Then there are markets where airbnbs have caused apartment buying and rental prices to go up much faster than what they should have, bringing millennials further away from home ownership. (not going to go into people getting evicted for landlords to open airbnbs, but deserves a quick mention)
This one is more tricky, as it is not strictly bad, but definitely not good. It tends to be good for some sectors of the economy (i.e. tourism, restauration, culture, etc.) As a whole(and in theory) it should drag -with some delays- the construction industry into building more housing units at a faster pace. Now, considering the economy as a whole was very good pre-pandemic and we were near full employment, construction companies likely had trouble finding more qualified workers to fulfill the demand. Government incentives were also either not present or not strong enough for new 'affordable' housing to be build in cities.
I know I went up fairly quickly over these issues, there is so much more going on, I strongly suggest reading/researching more about the various issues as there are definitely valuable startup ideas hiding in there.
Overall, I have no doubts the balance will be reached in the following decades: (i)Regulations to limit the numbers of airbnbs, coupled with permits and taxes. (ii)Strong government incentives to build more housing as I doubt people leave the cities for good following the pandemic, let alone remote working remaining the standard. (iii)Airbnb modifying it's business model. i.e. keeping the actual airbnbs, but potentially acquiring hotel chains amongst other things.
But how? How can you build more apartments in Lisbon or Amsterdam, where every inch is already used? Houses can be build in more distant areas but this forces people to commute longer making their live much worst.
There are creative ways to go around most problems, given the incentives are strong enough. i.e. we all live underground /s
On the other side, too much regulation can prove to be a strong disincentive. In this case I expect architecture or density requirements, amongst other things, in cities like Amsterdam to cool down the market, maybe a bit too much.
In short, in a city like Lisbon, good luck being a student for example. Pay upwards of 500$/mo (or for perspective, 75% monthly minimum wage) for a room in a shared house, or live a 1h30 commute away from campus.
I guess that way I look at it is that people want to visit cities for a variety of reasons. Those people need to stay somewhere. Wherever they stay will take up space, thus driving up rents through land scarcity. I am not really sure how people staying in someone's apartment is much worse than staying in a hotel.
If rents are going up, it's because there is more demand than supply. Unless Airbnb is actually increasing demand (perhaps?), I don't see how it is really affecting this equation.
They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic. This paradox is well-known among city planners (but often ignored by those who make the decisions because it is counterintuitive).
In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
This seems like a regulatory arbitrage that shouldn't exist to begin with. Why should the fire safety regulations for a hotel be dramatically different in expense than the ones for the equivalent apartment complex?
> They are increasing demand in the same way more and bigger roads do not reduce but instead increase traffic.
People consistently get this wrong. Bigger roads don't increase traffic. Congestion suppresses traffic. If there is a congested two lane road because it's carrying traffic that would require a four lane road, so then you build a four lane road, you then discover that the four lane road is still congested. Because once you remove some of the congestion, the demand it had been suppressing comes back and you still don't have enough capacity.
The distinction is important because there is a point at which you actually have enough road capacity to satisfy the demand that exists when it isn't being suppressed by traffic congestion. It's just more than you might have expected based on the amount of traffic observed when the road was congested.
> In addition to that they can ignore zoning laws and therefore move rent prices up in areas where hotels are not allowed to be.
The solution to which is to eliminate restrictive zoning like that, so that supply can respond to demand.
The primary reason that short-term rentals are zoned differently is local regulatory capture by hotels to limit competition and keep prices high. Without restrictive zoning, short-term rentals don't have to come at the expense of long-term housing because you can build more housing and have both.
Current knowledge says that "on average, a 10 percent increase in lane miles induces an immediate 4 percent increase in vehicle miles traveled, which climbs to 10 percent – the entire new capacity – in a few years." https://en.wikipedia.org/wiki/Induced_demand
That said, I think the source of this paradox is ultimately not in the road one is thinking of expanding, but in all the connections between it and other roads. It buys you little to turn one lane into five if all the exits are still the same capacity.
This paper explains this quite well: https://link.springer.com/article/10.1007/BF00166218 - I've heard it is available on sci-hub.
Your second point is very important though, and IIRC is the main reason why so many city planners are so critical of the boring company idea of underground car tunnels: It tries to solve an aspect of traffic that isn't the problem.
You're really just saying the same thing as I did -- congestion suppresses demand.
Suppose you have an uncongested two lane road. Making that a four lane road is not going to induce anything, because the widened road has more capacity than the original one, but you weren't even using the full capacity of the original one. It doesn't encourage anyone to do anything they hadn't already been able to.
