Airbnb Deep Dive

Announcing the release of our 108-page Extensive Research Report on Airbnb

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Airbnb was a poster child of the hypergrowth a start-up could bring. Just 15 years after being founded in a small San Francisco apartment, they would facilitate over $80bn annually in room bookings.

As CEO Brian Chesky notes, Hilton was started in 1919, over 100 years ago—and Airbnb was able to have the entire growth of Hilton in 10 years.

They pioneered the sharing-economy and gave millions of individuals the opportunity to monetize their empty bedrooms or entire houses. Airbnb would enable a new way of life for “digital nomads” who traveled the world making nowhere their home. They would become a verb and a noun, and along the way become one of the best VC investments of all time. The three founders would all become multi-billionaires.

However, despite all the initial excitement and cultural impact, profits never came.

As a scaled internet platform that enjoyed 90% of its traffic from unpaid channels, they theoretically should have been highly profitable. Instead, in 2019, Airbnb lost $500mn on $5bn in revenues.

The pandemic could have plunged them even further into losses. In fact, some financial commentators were openly discussing their potential bankruptcy when travel was shutdown.

But rather, Brian Chesky took it as an opportunity to reinvent the company.

They turned off all of their marketing, laid off 25% of their workforce, and reorganized to a functional organization, cutting redundant expenses and streamlining operations.

The result?

Within a few years, EBIT margins jumped from -10% to positive 25%. Free cash flow swung $7bn from -$4bn in 2020 to positive $3bn in 2023.

But with the business on strong footing, Airbnb is looking to the future.

They have ambitiously proclaimed that they will launch a new billion dollar business every year, and Brian Chesky believes his best ideas are still ahead of him.

What are they contemplating? Brian Chesky commonly quotes Jeff Bezos and Steve Jobs—can he lead Airbnb to join the ranks of tech monoliths like Amazon and Apple? And how secure is their core alternative accommodation business with competitors like Booking and Expedia focused on stealing share? NYC just banned Airbnbs—will regulators prove to be their Achilles heel?

All of this and more in our 108 page, 23k deep-dive on Airbnb!

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If you are a member, you can access the Airbnb report here.

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The Synopsis Podcast.

We will be releasing a company episode just on Airbnb in the future. Follow our Podcast below to make sure you get it when it is released!

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Airbnb Table of Contents

1. Founding History

2. Business History

3. Business

4. Industry

5. Competition

   1. Booking Holdings

   2. Expedia

   3. Other Competition

   4. Competitive Dynamics

   5. Why Airbnb?

6. New Services and Other Bets

   1. Experiences

   2. Tangential Opportunties

   3. Moonshots

7. ROIC and Capital Allocation

8. Revenue Growth

9. Valuation

10. Risks

11. Summary Model

    1. Historic Model

    2. Model Forecast Summary

12. Conclusion

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