WEBVTT - Reservations About AirBnB 0:00:04.280 --> 0:00:07.200 Airbnb in the past ten years, they have had few 0:00:07.280 --> 0:00:10.399 reservations about giving the hotel industry a run for their money. 0:00:10.520 --> 0:00:13.240 But this company, which started as a way to inflate 0:00:13.280 --> 0:00:16.320 a couple of guys rent money, wasn't always the holiday 0:00:16.400 --> 0:00:19.400 it seems now. In fact, they had multiple failed launches 0:00:19.480 --> 0:00:21.959 and went from broke to broker in the beginning. But 0:00:22.040 --> 0:00:24.239 these founders weren't content just to lie in the bed 0:00:24.280 --> 0:00:27.000 they made. They wanted to jump on it. So let's 0:00:27.160 --> 0:00:29.480 get away and look at how this company went from 0:00:29.520 --> 0:00:33.320 the ground floor to the top bunk. It's Airbnb on 0:00:33.360 --> 0:00:47.200 the brink. So Ariel today we're talking about Airbnb. We are, 0:00:47.600 --> 0:00:51.440 and uh, you know, I'm a traveler. I've used Airbnb before, 0:00:51.479 --> 0:00:56.320 have you once? So we have both used Airbnb. Before 0:00:56.480 --> 0:01:00.120 this episode, I had not actually really looked in to 0:01:00.400 --> 0:01:03.960 the history of Airbnb because it was just it was 0:01:04.040 --> 0:01:06.280 part of the sharing economy. It kind of for me, 0:01:06.360 --> 0:01:11.679 got lumped in with Uber and other things that, to 0:01:11.880 --> 0:01:14.679 some degree or another tend to get lumped in with 0:01:14.680 --> 0:01:19.240 the shared economy. So let's talk about where this company 0:01:19.280 --> 0:01:23.840 came from. Who started Airbnb? Well, it was founded by 0:01:24.720 --> 0:01:31.360 Brian Chesky and Joe Gebbia and eventually another gentleman, Nathan Blackhard. 0:01:31.920 --> 0:01:33.800 I have no idea that's the right way of pronouncing. 0:01:33.880 --> 0:01:37.679 We were butchering his name, but good reliable Nathan Nathan 0:01:38.240 --> 0:01:40.760 back in two thousand and eight. But they actually had 0:01:40.760 --> 0:01:43.640 the idea like a year earlier. So airbnb is only 0:01:43.680 --> 0:01:46.480 about ten years old as of recording this episode. And 0:01:46.560 --> 0:01:51.560 the idea came out of necessity. So you had Joe 0:01:51.600 --> 0:01:55.760 and Brian who were living together an apartment in San Francisco, 0:01:55.920 --> 0:02:00.560 one of the most expensive places to live on the plan, yes, 0:02:00.960 --> 0:02:05.720 and they were struggling to make rent. And I'm sure 0:02:05.800 --> 0:02:07.960 that is a case that a lot of folks out 0:02:08.000 --> 0:02:10.960 there can identify with. So they came up with an 0:02:11.000 --> 0:02:13.960 idea sort of. This wasn't even a permanent solution. This 0:02:14.120 --> 0:02:17.640 was literally an opportunity in front of them. Yeah. In 0:02:17.680 --> 0:02:23.000 September seven, Joe emailed Brian because they're living together, and said, Hey, 0:02:23.080 --> 0:02:25.000 I thought of a way to make a few extra bucks. 0:02:25.160 --> 0:02:28.639 Let's buy some air mattresses and rent out. Are a 0:02:28.720 --> 0:02:31.480 little bit a loft to people who are coming in 0:02:31.560 --> 0:02:35.919 town for designers conference because hotels are getting kind of scarce. 0:02:35.960 --> 0:02:38.040 We can give them breakfast and maybe tore them around 0:02:38.080 --> 0:02:40.840 the city and um, make a few extra bucks for Yeah. 0:02:40.840 --> 0:02:42.640 In fact, that was the U r L airbed and 0:02:42.639 --> 0:02:46.600 breakfast dot com. And how much did it cost to 0:02:46.840 --> 0:02:50.560 stay on a air mattress in these guys apartment with 0:02:50.639 --> 0:02:53.720 breakfast and maybe touring of the city, don't forget a 0:02:53.840 --> 0:02:57.400 cost eighty dollars. Not bad for San Francisco, actually not 0:02:57.480 --> 0:03:01.440 at all. So then they had to go for one 0:03:01.480 --> 0:03:04.600 of the events that has become at least for a while, 0:03:04.639 --> 0:03:07.920 it was really really, really important, especially in the tech space. 