SW2 + WC = MO.
Don’t worry: This isn’t an algebra lesson. The formula above is actually some inspiring advice Airbnb co-founder Joe Gebbia learned from an RISD professor about how to deal with rejection. In a recent interview with Signapore’s Strait Times, Gebbia shared his journey from selling Teenage Mutant Ninja Turtles drawings to his elementary classmates for $2 to co-founding global powerhouse Airbnb.
Today Jasper chats with Hostfully’s Vice President of Strategic Partnerships, Nicole Prentice Williams, about the Gebbia interview and other current Airbnb news items. They cover the IPO timeline, potential disruption in the air travel industry and enforcement of the “One Host, One Home” policy in San Francisco. Listen in to see what’s going on in the world of Airbnb!
Article #1: Airbnb CEO Brian Chesky: Going Public is a ‘Two-Year Project’
- Implied IPO in 2018
- Investors have been patient
- Legal uncertainty would affect stock market
- Positioning through diversification of services
Article #2: The Co-founder of $31 Billion Airbnb Expects a ‘Revolution’ in Air Travel Next
- Little change in decades
- Ripe for disruption
- Services like JetSuite and JetSmarter already cropping up
Article #3: Airbnb Yanks 923 Listings in San Francisco
- Violations of “One Host, One Home” policy
- Attempt to smooth relationship with city regulators
- Pulled listings included 317 entire homes, 26 private rooms and 580 shared rooms
- Of the 10,200 listings in San Francisco, only 1,877 are registered per city requirement
Article #4: It Changed My Life: Airbnb – an Adventure That Begins at Home
- Joe Gebbia interview at launch of Airbnb Trips in Singapore
- In 3rd grade, sold Teenage Mutant Ninja Turtles drawing to classmates for $2
- Met Chesky at Rhode Island School of Design
- Learned formula to deal with rejection
- Launched startups Critbuns and Ecolect to mild success
- Got the idea for Airbnb while struggling to make rent in San Francisco
- Business has grown from 500,000 users in 2012 to 3 million today
Article #1: fortune.com/2017/03/13/airbnb-brian-chesky-ipo-2018/
Article #2: cnbc.com/2017/03/17/airbnb-ceo-brian-chesky-air-travel-revolution-coming.html
Article #3: hcnet.com/news/airbnb-yanks-923-listings-in-san-francisco-one-host-one-home
Article #4: straitstimes.com/world/it-changed-my-life-airbnb-an-adventure-that-begins-at-home
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Complete Transcript for Get Paid for Your Pad Episode 138
Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.
Jasper: I began using a really cool service from Aviva IQ, and it’s made my life so much easier. My guests love receiving all the important details about their stay exactly when they need it, and I love all the five-star reviews I’m getting on communication. Check them out at www.avivaiq.com.
Welcome, everybody, another news episode of Airbnb, and today, I’m cohosting with Nicole Prentice Williams, who is the Vice President of Strategic Partnerships at Hostfully. So, Nicole, welcome, and how are you doing?
Nicole: I’m great. How are you, Jasper?
Jasper: I’m very well. I am in Santiago, in Chile. I just spent two weeks in Florianópolis, one of my favorite places in the world, in the south of Brazil. Now, I’m back in Santiago and looking at some properties to invest in.
Nicole: Fantastic. I am right up the coast from you in Los Angeles.
Jasper: Just a few thousand miles north.
Nicole: Yeah, exactly. I’m happy to be here with you this morning. Thanks for having me.
Jasper: How are things going at Hostfully? I hear that things are going pretty well.
Nicole: Yeah. We’re getting ready for a big vacation rental management conference that’s going on in Georgia next week, and we have another one coming up here in California about five weeks later. So, yeah, we’re growing and it’s going really well. Awesome.
Jasper: That’s great to hear. Well, I’m getting a lot of positive feedback from the community, that people really love the guidebooks and the fact that they don’t have to pay for it.
Nicole: But if you do pay for it, you get it in four languages, which is incredible.
Jasper: That’s pretty sweet.
Nicole: Yeah. Portuguese, French, Spanish, English, yeah.
Jasper: What about Dutch?
Nicole: Maybe soon. I’ll talk to Noah.
Jasper: Awesome. Well, let’s get into the news for this week. I think the biggest headline that came out was about the IPO. We’ve talked about it a few times in recent weeks, but this was the first time that Brian Chesky actually gave somewhat of a timeline. He basically said that he thought the process of getting ready for an IPO, it takes about two years, and then he said that they’re probably about halfway through that project. And that would imply that they have about one year to go until they’re ready to go public.
