The Airbnb IPO : Ready for Web3?
I don’t know whether buying into the Airbnb IPO is a good idea or not.
It depends not only on when you buy, but also on when you sell.
I told friends to buy Bitcoin at $3000 in 2017, short before it went to $20,000, and some of them panic-sold it at $3500 in 2019.
Now it’s at $18.000 again, and they don’t have any.
I’m done giving advice.
What I’m going to give you now instead, are some new elements you may have overlooked, mostly because few people really understand where the web is going, and Airbnb is a web company.
Let’s start with the basics:
WEB1 > WEB2 > WEB3
Web1: the read-only web. 1995–2005. King: Homeaway, an online newspapers ads listing site.
Web2: the read-write web. 2006–2020. King: Airbnb, a we-do-it-all-for-you platform.
Web3: the trustless web. 2021-future. King: to be defined, probably a whole range of community based projects and direct booking sites.
And here’s my thoughts:
1) Airbnb is innovative and stagnant at the same time
The company reinvented the space and took it by storm by being a native Web2 project.
Homeaway was Web1 and didn’t get it.
It started the transition to Web2 late and it was a mess.
Booking.com was much more effective, still, they are a Web1-upgraded-to-Web2 company.
Airbnb innovated like crazy, built the moat, stopped innovating and focused on the money.
It’s that simple.
The real innovation has been happening behind the scenes in the crypto space.
If you just give a quick look at Crypto Twitter, you’ll see the incredible speed at which things are happening.
You won’t understand much at first, which is the definition of radical change.
2) Airbnb is the best-placed platform to transition to Web3.
Homeaway is hopeless.
They are still adapting to Web2 today.
This is like your grandma learning the basics of Nokia at the 2020 Xmas dinner table (if that even ever happens).
No way.
She can slap an Apple label on it, but it’s not an iPhone grandma, sorry.
Booking.com could make it but in my opinion, it has little chances.
They have too much technological debt at this point.
You can upgrade your 1970 car to make it look more modern, you can even put a 2020 engine, but it will never be a Tesla.
And no, accepting Libra, or even Bitcoin is not going Web3.
It’s Blockbuster launching a website to rent DVDs.
It ain’t Netflix, my friend.
Airbnb is younger, leaner and it has shown some interesting signs, namely these three:
- In 2018 Airbnb proposed a new perk for hosts: A stake in the company.
It asked permission from the SEC. We haven’t heard from it since but, well, it’s a sign. - The New Endowment Fund:
The 2020 version of the above. Hosts will get a seat at the table and, indirectly, some shares. It could be something substantial or just pre-IPO talk. We’ll see. - Airbnb Plans to Consider Cryptocurrencies and Blockchain Technology in the IPO filing.
How much of this is a sales pitch and how much is real, we’ll know only later on. But, again, it’s a good sign.
What matters here is that they KNOW what’s going to happen.
Will they be able to execute?
3) Airbnb may be a dinosaur in the making.
You see, if you compare Airbnb to VRBO, it’s a fresh company.
But if you compare it to, say, Uniswap, you can see how it’s quickly turning into a dinosaur.
(Maybe don’t click on the Uniswap link, maybe click on this one, it will still not make much sense, but at least you’ll see some numbers.)
A little story may help:
The Old Web2 Papa Vs the Web3 Daughter
It’s 2030 and your daughter is 20 years old now.
She’s going on a two months trip with her laptop (yeah, those kids don’t do “holidays” anymore, that’s sooooo 2019).
She says:
- «Hey pa, what do you use for booking places?»
- «Try Airbnb. It’s pretty cool and I’ve got shares.»
- «Airbnb… OK.» She’s never heard of it.
She “duckduckgos” it (Google is over, to hell with them and their data-stealing operation) and says.
- «Got it. Let me see.»
She starts looking at Airbnb listings and goes:
- «Wait, do I have to open an account?»
- «Well, yeah, just put your email, address, create a pas..»
- «Oh come on! You mean I can’t connect my wallet? Why the hell should I waste time on a new account? I’ve got all my reviews in my wallet. How will they know who I am?»
