Airbnb Strategy
Teardown
Ahead of Potential IPO, Airbnb Looks Beyond The
Hotel Industry
I
Airbnb reimagined hotel accommodation, creating a niche in the
travel industry. Now it’s expanding its inventory, targeting luxury
and business travelers, and going up against Priceline, Expedia,
and others. Its success will hinge on whether it can compete with
these giants while retaining the identity that set it apart.
Since its founding in 2008, Airbnb has grown from a small startup
that let users rent out their air mattresses, to a global player in
international travel and hospitality.
•
Now, as it sets its sights on an IPO, it is evolving from a
home-sharing platform to an expanded travel services
company, challenging incumbents like Expedia and Priceline.
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It’s getting into real estate, targeting larger property manag-
ers, and building an Airbnb-branded property in Orlando.
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And it is expanding internationally, with certain markets in
Asia emerging as a key area of growth and hiring, as we’ll
show.
As it looks to become a full-service travel platform, it faces a new
host of competitors.
Online travel agencies like Priceline and Expedia, which own a slew
of online travel booking platforms, have already added features that
make them more competitive with Airbnb. They have tremendous
online marketing resources for capturing comparison-shopping
travelers.
Just as Airbnb distinguished itself as an alternative to the hotel
experience, it will need to do the same against the major online
travel players.
In addition, the company faces regulatory challenges fanned by
the hotel industry. The hotel lobby in some cases has successfully
pressed local governments to regulate short-term subletting. It
has also had to improve the trust and safety associated with its
home-shares, as it seeks to make home-sharing more mainstream.
Thus far, the company has successfully navigated many of the
hurdles it’s encountered. Unlike Uber, the only private company in
the US valued higher than Airbnb, the company has had relatively
stable leadership, with most of its senior executives in their
positions for at least 2 years. It has made effective legal hires that
have helped it navigate the regulatory challenges it’s faced.
In this analysis, we examine Airbnb’s strategy and future prospects
using CB Insights data on funding, investments, acquisitions,
partnerships, and patents.
II
Background & Leadership
Hiring & Geographic Analysis
Financials & Valuation History
Acquisitions & Investments
Patents
Regulation
Forward-Looking Strategies and
Competitive Landscape
Final Words
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4
6
8
11
16
17
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Table of
Contents
1
Background &
Leadership
Airbnb’s present-day business is a far cry from its early inspiration.
As of August 2017, Airbnb has:
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4 million listings in 190+ countries (up from 2.3M in 2016)
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Over 200 million customers that have used the platform to
book accommodations (up from 140M in 2016)
•
Total listings that exceed those of the top 5 hotel chains
combined (the company did not specify how it compared
listings)
CEO Brian Chesky has said that the company is still a year or so
away from a public offering, insisting the company intends to
be “ready” to IPO but will take its time and be “methodical and
thoughtful” about the process.
As Airbnb readies itself for corporate adulthood, it has put in place
a seasoned leadership team with significant tenure at the com-
pany, adding structure to a sprawling home-sharing marketplace.
Employee Organizational Chart
Nearly all of Airbnb’s senior leadership has been with the company
for more than two years, but some notable gaps remain.
The departures of Chip Conley, who left his position as Head of
Global Hospitality & Strategy to take on a part-time advisory role,
and of Varsha Rao, former Head of Global Operations, is straining
the company’s leadership as Airbnb seeks to grow internationally.
The org chart below shows Airbnb’s current senior leadership and
is color-coded based on employees’ tenure at the company. As
evidenced by the abundance of blue, nearly all senior staff have
been with the company for more than 24 months, a positive sign
for the company’s stability and its ability to execute in the ramp up
to a public offering.
As reflected in our chart, nearly all of the newest employees in lead-
ership positions have been added by way of Airbnb’s acquisition of
Luxury Retreats. Joe Paulin, President and CEO of Luxury Retreats,
will likely spearhead the company’s luxury efforts.
“Brian,
I thought of a way to make a few
bucks—turning our place into a
designer’s bed and breakfast—offering
young designers who come into town
a place to crash during the 4 day
event, complete with wireless internet,
a small desk space, sleeping mat, and
breakfast each morning. Ha!”
