The topic of Airbnb’s IPO has attracted great attention recently, in the context of Covid-19 making many businesses in the tourism sector worldwide struggle. Let’s take a look at some of the important milestones in the journey of foundation and development of the billion-dollar startup.
The idea of sharing house first emerged in 2007 when Joe Gebbia and Brian Chesky – two of the three Airbnb founders – saw a business opportunity when the upcoming Industrial Designers’ Conference in San Francisco attracted a lot of visitors, making hotels in the region fully booked in advance. Seizing this opportunity, the two founders launched the website airbedandbreakfast.com and offered airbeds and breakfasts for the designers who haven’t found accommodation. Their initial service only attracted the first 3 guests. However, Joe Gebbia and Brian Chesky did not give up. They teamed up with their friend Nathan Blecharczyk – the third founder of Airbnb – to jointly develop the idea of accommodation sharing and officially founded a business in 2008.
In March 2008, the website Airbed and Breakfast officially launched for the first time during SXSW Conference & Festivals in Texas, but only attracted 2 customers, one of them is Chesky. To solve the financial problem of the company, all three have created and sold presidential-themed breakfast cereals riding on the presidential election at that time. The “breakfast” is also part of “Airbed and Breakfast” as a way to promote the company. This idea helped the three founders bring in enough revenue to run their business, while also drawing the attention of Paul Graham. Paul Graham invited three founders to participate in the Y Combinator program. The idea of them attracted other investors and this started the strong growth of the company. In March 2009, Airbed and Breakfast changed its name to Airbnb.
Just nearly 4 years since the founders’ idea of sharing houses popped up, Airbnb has grown rapidly, being present over 89 countries with more than 1 million bookings. In 2011, a capital fund had invested 112 million USD in Airbnb, making the company become a unicorn startup in Silicon Valley.
Quickly adapting to market changes amid Covid-19
Airbnb continuously received capital from many investors and grew over the years to come. Until this year, the Covid-19 pandemic had caused huge changes in the tourism sector and made Airbnb be in crisis. In May 2020, Airbnb had to lay off nearly 2,000 employees, accounting for 25% of the company’s total employees.
In an interview with CNBC, founder Brian Chesky said: “It took us 12 years to build Airbnb, and we lost almost everything in four to six weeks.”
However, in the US market, the founders found that customers tend to book accommodations in the suburbs for traveling while complying with social distancing measures, as well as to escape the epidemic pressure in the city. Airbnb quickly seized the opportunity. They changed the model from short-term rentals to long-term stays, focusing on domestic travel, and adding health protocol requirements for homeowners. This quick adaptive move helped the company’s business slowly recover and be profitable again in the third quarter.
The milestone of the initial public offering
In the midst of the tourism industry facing many difficulties due to Covid-19, but Airbnb decided to issues shares of stock to the public for the first time (IPO) with the expectation of raising 3 billion USD. Since the announcement of Airbnb’s IPO plans, this IPO has become the most anticipated IPO in 2020. In the open for trading, Airbnb’s stock price jumped more than doubled compared with the company’s initial valuation of 68 USD.
On December 10, Airbnb was officially listed on the NASDAQ stock exchange with the stock symbol ABNB. In the open of trading, Airbnb’s stocks jumped more than doubled compared with the company’s initial valuation of 68 USD. The new price has brought Airbnb’s market capitalization to more than $ 100 billion, higher than the total capitalization of the three hotel chains Marriott International, Hilton Worldwide and Hyatt Hotels. Airbnb’s IPO has become the largest IPO in the US and the third-largest in the world this year.