Will Airbnb survive Coronavirus?

published on August 1, 2020

This video was sponsored by Skillshare the first thousand people to join with the link in the description will get two free months on their Premium Membership today we are going to talk about travel before all of this happened chances are we used Airbnb to find a

Place to stay and we discover that some of those options were great and others well not so much but regardless of personal experiences one thing is certain Airbnb revolutionized how we travel and

Not only that Airbnb along with similar platforms shook up local economies and the real estate market people listed anything and everything from small cramped rooms to luxury homes so Airbnb s social impact is bigger than most

People think Airbnb itself is no stranger to controversy the past years have brought criticism and backlash from local and national governments alike this latest crisis has only aided in putting the

Company to the test layoffs controversial refunds and a shaky IPO Airbnb is going through turbulent times will it come out on top let's talk about it in this episode of company forensics an air mattress in the middle of a

Living room Joe Gebbia and Brian Chesky shared an apartment in San Francisco and needed some extra cash to pay rent they noticed their living room was empty so they just stood up put on an air mattress in the middle and offered

Breakfast it was in their own words a bed and breakfast and it worked the first guests paid $80 and night Hey san Francisco's pretty expensive along with Nathan black our CES CTO they launched air bed and breakfast calm in 2008 it

Offered short-term stays to those who couldn't find hotel rooms in crowded cities like San Francisco and New York to help promote the platform they even turned to politics and cereal but it failed to catch on even when they

Reached what seemed to be the final version interest was still lackluster and it was a good idea find a place and make a reservation and only three clicks it sounds great right well investors weren't convinced

In fact 15 investors passed on the idea I wonder how they feel now but then there was one guy who did it and that's Paul Gray hem from the Y Combinator program he decided to take them under his wing providing cash and training in

Exchange for a slice of air bed and breakfast so the founders used these new funds around $20,000 to fly to New York City to stay with hosts and write detailed reviews and even take professional photographs to help them

With advertising then there was the name heir Ben and breakfast just didn't sound right so they changed it to Airbnb which really marked a new era a chaotic one at that because people started noticing your B&B and most importantly they

Started using it in fact 2009 was so chaotic that Chesky moved out of his place because it worked both as an office and as a rental place they reached 10,000 users and 2,500 listings and such numbers finally drew the

Attention of investors in April of that year why investors and Sequoia Capital invested six hundred and fifteen thousand dollars the pitch stick they used to raise that money is actually our most used template on slight beat you

Can go to sleeping comm /youtube to use the actual slides that these guys use to raise money with some nice redesign by our team after this the platform only kept growing and by 2010 Airbnb reached more than 7

Bookings 80% of which came after the investment with such success and only then did investors really say hey Airbnb might be worth a shot so for their second round of funding Airbnb raised 72 million dollars which

Already valuated the company at 70 million not bad given that they started in 2008 Airbnb says hello world 2010 was a good year Airbnb won awards opened their first international office in London and

Reached 10 million nights booked they secured more than 112 million dollars in funding and the operations had grown so massive other international offices followed in places like Barcelona Milan Paris and Sao Paulo in 2013 alone the

Number of listings increased to a quarter of a million Airbnb was all over the world in fact it even became one of the first us-based companies to operate in Cuba after the Obama administration eased restrictions on the Caribbean

Country by 2015 the company had garnered serious funding in its series e1 round investors shelled out 16 billion dollars against the valuation of 25 billion dollars aided by such funds it started

Absorbing the competition they acquired rivals at Colio and crash patter in Europe and bought companies that works at hyper local levels with valuable data such as mapping and restaurant guides this way Airbnb was consolidating itself

As one of the main choices for short-term rentals but it's not all a fairy tale because there's an unavoidable phenomenon that comes with having hundreds of thousands of guests and hosts complaints began pouring in

Trashed apartments theft racism some guests were held at gunpoint and even prostitution so in order to deal with these issues which go back as far as 2012 Airbnb implemented actions such as host guarantee funds change in policies

And they went as far as redesigning the entire image to gartner a feeling of belonging anywhere but prostitution and theft we're into the biggest issues the challenge was the cities themselves all over the world local and national

Governments applied more stringent measures against temporary rentals take New York for example it's one of the biggest Airbnb destinations but still the local government threatened to shut down the platform even San Francisco

