Airbnb’s IPO will also cause problems

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Airbnb’s return from a struggling company to a very hot first audience offer is one of the most extraordinary tech stories of the year. For investors, the San Francisco travel platform is now a way to bet on the world back to normal after the pandemic. But there is a problem that even a vaccine cannot solve. The more Airbnb grows, the more unhappy many key external groups become.

In fact, Airbnb is a perfect example of the conundrum faced by all businesses whose success places a burden on the entire community. Think of neighbors who live next door to popular Airbnb rental properties and complain about the noise of wheeled suitcases trundling back and forth. Or the small guesthouses and bed and breakfasts that have to compete with Airbnb prices while complying with regulations the tech company can bypass. Or city regulators who accuse Airbnb of pricing local buyers in favor of short-term vacation rentals.

Asking for forgiveness instead of permission, or neither, is the norm for an ambitious startup. But rambling ingenuity seems more sinister in a large corporation. As Airbnb wraps up its IPO – the busiest in a year of big deals – these third party fights should not be ignored.

Some fights were very close to home. Airbnb’s distinctive corporate headquarters are modeled after a number of popular announcements on the platform, meaning it’s packed with quirky wallpapers and comfy furnishings that are the epitome. Airbnb aesthetics.

But the design, conceived as a flattery, came across as creepy to some of its own hosts. A French couple were so upset that a head office of a multibillion-dollar tech company contained a replica of their home they said BuzzFeed they felt that Airbnb was “marking their business with our life”. Airbnb no longer copies homes without telling their owners.

The IPO is an opportunity for Airbnb to define itself more positively. Like many tech companies, it combines a cute origin story with gargantuan growth. What started as two tenants offering space on an air mattress has grown into the fourth largest accommodation company in the world, by number of rooms booked per night. He says his potential market is worth $ 3.4 billion.

the list of documents specify that Airbnb markets itself as a socially responsible company. He devotes large chunks of text to the work he does to “serve the communities in which we operate”.

Such signaling of virtue is important. When rideshare company Uber went public, it was fighting multiple regulatory fires, which weighed on the share price. Airbnb’s policy team, led by former Bill Clinton policy adviser Chris Lehane, attempted to resolve these issues prior to listing. As of October 2019, 70% of the 200 largest cities in which the company operates were regulated in one form or another.

Regulation can hinder growth. Registrations in San Francisco were cut in half after changes were made in 2018. But that can also reassure hosts and guests. Airbnb would have had more difficulty recovering from the first days of the pandemic if it had had fewer agreements with the cities.

So why Airbnb lose money? In the first nine months of 2020, it recorded a net loss of $ 697 million on revenue of $ 2.5 billion. As a platform, it shouldn’t be particularly expensive to operate: it doesn’t have a flying car unit to finance, for example. Yes, lockdowns have hit the travel industry: Airbnb’s $ 31 billion valuation was hit at $ 18 billion, and in May it laid off 25% of its workforce. Yet even before the pandemic, he made a loss.

The crisis seems to have imposed greater discipline. In addition, the speed of recovery was remarkable. Strong cost cuts and an increase in domestic bookings allowed Airbnb to post an unexpected profit in the third quarter. Analysts at stock research house Redburn believe it may soon beat Marriott and Expedia to become the second-largest accommodation company behind Booking.com.

Investors are likely to focus on this growth and not on recurring losses. But the costs will rise again if Airbnb starts promoting ancillary activities again. Then there is Jony iveApple’s former chief design officer has become an Airbnb employee. Its services, still unknown, will not be cheap.

This does not mean that the stock will be missed. Airbnb is a truly disruptive business that has unlocked additional income for homeowners and democratized vacation accommodation. But the float indicates that Airbnb is a maturing technology platform, with all of the network-to-scale advantages that this confers. Social consent for its activities is about to become as conditional as it is for the rest of Big Tech.

elaine.moore@ft.com

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