– Joe Gebbia, Co-founder & Chief
Product Officer at Airbnb
2
Digging into the chart, it’s worth highlighting how key hires have
helped the company navigate regulations and tighten up Airbnb’s
finances. The org chart also provides a window into challenges in
China, an important market for growth.
Regulatory Risk
Chesky’s first senior executive hire was Belinda Johnson in 2011.
A lawyer who positioned Airbnb to navigate its regulatory risk,
Johnson has more than 20 years of experience representing tech-
nology companies, and from the outset expertly guided Chesky
to open lines of communication with regulators and government
officials. Today she is the Chief Business Affairs & Legal Officer.
Johnson’s hiring of Chris Lehane (Head of Global Policy & Public
Affairs) has also added to Airbnb’s public affairs chops. Lehane, a
lawyer and political strategist, is an alumnus of the Clinton White
House. He brings to Airbnb a cutthroat and formidable resume in
opposition research and crisis management.
Together, Lehane and Johnson will continue to play a crucial role in
pushing for friendly regulation in key cities like San Francisco, New
York, Barcelona, and Paris, among others.
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Path to IPO
The company’s most significant hiring move in preparation for
an IPO was its decision to bring aboard Laurence Tosi as Chief
Financial Officer. Tosi previously worked as Chief Financial Officer
of The Blackstone Group.
Besides tightening up Airbnb’s finances, Tosi has also reportedly
taken an outsized role in its operations and corporate development,
demonstrating his value as the most experienced executive at the
company.
Notable Departures
Notably absent from Airbnb’s executive structure (and seen
floating awkwardly near Brian Chesky in our graphic) is Chip
Conley, formerly Head of Global Hospitality & Strategy. Conley is no
longer with the company officially, and is instead now serving in an
advisory role as Strategic Advisor for Hospitality & Leadership.
Conley brought deep hospitality experience to the company and
is credited with defining the company’s priorities and setting
standards for hosts.
Changes In China
The departure of Hong Ge, vice president of Airbnb’s China entity,
has raised questions about the health of Airbnb’s China business.
Reports indicated that Airbnb hired Ge from Facebook after Airbnb
was unable to sucessfully hire from Chinese companies. Ge
departed only four months after assuming the role.
Recent reports suggest that Ge might have violated the company’s
code of ethics, but Airbnb’s official stance has been that he left to
pursue other opportunities. With Ge’s exit, Nathan Blecharczyk,
co-founder and Chief Strategy Officer, will take over as head of
Airbnb’s China operation.
Faced with growing pressure to expand globally, and with
Blecharczyk taking on more responsibility for the China operation,
it will be interesting to see if the company tries to hire another sea-
soned executive as chief operating officer to manage international
growth.
In March of this year, Airbnb renamed its Chinese entity “Aibiying”
(translated as “welcome each other with love”) to better position
itself within the Chinese market. Whether the company can
succeed in finding an executive to lead its efforts there full-time is
an outstanding question.
4
Looking into Airbnb’s jobs listings further shows the importance of
China to the company’s strategy. It also highlights the emphasis
the company is placing on its nascent luxury business.
We analyzed Airbnb’s open job listings (as of 10/16/17). We also
cut the data around how open listings were distributed across
Airbnb’s offices internationally.
After San Francisco, Beijing, China had the second highest number
of open listings, with 17% of the available openings. Close behind
in third was Montreal, Canada — the home of Airbnb’s latest
acquisition, Luxury Retreats.
Hiring &
Geographic
Analysis
5
The below graphic shows the distribution of Airbnb’s 200+ open
jobs by department. Engineering and operations roles take the
lion’s share of open listings.
Focus on Engineering, Operations, and
Luxury Retreats
Engineering and operations roles accounted for the bulk of the
company’s available positions, at 25% and 16%, respectively.
Analyzing job listings by focus area (not shown in graphic), we also
found that jobs for Airbnb’s Luxury Retreats business accounted
for 18% of total listings, with a heavy concentration in operations.
Luxury Retreats operations roles accounted for 62% of the total
operations listings.
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Airbnb has become a household tech company name. Within the
global unicorn club (private companies valued at $1B or more),
only a handful of private companies are valued in the tens of
billions. Airbnb has a “double deca-corn” valuation of $29.3B.
