Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation
According to several sources Airbnb is in the process of closing a whopper of a funding round: $100 million or more at a $1 billion-plus valuation. The round is being lead by Andreessen Horowitz, and includes participation from DST, say our sources.
That’s a big increase from the company’s last funding round of $7.2 million, which included Sequoia Capital, Greylock, SV Angel, Ashton Kutcher and Youniversity Ventures (Kutcher broke the news that he’s an investor in AirBnB at TechCrunch Disrupt last week). The company, which launched via Y Combinator, has raised just $7.8 million to date.
No surprise, it was a hotly contested deal. The service has exploded, growing more than 800% last year and booking 1.6 million night stays in other people’s homes to date. On any given night in New York there are more people staying in homes via Airbnb than there are rooms in the biggest hotel in Manhattan.
Airbnb has become the sleeper hit of the startup world. It’s one of those companies plenty of well-heeled investors passed on in the early days, because they thought no one would want to open his or her home to strangers. Out of twenty angels he pitched in 2008, founder Brian Chesky said half didn’t return his emails and most of the others told him it was an awful idea. Even Paul Graham hated it, but he liked Chesky and backed him hoping he’d change the company. TechCrunch’s own hotel expert Paul Carr was a cynic too.
Now, the fear of missing another Airbnb is palpable in the Valley, and one of the reasons GetAround became the darling, audience choice and winner of our Disrupt conference this week.
Earlier in the week, I sat down with Airbnb founder Brian Chesky to talk about this reversal in fortune and how the business is going, although at the time we hadn’t heard the details of the deal he was busy negotiating. Check it out below.
Hi, I'm back stage with Brian Chesky, the founder of Airbnb. You guys have kind of been a sleeper hit. I mean you certainly didn't have the color fanfare when you launched.
Nope.
Or anything like that. Mike was just back here. He said he thought you were stupid. Paul wrote something nasty about you. There's Ron Konway waving. That they were stupid?
Are you live?
You are live. Alright, so no one really thought you guys were going to be as big as you have.
Absolutely not.
And I can tell you, the last couple of days, you guys have been the sort of example everyone keeps bringing up. One of the companies thats in the finals get around. Chris Saka said, "Oh this the Airbnb I could get. I passed on Airbnb. I thought it was stupid. I can't believe I passed on it". I mean the fact that people passed on you is dictating investment decision.
It's ridiculous.
Because it's seen as such a mistake.
That's ridiculous. When I first told my parents. They thought I was insane about this idea. Paul Graham, when we first met him in January 2009, he admitted he thought the idea was terrible.
Hm-mm.
And Paul Graham only invested in us, when he heard about the Obama O's story. And he figured, well these guys are like really creative, smart entrepreneurs; they'll probably change their idea. That's the only reason he invested in us, is he thought we were going to change ou idea; he hated it. And we met in the Fall of 2008, probably 15 or 20 Angels, and well, probably half of them didn't return my emails and the ones that did, no one wanted to invest in us.
Right.
It was just something that seemed like obviously a bad idea until one day it seemed like obviously a good idea. And I don't know when that tipped, I think it was just enough people doing it.
So what was the insight that you had that other people missed?
The insight we had was that we actually did it. The way this started is that I moved,--Joe, my co-founder, was living in San Francisco, and I was living in Los Angeles. I came up to San Francisco. We had to figure out a way to make rent. This international design conference is coming to San Francisco, all the hotels are sold out.
We were trying to figure out, how are we going to make rent? And Joe had some air beds in his closet. We pulled the air beds, and we decided we're going to create an "airbed and breakfast" one weekend, and it was only meant to make our rent. We ended up hosting three people. We made a bunch of money, and so I think the insight we gained was, we by accident, I guess you could say, did it ourselves, had an amazing experience.
And by then we realized, this is awesome, one day people all over the world are going to do this. I don't think we had the vision that people were going to be renting all the spaces and renting? We originally envisioned, like, kind of air beds, and like kind of budget. I was a little different vision.