0:03:08.600 --> 0:03:10.520 I don't know if I would argue it's just as 0:03:10.520 --> 0:03:12.919 important today as it was maybe a few years ago, 0:03:12.919 --> 0:03:15.880 but that would be south By Southwest, And so they 0:03:15.919 --> 0:03:20.320 decided this was a good spot to give it another shot. 0:03:20.760 --> 0:03:24.160 And how many people did they manage to land at 0:03:24.200 --> 0:03:28.919 that auspicious launch to customers and one of them was 0:03:28.960 --> 0:03:33.040 a founder was they really was kind of only one customer, um, 0:03:33.120 --> 0:03:35.560 but they did get, you know a little bit of 0:03:35.560 --> 0:03:37.880 good out of south By Southwest. They connected with the 0:03:37.960 --> 0:03:41.880 CEO of Justin TV, Michael Siebel, who kind of became 0:03:41.920 --> 0:03:44.360 their friend and helped advise them from that point on. 0:03:44.880 --> 0:03:48.760 Now they were looking at ways to perhaps attract more people. 0:03:48.800 --> 0:03:50.680 One of the things they were concerned with was that 0:03:51.120 --> 0:03:55.280 perhaps they had made the interface a little too complicated. 0:03:55.720 --> 0:03:59.480 And we've seen this over and over with user interfaces 0:03:59.520 --> 0:04:02.520 where it comes pies keep working to try and simplify that, 0:04:02.560 --> 0:04:06.400 to remove as many steps as possible, because the fewer 0:04:06.440 --> 0:04:09.040 steps you have, the more customers you tend to land. 0:04:09.040 --> 0:04:11.360 I mean, that's why Amazon has that buy it with 0:04:11.400 --> 0:04:14.840 one click button. So they did a kind of a 0:04:14.880 --> 0:04:19.800 redesign there, and how many like this, Like they just 0:04:19.880 --> 0:04:22.000 keep asking me all of this trivia about what I've 0:04:22.000 --> 0:04:25.599 written because because you wrote it, because you wrote it, 0:04:26.880 --> 0:04:32.240 how many people per day We're we're visiting the site, um, 0:04:33.080 --> 0:04:35.640 about fifty people a day, and that's not great. It's 0:04:35.680 --> 0:04:38.000 not great. And out of those fifty people, they're only 0:04:38.040 --> 0:04:44.039 getting right. So this is clearly very slow starter. And 0:04:44.040 --> 0:04:45.800 and in fact, I think a lot of people at 0:04:45.800 --> 0:04:49.640 this point probably would say we're gonna pull up stakes 0:04:49.680 --> 0:04:54.080 before it gets we're too deep. But um, these folks didn't. 0:04:54.240 --> 0:04:57.000 They took their tool I was not doing well and 0:04:57.040 --> 0:04:59.760 brought it to fifteen investors and out of those fifteen 0:05:00.000 --> 0:05:03.320 they got eight rejections. Okay, and then the rest just 0:05:03.360 --> 0:05:07.120 didn't respond to them. Yeah. Yeah, And all this time, 0:05:07.160 --> 0:05:08.920 you know, they're trying to keep their business running. They 0:05:08.960 --> 0:05:12.360 really believe in this idea. But now they're in debt 0:05:12.440 --> 0:05:16.200 and they're broke. Yeah. Brian had built up about twenty 0:05:16.240 --> 0:05:19.640 five thousand dollars in credit card debt. Yeah, and I've 0:05:19.680 --> 0:05:21.800 I've read some accounts that said Joe had about the 0:05:21.800 --> 0:05:23.840 same and other accounts where they said they only had 0:05:23.839 --> 0:05:25.520 like thirty candid But it's still a lot of debt 0:05:25.520 --> 0:05:27.520 if you don't have money and you're struggling to make rent. 0:05:27.640 --> 0:05:30.640 They said that they had binders like the kind you 0:05:30.680 --> 0:05:34.040 would collect baseball cards in, except they were filled with 0:05:34.120 --> 0:05:38.279 credit cards. Yeah. Yeah, but they still they still did 0:05:38.320 --> 0:05:41.479 not give up there, like the little engine that could. Yeah. 0:05:41.720 --> 0:05:46.359 So they decide to try for another big event. So 0:05:46.520 --> 0:05:49.320 this particular event that they were looking at was the 0:05:49.400 --> 0:05:55.200 Democratic National Convention, another huge event, and they launched a 0:05:55.279 --> 0:05:59.760 new website in line with the two thousand eight DNC 0:06:00.800 --> 0:06:04.280 and they got eighty bookings out of it, you know, 0:06:04.760 --> 0:06:07.400 is a little bit of an improvement. Yeah. And then 