| My pet theory is that valuation is in part derived from engineer head count. Please note that this isn't a "I could build twitter in a weekend, why do they even have so many people" comment. I am not privy to the scope of work inside of AirBnB and can't really comment whether a large amount of inefficiency exists - but if it does, perhaps this is a plausible explanation as to how that can be. For an earlier stage company some mental gymnastics can justify the statement that in the event the startup doesn't become a unicorn 100 engineers are still "worth $100m" to big corporate buyers as a sort of big acquihire. This provides a hedge against failure. It also provides arguably necessary redundancy during a volatile growth stage. A higher bus factor if you will.
https://en.wikipedia.org/wiki/Bus_factor And so a slightly inflated head count early on based on the above principals ensures that bureaucracy, having reached critical mass, keeps on expanding. At the present point, there's no plausible scenario for 100 to be reduced to 25 when the company is growing and doing well. If AirBnB suffers a calamity and its network effects somehow start disintegrating, holding on to these people could ultimately increase the sale price - the brand would have suffered, the apartment inventory is reduced, but you're still left with IP and engineers to hawk. In the event there are no buyers you could significantly stretch out the runway by multiple rounds of layoffs from this group, claim a successful turn around with the fat trimmed, and raise a new round of financing. |