hello friends this week the topic is
Airbnb and we’re going to look at how
important it is to be early early to
connect with your customers number one
and also early to get help in mentorship
along the way and perhaps even consider
joining an incubator and we’re going to
show you how that worked out for Airbnb
Airbnb who are they well you’re around
the world you should be familiar with
them they connect people that have a
room an apartment or even a home to rent
with people that want to rent those
things for a short time they make a
little bit in the middle a little bit
off the person renting their room and
they make a cut of the transaction of
the person paying for the room or the
home that’s how they make their money
and they are a global phenomena and
amazing levels evaluation I’m going to
take you through a record-setting
startup to establish global company
let’s go back and look at where it all
started back in 2007 this is the story
of this company starting in 2007 and who
would know that 10 years later they
would have raised over 4.1 billion
dollars and they’re out there
propagating a marketing and branding
message that promotes a sense of
belonging and a sense of being very
interesting the way they’ve done that so
it all starts with the gentleman named
Brian Chesky and his friend Joe Gebbia
and they had come from New York and they
were living in San Francisco and like
most aspiring entrepreneurs they were
broke and they were looking at money
being tight and they’re saying gosh we
got to pay our rent we got to live while
they’re trying to figure life out and
they were looking for a way to earn some
extra cash and they noticed that all the
hotel rooms seemed booked up in San
Francisco every time there was a
conference and there is an industrial
design conference coming to town and it
once again booked everything up and they
said listen what if we put up a fast
website called air bed-and-breakfast and
we’ll get a couple inflatable air beds
you know air mattresses with a sleeping
bag or a blanket and we’ll sell people
the opportunity to sleep in our living
room here in our flat they’re like
seriously yeah let’s try it so they
bought some air mattresses and some
other materials and set it up and put a
quick website up simply called the air
bed-and-breakfast
kind of a take-off on bed-and-breakfast
but it was an air bed and they priced it
at $80 and on that website the week of
the industrial design conference they
got three one two three visitors that
was it I was a gentleman from India
there’s a woman about 35 or 40 years old
and a guy from Utah so it was a random
set of people but they weren’t
20-somethings who’s looking for a crash
pad like you’re hiking across Europe
looking for a youth hostel these were
people that were professionals over 30
years old looking for a place to crash
and so they paid $80 each they said wow
that’s really great
and right about the time that happened
they had found themselves a harvard
graduate who was be a tremendous
architect for the technical side of the
site and the systems that are behind it
to connect people that want to rent a
room that people that have a room to
rent
and his name is Nathan with charvak and
now they got the three guys that would
become the trio of founders of Airbnb
Brian Chesky Joe Gebbia and Nathan blech
are zyk and they would make history so
they went off to South by Southwest I
don’t know if you know what that is
that’s an incredible conference it’s in
Austin Texas every year start out as a
music conference but now there’s
interactive and education there’s a
bunch of different topics that are there
so they headed down there because
there’s a lot of startups down there
there’s a lot of venture capital people
they head to Austin they set up shop
they announced that air
bed-and-breakfast is up there and going
strong and they get two bookings one to
that’s hit and they’re thinking huh
no this is not working come all the way
down to South by Southwest they said
well let’s take another stab at it
so there’s important thing to learn here
they were committed to their original
concept and they kept at it for as long
as they had resources and the next thing
that was coming up was in Denver and it
was a Democratic National Convention in
2008 and this is for Obama spoke where
we the world and the u.s. saw him
coronated as the Democratic nominee for
president happened in Denver and they’re
like look at a bunch of places out there
and and people will be able to stay
there cheap because the whole world and
media
and press and everybody are convening in
Denver and converging on Denver and
there’s going to be a shortage of hotel
rooms let’s see if we could do it there
so they set up shop and they keep notice
out to the nine hundred delegates oh
they sent them the notifications he did
everything they could to let him know
and they got fifty reservations which is
better but it was still not nearly
enough along the way you may have
remembered this little news bit that
went kind of viral and he had cereal
Obama owes and captain McCain’s the
cereal was branded for the two
candidates running in the United States
presidential election John McCain and