0:06:07.440 --> 0:06:11.040 they had a crazy marketing idea they did. They bought 0:06:11.040 --> 0:06:16.240 a bunch of really cheap Cereal, and they had a 0:06:16.240 --> 0:06:22.520 friend print up a bunch of cereal boxes. And these 0:06:22.520 --> 0:06:26.120 cereal boxes were filled with the really cheap cereal. But 0:06:26.160 --> 0:06:33.440 the boxes themselves said Obamas and Kata McCain's to kind 0:06:33.440 --> 0:06:35.760 of play to the people who are at the d 0:06:35.880 --> 0:06:38.760 n C. And then they put their company info on 0:06:38.800 --> 0:06:40.560 it as well, and then a number. Because these were 0:06:40.600 --> 0:06:43.800 limited edition boxes, they could only afford to make, you know, 0:06:43.960 --> 0:06:46.479 so many of them. Yeah, And they ended up selling 0:06:46.520 --> 0:06:50.720 them for forty dollars each. Yes. And the crazy thing 0:06:50.800 --> 0:06:55.640 is Obama Ow's sold out. It was a prediction, I 0:06:55.680 --> 0:06:59.400 guess for the Yeah. Yeah, kept mckaines didn't sell out, 0:06:59.680 --> 0:07:03.040 which is actually good for them. We'll get to that point. Um. 0:07:03.080 --> 0:07:06.520 But they raced around thirty dollars um and they put 0:07:06.520 --> 0:07:08.680 it back in the company to pay off debt. They 0:07:08.720 --> 0:07:11.560 had only made like five k by this time, like 0:07:11.560 --> 0:07:16.560 five dollars, yes, So they were not making enough money 0:07:16.640 --> 0:07:20.200 to pay their day to day living costs. So so 0:07:20.280 --> 0:07:24.040 Nathan said, buy you guys, peace, he says, And so yeah, 0:07:24.120 --> 0:07:27.000 we're talking. They're still in debt. They had paid off 0:07:27.040 --> 0:07:28.800 some of it, but they were still they still had 0:07:29.080 --> 0:07:31.600 a good amount of debt going. They were not making 0:07:31.720 --> 0:07:35.080 enough revenue to pay their living costs. And remember this 0:07:35.120 --> 0:07:38.320 all started off as a way to try and pay 0:07:38.360 --> 0:07:41.360 off rent. Yes, so they were not even making enough 0:07:41.400 --> 0:07:44.360 to buy food. They were living off of leftover dry 0:07:44.440 --> 0:07:49.320 McCain cereal. They wouldn't even buy milk, Yeah, just just 0:07:49.400 --> 0:07:53.400 crunching on druy crunchy McCain. I did that the other day. 0:07:53.400 --> 0:07:55.960 I made a bowl of Simantos crunch in the morning 0:07:55.960 --> 0:07:57.560 and then found out we didn't have milk. And that 0:07:57.640 --> 0:08:00.520 was a sad, sad experience. It is. That's because you've 0:08:00.520 --> 0:08:04.560 already committed, you've gone from box to bowl and yet yeah, 0:08:04.720 --> 0:08:08.239 and you know, I've been there. I've tried to put 0:08:08.240 --> 0:08:10.880 the cereal back into the box and it never goes well. 0:08:11.520 --> 0:08:15.040 So these guys they had a choice. Did they continue 0:08:15.040 --> 0:08:17.360 forward or did they try to put the cereal in 0:08:17.440 --> 0:08:21.320 the box? Well will? I mean, you already know because 0:08:21.360 --> 0:08:22.960 their B and B still a thing. But we're going 0:08:23.000 --> 0:08:25.160 to explain how that happened in just a moment. But first, 0:08:25.240 --> 0:08:38.640 let's take a quick break to thank our sponsor. Okay, 0:08:38.679 --> 0:08:43.559 so we've got our co founders living off of leftover 0:08:44.160 --> 0:08:49.760 marketing materials and still struggling to make ends meet. What 0:08:49.920 --> 0:08:53.800 comes next? All right, so you know they're they're still 0:08:53.800 --> 0:08:56.280 not giving up. And their friend Michael Siebel, who they 0:08:56.280 --> 0:08:59.839 met at south By Southwest from Justin TV, said, you 0:09:00.000 --> 0:09:03.840 guys should join the Y Combinator. Yeah. That's the incubator 0:09:03.960 --> 0:09:10.239 company that helps startups and it typically connects the entrepreneurs 0:09:10.240 --> 0:09:14.920 who have founded a business with potential investors. Yes and uh. 0:09:15.000 --> 0:09:17.080 He even went as far as to call it Paul Graham, 0:09:17.120 --> 0:09:20.240 the founder of the Y Combinator, to have him extend 0:09:20.280 --> 0:09:23.640 the deadline for them to apply because it had just passed. 