Nicole: Yeah, he has alluded to that. He won’t give a date, he won’t put it in black-and-white there, so he’s not held to it quite yet, but it sounds like it’s all headed in the right direction, and I guess the speculation’s just, when.
Jasper: And it’s interesting to think about, what’s the reason that they want to do this IPO, because they have so much money. They have like $3 billion in cash, and he mentioned this in the interview, actually, because he said the main reason for them to go public would be to provide their shareholders with more liquidity, or more instant liquidity, which makes a lot of sense, of course. I mean, imagine you’ve invested in Airbnb. I know Sequoia Capital invested $600,000 back in 2009 or 2008, and I think they were the first sort of major investment that they received. I mean, that’s worth… How much would that be worth, right now? I mean, I don’t know, but that’s probably worth like billions, you know. And so, it would be very convenient for them to probably offload some of their shares.
Nicole: Yeah, and he says that everybody’s been patient, the investors have been patient. You know, it’s been a while. When did they invest that money?
Jasper: I think it was in 2009, I believe.
Nicole: Yeah, so it would be great for them, right?
Jasper: Yeah, absolutely, because then they could use that money to reinvest in other start-ups.
Nicole: Right, yeah. Absolutely. And I guess they’re positioning themselves by kind of, we read, unloading some properties, and then looking at some other, kind of diversifying their services, as well.
Jasper: Right, because, you know, it’s interesting. I posted this news article in a group that I have on Facebook, Airbnb News, and somebody commented on it. It’s actually somebody I know, a host from San Francisco. His name is Keith. And he immediately said, “Not going to happen.” And so, I was interested to see why he thought that, and he made some good points.
He says that, obviously, investors are eager, but he says that the stock market, right now, wouldn’t be so interested because there’s a lot of legal uncertainty. You know, there’s a lot of lawsuits going on in Airbnb land. There’s a lot of regulation. A lot of cities are putting in regulations, like we’ll mention later in this episode. We’ll talk about San Diego. Basically, what they need to do is, they need to diversify from the accommodations business and show that they can make money in other businesses, like the trips and the experiences for example, because if they’re only dependent on the homes and there’s a lot of legal uncertainty there, that might not get a very attractive IPO price.
Nicole: Right. Well, they’re also looking at long-term rentals, I read, as well, and they have connected with a research firm in San Francisco to look at that. So, they wouldn’t hit as many roadblocks if they were offering long-term rental options, as well.
Jasper: Right. Yeah, it’s interesting. They have a website, part of their website is actually for sublets, but I don’t think very many people use it, and I didn’t even know it existed, honestly.
Nicole: Yeah, and it’s been around for like six years, and I don’t think there’s much marketing or advertising going on for it.
Jasper: No, no, absolutely not. The legal issues are definitely something that they have to solve before they do the IPO, and there’s a lot of signs that they’re actually working on that. I mean, they’ve cooperated with the governments in Amsterdam and in London to, basically, Airbnb is now, you know, they’re not permitting hosts to rent out for more than 60 days in Amsterdam and 90 days in London. My Airbnb listing in Amsterdam is actually, I’m at 60 days now, so my calendar is completely blocked. I can’t do anything, and I’ve actually sold my house, so you know, that’s the end of the game for me in Amsterdam, but that’s cool. I’m looking at some other properties in other places.
But, anyway, there’s an article that came out that they had closed 923 listings in San Francisco, and these were all listings that were owned by people who had more than one listing, right, because they have this policy in place that’s called ‘one host/one home’, and so every host is only supposed to have one listing.
Nicole: Right, yeah. They’re also looking at a flight booking tool, so that could diversify them, as well.
Jasper: Right. There’s another article in which Chesky talks about, that he thinks the next revolution will be in air travel. And he doesn’t mention that Airbnb is going to be the company responsible for this revolution, but one of the things that he says is, you know, he says the airline industry hasn’t changed in decades, which is very true, other than the fact that you’re not allowed to smoke anymore and that the food used to be much better. But, he says, “I went on a plane in the ‘80s. I go on it today, it’s very similar.” I think that’s a good point, although, I don’t know, in the ‘80s, I don’t know how old he was back then, but he must have been pretty young.