Barack Obama who would win and become
president of course well they made
thirty thousand dollars taking cereal
cereal it was made by cereal companies
but putting in boxes branded for the
candidates so they made thirty thousand
dollars to put a couple bucks in the
pocket and make up for the fact that
they had booked a whopping 50
reservations there at the Democratic
National Convention well at that time
they were just suffering their weekly
weekly revenue at that time was two
hundred bucks that’s not going to cut it
that doesn’t even pay for your servers
or anything so these guys are starving
to death
they make thirty grand on the cereal
with the presidential election and they
go on and said hey maybe let’s try the
inauguration so I’m going to stop right
here and give you a bonus point for this
week and it is random event success is
not a path to sustainable success and
I’m sure Paul’s going up a little
graphic up there for that but here’s my
point you put up a website you’re doing
videos for something you have a viral
video that’s one viral video sustainable
success is building a repeatable
customer base and right now Airbnb did
not have a repeatable customer base but
nonetheless they said well we did okay
you know if 50 reservations is okay
let’s head to Washington DC for the
inauguration because the press and the
media and people are going to be
converging on Washington DC to see Obama
a sworn in as president and you know
let’s put up shop there well they did a
little better they got a hundred and
fifty bookings
and they went back to San Francisco and
they’re on the brink of being shut down
what do they do they had a chance
meeting with Paul Graham who is the
founder and an entrepreneur behind the Y
Combinator incubator it was an incubator
where you could get some money you could
get mentorship from people and more
importantly it was a three month four
month intensive program that ended with
what’s called demo day where you would
present what you’ve been working on in
incubating and improving with all this
great mentorship you would present it to
venture capitalists to see people go mmm
maybe me maybe give you your first round
of capital so they did that and in the
winter January of 2009 they get into the
Y Combinator incubator and so they’re
often you know learning and things like
that and had about $20,000 budget to
work with during that that that little
phase there just a few months at the
incubator and they went with a new and
different logo which one you may
recognize right here
this became the Airbnb logo as as good
as I can draw it for you there and at
the end of it something happened a VC
from Sequoia said on demo day I think
there’s something here and they gave
them six hundred thousand dollars in
seed capital so now they had mentorship
they had refined their idea and they had
the trust and belief of Sequoia Capital
and as very interesting Brian Chesky at
that time would say this is the most
important three months in the company’s
history let’s take a look at that when I
at the beginning of this video talked
about I talked about being early but be
early about getting mentors get mentors
right out of the gate find people to
know that they’re doing in mentorship
and if you’re in a town or a city that’s
got a start-up environment get involved
in that environment or find an incubator
and see if you can apply for admission
so that your idea is good enough to get
you in the door where you’ll get a
little bit of money you get resources
like servers and bandwidth but more
importantly you’ll get mentorship from
people that have walked that path before
and that’s exactly what happened here
and it led to them getting $600,000 and
seed they also talked to the legendary
venture capitalist Fred Wilson he’s a
great guy he’s done a lot of great
investments but as they say even Babe
Ruth struck out from time to time and he
said this problem of connecting spare
rooms and people is a bitch and you
won’t solve it and it’s going to kill
you
well Fred was wrong but he’s been right
about many many other things but it’s
always a badge of honor for startups to
actually be able to say this guy was
wrong but we still made it anyway and
nonetheless I think Fred nowadays will
tell you hey you win some you lose some
you’re right you’re wrong and he moved
on and they moved on so the boys are
trio heads to New York and they start
talking to people one of those points I
brought up get close to your customers
they start talking to people that they
call the hosts the people that are
renting out the rooms they started
talking to people who are the guests
that were renting asking him questions
back and forth and what they discovered
was a lot of the pictures taken by host
people maybe like you and me they got a
room to rent we’re terrible so they said
look this is all part of the branding
and marketing why would someone say yeah
I want to stay there for one night in
New York if it doesn’t look good and so
they put a program in place where they
sent professional photographer out to
take quick pictures of these locations
and guess what they immediately noticed
that those that they had the better
pictures of over a one week time frame