As a major travel company, Airbnb sits in 5th place on our unicorn
tracker, behind ride-sharing behemoths and Chinese hardware and
e-commerce companies. It is the second most valuable private
company in the US, after Uber.
Our funding and valuation data highlights how quickly the company
has raised funding and increased its valuation.
Airbnb has raised money from a variety of investors, including both
traditional sources of venture capital as well as larger financial
institutions and crossover investors.
Financials
& Valuation
History
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Since it originally received seed funding as a Y Combinator alum
in January 2009, Airbnb has raised from a cohort of traditional
venture firms, including Sequoia Capital, FirstMark Capital, Kleiner
Perkins Caufield & Byers, Andreessen Horowitz, and others.
The firm also saw early angel investment in its Q4’10 Series A
round, which included Elad Gil, Jeremy Stoppelman, and Keith
Rabois, while Ashton Kutcher joined the Series B round in Q3’11.
Later in its investment cycle, the company raised money from
growth equity firms and larger institutional and crossover
investors. Airbnb’s $1.5B Series E round in Q2’15 included General
General Atlantic, T. Rowe Price, and Tiger Global Management,
among other investors.
8
Corporate and strategic investors are largely absent from Airbnb’s
investor cohort, though capitalG, Alphabet’s growth venture capital
investment vehicle participated in Airbnb’s $556M Series F in Q3’16.
To date, Airbnb has made 16 acquisitions and one investment. The
company has leveraged M&A deals to acquire market share, talent,
technology, and strategic edge.

Core Business
While Airbnb famously rebuffed offers to partner with or acquire its
early German home-sharing counterpart Wimdu, the company has
not shied away from making acquisitions to improve and expand its
core business.
In 2011 and 2012, the company bought home-share websites
Accoleo and Crashpadder, both operating in Europe. And in 2015,
the company acquired RentMethod, an apartment rental website, in
an acqui-hire.
Acquisitions &
Investments
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Experiences
Recent acquisitions tie directly to the company’s strategic goal of
building out its Trips and Experiences services: an integration of
in-city tours, experiences, and guides discussed in further detail
below.
In 2015 Airbnb purchased Vamo Labs, a Seattle-based multi-city
itinerary and cost-planning travel site. The Vamo team joined
Airbnb post-acquisition. In 2016, less than a month before
announcing the rollout of its new Trips feature, Airbnb also
purchased Trip4real, a Spanish startup that connects travelers with
locals offering unique travel experiences in Spain.
2017 Investments
Airbnb’s 2017 investments have been relevant to a few of the
company’s key strategies including: building trust in its homes
investory, improving and expanding the Airbnb platform, and
targeting luxury travelers.
Mobile
In May of this year, Airbnb acquired Deco Software for an
undisclosed sum. Deco constructed an integrated development
environment, or IDE, to allow developers and designers to collab-
orate on mobile apps. The acquisition underscores Airbnb’s focus
on improving the mobile experience and could help encourage
developers to create new Airbnb tools for travelers.
Marketplace safety
In June, Airbnb acquired Trooly, bringing in the company’s engineer-
ing team and intellectual property. Trooly uses public and private
sources of data to construct “digital scorecards” on individuals.
The conventional use cases for Trooly’s product include
background checks and credit scoring. Airbnb will likely use the
company’s technology to protect its marketplace from fraud and
bad actors.
According to Bloomberg reporting, Airbnb had been a Trooly
customer since 2015. (We discuss Trooly in greater detail below in
the patents analysis section.)
Luxury
Airbnb’s February acquisition of Luxury Retreats for $200M marked
an aggressive move into the luxury market. Luxury Retreats is a
home-share company offering high-end villas that the company
thoroughly vets and curates.
Luxury Retreats seems like a choice target for Airbnb. The
company says it does $150M in annual bookings, with 40% of its
clientele becoming repeat customers, in over 100 destinations.
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The company also says it accepts less than 5% of homes that
apply to the platform.
Bloomberg reported in June that Airbnb was working on a luxury
tier of accommodation called “Airbnb Lux,” as well as a pilot
program called “Airbnb Select.”