The reason it "enables sprawl" is that if the original road was congested, people wouldn't want to travel it to commute, so buying a house in the suburbs and commuting via that road is suppressed. Congestion suppresses demand. If you reduce the congestion by widening the road, some of the demand comes back. And notice that the same thing happens if you alleviate congestion in some other way -- if you somehow make it more attractive to take the subway and then more people do, there is less traffic on the roads and it becomes more attractive to drive.
But you don't actually want the congestion. Traffic congestion sucks. You want to get rid of it somehow.
Part of the solution could be expanding the road, but you could have to expand the road a lot to satisfy all of the demand that would exist with uncongested roads, if you want to use that as the only solution. Which is why you shouldn't. There are other things that reduce congestion.
Like building higher density housing, so that more people can live closer to where they work and have a shorter commute, which in turn makes mass transit more viable. Then that in combination with widening some roads relieves the congestion.
The real problem here is the politics of it. Increasing the housing stock sufficiently to satisfy the demand would tend to reduce housing costs, which existing property owners don't want. So they fight high density construction with restrictive zoning rules and then the high cost and low supply of housing in the city pushes people into the suburbs, which increases the demand for roads.
There is an obvious confounder here, which is that anywhere they add lane capacity is going to be a place undergoing growth, which is why they felt the need to add lane capacity. But if the growth the continues, the new lane capacity once again becomes insufficient at some future point.
I would expect to see the same pattern with electrical transmission capacity. Where they add more capacity, you then see an increase in consumption. Which is to be expected, because why else would they add the capacity?
The difference with roads is that they don't catch fire if you want until after you're over-capacity before expanding them, which makes it more likely that the demand will consume all of the new capacity, since you're starting off from the point of already being underwater.
see: https://www.nytimes.com/2020/09/21/world/europe/airbnb-dubli...
So strong hotel demand certainly does push up land value overall over time, but it happens much more slowly and to a lesser extent than with AirBnB.
AirBnB gives investors a way around hotel regulations and construction costs. You can buy an existing house and with very little friction or cost start generating revenue from tourism demand.
No. They just wouldn't come. AirBnb and discounter-airlines has turned the tourism industry upside down.
Now, I do believe, that it's NOT AirBnb "fault" - AirBnb just accelerates the inevitable (like most technologies do) but the impact is still huge.
I have friends who live in Lisbon and Barcelona and from their eyes: tourism, that used to be a profitable "fancy" industry - with middle class people bringing their money to spend it - has turned into something different. These days "tourists" can be a group of 12 football fans, who've spent £18 on a RyanAir ticket and all stay in the same Airbnb room (as a group), getting drunk and vomiting on the streets.
I'm not saying that's definitely a bad thing (everyone deserves the right to experience travel) I'm just saying I can relate to (many) EU cities opposing this, claiming they're not getting any value from these crowds.
Some people like myself (eg. digital nomads) prefer short term rentals, and AirBnB has changed our lives.
Good for you but AirBnB has a proven impact in increasing rent prices for long-term rentals in any touristic city, be it Barcelona, Lisbon, Amsterdam, lots of cities in Europe have suffered from AirBnBs pushing units out of the long-term rental market and being available for people like you. And people like you aren't the majority of the inhabitants of a city, when people that are born and raised in a city are pushed out by pricing due to 10+% of the stock of possible rental units being used as short-term just so landlords can make a bigger buck it's sad and inhumane.
Great that from your perspective it's helped you, it's definitely impacted the lives of a lot of young people that were born in the cities you like to live, AirBnBs are eroding exactly what made them attractive: a good city neighbourhood.
But sure, tell every single young person that the solution for them on the next 5 years is to sit down and demand more housing built. What do people do while that's happening? Allow AirBnB to extract money and rent-seekers to gouge prices for the population?
That's not how the real world works, I'm sorry.
The real world is dictated by supply and demand. When demand is high and supply is low, prices rise as competition pushes them up. The increase in housing prices is a huge incentive for developers to build new housing. And it also increases the capital necessary to build more housing. Obviously the political situation will need to allows for new housing. Otherwise prices will just continue to increase.
It's the same reason developer salaries are high. Demand is high and supply is (currently) low. My company is struggling to find people to hire right now and are offering cash incentives.
Believing that the world is dictated by a reductionist model of supply-and-demand is either myopic or ignorant, the world doesn't work like that, that is a model that works well for a diverse set of markets, not all and not at all if you start to include the social aspects into it.