0:09:24.360 --> 0:09:28.080 But Brian and Joe didn't really want to because they 0:09:28.120 --> 0:09:34.800 had some customers and they had already launched or five times. 0:09:34.840 --> 0:09:38.240 But they did. They did, and good old reliable Nathan 0:09:38.720 --> 0:09:43.079 comes back out to join them for the big pitch. Yeah. Yeah, 0:09:43.160 --> 0:09:49.800 and their interview did not go super well. Um and 0:09:49.800 --> 0:09:51.679 and in fact, Joe wanted to pack some of their 0:09:51.720 --> 0:09:53.600 Capta McCain's with him, and the guys are like, no, 0:09:53.720 --> 0:09:55.440 don't do that. You've just got to give your pitch 0:09:55.480 --> 0:09:58.200 at Y Combinator. You just have to give your pitch, 0:09:58.240 --> 0:10:00.840 no presentation. Yeah, you're not supposed to have any other 0:10:00.880 --> 0:10:04.360 materials that could possibly sway somebody, but he snuck it 0:10:04.400 --> 0:10:07.680 in and when their presentation didn't go well, he gave 0:10:08.480 --> 0:10:11.559 the cereal to Paul, and Paul realized that these these 0:10:11.600 --> 0:10:13.839 boys just don't give up, and he said that if 0:10:13.880 --> 0:10:18.640 you can convince somebody to fork over forty dollars for 0:10:18.800 --> 0:10:23.600 some cheap cereal, maybe you can make this work. Yeah. Yeah, 0:10:23.840 --> 0:10:27.360 So there's another thing about y combinator. Once you're given 0:10:27.400 --> 0:10:30.520 an offer to join, you have to accept it right away. Yeah, 0:10:30.559 --> 0:10:34.240 there's no deliberating. And so they're on their way back 0:10:34.280 --> 0:10:37.480 home to San Francisco when they get that call and 0:10:37.520 --> 0:10:39.400 they have to make the decision do they go with 0:10:39.440 --> 0:10:42.440 it or do they decide to try and strike out, 0:10:42.920 --> 0:10:45.719 keep going at it on their own. Yes, And they 0:10:45.720 --> 0:10:49.040 actually lost connection with the call on the way and 0:10:49.080 --> 0:10:51.000 had to get the call back, but they did accept 0:10:51.360 --> 0:10:55.120 and they received twenty dollars seed money for joining, and 0:10:55.160 --> 0:10:57.840 then they got Nathan to rejoin the company. So the 0:10:57.840 --> 0:11:00.800 three amigos are back again. And then uh in two 0:11:00.800 --> 0:11:07.280 thousand nine, they were still working on making, you know, 0:11:07.320 --> 0:11:11.760 adjustments to Airbnb or what would become Airbnb. They had 0:11:11.760 --> 0:11:14.560 that twenty dollars of seed funding, which is really not 0:11:14.720 --> 0:11:17.520 that much when you look at some of the initial 0:11:17.600 --> 0:11:21.199 seed investments in companies. Yeah, but it's more than they 0:11:21.240 --> 0:11:24.440 had been making by a substantial amount. They kept on 0:11:24.559 --> 0:11:27.600 looking for more investors. They kept finding a lot of 0:11:27.679 --> 0:11:30.920 closed doors in the way. Yes, people kept getting hung 0:11:30.960 --> 0:11:34.360 up on the name airbed and Breakfast, which I don't 0:11:34.480 --> 0:11:37.520 blame them. Yeah. They also looked for ways to make 0:11:37.559 --> 0:11:42.079 the service more attractive, like literally look more attractive. Yes. Yes, 0:11:42.280 --> 0:11:46.280 Paul had told them to go and visit their clients. 0:11:46.280 --> 0:11:50.440 So the people who are posting available spaces, available spaces, 0:11:50.600 --> 0:11:54.200 they're known as hosts in the airbnb speak. Yes, and 0:11:54.240 --> 0:11:57.400 he told them to go visit these hosts, take professional 0:11:57.440 --> 0:12:00.200 pictures of their homes. Yeah, not just those little cell 0:12:00.240 --> 0:12:02.520 phone images that were popping up. Remember this is also 0:12:02.960 --> 0:12:06.079 in two thousand nine when the cameras on cell phones 0:12:06.160 --> 0:12:08.360 were not as good as they are today. Yeah, and 0:12:08.559 --> 0:12:10.200 you know, get to know these people one by one, 0:12:10.800 --> 0:12:14.880 make reviews of their home, get feedback from them. So 0:12:14.960 --> 0:12:17.040 they did. They went in and they took quote unquote 0:12:17.040 --> 0:12:22.199 professional pictures of all these homes and rooms and rooms 0:12:22.640 --> 0:12:25.120 and posted them and made everybody's profiles that they could 0:12:25.120 --> 0:12:29.360 look much better now. This actually did have an effect. 