Airbnb Select homes are inspected by the company and cosmet-
ically improved. Both efforts come as part of a broader push to
improve the company’s accommodation inventory.
As of now, it is unclear whether Airbnb Lux will be integrated into
the core Airbnb platform or continue to live in the Luxury Retreats
property. Both options come with risks, and the former could
possibly alienate Luxury Retreats’ core user group, muddy its
branding, and (if non-exclusive listings were included) forfeit the
platform’s exclusivity.
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Restaurant reservations
In January, Airbnb participated in a $13M Series A investment to
restaurant reservation app Resy. The investment solidifies the
companies’ partnership and Resy’s integration as a feature in
Airbnb’s mobile app experience, allowing Airbnb users to discover
restaurants and book reservations at their destination. Airbnb’s
Resy partnership is a component of the development of its “Trips”
service.
AI
Reports about Facebook’s acquisition of Ozlo, an AI company that
suggests restaurants based on chatbot conversations, noted that
Facebook competed with Airbnb to acquire the company.
Mike Curtis, VP of engineering at Airbnb, says the company is
focusing on AI talent, with the purpose of increasing personaliza-
tion. “I will say we have a keen eye out for companies innovating in
this space.” said Mr. Curtis.
Airbnb’s patent application volume is low. However, the patents the
company has applied for in marketplace management show it is
working to further improve the trustworthiness of its service. Its
internet connectivity patent points to its efforts to make Airbnb a
full-service travel resource available wherever its users go.
Note: This analysis comes with a few caveats, primarily that the
patent filing process involves a significant time lag before the
publishing of patent applications. This delay can range from several
months to over two years.
Patents
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Improved Services in Remote Locations
In April 2017, we uncovered a newly published patent application
by Airbnb titled “Beam Device Architecture.” The patent describes
a data compression system that enhances internet services via
cellular transmission in remote regions with poor connectivity. The
patent explicitly references countries like China and Cuba.
Specifically, the application details an orb-shaped device called a
“beam modem” and a “beam API server” that act as intermediaries
between a user’s device (e.g. smartphone) and an external web
service, compressing the request from the user before sending it
on, and then compressing the response before passing it back to
the smartphone or other device.
While it is possible that the device would be used to provide
improved internet services to users visiting remote locations, the
device could also be used to further differentiate Airbnb’s mobile
efforts. By improving the connectivity of Airbnb’s app in remote
regions, users would be more likely to remain within the Airbnb
ecosystem for the ancillary services the company is currently
layering on (e.g. guest-host communications, destination guides,
experiences, restaurant reservations, etc.).
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Prototypes of the device might already be testing in the field. The
below photo was pulled from LinkedIn, where Alex Blackstock, an
Airbnb employee whose name is on the patent application, posted
it. There is a clear similarity between the photo to the right and the
drawing in the patent (left).
Trust and Standards
Each of the below patents relate directly to Airbnb’s emphasis on
maintaining a safe and high-quality marketplace, which is critical
as the company looks to become a mainstream alternative to
hotels.
In response to a handful of well-publicized home vandalism,
robbery, and other criminal incidents that have occurred in Airbnb
homes, Airbnb instituted the Host Guarantee, a $1,000,000 liability
insurance protection against damages that affords hosts peace of
mind.
What’s more, with the rollout of its new program Trips, Airbnb
now requires that all users (hosts and guests) scan a government
ID into their platform. The company claims that “a more robust
standard of authenticating identity will make the Airbnb community
stronger and reaffirms Airbnb’s ongoing commitment to authentic-
ity, reliability, and security.”
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Verification Using Online and Offline
Components
In June of this year, Airbnb was awarded a patent that describes
“methods and systems for verifying identity and trustworthiness.”
The patent describes a two-layered process of verification that
compares information received online and offline to information
presented by the user at registration.
Additionally, the patent defines the inclusion of a “third party online
system” that calculates a “confidence score” measured on the
difference in identity representations.
The patented technology is intended to negate fraud within the
Airbnb marketplace, by preventing hosts or guests from using
fake identities. In addition to gathering offline information like
a user’s government ID, credit score, banking information, and
criminal history, the system goes beyond simply verifying identity
by introducing a metric of “trustworthiness” based on third-party
information like social networks, email servers, blogs, etc.
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