You can't just start building anywhere and anything, that will kill cities, it's a shallow analysis of a broader scope of issues such as: maintaining livable conditions (as defined by the society and culture of that city, not by some metric of "available units per inhabitant"), maintaining harmony of urban planning, maintaining the cityscape, and so on. Devising the master plan for building is exactly the kind of aspect that a simplified worldview of pure supply-and-demand does not take into account, it's simplistic and unempathetic.
Prices will continue to increase if building new units doesn't take place. AirBnB and greedy landlords shouldn't have the power to increase this damage for short-term profits. And worse: doing that in a rent-seeking way, with little to no benefit to the society of that city apart from some tourism money and "digital nomads" income passing by, rent-seeking behaviour is disgusting, it's pure extraction by virtue of you accumulating enough capital to be able to own a piece of land, that's all, there's no productivity increase for society through this form of extractivism.
The NIMBY'ism of preventing new housing is the very definition of rent seeking. By legally locking in, the existing owners prevent others from entering the market due to artificially constrained supply. Airbnb doesn't create the demand; they are just a marketplace and one of many.
What contribution to productivity do corporations or people who have enough spare cash to buy available land provide to a society?
AirBnB can be just a marketplace, that doesn't mean it isn't damaging to society at large. Excluding the moral aspects of that is an ideology based on capitalism, it doesn't mean it's right.
People in the comments are acting like AirBnB is some villain, when in reality it's just a website that facilitates supply and demand of housing. If not AirBnB, it will be some other site (eg. many AirBnB listings are on other websites as well). So long as that market exists, platforms will come up to cater to those needs.
Everybody loves a good villain. But really the problem and solution are not as simple as AirBnB = bad. You guys sound like taxi drivers bashing Uber/Lyft.
Digital nomads building some pointless SaaS products with inflated egos working remotely in far flung places of the globe, getting to sample the delights of the worlds great capital cities are not an important consideration in the impact of AirBnB globally. The ability to live a lifestyle like that already comes with so much opportunity and privilege which is either denied or impossible for so many people.
And so when AirBnB ravages communities by driving prices up and forcing people out through their carefree regard for local rules and regulations, then yes, I would say that part of the problem also lies with AirBnB, unless you simply believe that any company should be able to bulldoze whatever comes in its path with zero repercussions?
There is a reason that cities like Lisbon are desirable to visit and spend time in. It's not because its increasingly filled with tech-nerds who talk about "Ramen profitability" and play on slides in offices at lunchtime. Its because of the rich history of the place and the communities + people which make it up. And much like gentrification has done, this easy carefree tourism dilutes that and risks turning everything into more of the same playgrounds of the world.
Look we get it, you hate digital nomads and SaaS products. I couldn't really care less, and that has nothing to do with anything I said, which is that local governments are responsible for their citizens. Whether it's AirBnB or Craigslist or Couchsurfing or some other website, there will always be a demand for people to find housing and to rent out spare housing. Villainify digital nomads or AirBnB, that's never going to solve the problem. (though part of me thinks you're more interested in venting about how much you hate "digital nomads" then actually thinking about the problem of affordable housing and what would could realistically be done to fix it).
I don't think it's really useful to put the blame squarely on the local government in Lisbon for example, sure perhaps they should take a share of it, but that doesn't exonerate exonerate Airbnb - far from it in fact. We're not "villainifying" Airbnb with baseless accusations - I've seen you comment elsewhere that if it wasn't Airbnb it would be some other company, that is terrible way to justify things.
I do believe we should villainify them for circumventing and bending local laws (especially in a country which is in a different continent to where Airbnb is based...) to their advantage and to the detriment of the cities they're "disrupting". Just because something is not technically illegal or you can get away with it doesn't mean it's justified.
I don't hate Airbnb either, though I am inherently distrustful of fast growing, power hungry & greedy "tech" companies and in fact have personally had positive experiences with it. I just don't think its as black & white as you're suggesting. Airbnb should be (and thankfully is) being held accountable for the damage its wreaked around the world. Local laws & regulations were perhaps not well enough equipped to deal with this new kind of tech behemoth and have been slow to adapt, but Airbnb didn't have to play the bad guy in violating zoning & short term stay regulations that the rest of the hospitality industry have to follow. But they did... knowingly.
Someone else made the point that Airbnb was kind of like Trump, exposing & exploiting the existing weaknesses in a system to their own personal advantage. We don't point the finger squarely at the the system, yes it clearly failed under Trump and he is in some way just a symptom of more fundamental problems. But it doesn't let him off the hook. Neither should it for Airbnb
Of course the aims of any private company are to maximise profits through whatever means necessary. That's just the world we live in unfortunately. But even if we accept that as a fact of life, it doesn't mean that on an ethical & moral level we should overlook the harm caused.
