Airbnb was created three years ago with a simple idea: Why not create a way for people to rent out spare rooms in their homes to travelers? Today, the scrappy little startup, a cornerstone in a booming sharing economy, nabbed a whopping $112 million investment from Andreessen Horowitz, DST, and General Catalyst. Andreessen General Partner Jeff Jordan, the former PayPal president who previously ran eBay North America, tells Fast Company why Airbnb is poised to change the way you and I travel--and help us make a little money on the side.
FAST COMPANY: What captured your interest about Airbnb, as opposed to the other players in this emerging field?
JEFF JORDAN: I’d never seen a business that reminded me more of eBay in the early days. eBay started with a core focus on the collector. At the time of its S-1, six or seven percent of its total sales were Beanie Babies. Airbnb started with “air bed and breakfast.” [Editors note: The company started when the founders offered to let strangers pay to crash on an air mattress in their San Francisco apartment.] In each case, the community of users started with the capability the company provided and took it aggressively into much broader and new verticals. In eBay’s case: Computers, sporting goods, apparel, and cars. In Airbnb’s case, it went from beds to apartments to houses to sublets to parking places to boats.
The other side of it is that they are growing like a weed. [They’ve sold] two million room nights already. It’s an impressive accomplishment.
What should we expect to see from Airbnb in the next year? The next three years? The next five years?
We’re not thinking five years yet. We’re thinking next week. It’s a fairly small company, being run by three founders, that has global ambitions. Job one is building out a management team. Brian [Chesky, CEO], Joe [Gebbia, Chief Product Officer], and Nate [Blecharczyk, CTO] are looking to build out a management team that can help them compete on a global basis.
Second is go global and to deepen the penetration in the United States. We have a good lead, but it’s dangerous to be complacent. [We’ll want to] look at the emulators and the great concepts that are around and try to “fast follow.” And if the company has global ambitions, it has to compete globally quickly. So the large round is largely to aggressively pursue the growth initiative on a global basis.
So is part of the idea behind the size of today’s investment essentially a land grab?
I’d phrase it differently. We think they’re off to a very impressive start, and they have a competitive lead. There are people who’ve been attracted by their momentum. We think a large round is very strategic to enable them to go as fast as they possibly can. The faster they go, the less opening they give for competitors [to catch up].
How is the world going to change for consumers as a result of Airbnb and everything it offers?
Airbnb consumers are overrepresented among young people and older people. Young people value a social way of travel. The hotel room is now perceived as sterile, boring, and depressing. The older travelers--I think it was Brian’s grandmother who said, “This is the way we used to travel all the time. You always stayed in people’s homes” (before the hotel business really kicked in).
On the business side, there are a whole bunch of hard assets that people have that can be monetized but that are challenging to monetize. Like boats and parking places.
So this is going to create new income streams for people, the way eBay created new income streams?
Absolutely. A guy had built a very elaborate tree house for his son. His son loved it, and then he went off to school and left. So now the guy has a very elaborate tree house in his back yard. He put it up on Airbnb. It sold out the rest of this year, and he’s paid off the mortgage on his real house from the proceeds from his tree house.
What did lessons did you learn from eBay that will help Airbnb win?
When we talk about the things at Airbnb that are challenging, and that they are going to have to overcome, the parallels with eBay are across the board. It’s community management. It’s making sure the marketplace is in balance--the right amount of buyers and sellers. It’s trying to avoid bad things from happening: the nightmare--which is highly infrequent, but it happens--when someone shows up and their reservation isn’t honored. We’re talking about what we need to do to avoid that. I’m hopeful that I can save them a few of the scars I developed over seven years at eBay.
VCs like to say they don’t invest in companies, they invest in teams. What impressed you about the Airbnb team?
What these guys have accomplished and how they’ve accomplished it strikes us as extraordinarily impressive. They took a little bit of money. They were incredibly scrappy every step of the way. During the 2008 Democratic National Convention, when hotel rooms were sold out in Denver, they tried to use that buzz to create awareness of Airbnb. They created collectible [cereal] boxes of President Obama and Mr. McCain and sold those boxes door-to-door to raise much needed money at the time. So there’s that, combined with huge vision. They think this is a company that will change the world.
What lessons should other startups draw from Airbnb’s experience?
If they’re other competitors, hopefully the lesson is: Stop. (Laughs)
These guys had a vision and just have been chasing it hard. And frankly, when I first heard the idea, just like when I first heard the idea for eBay, I was like, “Are you kidding? Stay in someone else’s house?” With eBay it was: “Send money to strangers?” But they believed in their vision. They chased it hard. It struck a chord, and it’s expanded rapidly. The biggest lesson for me is: If you have a belief in a vision, chase it.
Read More: The Sharing Economy