Nicole: Yeah. There’s some private jets, too, that are offering service. I know that my husband flies up to the Bay area quite often, and he’s been using JetSuite, which is, he said, painless compared to commercial travel. So, I think there’s already changes that are happening, and I think it’s ripe for disruption, for sure. I’m sure so many people do, it’s just that air travel has changed quite a bit since 9/11, and it needs some disruption.
Jasper: It’s funny that you mention that because I recently signed up for a company called JetSmarter, which I’m sure does a similar thing, but basically, the way it works is, I pay a yearly fee and I can go on as many private jets as I want.
Nicole: That’s fantastic.
Jasper: Yeah. I mean, it was a great experience. I flew from London to Paris, and that was my first one, and it was such a great experience. I showed up like 20 minutes before the flight and, you know, you get welcomed in a special little terminal, somebody just takes your bag, you get some food, you get some coffee, and then you just wait for 10 minutes, and then you just walk into the plane. There’s literally no hassle.
Nicole: Yeah, that’s great.
Jasper: And then, also, when I landed in Paris, there was a police officer right there on the tarmac who looked at my passport, and that’s it. I was ready to go.
Jasper: It was absolutely fantastic.
Nicole: And you felt safe?
Jasper: Yeah, I loved it.
Nicole: You thought the security was good?
Jasper: Well, I mean, there basically was no security.
Nicole: Well, that’s the one thing, I mean, if you take the security out, it’s hassle-free, but, you know, how safe, I guess, do you feel?
Jasper: Well, I don’t know. I felt pretty safe.
Nicole: Okay. All right.
Jasper: But it was so much fun because it’s a small plane, there was only four people, and you know, you’re talking to the pilot the whole time, you can look in the cockpit. And the landing was really cool, as well, because you could really just look through the front windows and see exactly what the pilots are seeing. I thought it was great. It was a very cool experience, and so much… Oh my God, I loved it. It was so hassle-free. It really was amazing. I met some pretty interesting people on the plane, too, because it’s much more intimate. You know, there’s only four people on the plane, so I ended up talking to all of them, pretty much.
Nicole: That’s great.
Jasper: Anyway, that’s an interesting topic, but I guess it does have a little bit to do with Airbnb, since it’s also in the sharing economy space. But who knows? Maybe Airbnb’s going to go into the private jets.
Nicole: Yeah, that would be a smart place to invest or partner with, I think. Yeah, definitely. But, if they’re doing a booking tool, I don’t know. That would be interesting to see how that works. How did you book your private jet?
Jasper: I mean, the JetSmarter app is really cool. You can do everything through the app. So, it has the functionality where you take a picture of your ID, and then you just, in the messenger, you’re literally talking to a flight representative, and so you just go on your phone and you see, “Can you upload a picture of your ID?” “Okay.” And then you get the itinerary, you get it on your smartphone. Everything takes place in the JetSmarter app.
Nicole: Awesome, so it was easy.
Jasper: It’s extremely convenient. And then, you know, when I was at the airport, I actually got a call from one of the flight representatives, who called me and he’s like, “Hey, are you at the airport yet? We’re here for you.” And I was like, “Oh, okay, yeah.” I was literally like a minute away. So, yeah, it’s very personal. It’s extremely convenient.
Nicole: Awesome. Awesome.
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Yes, so, let’s see what else shall we talk about? Yeah, so it’s 923 listings being wiped out in San Francisco. You guys are based in San Francisco, right?
Nicole: Yes, we are. Yes, and actually, one of our founders is a host there.
Jasper: Yeah, I’ve stayed with him.
Nicole: Oh, okay. You know, then.
Jasper: I know all about David’s little house. It was a very pleasant stay.
Nicole: Yeah, awesome.
Jasper: But, there’s some more interesting numbers in the article. It says 317 were entire homes, 26 were private rooms, and 580 were shared rooms. That’s something that really surprised me because I don’t really know a lot of people who rent out a shared room.
Jasper: So, that means you’re renting out like a couch in your living room, or like an airbed?
Nicole: Yeah, I would guess that’s more like a couch surfing, but they’re charging for it, perhaps.
Jasper: Right. So, I don’t know. I just don’t know anyone who does the shared room letting thing, so I was just surprised to see…
Nicole: And why would they close those down? I’m not…
Jasper: I don’t know. That sounds very strange to me.
Nicole: Very curious.
Jasper: I would expect that most of them would be entire homes because that’s kind of where the resistance came from, right?
