It is flawed, on two important levels. Airbnb's Unique Selling Point, the factor upon which its notional $1.3bn value rests, is the claim that it is a marketplace for real people to rent out their own homes - that is to say, the properties in which they themselves live - while they are away or individual rooms in their house while they are present. This is an intriguing idea and, if you don't think it through, it is easy to jump to the conclusion that most of us have homes, most of us have spare rooms and most of us have vacations, during which our homes lie empty and unproductive. Hotels have been screwing us for years (who hasn't, at some stage, been personally offended by minibar prices?), wouldn't it be great if we could all somehow route around those archaic hotel monopolies? So, that is the Airbnb pitch, it would clearly be of interest to investors if it could be shown to actually work and, at first glance, it appears that Airbnb has done this - over 2 millions nights have been booked through their system, each raking in a healthy commission of around 15%. Unfortunately, Airbnb has a dirty little secret, and any of you who have used it will know this: the vast majority of the properties available are actually the same vacation rental properties that have been available for years and are still available through all the other websites, provided by professional landlords with multiple properties - the only real difference is that these landlords charge about 15% more if you book through Airbnb.
Now, when I say majority, I don't mean overwhelming majority but certainly more than half of the actual beds per night. There are, for sure, lots of people new to renting out their places, there are lots of people renting out their actual homes but the point is that they do not represent very many of those two million nights - the two million nights that supposedly prove that Airbnb's unique angle - real people renting to other real people - is a moneymaker.
On closer observation, you will notice that of the many real people listed in a given city, you can look at their photos and read their endearing bios, but their beds are not actually available anywhere near as often as those offered by the pro landlords.
This is because they are real people with real lives - they listed their room because they figured it would be a handy way to make money and perhaps they even bought into Airbnb's charming message that it is an excellent way to meet good-looking hipsters from other countries but, whatever the initial motivation to list, people with real lives often find themselves too busy with real life to deal, right now, with fricking guests.
Also, when they do accept guests, it often doesn't turn out to be the sun-dappled cultural exchange that the Airbnb promotional video so artfully and persuasively suggests. So, very often, upon learning that accepting guests is less about receiving cheeky blowj*bs from stunning French models, and more about changing sheets besweated into by fat Greek geeks, a lot of the real people owners tend to drop out of the system by simply blocking off their calendars for months at a time.
So, the supposed point of Airbnb actually represents only a fraction of their actual bookings and perhaps you can see the longterm problem with that. As they reach greater scale, it becomes clear that, actually, the market there are depending upon, the bookings that are bringing in actual revenue, are not some virgin territory, exclusive to innovative Airbnb, but the same hard-bitten professional vacation rental landlords that all the other companies are chasing after.
Certainly, there is nothing there to justify a $1.3bn valuation and if you know anyone who is seriously considering sticking some of their savings into the Airbnb IPO, do them a favor and slap them to their senses.
Now, the second bomb fuse, happily fizzing away, lies in the essential difference between real people who are dabbling in rentals and those hard-bitten pro landlords: the pros know that, while most people are lovely, a regular percentage will surprise you by turning out to be complete scumbags. Pro landlords know this, they've experienced this and they accept it as an unfortunate but inevitable part of doing business.
Now, the real people owners, they aren't necessarily idiots but, certainly, compared to the pros they are sitting ducks. As yet, Airbnb has been fortunate to have been largely of interest to tech hipsters such as ourselves. As a general rule, such people are what is technically known in the industry as "nice", meaning they are unlikely to smash your toilet cistern while in a meth-induced frenzy. Unfortunately, as Airbnb grows and, more importantly, as word filters down to the criminal underclass that all these Macbook-owning fools are opening their doors to anyone, you are going to all sorts of interesting guests turning up and, inevitably, a good old-fashioned crime wave.
You are also going to see some rapes. I am sorry, I don't mean to be crude, but this is going to happen. If you look at Airbnb properties, you'll notice that they are selling the owner as much as the place. This is endearing and I have stayed with some lovely people, but I am always struck by how vulnerable young female owners are. Just for a moment, go to Airbnb and search for rooms within homes in any city. Look at a few and, in particular, take the time to look at the owners - read their charming bios, read the nice things that previous guests have said about them, click to enlarge their photos and admire their young, beautiful, trusting faces.
No, ask yourself this question: given that we know, for a fact, that there are some truly dangerous men out there. And given that we know that rapes occurs in every city, every day. Ask yourself, would you be happy if one of your sisters, needing a little extra dough to cover her mortgage, decided to start renting out a room in her apartment to a different stranger every night?
So, okay, I don't want to dwell too much on the awful implications, the all-too-likely disaster waiting to happen, so, let's think about it as investors - if just ONE person does get raped ... or .... if just one owner CLAIMS to have been raped ... what happens to Airbnb?
Well, obviously, it tarnishes the brand, that much is obvious but, more importantly, it effectively means that far fewer young women will continue to rent out rooms and, you'll notice, women in their twenties make up the majority of the real landlords. Even some who might be willing, themselves, to continue, they will be under tremendous pressure from their family and friends to quit.
So, suddenly, Airbnb's loincloth of real people landlords becomes far smaller and, suddenly, the difference between them and HomeAway is a lot less clear. Suddenly, the IPO become a much harder sell.
And that, my friends, is why Brian Chesky and Paul Graham have gone nuclear, because these two major flaws are slipping beyond their ability to control the story and, after so much hope, it is turning out that Airbnb might not be the next ebay after all, it might just be the next Pets.com.