Where Airbnb was born so a citizen initiative to limit the platform and the problem doesn't extend to the US alone citizens in Barcelona and Paris have openly spoken against the platform and the reason is quite clear aiming at

Tourism hosts have spiked prices up in a matter of a few years and have made entire cities completely unaffordable for locals especially for the middle class it has become a source of income and jobs both direct and indirect and

Though the company was growing there were some ups and downs the famed IPO you can find Airbnb anywhere maybe not in North Korea but anywhere else q3 of 2019 saw double the losses of 2018 with a considerable increase in marketing of

About 60% more than 2018 and this wasn't good because it had long been known that Airbnb planned to launch an IPO in 2020 Chesky however assured everybody that the company was profitable many companies have gone probably while not

Having profit you know uber and lyft and Twitter but here's an interesting nugget of information recent years have seen the highest number of IPOs from companies that aren't profitable since when take a guess well that's right

Since 2000 right before the dot-com bubble burst it's just a fun fact Chesky was pretty evasive about the whole thing this is what he said in an interview with CNBC you and asked about funding and the IPO we don't need to raise money

And so we haven't been in a rush to go public all he did was hype about 2020 in the climatic opening but that ideal along with everything else had to be put on hold the now and the future so we all know what has happened in the past few

Months 80% of lodging reservations around the world have been cancelled the WTO predicts that tourism will drop in a conservative scenario about 60% all over the world if not worse most Airbnb

Markets so reservations drop 90% some hosts at all reservations from April May and June cancelled so what has Airbnb done to deal with this situation first it has come to grips with reality its valuation formally at 36 billion dollars

Have been lowered internally to around 1/2 Chesky announced that revenue is expected to be 800 million dollars less than last year the company managed to race two rounds of funding each at an estimated 1 billion dollars

In the middle of a crisis where would this money go part of it 250 million to be precise will go to a fund for hosts this sounds like a lot of money but it's only to cover a percentage of cancellations as far as the IPO there

Are no signs of that happening anytime soon and experts agreed it would be the wrong time to go public then come the layoffs and that's by mid May when we're shooting this video everyone be fired 1900 employees 25 percent of its staff

The decision did not come easy for Chesky who took the high road in the eyes of many in his letter to those affected and the rest of the company he was very clear this wasn't the employees fault this was beyond what many could

Comprehend so those affected will receive 14 weeks pay plus one more week for each year with the company as for high executives they have reduced their salary in 50% and chesley will not receive his salary for the next six

Months when it comes to reservations now that's where it gets tricky Airbnb sent out communications detailing the refund process which was conditioned between dates the process seemed easy but many guests saw it's actually very

Difficult hosts come up with excuses and conditions that are impossible to fulfill this leads us to the hosts themselves big and small they've seen a complete halt in their income and many of them has said that the policies

Around this crisis haven't been geared towards their benefit as the refunds did not consider them at all backlash was such Chesky had to take it to social networks to issue an apology and take more actions which included this 250

Million dollar fund these are actions that can not compensate for the financial impact this crisis has generated and in fact it could reshape the way we see temporary rentals and cities themselves remember all these

Locals affected by rising house costs well some experts believe that they are key to the future of housing as empty apartments geared towards tourism might become normal apartments again though cesky have stated repeatedly that travel

Will return and that it will be different to him local and hyper local reservations will leave at norm at first and Airbnb will be there with newer stricter cleaning policies the WTO World Tourism Organization partially

Agrees with him as it estimates that travel will eventually bounce back by the end of the year as borders gradually open but this might not be enough Airbnb has had a lot against it it has had to funnel a lot of its

Investment to cover costs governments resist its presence and the future of travel is still up in the air so eventually might never come will another platform replace Airbnb perhaps so you should start decluttering your living

Room now we get tons of questions around the tools that we use to make these videos all the background animation is done in Adobe After Effects I found a great course by Jake Bartlett that goes over all the details on Skillshare and

I'm happy to recommend it Skillshare agreed to give us 1,000 codes to get two free months on the platform which you can access from the link in the description another course I can recommend is Caleb Babcock's iPhone

Filmmaking it's a quick 30-minute class on Skillshare on creating cinematic video with just your iPhone thanks a lot for watching this video make sure that you subscribe to stay in touch with our company forensics videos

Which we launched once a week more importantly we do a Q&A after each video a live Q&A with myself and the rest of the team so make sure you're joining our startup cafe on discord to be part of that see you next week

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