0:12:29.679 --> 0:12:33.120 They actually saw an increase in bookings and they doubled 0:12:33.240 --> 0:12:36.560 their revenues, which sounds impressive until you know how much 0:12:36.559 --> 0:12:40.400 they were making to start with four hundred dollars a week. Yeah, 0:12:40.559 --> 0:12:42.920 and that was the doubled amount. Previously they had been 0:12:42.960 --> 0:12:47.080 making two hundred dollars a week, so between three people, 0:12:47.240 --> 0:12:51.960 four dollars a week. Not a runaway success yet, but 0:12:52.080 --> 0:12:55.720 they were still determined to give this as hard a 0:12:55.720 --> 0:12:58.880 shot as they could, and it was in March of 0:12:58.960 --> 0:13:02.760 two thousand nine that they finally changed that name of 0:13:02.800 --> 0:13:07.000 air bed and Breakfast to Airbnb, and that helped a 0:13:07.080 --> 0:13:12.480 little bit. And then they also started to include the 0:13:12.520 --> 0:13:16.679 ability to do vacation rentals through Airbnb, yes, whole apartments 0:13:16.679 --> 0:13:19.760 and houses and the like. And then in April two nine, 0:13:19.760 --> 0:13:22.719 these changes really paid off because they got an investor 0:13:23.320 --> 0:13:26.880 in Sequoia Capital, who gave them six hundred thousand dollars 0:13:26.880 --> 0:13:30.800 of startup money, right, and finally they were able to 0:13:31.080 --> 0:13:35.560 really push for a good start up. There was also 0:13:35.640 --> 0:13:38.839 another thing that happened around then. The recession that had hit. 0:13:38.880 --> 0:13:42.200 The economic recession was starting to finally kind of we're 0:13:42.280 --> 0:13:44.320 coming out of that. So that helped them as well. 0:13:44.480 --> 0:13:47.680 You had people who suddenly felt like they could afford 0:13:47.760 --> 0:13:50.120 to go on trips, yes, and they had a cheaper 0:13:50.120 --> 0:13:53.360 way to do so. Yeah. So the thing to remember 0:13:53.400 --> 0:13:57.120 about airbnb the thing that the value proposition right, because 0:13:57.760 --> 0:14:00.520 you sit there and you think about the service that 0:14:00.880 --> 0:14:05.000 Airbnb actually does, because you think, well, the hosts own 0:14:05.080 --> 0:14:09.560 the property, right, they're renting it out. The guests are 0:14:09.600 --> 0:14:13.240 the ones handing over money to rent that property. So 0:14:13.320 --> 0:14:16.400 where does Airbnb come in. Well, they act as the 0:14:16.480 --> 0:14:20.280 platform for the hosts, and they elevate that property so 0:14:20.320 --> 0:14:22.960 that more people can see it. And that's where the 0:14:23.040 --> 0:14:25.440 real value is. Because obviously, if you wanted to just 0:14:25.520 --> 0:14:28.680 put up a room for rent, then you were doing 0:14:28.720 --> 0:14:33.040 it in some either like local papers or Craigslist or 0:14:33.120 --> 0:14:37.920 some other service. It might be hard to discover your property. 0:14:38.440 --> 0:14:42.080 So this was something that once it caught on, people 0:14:42.200 --> 0:14:44.720 really saw the value. So as a host, it was 0:14:44.800 --> 0:14:49.440 valuable because more people saw the potential rental property. As 0:14:49.520 --> 0:14:52.560 a customer, as a traveler, it was valuable because now 0:14:52.600 --> 0:14:55.280 you suddenly saw what your options were in the city 0:14:55.280 --> 0:14:58.640 you were traveling to, and you suddenly could say all right, well, 0:14:58.680 --> 0:15:00.520 we don't have to stay in a hotel. There's house 0:15:00.880 --> 0:15:02.800 and it's really close to the places we want to 0:15:02.800 --> 0:15:05.520 go to, and it's cheaper. Let's stay there instead. Yeah, 0:15:06.000 --> 0:15:08.800 and this is good because it meant that Brian and 0:15:08.880 --> 0:15:11.520 Joe and Nathan could now pay their own living expenses. 