Right. Well, it's fascinating because it tips so quickly, and usually when someone has this kind of story it takes a long time. It's also interesting because, you know, especially in the 90s when I first moved into Silicon Valley, founders would say exactly what you said. They have this story of, like, "Oh, you know, I did this, and then I saw these keys, and I realized I needed this special keyring." And it turned out it was all marketing.
Like the eBay Pez dispenser as the famous example. Is that really the real story or is that all marketing--
It's all real.
--that a PR person has come up with later?"
search in Google, "air, bed, and breakfast" because that was our original name. You will see an original blog post from like October 2007 when people kind of, in a half-jokingly way, are covering us in a blog, like, "couple designers doing this little thing" and it was a really slow launch.
It was like in 2008 we did South by Southwest. Then Erick Schonfeld had covered us in August of 2008. And even it was like still two years, or a year-and-a-half after that, that it took us to get to where we are. So it was a pretty long road. The story is pretty public. We've kind of gotten this market by accident.
And I certainly, I moved up to San Francisco to be an entrepreneur but I was an industrial designer in Los Angeles making physical products. So it was kind of serendipitous that we got into this space.
Now according to Mike, who just yelled this from the hallway, Ron Conway told him yesterday that you guys are on a $500 million dollar revenue runway.
I don't know where he heard that or I think he misunderstood. We haven't disclosed revenue but that's not the number for sure.
And it's lower, not higher?
It's not It's not, it's not higher you can confirm that Alright you guys another start I heard from our produce, John Orlean you guys books more rooms on Airbnb than there are hotel rooms in New York. Am I getting that right?
Tonight, in New York City, more people will stay on Airbnb than any hotel in New York City.
Got it.
We're not bigger than all the hotels combined.
An aggregate, but the biggest hotel. We're bigger than the biggest.How big is the biggest hotel?
I think it's got a thousand rooms and it's the Marriott or the Hilton, around Times Square. And so we have five thousand rooms, we have thousands of people stay with us, we've had as many as, I do not know. Maybe at new year's eve we had five or ten thousand people just in New York staying on Airbnb and there is no hotel that can accomplish that.
The really cool thing about Airbnb is there is literally an Airbnb in almost every block. I'm sure if we searched location, within a couple blocks of here there is probably one. So it's anywhere you go in the city there's basically an Airbnb No rests, no murders, no rape, you haven't craiglist moment yet.
You had 1.6 million nights books, and no one has been heard, there is been no reports. any major problems?
It's got to be coming though. It's got to be like hitchhiking in the 1960's where it's safe and rational and then it went horribly wrong.
1.6 million nights booked, I driven cars for, well, a shorter period of that, I've been in three car accidents. So, I'm going to say safe in the car. I have no idea.
Any tips for people on how to use AirBnB? You know Mark Zuckerberg always talks about the early days of facebook, that people were you know, people were adding all this people, and it's like no you just your real world connection. Do you see people who are using it, not the way it's intended or not getting the most out of it.
I think the number one thing is just adding a lot of information to your profile, especially if you have a listing, the thing that makes this work is that people knowing and like what they're getting, or who this person is that's coming to their place. And so if you're kind of like don't ever put your dog, if you're like don't have a complete listing.
That's not super productive or helpful but if you really just fill out all the information. We make it pretty easy now connecting to facebook import a lot of that. That's, I think, the key thing. That and just being super open-minded, and just remembering that when you're hosting people, you're kind of hosting people on behalf of, not just yourself, but your community.
And sometimes you're hosting people on behalf of your country because there are people who are staying with you who have never even been in the country before and you are their first impression.
Right .
The entire culture of the nations.
Southern manners, I grew up in Memphis, Tennessee, I like that.
Southern hospitality needs to have the pineapple representing hospitality in the south, so very much in that spirit.
According to several sources Airbnb is in the process of closing a whopper of a funding round: $100 million or more at a $1 billion-plus valuation. The round is being lead by Andreessen Horowitz, and includes participation from DST, say our sources.
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