Tuesday, June 19, 2012

Airbnb to earn $183M in 2012 (I think)

Today Airbnb released a very impressive infographic celebrating 10M nights booked through the service. It is an incredible accomplishment by a fantastic team. If you haven't already, be sure to check it out here.

Given my love for numbers and a desire to better understand the growth of the sharing economy I decided to take and hour, fire up excel, and see what I could derive from the various Airbnb data points across the web.

I was curious about their growth in rate of booking per month. What velocity is the service growing at? Based on the data points within their info graphic I derived a bookings per month number which has dramatically increased in 2012:

Perhaps the most astonishing aspect of their annoucement is the rate at which they climbed from 5M to 10M bookings in only a 143 day period. An average of 34,965/day. If that rate continues they will be on target to book between 12.7-15.7M rooms in 2012 assuming a 0% growth rate.

Looking at the growth rates between major announcements (1M  May/2011, 5M Feb/2012, 10M Jun12) their Compound Annual Growth Rate (CAGR) is around 227%, or ~19% month-over-month growth. If this continues, Airbnb will be booking 3M nights per month by the end of 2012 likely hitting the 22M bookings by the end of December.
So what does this mean for Airbnb revenue? Assuming a 13% commission with an an average rate of $80/night based on 17.6M nights book in 2012 Airbnb will earn ~$183M in 2012 (after host payments before all operating expenses). I really don't have any insight into operating expenditures so I'm not going to speculate about valuation, but a company with revenues of $180M+/year running a CAGR of 227% will not having any trouble finding investors (if they are needed). 

As a founder of a collaborative consumption company, ToolSpinner, it is extremely encouraging to read about the continued success of those who are leading the way. I wish Airbnb the best and look forward to their 20M booking announcement on Thanksgiving.


Friday, June 1, 2012

Collaborative Consumption Marketplaces

Collaborative Consumption was a term made popularized by Rachel Botsman & Roo Rogers in their 2010 book entitled "What's mine is yours: The Rise Of Collaborative Consumption". (Well worth the read). Their blog defines collaborative consumption as: 
"A social and economic system driven by network technologies that enable the sharing and exchange of all kinds of assets from spaces to skills to cars in ways and on a scale never possible before."
The book chronicles the history of sharing/bartering highlighting some of the innovative companies leading the new sharing economy. With the convergence of mobile technology, connectivity, economic challenges, and social networks we are seeing a shift in consumerism. In 20 years ownership, employment, and nearly every marketplace will be impacted by the ideas in this book.

I believe areas of traditional rental marketplaces represent the greatest opportunities within the sharing economy: Most of us have reserved a hotel room, rented a car, taken out a person loan, hired a carpenter, paid for parking, and rented a tool. Here is a quick run down of how these industries are being disrupted:
  1. Space - Temporary use of space is the largest near term opportunity. The entire hotel, B&B, and travel industry exists to support this need. Airbnb has done a fantastic job of building out a peer-to-peer accommodations marketplace. Other space needs such as event hosting are being addressed through sites such as Venuetastic.
  2. Cars - The utilization rate of person automobiles is an unbelievably low while the cost of ownership is very high. Car ownership costs vary widely but can be between $3K and $12K per year when factoring in carrying and operating costs. Car sharing companies RelayRides, GetAround, and Wheelz are working hard to address this market. Each has a different approach with hardware, market entry, partnerships, and focus.
  3. Capital - Obtaining personal loans from others outside your network will continue to grow in popularity. Sites like Prosper and Lending Club are creating efficient brokerage marketplaces to transparently lend money directly to others. Banks are no longer the only option for consumers.
  4. Skills - Service marketplaces are being created by companies such as TaskRabbit and Zaarly which enable consumers to directly address a variety of needs. Cleaning services, handy-man work, dog walking, and countless others will be radically changed through these services.
  5. Parking - We all pay for temporary use of pavement, many of us daily. ParkCirca and ParkingPanda are working to create a marketplace for all that unused pavement across our cities. 
  6. Tools - If you own a home you need tools. There are 11,000+ rental stores across the US alone renting items owned by others in our community. ToolSpinner is creating a marketplace for idle tools.

I believe the above six areas represent the greatest opportunity for disruption of traditional industries through technology enabling idle capacity.