0:15:12.160 --> 0:15:16.800 So comes around and the company is on the rise. 0:15:16.960 --> 0:15:20.480 It's it's now getting more widespread adoption, helped in no 0:15:20.680 --> 0:15:23.640 small part by the fact that they were able to 0:15:23.680 --> 0:15:28.320 get an app in the iPhone App Store, which was 0:15:28.600 --> 0:15:32.000 pretty brand new in like that the brand, the app Store, 0:15:32.040 --> 0:15:35.560 I think launched in two thousand eight, late two thousand eight, 0:15:35.640 --> 0:15:38.480 so this was not too long after the apps were 0:15:38.520 --> 0:15:41.440 first available. Yes, And then in two thousand eleven they 0:15:41.520 --> 0:15:45.120 hit one million nights booked. Not bad, No, and they 0:15:45.120 --> 0:15:47.440 were in eighty nine countries, which is also not bad. 0:15:47.640 --> 0:15:49.920 They went back to south By Southwest, Yes, where they 0:15:49.920 --> 0:15:53.960 won the Breakout Mobile App Award, And they also were 0:15:54.000 --> 0:15:57.560 able to land more investment money, and it was this 0:15:57.600 --> 0:16:01.760 time princely sum. Indeed, before it was six dollars, this 0:16:01.800 --> 0:16:07.160 time one million dollars, which bumped their value to one 0:16:07.240 --> 0:16:11.960 billion dollars, approximately a billion dollar company. This to me 0:16:12.800 --> 0:16:15.400 is one of the most phenomenal stories I've heard. You know, 0:16:15.440 --> 0:16:19.239 we talk in business about the concept of the unicorn. 0:16:19.320 --> 0:16:22.240 That's the startup, the billion dollar startup. You know, it 0:16:22.280 --> 0:16:24.640 took a couple of years. But when you again, when 0:16:24.640 --> 0:16:30.120 you go to barely able to stay out of debt 0:16:30.440 --> 0:16:33.120 to a billion dollar company in that short amount of time, 0:16:33.200 --> 0:16:36.280 it is a phenomenal story. Yeah. Yeah, then you're not 0:16:36.320 --> 0:16:39.640 necessarily make believe unicorn, You're in normal Yeah. And and 0:16:39.680 --> 0:16:43.280 in May two thousand eleven, Airbnb got a celebrity investor. 0:16:43.800 --> 0:16:47.600 That's when actor Ashton Kutcher would invest what was called 0:16:47.800 --> 0:16:51.400 a significant amount of money in the company and was 0:16:51.480 --> 0:16:55.480 named a strategic advisor. Um. Not many people realize this, 0:16:55.560 --> 0:16:59.720 but Kutcher is known for his investments in the business world. 0:16:59.760 --> 0:17:03.480 He's actually, from what I understand, not just business savvy, 0:17:03.520 --> 0:17:06.520 but very tech savvy as well. And he saw the 0:17:06.600 --> 0:17:09.320 value in this and he decided to also invest at 0:17:09.359 --> 0:17:11.479 this time. Yes. And then in two thousand twelve, they 0:17:11.480 --> 0:17:14.399 did something really good for the people who host on 0:17:14.440 --> 0:17:17.679 their site. They implemented a host coverage policy called a 0:17:17.680 --> 0:17:21.200 host guarantee. But they did this because the people who 0:17:21.200 --> 0:17:25.040 were releasing their their space. We're having issues. Some of 0:17:25.040 --> 0:17:28.439 the renters were trashing their location. Yeah, they would have 0:17:28.600 --> 0:17:30.960 like they would rent out an Airbnb and then throw 0:17:31.000 --> 0:17:34.800 a wild party in there yeah yeah, or in some 0:17:34.880 --> 0:17:40.320 cases use it for a brothel. Yeah, there were questionable uses, 0:17:40.400 --> 0:17:44.679 and Airbnb, in an effort to try and make sure 0:17:45.400 --> 0:17:49.199 that it was heading off any potential lawsuits or liability issues, 0:17:49.920 --> 0:17:53.640 creates this policy which is now essentially an insurance policy 0:17:53.760 --> 0:17:59.120 of like a million dollar insurance policy to protect the 0:17:59.160 --> 0:18:03.560 property of homeowners and hosts. Although there are a lot 0:18:03.560 --> 0:18:06.440 of qualifiers on that policy, so it's not like it's 0:18:07.080 --> 0:18:10.119 cart blaunch and though it's cash, art and pets are 0:18:10.160 --> 0:18:13.000 not covered, yeah, and and common areas are not covered, 0:18:13.280 --> 0:18:15.800 so it's not like it's, you know, you find a 0:18:15.840 --> 0:18:18.840 scratch on a table and