You don't get to evade responsibility for the your actions and the consequences of your lifestyle, while advertising "worker rights" and "anti-poverty" in your bio.
Again if you actually read my comment, the point is that governments are responsible AND the only entity capable of fixing affordable housing problems.
But sure feel free to villainify AirBnB and AirBnB guests/hosts if that makes you feel better. I was living off AirBnB and short-term rentals in NYC/SF too, I guess that means it's my fault that NYC/SF has expensive housing? Lol ok.
You should actually write a bio so I can anonymously insult your existence from the comfort of my keyboard. /s
Data point: around 25 years ago, I was paying GBP225/month - so that's ~USD300 - for a (tiny!) bedroom in a shared house in Cambridge, UK.
I'm not sure what approach one would best use to adjust for 25 years of house price and/or general inflation, but isn't that in the same ballpark as your '$500' in Libson now?
FWIW, we thought housing was expensive back then, too.
We were postgrad students. No idea about average wages for those who were working, but we were always broke.
Q: Are we talking about average students or average workers?
16 years ago I paid £270/month to live in a sharehouse in Bristol (not generally as expensive a place to live in as Cambridge) in a boiler cupboard that had been converted to a bedroom.
Students are broke, but parents can help, and if your "room" costs half of one your parents wage, that help is less likely to happen. Or make the poorer even poorer.
That situation is totally different if your room costs a quarter of one of your parents wage.
Q: Do "minimum wage" rules apply 1) in theory, 2) in practice to postgraduate students?
Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
> Students are broke, but parents can help
Q: Do we really think postgraduate students should expect their parents to still be funding them?
> £225 per month
Apparently, yes. We do expect parents to still be funding postgraduate students if they don’t want them to starve. £702 pounds per quarter seems kind of hard to live on. That’s like £8 a day to pay for everything except rent.
Actually, that seems kind of doable.
If you have to find a part-time to pay some of your expenses yes. In that case a part-time in Lisbon will pay you slightly more than half of your room and in "your case" it would pay the whole room. It's a BIG difference if you have to go down that road.
> Yet more [ancient] data: UK science research council funding for PhD students in the late 1990s was nothing to get excited about; I have an old bank statement here, BBSRC paid me the princely sum of £1377 on 1 July 1998, and by the way, that was for that quarter not for a month.
I do agree that post-grads are very badly paid. But that's another issue.
> Q: Do we really think postgraduate students should expect their parents to still be funding them?
Not really, but if there's an emergency I think parents will not let their kids starve.
And this hackernews rhetoric of 'if I suffered everyone has to suffer as well' needs to end. That's not how you move forward.
Subject to ability to do so. I knew many grad students who took part time jobs to send money in the other direction. Their earning power was greater than their family's.
Tuition is already 80€ per month, and even that is waived if you come from a low-income family. But how is someone earning 600€/mo supposed to send someone to college when rooms cost at the very least 350-400€/mo? Plus living expenses, 150€ the bare minimum. Even if you apply for financial aid (which you will get) the amount is woefully inadequate to face this rising costs. The result is that poor families cannot send their kids to uni. That's not democracy, freedom, or equality.
Also those 225£, what fraction is that of the minimum/median household income?
Of course it's not AirBnB's fault that there's no regulatory oversight on the hoarding of basic life necessities, and the original pitch ("couchsurfing but for money") clearly did not have that intent, but at this stage they're going to push back pretty hard against any restrictions on that kind of behaviour.
I wonder what would happen if housing were not an investment but construction would be legalized that turned housing into a commodity. Right now many attractive cities are often captured by home owners who collude against against new housing because that pushes prices down.
I hope the company that comes after Airbnb disrupts the construction industry, allowing cheap but high quality housing for everyone, and not just anywhere but in places of demand.
That said, that kind of balancing takes time in practice, so if you did find a way to deliver a lot of housing at a much lower cost you could exploit the delay and build a lot of housing quickly, which would increase supply, which would lower what buyers are willing to pay. Basically you’d have to flood the market with so much cheap housing that buyers willingness to pay goes down.
I think a better approach to fighting high housing prices is to make more different cities and towns appealing places to live. There already is a ton of housing in this country but it’s in places where not many people want to live.
In other words, it all started as an opportunity for private people sharing their rooms, now there are more and more businesses operating in this space, reaping all the benefits, but giving nothing back in return, paying no taxes, ignoring all safety measures etc. Give people the opportunity to abuse the system, and abuse they will.
Local rental prices skyrocketing is one side-effect, destroying the neighbourhood is another.
