In this Company episode of The Synopsis we draw on our 108-page research report on Airbnb; the company that pioneered the sharing economy and become a Silicon Valley poster child for what a succesful start-up can become.
Having started as a means to pay rent, Airbnb quickly turned into one of the world's largest accommodations provider. In a matter of just a decade, Airbnb was able to host more guests than Hilton could in 100 years. However, despite their large impact in how tens of millions of people traveled and millions more monetized their unused properties, they struggled for years to turn a profit. That is until founder Brian Chesky decided to do something drastic and reshape the business—in the midst of Covid no less. In the matter of just a few years he took the business from losing $4bn a year to generating $3bn annually in free cash flow. With Airbnb having a firm grasp on the Alternative Accommodations segment, they are preparing to enter into new businesses and new verticals. Tune in for all of this and more!
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Mentioned Speedwell Memos:
Minimum Viable Products versus Maximum Possible Products
Introducing the Piton Network Concept
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Show Notes
(0:00) — Airbnb Intro
Section 1: Business History
(5:33) — From RISD to SF
(19:05) — Cereal Boxes, Y Combinator
(34:12) — Early Airbnb Experience, Competitors, International
(43:10) — First Disaster
(47:21) — Toshi Hotels, Regulation
(52:50) — Covid, Pulling the IPO
(1:01:50) — IPO
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Section 2: Industry and TAM
(1:05:27) — Business, How do they Make Money?
(1:18:13) — Experiences
(1:22:31) — Margins and Cost Structure
(1:25:26) — TAM Discussion
(1:39:21) — Categories of Competition
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Section 3: Competitors and Competitive Differentiation
(1:42:16) — Booking Competition
(1:52:21) — Merchant vs Agent Business Model, OTAs
(2:02:17) — Booking’s Alternative Accommodation Push, Booking vs Airbnb
(2:12:25) — Expedia, VRBO
(2:25:47) — Other Competitors
(2:30:47) — Comparing all Competitors, Network Effects, Differentiation
(2:45:26) — Competitive Advantages
(2:54:28) — Airbnb Negatives
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Section 4: Other Bets, Capital Allocation, Valuation
(2:58:33) — New Services, Super App
(3:13:25) — ROIC and Free Cash Flow
(3:20:04) — Capital Allocation, Stock Awards
(3:27:44) — Growth Drivers
(3:35:42) — Valuation
(3:37:11) — Risks and Conclusion
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Disclaimer
Nothing in this podcast is investment advice nor should be construed as such. Contributors to the podcast may own securities discussed. Furthermore, accounts contributors advise on may also have positions in companies discussed. At the time of recording contributors had a position in Airbnb. Furthermore, accounts contributors advise on also may have a position in Airbnb. This may change without notice. Please see our full disclaimers here: https://speedwellresearch.com/disclaimer/
The Synopsis 