suddenly you get a million 0:18:18.880 --> 0:18:21.080 dollars and normal wearing tear is not covered. And they 0:18:21.119 --> 0:18:23.320 do encourage you to try to work it out with 0:18:23.359 --> 0:18:26.040 the person who leases your space first. Um. But they 0:18:26.080 --> 0:18:31.200 also instituted our support logistic teams, compliance teams, and local 0:18:31.240 --> 0:18:33.879 area teams. And this is because they didn't really have 0:18:33.960 --> 0:18:37.000 a company structure. Yeah, they kind of just did everything 0:18:37.280 --> 0:18:39.679 as they could themselves, and then when they couldn't anymore, 0:18:39.680 --> 0:18:42.760 they'd hire more people in, but there wasn't great communication 0:18:43.359 --> 0:18:46.359 or plans or this is what this is sometimes what 0:18:46.480 --> 0:18:48.680 happens when you've got like a small group of people 0:18:48.720 --> 0:18:50.960 who come up with an idea and then it grows 0:18:51.040 --> 0:18:54.400 exponentially very quickly, like you might have an idea that's 0:18:54.520 --> 0:18:58.120 easy to launch but difficult to maintain once it gets 0:18:58.200 --> 0:19:01.000 up to a certain scale. So they began to invest 0:19:01.040 --> 0:19:05.239 in the business and start to build out teams for 0:19:05.400 --> 0:19:09.560 leadership in order to actually be good stewards of the 0:19:09.600 --> 0:19:12.080 business and help it grow in a way that was sustainable. 0:19:12.320 --> 0:19:15.160 Yes um. And then also in two thousand and twelve, 0:19:15.680 --> 0:19:18.480 they added wish lists for places you want to stay, 0:19:18.480 --> 0:19:20.840 so if you're looking around on Airbnb and popping around, 0:19:21.400 --> 0:19:23.800 you can see, oh, there's this really cool place that 0:19:23.960 --> 0:19:25.480 I want to go and put it on your wish 0:19:25.480 --> 0:19:28.280 list UM to go in the future. And they helped 0:19:28.280 --> 0:19:31.320 with Hurricane Sandy. They worked with the State of New 0:19:31.400 --> 0:19:34.640 York to provide a disaster relief tool where people could 0:19:35.280 --> 0:19:37.600 basically give their space for free to people who are 0:19:37.760 --> 0:19:40.679 escaping the hurricane, saying I have space available if you 0:19:40.720 --> 0:19:43.359 need a place to stay, which happened this year with 0:19:43.440 --> 0:19:45.679 Hurricane Florence as well. Yeah, we got a little bit 0:19:45.720 --> 0:19:48.000 more to talk about with Airbnb, but we'll do that 0:19:48.119 --> 0:20:01.240 right after we come back from this break for our sponsor. Okay. 0:20:01.359 --> 0:20:03.560 So they're starting to come across some problems as their 0:20:03.560 --> 0:20:08.199 business grows, as all businesses do, growing pains, um And 0:20:08.240 --> 0:20:10.800 now they start running into this new problem and it's 0:20:10.840 --> 0:20:13.840 one that they're still struggling with today. They start coming 0:20:13.840 --> 0:20:18.840 against rental regulations cities and states and countries. We're having 0:20:18.880 --> 0:20:23.240 issues with people renting out their personal homes and apartments 0:20:24.560 --> 0:20:28.760 because it was conflicting with rental laws in that area 0:20:28.960 --> 0:20:32.080 and hotel laws, um. And some hosts are even getting 0:20:32.080 --> 0:20:35.800 evicted for using their residences as Airbnb destinations. Yeah. So 0:20:36.160 --> 0:20:39.679 you know, you also had established industries like the hospitality 0:20:39.680 --> 0:20:43.760 industry and various cities can be very very powerful, and 0:20:44.080 --> 0:20:46.800 there are regulations there for a reason. They're there to 0:20:46.920 --> 0:20:52.880 protect people from predatory business practices. It's it's the reason 0:20:53.000 --> 0:20:56.080 that the regulations are there are because without them there, 0:20:56.160 --> 0:20:59.760 people can get harmed in some way, whether it's financially, 0:20:59.840 --> 0:21:03.680 the sly, whatever it may be. And Airbnb was appearing 0:21:03.720 --> 0:21:07.040 to sidestep that, and some people were taking advantage of it. So, 0:21:07.359 --> 0:21:11.200 for example, if I happen to own a