There are positives too, like I now have the opportunity to easily rent a room or flat with a kitchen so I can cook myself (with various food intolerances/allergies this is important), this would not have been possible - or would have been really expensive - in the pre-airbnb world.
The yellow cab industry might be tightly regulated, but It doesn't seem to benefit the consumers. Cabs suck, plain and simple. Even the worst uber I've personally had was far better than a cab
In general the yellow cab monopoly got smashed apart with a sledgehammer.
Hotels face lots of regulation not only on how they operate (fire safety, egress, food safety, etc) but also where they can operate. AirBnB lets investors get around all these regulations and tap into tourism demand at a much lower cost.
We all have individual stories about the convenience of AirBnB when visiting a new city, but I feel a lot of us are unable to see the bigger picture beyond our own selfish need for slightly increased comfort levels. We either deliberately overlook or are blind to the damage AirBnB and similar tech companies have wreaked on society.
Flimsy, selfish delusions of grandeur from tech wankers who just want to print money in fastest way possible with total disregard for the destruction they cause along the way but don't worry, its "disruptive"! All to be lapped up and praised by people who were brainwashed into the Randian mode of thinking
I also find it quite amusing that some people come back with these replies of "you're just bitter" "jealous of the fact that they're rich and you're not!" just continuously beating everyone over the head with this idea that there's only one true way to measure success. As if, in questioning how that success was reached and the societal, ethical and moral issues it brings up are somehow not acceptable. I guess in pursuit of the American Dream no has no time for such trivial issues.
Those noisey parties happen at my neighbours house all of the time. It's the price of living in a city.
AirBnB - and Uber - just went and ignored these laws wholesale, essentially showing everyone a huge middle finger.
So you talk to your neighbours and you come to an understanding. Since you have a long running relation with them (you live next door to each other) you can improve living conditions for both parties by communicating. If you have different party go-ers every week next door you can't do that.
Housing area's should primarily be liveable. They are not there to provide real estate for someone to speculate with or to rent out to party go'ers. Though I guess this might be a too socialist view for you in which case we'll probably never agree with each other.
Your view sounds more republican. All of the home owners create a gated community with rules. Those who break the rules are kicked out.
I think people are mad that the Airbnb founders are rich (fair, but there are a lot of rich people) and that they have arguably raised rents, though I'm not 100% convinced of that.
EDIT - There is some good data out there suggesting a correlation between airbnb activity and rent increasing. Still researching.
As far zoning and hospitality regulations: it is scarcely exaggeration to say that a municipality can come close to ruining your life, and certainly your personal fortune, through whimsical application of them. Perhaps you live in a place where these things don’t matter, or, more likely, perhaps you’ve never been in business for yourself. I live in Seattle, where they will cheerfully shut down your business for weeks because you have an electrical outlet 6 inches too close to the wall.
For ex I’ve personally not heard anything much from Airbnb w.r.t impact on local real estate markets eg higher prices or low rental inventory. I’ve only heard them actively deny that they put pressure on real estate prices.
And they’ve only recently invested more in safety and have said they are trying to ban house parties after the shooting in Oakland last year when that has been a problem for years.
I think it may be easy to compare the two now, but back in the days they were fairly different. I was a fairly early user of Airbnb (they opened at a time when I was young and traveled a lot, especially solo). During those days, Airbnb was truly about renting out extra space in your own home. (Maybe not an "airbed" every time, but just a room in your house/apartment, nonetheless) All of my early usages of Airbnb (as a guest -- I was never a host) were actually renting rooms in these strangers' apartments, that they live in themselves. This was in France, Italy, Brazil, etc. It's not about vacation houses in popular resort places (Lake Tahoe etc.). In fact, I remember back in the days there was a lot of comparison of Airbnb and Couchsurfing. One is paid and one is free, sure, but both were very much about meeting folks locally.
Correct. I first used VRBO sometime around 2002. They were the only game in town for this kind of thing for a long time. Yes, you could rent out space in peoples' homes, but if you wanted a vacation spot that wasn't a motel, they (eventually) did that better than VRBO did. I'm pretty sure VRBO didn't change their vintage 1996 website until well after AirBNB was a competitor. Multiple years. I could be wrong on that, but suffice it to say that AirBNB also filled a vacation house need that VRBO had been limping on.
Sibling comment conductr is part of the problem, the same blindness as Airbnb: I want what other people have (private pads in cool locations, rented by the day), and I don’t care if that’s unsustainable in the long term, I will just take advantage of it now.
As a silicon valley outsider, blood drained from my face after reading this. Do you have to starve or raise money only to pay rent? I have a profitable business and it scares me to apply to YC after reading this.
