From an investor’s perspective, do you like thefounding team of Airbnb? Why and why not?Probablythey were not the best candidates in terms of experience. They had someunderstanding of the start-up business since they launched their publicitymaterials of the two lead candidates with success. This initiative demonstratedcomprehension of the consumer´s wants,flexibility and creativity. But an investor is also looking for the founder´s commitmentin the long haul. The team´s achievements depend on the well-defined definitionof the functions and if they are able to work together efficiently. At the end of the day, the idea of changing the traditionalaccommodation rental sector wasgreat and innovate, but also very ambitious and time consuming. In this case,the roles of the team were clearly defined, and they have been working togetherfor some time, reflecting a clear commitment to the company.
If you were a founder of Airbnb, what would you dowith the offer from Sequoia (610 k for 20%)? Please explain why. Sequoia`s offer of 610 k implied that the company`s valuation was approximately$3 MM. Although in 2008 nobody could have predicted the company`sfuture growth, it is true that it was easy to expect that disrupting a sectorwould exponentially grow the firm`s estimation.
With all the work that wasrequired from the investors in the short and medium term, they were onlyinjecting additional cash flow for the next months. Therefore, this offer wassignificantly lower that the company`s real value. Nevertheless, from my pointof view, it is not as important the amount of money for the offer but theinvestor´s track record of beating the market. Having Sequoia as a stakeholder,such a big player in the venture capital world, lead to open many doors offurther opportunities. In addition, the founders did not have a profound knowledgeof the market and Sequoia had a deep understanding of the sector`s specialised laws.
In general, what are the major barriers to the sharing(on-demand) economy? How to overcome them? Major playersin traditional sectors are a big barrier for new businesses in the same sector.In addition, consumers do not consider sharing economy´s platforms reliable andsafe. They believe that they do not have guarantees of “returning what Ibought”. The solution is to developand upgrade the service´s security.
I wouldalso consider a barrier understanding the business model and making money tothe company. I think that many start-up business esin the new sharing economytend to develop business models without profitability. biggers players that normally are big in the area.