Nicole: Right, absolutely. And there are companies that are representing those types in San Francisco. You know, I guess the fines and stuff go to the owner, not the management company, so they’re going to try to continue to rent and make some money until, I guess, they get caught.
Jasper: Right, yeah.
Nicole: I mean, it’s just a matter of how many resources, what kind of resource San Francisco has to go after that. Is it worth it for them?
Jasper: Right. And the article also mentions that there’s 10,000 listings in San Francisco, and in San Francisco, Airbnb hosts are required to register with the city, but only 1,877 are registered, according to the Office of Short-term Rentals. So, that’s less than 20%, so I guess there’s a lot of hosts who still need to register before the city of San Francisco will be happy.
Nicole: I guess, well, you have to pay annually. I would assume you have to pay annually to register. I don’t know what that price is to be a registered host. Wouldn’t you think?
Jasper: I don’t know how much it costs. All I know is that when I was in San Francisco last year, when I was staying with David, I interviewed a host, Bruce Bennett, and he’s very active in the Airbnb community in San Francisco, and he showed me sort of a step-by-step process of registering, and it was quite complicated, I have to say. It’s like they make you jump through quite a lot of hoops, so I think that’s problem the reason why a lot of people don’t register, because it seemed like kind of a hassle.
Nicole: Yeah, yeah. And I read, in San Diego, they’re no longer allowing short-term vacation rentals.
Jasper: Yeah, that’s new to me.
Jasper: That must have come out today. Or, when was it? No, actually, March 16th, so a few days ago. So, they’ve completely outlawed it, didn’t they?
Nicole: Yeah, it sounds like they’re not permitted under the Code as it’s currently written, so I’m not sure if it’s been going on illegally. It sounds like they didn’t just rewrite it. But, we have a couple clients down in San Diego that we are actually speaking with tomorrow, so I’ll be getting some more inside scoop from on the ground down there, seeing how this could affect that industry there.
Jasper: Interesting. Okay, so maybe we can talk more about that next week. But, it’s not just Airbnb, it’s all vacation rentals, all short-term rentals, basically, that they’ve banned now.
Nicole: Right, right.
Jasper: Let’s move on to something a little bit more light and a little bit more humorous and funny, because there’s a really good article came out, The Straits Times, which is a Singaporean newspaper or website. And Joe Gebbia went to Singapore to launch Airbnb trips there, and he did a really long interview with one of the reporters of this newspaper, and I think it’s interesting to share some of the stuff in this article because a lot of people know about Brian’s background, because he’s kind of like the main guy at Airbnb, but of course, the other two founders, they’re also really interesting, to look at their stories. And there’s a lot of interesting things in this interview.
First of all, Joe Gebbia, he grew up in Atlanta, Georgia, and when he was in middle school, I think, in third grade… Is that middle school, third grade?
Nicole: No, it’s elementary school here. Yeah, elementary.
Jasper: Oh, elementary school, okay.
Nicole: Yeah, even younger. He was probably eight or nine. Yeah, he was an entrepreneur way back then.
Jasper: Okay, interesting. Yeah, so his entrepreneurial skills really surfaced early because, in third grade, he was drawing Teenage Mutant Ninja Turtles. For those of you who are a little older, like myself, that was a very popular cartoon series back in the day.
Nicole: It still is, actually. I have kids.
Jasper: It still is? Oh.
Nicole: Yeah, it’s huge now. We go to Ninja Turtle parties.
Jasper: Oh, really? Wow.
Nicole: Yeah. Yeah, and they’ve had a few movies out.
Jasper: Okay. I’m not so up-to-date anymore on the latest news on the Teenage Mutant Ninja Turtles. But, anyway, he was drawing these things and selling them to classmates for $2 a pop, and the business did so well that the parents complained to teachers that their kids were asking for extra lunch money and they didn’t know why.
Nicole: And it wasn’t for nutrition.
Jasper: No, no, it was not for nutrition.
Nicole: Yeah, he was making money, had a business plan, way back then. That’s great, a great story.
Jasper: But that wasn’t his last enterprise. He did some other things, as well, but first, he went to the Rhode Island School of Design, which is where he met Brian Chesky, and the day he graduated, he launched a business called CritBuns. It was a company that produced portable butt pads, and apparently, they were very comfortable to sit on. And the name was inspired by the long hours design students sit around critiquing one another’s works in front of teachers and peers. These seats can be quite uncomfortable, so he decided to design a seat that would be more comfortable to sit on.