It seems safe to say that the majority of Airbnb use now is not a delightful experience of being hosted in someone else's home, but whole-apartment/house rentals or other circumstances with not much interaction between host and guest, feeling very business-like. No? I don't it's common to especially enjoy it as an experience anymore, it's just a way to make money or a way to find a nice place to stay at a good price.
If that delightful hosting experience is what inspired them to keep going... it's still not what the company mostly ended up providing to the world. If we were to weigh the pro- and anti-social aspects of airbnb, that pleasant human relationship between host and guest would barely weigh on the scale, because it's mostly not what happens there anymore. The founders don't seem that concerned about that though, do they?
So what do we take from all that? It seems odd to me to highlight that aspect of the founders initial motivation without even mentioning whether that's what the company actually does now.
Either way, it's not what it is now, and he's choosing not to mention that, while leaving it at the center of the story...
Was it Ford that said: don't ask me how I made my first million?
That still enables the personal-experience ones to exist -- and there are tons of them.
One doesn't negate the other. A supermarket can sell conventional and organic produce at the same time.
Travelers and hosts have different tastes. Why wouldn't you cater to a broad range?
Look at Dr. Bronners soap -- it was for spreading religion. Turned out the soap was more popular than the religious message. But every bar and bottle is still chock-full of the religious stuff.
Or how people start movie theaters to show movies they love, but that's not profitable, which is why they have overpriced concession stands that actually make the entirety of the money.
If someone wants to bring organic food to a town, but the only way that's a sustainable business is to make it a small area of a large conventional supermarket... that's entirely normal.
I don't know why anyone would wonder about it at all?
The problems she has with guests and the problems Japanese people face as a country are very different. She has had to stop taking specific types of guests because of rude behavior like flushing food down the toilet and damaging tatami mats. When in Japan, a person described their culture as, "having a very specific way of doing things and becoming very upset when people get in the way of that." With so many people having that mentality, hosting is a more friendly sort of thing.
We have different issues. We've become friendly with several of our guests, and even see some past guests once or twice a month to spend time together. When the guests come from AirBNB, we have to maintain a lot of vigilance. We've had multiple drug dealers, a large number of people smoking weed in our rentals, child endangerment, and a few parties. AirBNB has a hands-off policy and there are a lot of pieces of shit who have learned they can abuse AirBNB's system to do what they want, and we don't quite have the same culture of empathy anymore.
Wow, how did you find out? Got calls from FBI or something? (Just curious.)
I am not saying that there are no problems. But it's kind of possible to get them under control and also have a good value proposition as a host. If you don't have this, then switch back to classical long-term renting. If you keep renting (rather short term) via AirBnB, then the value proposition for you (the host) must also be good enough considering all factors. It kind of does not make sense to be an AirBnB host and be unsatisfied - only temporarily.
You assumed what our properties neighborhoods are like incorrectly. You used your faulty assumption to create a story inside of your head so it would be easier to be patronizing. Your unsolicited advice was a waste of my time and yours, but I do hope it gave you that dopamine hit you seem to desperately need.
That's what I actually like about Airbnb. I get a whole house to myself and no one is there. I can go to a new country but still cook food and travel with a family, something that can be annoying in a hotel.
If you feel like being cynical, you can see ycombinator as analogous to a ram pump[0] that raises a small amount of water to a large elevation by dumping a large amount of water from a lower elevation. The way they get that flow is from what inspired people to keep going. So why not promote that? It's only logical.
[0]https://www.youtube.com/watch?v=i31hGJ93OTg
In my opinion, this kind of behaviour needs to stop being glorified. 99 out of 100 times this does not end with a billion-dollar company, but rather with someone drowning in personal debt.
The only "acceptable" time you can really run up a literal binder full of credit card debt is when you have a very easy safety-net to fall back in to, which again, does not apply to the large majority of people who would find this "came from nothing" story inspiring.
I get that times were different in 2008, but who was giving them all of these cards with no income and a stack of already-maxed-out cards.
I do. Credit cards weren't hard to get. Even if you were in debt up to your eyeballs. I know because I was, and I could still get new credit cards.
It took a credit management service and ten years of steady payments, but I'm now out of (consumer) debt. Thankfully.
<Edit> Sorry if the above sounded snarky. Being that much in debt still evokes some painful memories.
Honestly, I was in high school. So, no, not really. There were other reasons that no one would give me a credit card.
> It took a credit management service and ten years of steady payments, but I'm now out of (consumer) debt. Thankfully.