were being rented two times the three
times more often as the others so there
you have it getting close to the
customer which is the host and the guest
and refining your marketing with
something that they learned at the
incubator and they were iterating very
very fast
and before you know it they were
suddenly at $400 a week and they were
growing a big hit happened when Barry
Manilow’s drummer rented an entire house
now if you don’t know anything about
Barry Manilow he was a kind of a pop
star in the 70s and 80s United States
and the word Manilow Swedish which
really means man is lame I’m going with
that and don’t send me any notes on it
that’s what I’m going with you’ve ever
listened to Barry Mann all of his music
and tortured in that way you’ll know man
is land
lesson 1 Lord of all people rents an
entire house and that’s like an aha
moment and the company is starting to
grow an interesting thing happens that
was an inflection point during that time
period and they went out in 2010 so
within one year and they raised 7.2
million in a a round from Sequoia again
joining and Greylock well now they’re
pretty sure that they’ve got a pretty
good hit on their hands so let’s talk
about the challenges that happen and
what the amazing growth statistically
and valuation wise so they at the time
that were well on their way and a year
later in 2011 check this out they hit
their one millionth booking this white
line here is the bookings and they
raised a hundred and twelve million
dollars in a series B from increasing
Horowitz you know Marc Andreessen the
founder of Netscape one the first
browsers way back well a hundred and
twelve million dollars from him and
others it’s a 1 billion dollar valuation
let’s take a quick reflection back two
years prior they were getting into the
incubator because they had almost died
$200 a week selling cereal at the
Democratic National Convention and look
at that two years later a billion dollar
valuation and in dreesen Horowitz
Sequoia and Greylock pillars of the
venture capital community are in this
deal fantastic it’s now what we call a
unicorn
Tom’s led a startups that get a
valuation of a billion dollars are
called unicorns and this unicorn was not
based on eyeballs like early Twitter or
users like early Instagram it was based
on money it had a business model I want
to rent a room you want to rent that
room from me
they take a cut of both it was a
business model so from the beginning
they were making revenue and they were
making profits we go driving down and
about this time you know came their
first controversy and they got over
there first controversy and that was it
was bound to happen somebody comes home
and she finds her entire house trashed
and everything stolen
find out well as a young company
sometimes you know what to do sometimes
you don’t and at this time they refuse
to help you know you rented this at your
own risk
the publicity and backlash was terrible
and they finally came out and said wait
wait wait wait wait we will help you we
didn’t do it right but we will we
weren’t there cause of this but we get
it we got to put something in place so
they launched a fifty thousand dollar
insurance program for people that were
the hosts that were renting and they
also reached back out to the woman had
all that stuff happen and they helped
her out a little bit and work with her
there was another incident where
somebody rented their place out and they
came back in to find all kinds of drug
paraphernalia meth pipes and some other
things that were left there so people
obviously rented it to get together with
a group of people and have a party and
get seriously high and some really
dangerous drugs so nonetheless there is
some protection that put in place and
before long you know this one hundred
and twelve million dollars has carried
them and they have their five millionth
booking and what was very interesting
right here at the end of 2012 they had
sold that year more nights than Hilton
more nights than Hilton a three-year-old
company sells more nights than Hilton
one room at a time there was only one
word for that and that is damn that’s
amazing and suddenly they were doing
more per night yo Reynolds then then
Hilton was that’s incredible well they
continue to expand they continue to
drive forward and in 2013 they raid 200
million dollars in their ciri fee and
that involved founders fun peter thiel
somebody who I have incredible respect
for an admiration in the book zero to
one if you haven’t read that I’ve
mentioned it in some of my other case
studies on here go get a copy of that
book and make sure you take notes in it
yeah book marks in it and it stays on
your shelf because it’s exactly what you
need at the beginning and if you can get
into an incubator along the way so much
the better
but now Peter Thiel’s and the deal
founders fun is in the deal and they’re
headed toward ten million dollars in
bookings just a short time later you
know one year later they suddenly raised
five hundred
million dollars in a series D at a ten
billion dollar valuation so now their
valuation is in the double-digit billion
Club and along the way another
controversy with you may have seen this
