Airbnb has just raised $850 million in new funding, valuing the business at £30 billion. It is the world’s fourth most valuable private company, behind Uber, Xiaomi, and Didi Chuxing.
Yet Airbnb was only founded in 2008, not that such a recent birth is that unusual for the big unquoted firms.
Truth is though, to a traditional player in the accommodation business, the Airbnb model seemed destined to fail.
For one thing, there was regulation, how would it get around that? For another thing, there was this business of staying in a strangers’ home.
You can see why a large hotel chain, or a travel company, might say of Airbnb: “destined to fail.”
Airbnb is not the biggest travel company in the world by market cap, the Priceline Group is valued at $72 billion, Las Vegas Sands at $50 billion, but the biggest of the hotel chains is Hilton Worldwide, valued at $24 billion.
So the Airbnb model may have seemed crazy, but who is laughing maniacally now?
Part of it success lies with the importance of peer-to-peer. Sure, staying in a stranger’s home can seem risky, but peer-to-peer reviews largely tackle that, and this is something that the established industry just didn’t see coming.
But Airbnb also benefits from the culture among investors. Its head office is in San Francisco, can you imagine how its CEO, Brian Chesky, would have done on Dragon’s Den?
It is just too easy to poke holes in its plan.
A company like that needs investors with almost as much vision as its founder.