Wait, you mean the binder full of credit cards didn't work out to a billion-dollar company for you?!? That sucks. I guess we're 1 for 2 on that one today.... 50% chance of success. /s
Sounds to me like it was a calculated risk they needed to take.
Also see Paul's point on how the Airbnbs would have given up incase "this Y Combinator does not work out."
Just like Facebook, etc, people who support/work for it are not without blame. Bankrolling huge political efforts to overturn regulations. Nonsense rules that allow corporate owners to buy up low-income housing turn it into vacation homes. Simply terrible company.
I'd hate to hear what you think of people who work in the energy sector, or textiles, or agriculture, or any of the other dozen industries that cause farm more social and environmental harm than AirBnB could ever hope to.
The analogy could almost be equivalent to MySpace and Facebook; the former created the mindshare and made the big first mistakes, while the latter learned from them and expanded the concept.
> After all, why do something for free when you could get paid instead?
I really doubt the Couchsurfers were the ones who were converting their listings to Airbnb spots initially. Rather I think Airbnb enabled previously unwilling (or unmotivated) people to start hosting others for a cost.
The type of people I would meet were from a different cut of cloth than Airbnb folks. One picked up my friend and I from a Megabus stop and later we ended up going to our host's second home on Martha's Vineyard. One let us try out his expensive cycling bike out for a bike ride. I've attended a yoga session with my Couchsurfing host before on a trip. When I hosted, I took my guest (a cadet at West Point who hadn't had drinks in forever) on a spontaneous bar hop with my group if friends.
There was always a mentality of paying a good experience forward and a sense of community - which is tough to preserve when it becomes a transactional experience.
That being said, I agree Airbnb likely led to the downfall of the CS community. There were some sketchy ppl in that world. After running into one of those, I slowly found myself preferring to pay for the security and safety although deep down I knew I was going to miss out on all the fun that I couldn't simply pay for. As for hosting, I just wasn't interested anymore knowing that if someone were paying to crash at my place, it would be less about hanging out or getting recs but more about just needing a reliable roof to cover... where's the fun in that for a host?
https://twitter.com/paulg/status/1337011619268882432?s=20
Eg. I absolutely don't want to downplay Mark Zuckerberg's contribution/genius, but Facebook comes to my mind, which certainly wasn't the first (attempt) at a social network. And: What are they today?! - Kind of the "web" (on phone/mobile) in India for example. With all the social integration and native (applications) first on (Android) phones, they became a better version of the WWW in less developed regions of the world.
While I agree that grit and persistence eventually lead to success for most smart founders, I think PG's explanation for why the founders didn't give up is misguided. If the explanation for their persistence was the great experience they stumbled upon, why didn't they quit in the preceding 3 years?
My guess is that Brian, Nate, and Joe are naturally stubborn (read: persistent) and have a high degree of self-belief. They eventually hit the lottery with their idea for Airbnb. Had they not founded Airbnb, I bet they would've kept trekking along and stumbled upon another (less) successful idea.
Persistence is a double-edged sword. It'll eventually lead you to success but at what opportunity cost? I'd be interested in seeing studies that help quantify the downside of grit by studying founder failures.
It's also kind of strange for me to see this level of conviction against a company that rents out rooms while barely commenting on others that are involved in so much worse ranging from human trafficking and modern slavery to global warming, corruption and extreme waste.
Between SPACs and "startups" rolling public at the moment signal from the owners is it's a good time to be a seller.
Some people look at life and see the opportunities. Others look and see the obstacles. Some take the hardship they encounter and use it to grow. Others use it as an excuse for their failures.
The older I get, the more people I know, the more I arrive to the conclusion that it’s all about attitude, more than anything else.
It’s our attitude that decides if we end up as winners or losers. It’s our own responsibility and merit, not others'. But pushing a victim mentality, a loser attitude on others - is criminal.
With the empaths, we'd still be in caves.
Yes sir, damn empaths, coming together to take care of the children and the tribe and hunt for prey. Let every person go out there and hunt for themselves.
If it weren't for the "empaths" your would be indentured to a warlord at best. Ayn Rand world does not exist, have never existed and it will never exist.
Here in the comments I see concerns not just about whether the company is successful or not, but whether it has done any good. That is, _good_ for people other than the owners of the company.
That is not about “attitude”, or some other self-help slogan. You can’t evaluate the outside world based on what you read in Think and Grow Rich.
It certainly inspired me. Huge congrats.
Is there any way to be really successful without being some kind of disingenuous sociopath or at least blithely unaware of the broader context of your success and the suffering it's built on?
No, not really. And if that makes somebody bitter, then I think that makes them sane.