in the media if you’ve studied Airbnb a
New Yorker was fine twenty four hundred
dollars for allowing people to stay his
apartment and they were calling it
unlicensed rental business or things
like that but Airbnb jumped in and they
said timeout we’re going to help defend
this guy and we’re going to help pay his
legal fees because we don’t like that
law that doesn’t allow people like you
and me just to rent a room out I mean
good grief I rented a room from
relatives when I was in college and I
was a relative and I’d paid three
hundred bucks a month and you know had
room and board well why not get 50 bucks
for somebody staying in an extra bedroom
and in many ways the New York law is
wrongheaded but nonetheless aaron B&B
jumped in because that’s kind of
legislation that can get in the middle
of you go watch the case study I did on
uber and see how they dealt with
legislation and governments and trying
to stop the hand of capitalism and
startups there’s some great points in
that one as well so here we go the ten
billion dollar club here and moving on
and in 2014 they change their logo and
that was also controversial because many
people thought that this logo was very
could be interpreted a lot of ways in
sort of a female interpretation way they
thought it was you think that’s really a
good logo and good taste is a little too
suggestive but nonetheless they went
with it and the controversy just kind of
washed ashore and then wash back out to
sea as they were continuing to grow and
cross ten billion excuse me ten billion
I would be there Paul look at this I
have a be 5 million bookings 10 billion
bookings that would be 1.1 booking for
every person on earth and you know what
that would be damn
a lot of bookings but that’s a mistake
that should be 10 million so I’m going
to leave that right there so 10 million
bookings so in the middle middle of
doing a case study now I discover an
error but anyway they go from one to
five to 10 million bookings now you can
see the things are just crazy and just
going very very well
all the raising money they’re expanding
internationally and along the way here
they also expanded that insurance
program from $50,000 to $1,000,000 again
doing the right thing trying to set
things up so you and I can feel
confident about renting out our home or
a room in our apartment or our flat so
we move forward here to 2015 and they
raise 1.5 billion dollars from General
Atlantic Hillhouse capital and the great
kleiner perkins so now they are Series V
is in the bank and the valuation is now
twenty five billion dollars and then
eight hundred and fifty million in
middle of 2016 from capital G which is
Google Capital and that’s how they go
that’s their new branding capital G so
now you even have Google in the game so
if you think about search and search
technology and finding places to stay
now you’ve got the biggest search
company in the world on your board and
with big skin in the game and so you’re
ready to go the next level and at this
time is very it’s worth noting that
there thirty billion dollar valuation
that compares favorably with Hilton
who’s worth twenty eight billion dollar
enterprise valuation so now these guys
are worth as much as Hilton amazing
stuff so what’s next is they’re sitting
here well there’s a couple things
there’s all there’s still challenges in
the regulatory environment as a matter
of fact not too long ago Governor Andrew
Cuomo of New York trying to put another
bill in place trying to put fines on
Airbnb hosts if they do certain things
and so there’s having to fight the
regulatory battle they’ve also got
something coming thing called
experiences where maybe a local person
as you use Airbnb to stay in New York a
local person could give you a tour of
the neighborhood and maybe some of the
more interesting sites so extending the
way that people like you and me could
use our room that we rent and our local
knowledge to make a little bit of money
and more recently the just closed in
February 2017
they bought luxury retreats which is out
of Canada had two rounds 16 million
dollars from I know via capital here’s a
little lesson for you
I know via over just about I think it’s
two to three years luxury retreats was
renting villas all around the world and
now they’re talking about using the
Airbnb engine to be a way to connect
people that want to rent those villas
with the owners or the host of those
villas so two rounds of capital over
just a couple years from my novia cap
capital and they get bought for two
hundred million dollars by Airbnb so
they use some of the state hundred fifty
million dollars to go make an
acquisition of a high-end company that
had a ton of listings on villas so
here’s another investment lesson for
those of you scoring at home
I know via capital it put in sixteen two
hundred comes out that’s about a 10x
return so they made 10x so again for
those who’s scoring at home trying to
figure this out
I know via capital investing and
probably got 10x back that’s pretty
amazing and for those of you not scoring
at home get on Airbnb rent a room and
then download tinder maybe that will
help you air B&B the second most
valuable private company in the u.s.
