[ardit33]

AirBnb is in an existential crisis right now... it might take years before their market recovers...

It makes absolutely sense to have enough money to weather this storm....

Even firing people costs money... even just keeping their lights on, and service at bay, (with no new features) costs money....

People that usually comment like the above are either: Young and inexperienced, or just not don't have real life experience on running a business. I used to think like that when I was young, but after some years of experience your view on things changes and becomes more nuanced.

[appleshore]

In general, it’s a great question: why does it take such extreme overhead to run a digital company that’s like Craigslist with better pictures. I understand it’s more than that but it’s still a valid philosophical question to ask it there’s a way to run it with say 1,200 employees? Or maybe there’s not.

It’s analogous to the size of government and this trend of doing less with more.

Craigslist has 50 employees. I know there’s a ton of counter arguments to minimize my point but surely there’s a third way between 50 and 12,000.

[onion2k]

Craigslist is only the listing part. Airbnb does listings, but it also does booking management, cancellations, payments and refunds, host support, etc as well.

Plus Airbnb has reps all over the world helping hosts. If they had ten staff (photographers, sales, etc) in every city that has more than a million population that'd account for more than 5000 people alone.

[thelittleone]

Not sure how much "helping" of hosts Airbnb does, at least when it's really needed. They quick and thick with platitudes but thin on support when push comes to shove as they almost always side with guests.

I'm a superhost with only 5 listings one has over 100 reviews with 4.98 average rating. So far Airbnb has remotely adjudicated 2 guest disputes (on my 4 years of operations) that cost me $5k. Not trivial.

[onion2k]

That's subjective though. The guests who raised the disputes presumably think Airbnb did a great job.

Dispute resolution is essentially marketing. When a host tells people they lost a dispute most people don't care because they're not going to be in that position. Most people can't afford to buy property to let on Airbnb. Even it they are in a position to buy and let a property, so long as Airbnb have more supply than demand then they're happy - they're getting every booking they can. Having another host in an area that already has hosts doesn't add much to their business. (If you were the only host in the area then you'd be much more likely to win disputes.)

When a guest tells people they lost then everyone can imagine being in that position, and might stop wanting to use Airbnb. That has a measurable impact on Airbnb's revenue.

The key thing to remember with any company that runs both sides of a marketplace is that they care about themselves more than either party in a dispute. I have no idea about the numbers, but if Airbnb side with hosts more than 10% of the time I'd be absolutely amazed. In popular areas it's probably less than 5%.

[thelittleone]

I agree completely with all you say, particularly the incentives to favor guest outcomes. There is a rising tide of hosts scarred by Airbnb here in Bali. The market is (was) ripe for alternatives.

[tootie]

I think the question is what are they going to do with $1B though? Like why would they ever need that much money? I have the same question about a bunch of unicorns like Lyft and Uber. Their core offering hasn't changed all that much in years. My only guess is that it's like Hitchhikers Guide to the Galaxy where they have spend 10% of operations and 90% on running their complaint department.

[icebraining]

"Airbnb Will Give $250 Million to Hosts Who Lost Income to Virus"

https://www.bloomberg.com/news/articles/2020-03-30/airbnb-wi...

[DevKoala]

When you write it like that, they sound generous. In reality, they tried to pass the hit for Coronavirus related cancellations to the hosts and then realized they were in for legal trouble if they followed through.

[hkmurakami]

Iirc they passed the costs from the end user to the hosts by enforcing a much more lenient refund policy than what many hosts had put on their listings?

[DevKoala]

https://www.airbnb.com/help/article/43/what-happens-if-my-gu...

> Guests who cancel are automatically refunded according to YOUR cancellation policy—unless the cancellation qualifies as an extenuating circumstance or falls under our Guest Refund Policy.

Exactly. And they were not legally allowed to do that. Which is why they are reimbursing hosts. They were flooded with cancellations and did right by the renter, but wanted the host to take the hit, when in reality the broker (AirBnb) is liable.

[slenk]

Still screwing people though. We had reservations that fell outside of their "coronavirus window" (the 24th) so they wouldn't give us a refund.

When Trump extended his guideline, they only offered half the cash back or all of it in credit. That doesn't even feel legal to me.

[foobar1962]

Yes, particularly those with "strict" policy which was originally no refund, then Airbnb degraded it to 50% refund if cancelled before 14 days, then degraded to 100% refund if the guest had an "extenuating circumstance", then a full refund when virus-related things were added to the ECs.

[thelittleone]

Amazing. What worth does a policy have if it can be changed at will?

[bogomipz]

Might you or someone else be able to elaborate? Did they simply tell hosts that they were responsible for refunding the money or was it that hosts were on the hook for AirBnBs percentage of the bookings?

[eisa01]

Why would they do this? I thought this is what travel insurance is for, at least in Norway I think they are liable for the bill when the government deems an area unsafe to visit

[gnopgnip]

This certainly varies by country. In the US and many other countries travel insurance typically excludes pandemics.

[xchaotic]

PR and they thought they could get away with hosts shouldering the costs

[refurb]

With 13,000 employees at an average fully-loaded cost of $150K/yr (just a guess), $1B will let you keep them all employed for about 6 months.

[derision]

They have 13000 employees. That's a lot of money in salary alone

[fullshark]

Well why do they have so many employees?

[whymauri]

The number of countries they operate in and the assumption that the next few years would be growth years. This isn't really rocket-science.

[jonathankoren]

It’s not just that. Being flush with cash causes engineering bloat. You start chasing blue sky trendy ideas (AirBnb was reportedly doing chatbot for a while, ala Volara.) or chasing more and marginal gains on existing products. It’s inevitable, when money is cheap.

[xchaotic]

So they probably need to let go of those staff and projects rather than raising money at high interest?

[thelittleone]

The vulnerabilities of this business model laid bare. If you're a business like Airbnb you have to be global, otherwise a competitor will be and they'll eat you up. You need solid in country representation otherwise competitors with a deeper regional focus (even smaller companies) will have better offerings and eat your market share. It seems being global and local is possible with 13,000 employees.... except when tourism crashes 90+%.

[tootie]

Sure, but why do they need 13,000 employees is the question.

[dzhiurgis]

No doubt there's big layoffs coming

[grandridge]

Makes sense to borrow at 10%?!?! You are witnessing the end here

[unlinked_dll]

And comments like this usually come from people with a warped concept of money and funding. But it doesn't help to comment on the nature of a poster because you don't know much about them.

The comment is not on the necessity of money but the amount. I legitimately can not fathom why AirBnb needs that much money to run a service business on top of a custom app and website when the fundamental complexity of the business (the particular nuances of local markets, their regulatory/compliance needs, etc) has always been a second thought to their management and trawling for articles, it does not seem like they need that much money to continue. Particularly since regulatory bodies and courts have closed worldwide.

[lancesells]

They are a middleman but a very complex one with what I would guess are enormous legal costs. Paypal has the same amount of employees. Uber has twice the amount. Could they exist with fewer employees? I'm sure they can but that means less people employed.

[redwood]

Employees and potential assistance for hosts...