This is story is the perfect example of the above. PG is selling us same old story that these two made it through hard work and attitude, while they really made it by opening up residential housing to rent-seeking speculators to use as hotels.
I think this dynamic is generally less recognized by software developers because we're frequently comparatively well paid and well treated at work, and can occasionally accumulate enough capital to break out of this vicious cycle (though we're still paid less than the value of our labour and still deal with much of the BS noted above). However the same can't be said for the people making our computers.
This is also why the expression “you can do anything you set your mind to” is a naive saccharine pile of oliphaunt excrement. Frankly, this overwrought phrase sounds like something an early 20th-century Gilded Age industrialist would have coined as a means of motivating the common man to toil even harder in a world extolling unbridled capitalism as its loftiest ideal.
An inspiration for wealthy white men in tech? Okay, sure.
> they said the biggest surprise was how many of the hosts were in the same position they’d been in: they needed this money to pay their rent.
Twelve years later, Airbnb has been a very relevant factor in the increase of prices of rentals in a lot of major cities. People still can't pay their rent, although this time Airbnb is not precisely helping. You can also take a look at this other paragraph:
> But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they’d all had a great experience.
Most listings you find now on Airbnb are full rentals, no sharing experience at all. Basically a page for booking hotels and apartments, only they don't care if you're doing it illegally.
So no, for a lot of people they are not an inspiration. In fact, for me, it is the perfect representation of what is wrong with the current tech world: capable people with good ideas and good intentions (let's assume) who just abandon those ideas and intentions in the road to making absurd amounts of money, and who will take advantage of morally grey (and even morally wrong) areas with no regard for real world consequences.
- Grit and formidability. "They did nothing half-way, and we could sense this even in the interview." If one doesn't feel so strongly about the problem they're trying to solve, it is going to be hard to sustain the energy needed for the effort required.
- The founding team is key. "We didn’t even like the idea that much. Nor did users, at that stage; they had no growth." Despite the "startups = growth" truism, it is refreshing to see that one of YC's biggest exits had no such trait even after a year of work (when they decided to fund them in W09) apart from the fact that the founding team was relentless.
- Momentum is everything. "No one ever worked harder during YC than the Airbnbs did. If you suggested an idea to them in office hours, the next time you talked to them they’d not only have implemented it, but also implemented two new ideas they had in the process." This may sound easy but it is so hard to do in practice (speaking from experience) because of the discipline and focus it requires to keep moving the needle a bit more every day.
- Don't let rejections break you [0]. "One investor they met in a cafe walked out in the middle of meeting with them." Again, it so very easy to let rejections get to you despite trying your hardest to not be bothered by them. You start to question all kinds of things which isn't a healthy thing to do but it is kind of inevitable because the disillusionment hits so hard.
- Live in the future. Care enough to make it happen. "When they first tried renting out airbeds on their floor during a design convention, all they were hoping for was to make enough money to pay their rent that month. But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too... That experience was why the Airbnbs didn’t give up. They knew they’d discovered something. They’d seen a glimpse of the future, and they couldn’t let it go." The Airbnbs weren't the first to realise this [1] but they cared enough about making this work at a scale never done before [2].
- Know your metrics of goodness and identify how to hit them [3]. "They knew that once people tried staying in what is now called 'an airbnb,' they would also realize that this was the future. But only if they tried it, and they weren’t. That was the problem during Y Combinator: to get growth started. The way to get growth started in something like Airbnb is to focus on the hottest subset of the market. If you can get growth started there, it will spread to the rest. When I asked the Airbnbs where there was most demand, they knew from searches: New York City. So they focused on New York." If I take the liberty to draw parallels with Amazon's founding [4], Jeff Bezos (who incidentally is an early Airbnb investor himself) chose Seattle for a reason (taxes and tech talent). He chose Books for a reason (warehouse-ability, shippability). He chose to be online-only for a reason (low costs and reach). Again, easy in retrospect, but requires non trivial amount of insights and delibration when starting up. And it is all too easy to overthink this and get lost in a quagmire. Drinking the kool-aid, as it were.
Survivorship Bias or not, I think Paul would be the first to point out that every startup is different.
[0] https://medium.com/@bchesky/7-rejections-7d894cbaa084
[1] VRBO, HomeAway, CouchSurfing...
[2] https://www.linkedin.com/pulse/airbnb-didnt-create-brand-new...
[3] subsubzero ↗ I love this story, I never knew how close to failing airbnb was, it just shows that with enough hard work, a decent business plan, intelligence, and some optimism anything is possible. Also, alot of luck, airbnb is one company that did make it, what isn't being said is the graveyard of thousands of companies that were not so lucky in similar situations.