venture scene second only to uber making
money with an estimate just came out
this amazing estimate that in 2020
people believe these guys could have two
to three billion dollars in profits in
just a few years amazing things so as we
look at it get connected to your
customers early the way they did in New
York and taking pictures and improving
it and get connected to mentorship early
and if you’ve got an opportunity to take
your idea and to pitch it to an
incubator to get in for a 90 day program
or something you go do that because what
you’ll learn and a little bit of capital
it’s just amazing that’s this week I
hope you enjoyed it please subscribe to
value tainment for more case studies by
the biz doc and the best content on the
internet for entrepreneurs until next
time I’m Tom Miller and I hope I left
you better than I
[Music]
you [Music]
Airbnb and we’re going to look at how
important it is to be early early to
connect with your customers number one
and also early to get help in mentorship
along the way and perhaps even consider
joining an incubator and we’re going to
show you how that worked out for Airbnb
Airbnb who are they well you’re around
the world you should be familiar with
them they connect people that have a
room an apartment or even a home to rent
with people that want to rent those
things for a short time they make a
little bit in the middle a little bit
off the person renting their room and
they make a cut of the transaction of
the person paying for the room or the
home that’s how they make their money
and they are a global phenomena and
amazing levels evaluation I’m going to
take you through a record-setting
startup to establish global company
let’s go back and look at where it all
started back in 2007 this is the story
of this company starting in 2007 and who
would know that 10 years later they
would have raised over 4.1 billion
dollars and they’re out there
propagating a marketing and branding
message that promotes a sense of
belonging and a sense of being very
interesting the way they’ve done that so
it all starts with the gentleman named
Brian Chesky and his friend Joe Gebbia
and they had come from New York and they
were living in San Francisco and like
most aspiring entrepreneurs they were
broke and they were looking at money
being tight and they’re saying gosh we
got to pay our rent we got to live while
they’re trying to figure life out and
they were looking for a way to earn some
extra cash and they noticed that all the
hotel rooms seemed booked up in San
Francisco every time there was a
conference and there is an industrial
design conference coming to town and it
once again booked everything up and they
said listen what if we put up a fast
website called air bed-and-breakfast and
we’ll get a couple inflatable air beds
you know air mattresses with a sleeping
bag or a blanket and we’ll sell people
the opportunity to sleep in our living
room here in our flat they’re like
seriously yeah let’s try it so they
bought some air mattresses and some
other materials and set it up and put a
quick website up simply called the air
bed-and-breakfast
kind of a take-off on bed-and-breakfast
but it was an air bed and they priced it
at $80 and on that website the week of
the industrial design conference they
got three one two three visitors that
was it I was a gentleman from India
there’s a woman about 35 or 40 years old
and a guy from Utah so it was a random
set of people but they weren’t
20-somethings who’s looking for a crash
pad like you’re hiking across Europe
looking for a youth hostel these were
people that were professionals over 30
years old looking for a place to crash
and so they paid $80 each they said wow
that’s really great
and right about the time that happened
they had found themselves a harvard
graduate who was be a tremendous
architect for the technical side of the
site and the systems that are behind it
to connect people that want to rent a
room that people that have a room to
rent
and his name is Nathan with charvak and
now they got the three guys that would
become the trio of founders of Airbnb
Brian Chesky Joe Gebbia and Nathan blech
are zyk and they would make history so
they went off to South by Southwest I
don’t know if you know what that is
that’s an incredible conference it’s in
Austin Texas every year start out as a
music conference but now there’s
interactive and education there’s a
bunch of different topics that are there
so they headed down there because
there’s a lot of startups down there
there’s a lot of venture capital people
they head to Austin they set up shop
they announced that air
bed-and-breakfast is up there and going
strong and they get two bookings one to
that’s hit and they’re thinking huh
no this is not working come all the way
down to South by Southwest they said
well let’s take another stab at it
so there’s important thing to learn here
they were committed to their original
concept and they kept at it for as long
as they had resources and the next thing
that was coming up was in Denver and it
was a Democratic National Convention in
2008 and this is for Obama spoke where
we the world and the u.s. saw him
coronated as the Democratic nominee for
president happened in Denver and they’re
like look at a bunch of places out there
and and people will be able to stay
there cheap because the whole world and
media
and press and everybody are convening in
Denver and converging on Denver and
there’s going to be a shortage of hotel
rooms let’s see if we could do it there
so they set up shop and they keep notice
out to the nine hundred delegates oh
they sent them the notifications he did