Nicole: Yeah. I don’t know if he sold them at stadiums, but that’s where I imagine that he would have made some good money off of the butt pads.
Jasper: Right, yeah. He said it was ‘ramen profitable’, which basically means, just enough to make rent and ramen.
Nicole: Oh my goodness. He’s come a long way, right?
Jasper: Yeah, exactly. Yeah. And so, it was reasonably successful because he did manage to sell it in the gift shop at the New York’s Museum of Modern Art. So, I mean, that’s a fair accomplishment, but the number one thing that he learned from this experience was something that one of his professors taught him, which was a formula on how to deal with rejections because, you know, he tried to get some investors, and we all know that when you’re trying to get investors, like 99% of the time, they walk away within one minute. So, that happened to him, as well, and then his professor taught him the formula, SW² + WC = MO, which stands for, ‘when you have a new idea, some will love it, but some won’t’, plus, ‘who cares’, equals ‘move on’.
Nicole: That’s great. That’s a great formula. I love it.
Nicole: I have to remember that one.
Jasper: It’s pretty funny, isn’t it?
Nicole: Yeah, absolutely. I think that could have been his first big hit company, though, if he had had a different audience than shoppers at New York’s MoMA.
Jasper: Yeah, yeah.
Nicole: I mean, everybody there is walking around, they’re really not sitting, so you’ve got to go someplace where the buns are going to get sore.
Jasper: Yeah, that was probably a good lesson for him, where he thought, okay… He probably thought about his creation as art, and that’s probably why he wanted to sell it there, but I think the football stadium would be a better place.
Nicole: Yeah, Yankee Stadium.
Jasper: Anyway, he went on to start another company, which he also said was mildly successful. It was called Ecolect, a website for designers looking for ecofriendly raw materials for their products. But then, of course, he moved to San Francisco and started living together with his best friend, Brian, and when they ran out of money, they couldn’t afford their rent because their landlord had just raised their rent by 20%, and that’s how Joe actually… I guess it was Joe Gebbia who came up with the idea to rent out an airbed in their room. So, he went out to buy two $20 airbeds, and he quickly built a website called AirBed & Breakfast, and that’s how it all started.
Nicole: Yeah, amazing.
Jasper: And that was, about, pretty much 10 years ago. It was in 2007, so Airbnb has been around for a decade now.
Nicole: Yeah, that’s crazy.
Jasper: It is pretty crazy.
Nicole: That’s crazy, it’s been 10 years.
Jasper: Yeah. I feel like those… Well, I’ve been hosting since 2012, but those years have flown by like crazy.
Nicole: Yeah, us too, 2012, is when we… I think that’s when they really started to grow out. I don’t know what round of funding that was for them.
Jasper: No, it really went fast after that. I remember, when I started, they had like 500,000 hosts, and now it’s like 3 million, so there’s definitely been some spectacular growth.
Nicole: He talks about it. You know, he says, this is a one in a million shot to turn it into a global business, but, you know, they did it. It’s really amazing, and they really have disrupted the travel industry, and ‘global’ is really their message with the experiences and the trips, and just thinking on a global level. It’s amazing what they’ve done.
Jasper: Absolutely. Absolutely.
All right, well, I think we’re getting to the end of this episode. And, by the way, I want to mention, I post these news articles in this Facebook group called Airbnb News, so if you want to sort of keep updated with what’s going on, of course, you can listen to this episode, podcast episode, but I also post them there. And, also, I have a Facebook group called Airbnb Academy, which is very active. It has about 500 members now, where we discuss all sorts of things related to Airbnb – questions about hosting, experiences, etc. – so feel free to join. It’s a free open group, so you can just join, and I hope to see your there.
And, Nicole, thank you so much for joining today, and it was a pleasure to cohost this episode with you.
Nicole: Thank you, Jasper. It was a pleasure being with you, and thank you for the invitation.
Jasper: And, of course, in four weeks, we will be talking again.
Jasper: So, I wish you all the best at Hostfully. I know you guys are very busy. I’m very appreciative of your time.
Nicole: Thank you for your support.
Jasper: Yeah, no worries. No worries. Like I said, I’m still getting positive comments from my guests about the guidebook I sent them, so I’m all support for you guys.
Nicole: Great, thank you. We appreciate it.
Jasper: And, for the listeners, thank you for listening. And, of course, every Monday, there’s an episode, and every Thursday, there’s an episode, so stay tuned and I’ll see you next week.