building that's 0:21:11.240 --> 0:21:16.520 filled with apartments and I'm collecting two thousand dollars per 0:21:16.560 --> 0:21:20.080 apartment per month, but I could rent out each of 0:21:20.119 --> 0:21:24.080 those rooms for two hundred bucks a night, then suddenly, 0:21:24.160 --> 0:21:27.000 economically it makes way more sense for me to clear 0:21:27.040 --> 0:21:31.720 out that building and operate it as a hotel, essentially 0:21:31.800 --> 0:21:35.840 using Airbnb as my front end, because even after they 0:21:35.880 --> 0:21:38.639 take their cut, I'm still going to make more money 0:21:38.640 --> 0:21:41.840 than I would as a landlord. And that was a 0:21:41.880 --> 0:21:45.480 big fear was that there were landlords who were doing 0:21:45.520 --> 0:21:49.280 something similar. Maybe it's not a full apartment building, maybe 0:21:49.280 --> 0:21:54.480 it's a duplex house that has multiple apartments built into it, 0:21:55.160 --> 0:21:59.240 and that became a big concern, and hotels were saying, hey, 0:21:59.240 --> 0:22:02.640 this isn't fair. They're they're not held to the same 0:22:02.680 --> 0:22:07.359 regulations that we are. They're undercutting our business. We have 0:22:07.480 --> 0:22:12.240 to still adhere to the regulations and they're doing the 0:22:12.280 --> 0:22:14.320 same thing we're doing. It's just that they don't have 0:22:14.359 --> 0:22:16.399 to play by the same rules. And they're also saying, hey, 0:22:16.440 --> 0:22:18.480 they're cutting into your tax money because they're not paying 0:22:18.520 --> 0:22:21.160 taxes on this. Yeah. So this this is also something 0:22:21.160 --> 0:22:23.720 that we see in general in the sharing economy as well, 0:22:23.760 --> 0:22:27.760 Like we've seen this with Uber and lift and taxis yeah, yeah, 0:22:27.800 --> 0:22:32.040 and limited limousine companies as well. So we're still seeing 0:22:32.080 --> 0:22:36.520 that kind of shake out. And this is a really 0:22:36.560 --> 0:22:40.480 complicated issue. It is because it's not like there's a 0:22:40.520 --> 0:22:45.080 blanket response for every incident. Every city is different, countries 0:22:45.119 --> 0:22:48.520 are different. Yeah, some some city states and countries welcome 0:22:48.680 --> 0:22:51.960 Airbnb and others say, oh, please know you're hurting our economy. 0:22:52.800 --> 0:22:56.280 And I think Airbnb is a very valuable service. I 0:22:56.320 --> 0:22:58.399 can also see the point of view of some of 0:22:58.440 --> 0:23:02.959 the critics. Not all the critics are regulatory agencies. Sometimes 0:23:03.160 --> 0:23:06.280 it's people who live in certain neighborhoods, right, they're saying 0:23:06.320 --> 0:23:09.360 that it's gentrifying their neighborhood or taking up all their parking, 0:23:09.480 --> 0:23:12.480 or is just too loud, yeah, or they don't know 0:23:12.520 --> 0:23:15.560 who's living next to them, and and things are driving 0:23:15.640 --> 0:23:19.080 up the price of living in some areas, and that 0:23:19.080 --> 0:23:22.240 that which goes in with your gentrification that you were saying, like, 0:23:22.320 --> 0:23:24.960 that's you know, we've seen that happen here in Atlanta 0:23:25.040 --> 0:23:29.120 quite a bit, where we've seen whole neighborhoods that get 0:23:29.160 --> 0:23:31.280 transformed to the point where the people who are living 0:23:31.280 --> 0:23:34.399 there can't afford to live there anymore. And uh, and 0:23:34.440 --> 0:23:37.720 while there are benefits to gentrification, you have to look 0:23:37.800 --> 0:23:41.000 at all the consequences, not just the good ones. Yeah, 0:23:41.800 --> 0:23:44.760 they've started some worldwide home sharing clubs so that the 0:23:44.840 --> 0:23:46.480 people who are sharing their homes and the people in 0:23:46.480 --> 0:23:49.480 the community can get involved and help find these solutions. 0:23:49.880 --> 0:23:53.919 They've also put into their company fees to collect hotel 0:23:53.960 --> 0:23:56.439 taxes in the in the cities like San Francisco and 0:23:56.480 --> 0:24:01.240 Portland where that is required. So that's currently where they are. 0:24:01.880 --> 0:24:04.439