everything they could to let him know
and they got fifty reservations which is
better but it was still not nearly
enough along the way you may have
remembered this little news bit that
went kind of viral and he had cereal
Obama owes and captain McCain’s the
cereal was branded for the two
candidates running in the United States
presidential election John McCain and
Barack Obama who would win and become
president of course well they made
thirty thousand dollars taking cereal
cereal it was made by cereal companies
but putting in boxes branded for the
candidates so they made thirty thousand
dollars to put a couple bucks in the
pocket and make up for the fact that
they had booked a whopping 50
reservations there at the Democratic
National Convention well at that time
they were just suffering their weekly
weekly revenue at that time was two
hundred bucks that’s not going to cut it
that doesn’t even pay for your servers
or anything so these guys are starving
to death
they make thirty grand on the cereal
with the presidential election and they
go on and said hey maybe let’s try the
inauguration so I’m going to stop right
here and give you a bonus point for this
week and it is random event success is
not a path to sustainable success and
I’m sure Paul’s going up a little
graphic up there for that but here’s my
point you put up a website you’re doing
videos for something you have a viral
video that’s one viral video sustainable
success is building a repeatable
customer base and right now Airbnb did
not have a repeatable customer base but
nonetheless they said well we did okay
you know if 50 reservations is okay
let’s head to Washington DC for the
inauguration because the press and the
media and people are going to be
converging on Washington DC to see Obama
a sworn in as president and you know
let’s put up shop there well they did a
little better they got a hundred and
fifty bookings
and they went back to San Francisco and
they’re on the brink of being shut down
what do they do they had a chance
meeting with Paul Graham who is the
founder and an entrepreneur behind the Y
Combinator incubator it was an incubator
where you could get some money you could
get mentorship from people and more
importantly it was a three month four
month intensive program that ended with
what’s called demo day where you would
present what you’ve been working on in
incubating and improving with all this
great mentorship you would present it to
venture capitalists to see people go mmm
maybe me maybe give you your first round
of capital so they did that and in the
winter January of 2009 they get into the
Y Combinator incubator and so they’re
often you know learning and things like
that and had about $20,000 budget to
work with during that that that little
phase there just a few months at the
incubator and they went with a new and
different logo which one you may
recognize right here
this became the Airbnb logo as as good
as I can draw it for you there and at
the end of it something happened a VC
from Sequoia said on demo day I think
there’s something here and they gave
them six hundred thousand dollars in
seed capital so now they had mentorship
they had refined their idea and they had
the trust and belief of Sequoia Capital
and as very interesting Brian Chesky at
that time would say this is the most
important three months in the company’s
history let’s take a look at that when I
at the beginning of this video talked
about I talked about being early but be
early about getting mentors get mentors
right out of the gate find people to
know that they’re doing in mentorship
and if you’re in a town or a city that’s
got a start-up environment get involved
in that environment or find an incubator
and see if you can apply for admission
so that your idea is good enough to get
you in the door where you’ll get a
little bit of money you get resources
like servers and bandwidth but more
importantly you’ll get mentorship from
people that have walked that path before
and that’s exactly what happened here
and it led to them getting $600,000 and
seed they also talked to the legendary
venture capitalist Fred Wilson he’s a
great guy he’s done a lot of great
investments but as they say even Babe
Ruth struck out from time to time and he
said this problem of connecting spare
rooms and people is a bitch and you
won’t solve it and it’s going to kill
you
well Fred was wrong but he’s been right
about many many other things but it’s
always a badge of honor for startups to
actually be able to say this guy was
wrong but we still made it anyway and
nonetheless I think Fred nowadays will
tell you hey you win some you lose some
you’re right you’re wrong and he moved
on and they moved on so the boys are
trio heads to New York and they start
talking to people one of those points I
brought up get close to your customers
they start talking to people that they
call the hosts the people that are
renting out the rooms they started
talking to people who are the guests
that were renting asking him questions
back and forth and what they discovered
was a lot of the pictures taken by host
people maybe like you and me they got a
room to rent we’re terrible so they said
look this is all part of the branding
and marketing why would someone say yeah
I want to stay there for one night in
New York if it doesn’t look good and so
they put a program in place where they
sent professional photographer out to
take quick pictures of these locations
and guess what they immediately noticed
that those that they had the better
pictures of over a one week time frame
were being rented two times the three