- «Well, you need to verify your identity, do a selfie and…»
- «Are you freaking kidding me?»
- «No well, that’s the way we did it in the old days...»
She rolls her eyes and mutters something like «you must be joking if you think I’m going to do all that stupid s**t on every single website».
But now she’s intrigued, she loves ancient internet history.
So, she keeps looking:
- «Pa…», she says slowly. There’s disbelief in her voice.
- «Yes, darling». You are worried by now.
- «Pa, I found this great place, it’s $100,000 per month…» (don’t worry, this is like $1,000 today, but the Feds never stopped printing so…) «how much is it in Bitcoin?»
- «Ehm… let me check. It’s about 0,05 Bitcoin.» You still don’t get this Bitcoin thing, but youngsters use it as a unit of account.
- «Mmm… OK. There’s one thing I don’t understand here. It says there’s a $10.000 service fee. This can’t be right. It’s 10%!»
- «Well yeah, it’s about 10-12% for the guest and 3–5% for the Host. It’s always been like this».
- «Wait, they keep a 15% on each transaction? Just to move some bits around?», she looks at you, her mouth open. Your discomfort grows.
- «Yes…bits, ehm…they have great customer serv…»
- «Ok, let me check their token. What is it?».
- «Token?»
- «They don’t have a token. You are telling me they don’t have a token.»
- «No, I guess they never felt the need…»
- «Of course they never felt the need pa! They grab freaking 15% and don’t share anything with you or the Host? Why would they feel the need?»
- «Why would they feel the need…» You are just repeating words now.
She puts the phone down, looks at you, and asks:
- «How are the shares doing?»
- «Well, they were great for a few years after the IPO, but on the downward trend recently. They say they are launching a new version soon. It’s going to be more focused on customer service.»
- «Dump them pa. They’re done.»
- «Airbnb done? Really? This is like the biggest company in travel since…»
- «Dump them pa.»
She leaves the room.
You feel old.
She’s already in her room shorting the wrapped tokenized Airbnb shares on FTX.COM.
It took her 3 minutes, you are still looking for your broker’s number.
Oh, it’s 5:30 pm on a Friday.
You’ll call him on Monday.
4) Short/medium/long-term
If you decide to buy in the IPO, look for signs of innovation.
Will they make your daughter happy? Or will she roll her eyes?
Is their transition to Web3 for real?
If not, the long-term prospect may not be good.
If yes, the company may thrive but the shareholders may not.
Web3 is about sharing with the users, those who bring the money (Guests), and those who provide the properties (Hosts).
If they come to the table, there may be less for you.
Or you may get some “reverse dropped” tokens and become also part of the tokenization process.
Who knows.
Check the signs and ask your daughter.
5) Community: is it too late for that?
Airbnb has been calling its user “Community” for a long time.
The Hosts are referred to as “Partners” to this day.
I bet that less than 20% of them still believe this narrative.
Most have woken up from the marketing induced illusion that Airbnb is anything else than a corporation.
Disillusion is probably the most precise term here.
Does it mean they’re leaving anytime soon?
No, in the same way as most haven’t left Facebook, Google, Amazon, your local internet supplier, and all the other quasi-monopolistic service providers which plague our lives: there’s no real alternative and even if there is, it’s probably even worse.
Hosts are becoming increasingly aware of the abusive relationship they’re in, especially as deplatforming keeps happening and those unlucky enough to have hosted the wrong guest, find themselves separated from the fruit of years of hard work, their thousands of reviews gone forever (by the way, see here how we plan to fix this).
This means one thing only: as soon as a better option comes along, they’re gone.
The only retention power Airbnb has, for the most part, is that if you leave them, you’re in the void of space.
Look at the increased efforts of the direct booking movement: this screams “we want to leave” as nothing else does.
Don’t just look at the retention rate or other metrics like that.
They measure the past but don’t take into account what happens when valid alternatives come along.
Conclusion
Take this as an addendum to all the other analyses you’ve done (you know, cash to flow ratio and stuff) and try to give it a longer-term outlook.
You can choose to ignore that Web2 is on the way out and Web3 is the next, inevitable, iteration of the internet, but at least now you know about it.
I hope that helped.