times more often as the others so there
you have it getting close to the
customer which is the host and the guest
and refining your marketing with
something that they learned at the
incubator and they were iterating very
very fast
and before you know it they were
suddenly at $400 a week and they were
growing a big hit happened when Barry
Manilow’s drummer rented an entire house
now if you don’t know anything about
Barry Manilow he was a kind of a pop
star in the 70s and 80s United States
and the word Manilow Swedish which
really means man is lame I’m going with
that and don’t send me any notes on it
that’s what I’m going with you’ve ever
listened to Barry Mann all of his music
and tortured in that way you’ll know man
is land
lesson 1 Lord of all people rents an
entire house and that’s like an aha
moment and the company is starting to
grow an interesting thing happens that
was an inflection point during that time
period and they went out in 2010 so
within one year and they raised 7.2
million in a a round from Sequoia again
joining and Greylock well now they’re
pretty sure that they’ve got a pretty
good hit on their hands so let’s talk
about the challenges that happen and
what the amazing growth statistically
and valuation wise so they at the time
that were well on their way and a year
later in 2011 check this out they hit
their one millionth booking this white
line here is the bookings and they
raised a hundred and twelve million
dollars in a series B from increasing
Horowitz you know Marc Andreessen the
founder of Netscape one the first
browsers way back well a hundred and
twelve million dollars from him and
others it’s a 1 billion dollar valuation
let’s take a quick reflection back two
years prior they were getting into the
incubator because they had almost died
$200 a week selling cereal at the
Democratic National Convention and look
at that two years later a billion dollar
valuation and in dreesen Horowitz
Sequoia and Greylock pillars of the
venture capital community are in this
deal fantastic it’s now what we call a
unicorn
Tom’s led a startups that get a
valuation of a billion dollars are
called unicorns and this unicorn was not
based on eyeballs like early Twitter or
users like early Instagram it was based
on money it had a business model I want
to rent a room you want to rent that
room from me
they take a cut of both it was a
business model so from the beginning
they were making revenue and they were
making profits we go driving down and
about this time you know came their
first controversy and they got over
there first controversy and that was it
was bound to happen somebody comes home
and she finds her entire house trashed
and everything stolen
find out well as a young company
sometimes you know what to do sometimes
you don’t and at this time they refuse
to help you know you rented this at your
own risk
the publicity and backlash was terrible
and they finally came out and said wait
wait wait wait wait we will help you we
didn’t do it right but we will we
weren’t there cause of this but we get
it we got to put something in place so
they launched a fifty thousand dollar
insurance program for people that were
the hosts that were renting and they
also reached back out to the woman had
all that stuff happen and they helped
her out a little bit and work with her
there was another incident where
somebody rented their place out and they
came back in to find all kinds of drug
paraphernalia meth pipes and some other
things that were left there so people
obviously rented it to get together with
a group of people and have a party and
get seriously high and some really
dangerous drugs so nonetheless there is
some protection that put in place and
before long you know this one hundred
and twelve million dollars has carried
them and they have their five millionth
booking and what was very interesting
right here at the end of 2012 they had
sold that year more nights than Hilton
more nights than Hilton a three-year-old
company sells more nights than Hilton
one room at a time there was only one
word for that and that is damn that’s
amazing and suddenly they were doing
more per night yo Reynolds then then
Hilton was that’s incredible well they
continue to expand they continue to
drive forward and in 2013 they raid 200
million dollars in their ciri fee and
that involved founders fun peter thiel
somebody who I have incredible respect
for an admiration in the book zero to
one if you haven’t read that I’ve
mentioned it in some of my other case
studies on here go get a copy of that
book and make sure you take notes in it
yeah book marks in it and it stays on
your shelf because it’s exactly what you
need at the beginning and if you can get
into an incubator along the way so much
the better
but now Peter Thiel’s and the deal
founders fun is in the deal and they’re
headed toward ten million dollars in
bookings just a short time later you
know one year later they suddenly raised
five hundred
million dollars in a series D at a ten
billion dollar valuation so now their
valuation is in the double-digit billion
Club and along the way another
controversy with you may have seen this
in the media if you’ve studied Airbnb a
New Yorker was fine twenty four hundred
dollars for allowing people to stay his
apartment and they were calling it
unlicensed rental business or things
like that but Airbnb jumped in and they
said timeout we’re going to help defend
this guy and we’re going to help pay his
legal fees because we don’t like that
law that doesn’t allow people like you
and me just to rent a room out I mean
good grief I rented a room from
relatives when I was in college and I
was a relative and I’d paid three
hundred bucks a month and you know had
room and board well why not get 50 bucks
for somebody staying in an extra bedroom
and in many ways the New York law is
wrongheaded but nonetheless aaron B&B
jumped in because that’s kind of
legislation that can get in the middle
of you go watch the case study I did on
uber and see how they dealt with
legislation and governments and trying
to stop the hand of capitalism and
startups there’s some great points in
that one as well so here we go the ten
billion dollar club here and moving on
and in 2014 they change their logo and
that was also controversial because many
people thought that this logo was very
could be interpreted a lot of ways in
sort of a female interpretation way they
thought it was you think that’s really a
good logo and good taste is a little too
suggestive but nonetheless they went
with it and the controversy just kind of
washed ashore and then wash back out to
sea as they were continuing to grow and
cross ten billion excuse me ten billion
I would be there Paul look at this I
have a be 5 million bookings 10 billion
bookings that would be 1.1 booking for
every person on earth and you know what
that would be damn
a lot of bookings but that’s a mistake
that should be 10 million so I’m going
to leave that right there so 10 million
bookings so in the middle middle of
doing a case study now I discover an
error but anyway they go from one to
five to 10 million bookings now you can
see the things are just crazy and just
going very very well
all the raising money they’re expanding
internationally and along the way here
they also expanded that insurance
program from $50,000 to $1,000,000 again
doing the right thing trying to set
things up so you and I can feel
confident about renting out our home or
a room in our apartment or our flat so
we move forward here to 2015 and they
raise 1.5 billion dollars from General
Atlantic Hillhouse capital and the great
kleiner perkins so now they are Series V
is in the bank and the valuation is now
twenty five billion dollars and then
eight hundred and fifty million in
middle of 2016 from capital G which is
Google Capital and that’s how they go
that’s their new branding capital G so
now you even have Google in the game so
if you think about search and search
technology and finding places to stay
now you’ve got the biggest search
company in the world on your board and
with big skin in the game and so you’re
ready to go the next level and at this
time is very it’s worth noting that
there thirty billion dollar valuation
that compares favorably with Hilton
who’s worth twenty eight billion dollar
enterprise valuation so now these guys
are worth as much as Hilton amazing
stuff so what’s next is they’re sitting
here well there’s a couple things
there’s all there’s still challenges in
the regulatory environment as a matter
of fact not too long ago Governor Andrew
Cuomo of New York trying to put another
bill in place trying to put fines on
Airbnb hosts if they do certain things
and so there’s having to fight the
regulatory battle they’ve also got
something coming thing called
experiences where maybe a local person
as you use Airbnb to stay in New York a
local person could give you a tour of
the neighborhood and maybe some of the
more interesting sites so extending the
way that people like you and me could
use our room that we rent and our local
knowledge to make a little bit of money
and more recently the just closed in
February 2017
they bought luxury retreats which is out
of Canada had two rounds 16 million
dollars from I know via capital here’s a
little lesson for you
I know via over just about I think it’s
two to three years luxury retreats was
renting villas all around the world and
now they’re talking about using the
Airbnb engine to be a way to connect
people that want to rent those villas
with the owners or the host of those
villas so two rounds of capital over
just a couple years from my novia cap
capital and they get bought for two
hundred million dollars by Airbnb so
they use some of the state hundred fifty
million dollars to go make an
acquisition of a high-end company that
had a ton of listings on villas so
here’s another investment lesson for
those of you scoring at home
I know via capital it put in sixteen two
hundred comes out that’s about a 10x
return so they made 10x so again for
those who’s scoring at home trying to
figure this out
I know via capital investing and
probably got 10x back that’s pretty
amazing and for those of you not scoring
at home get on Airbnb rent a room and
then download tinder maybe that will
help you air B&B the second most
valuable private company in the u.s.
venture scene second only to uber making
money with an estimate just came out
this amazing estimate that in 2020
people believe these guys could have two
to three billion dollars in profits in
just a few years amazing things so as we
look at it get connected to your
customers early the way they did in New
York and taking pictures and improving
it and get connected to mentorship early
and if you’ve got an opportunity to take
your idea and to pitch it to an
incubator to get in for a 90 day program
or something you go do that because what
you’ll learn and a little bit of capital
it’s just amazing that’s this week I
hope you enjoyed it please subscribe to
value tainment for more case studies by
the biz doc and the best content on the
internet for entrepreneurs until next
time I’m Tom Miller and I hope I left
you better than I
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