The listing of companies is often reminiscent of the feast of ringing bells and champagne, but the listing of Airbnb, the unicorn of the former sharing economy, is somewhat bleak and even tragic.
On November 16, the world's most well-known short-term rental platform Airbnb public prospectus, NASDAQ listing plan and the latest company operations were presented to the market.
On the bright side, the prospectus shows that Airbnb achieved its first profit in 2020 in the third quarter of this year after a sharp cut in expenses.
And this IPO also has a very "tragic" aspect. The plan to raise $1 billion to $3 billion to "increase the company's capital and financial flexibility and create a public market for common stocks" is actually to supplement the capital ammunition to help the company survive the overseas epidemic winter.
Airbnb is such a "bloody listing", will the funds support it in the secondary market?
1
The last star unicorn of the sharing economy
Airbnb was born in Silicon Valley in 2007, and the two founders, Gebbia and Chesky, are not tech tycoons or geeks, but graduates of the Rhode Island School of Design, a top design school.
At that time, the two graduates were not rich in money, wanted to participate in the designer conference, but they were too shy to live in the hotel, and the same embarrassment also plagued other young people.
So they launched an "Air bed and breakfast" project that lets landlords prop up inflatable beds in the living room and provide overnight service for tenants at less than half the hotel's price. This model gradually evolved into what would become Airbnb.
It was before 2010, when the "sharing economy" was not yet popular around the world, and it can be said that Airbnb's creative business model prompted the birth and development of the sharing economy concept.
In the early days of its business, Airbnb did not go well, and even sold cereal at one point to maintain the company's operations. The two founders, who are designers, also went to the landlord's house to take beautiful photos for free to attract more tenants to book, and this boutique style later became Airbnb's golden sign.
After 2012, the company finally ushered in rapid growth, when more than 2,000 freelance photographers worked for Airbnb, providing a total of 13,000 beautiful Airbnb room photos, which greatly promoted the company's business growth.
Investors have also extended an olive branch, making Airbnb a star unicorn with a unique scenery.
From 2013 to 2014, the company continued to expand steadily, especially in overseas markets. At that time, social networks also continued to penetrate deeply into people's lives, and Airbnb also took the opportunity to launch a "social network connection" function, which allows landlords and tenants to know if they have a common Facebook friend.
The benefit of this is that not only does it make tenants more comfortable to live in, but also to enjoy the social network dividends allows Aribnb to grow fission on a larger scale.
But the company's rapid expansion has also brought difficulties, such as many people questioning that Airbnb hosts are not qualified to operate, but are actually engaged in the hotel business, which also increases the possibility of breaking the law. For example, many people book Airbnb rooms or villas as "party rooms", and many shootings in recent years have been related to such rooms.
Airbnb also moved the cake of the hotel industry, which attracted many "enemies" in the open and in the dark.
Because the business is spread around the world, the laws, regulations and regulations of different countries are different, and how to operate in compliance in various countries also increases the company's operating costs.
What also makes the company highly criticized is that more than a decade after its birth, the star unicorn has never self-proved profitability. The company has reported less than $2 million in operating profit before taxes and interest for the full year of 2018, but for a business valued at a billion dollars, this pre-tax revenue is far from enough to prove self-profitability.
In 2019, although revenue increased significantly year-on-year, overall expenses increased even more. There is growing doubt as to whether shared accommodation is a business model that works. In contrast, the hotel industry in 2019 has maintained growth, and in the wave of technological empowerment (such as hotel robots), investors have seen more imagination.
Airbnb is saddled with investor skepticism coming to 2020, but what awaits it is an even more brutal global pandemic. In the second quarter, for example, the company's revenue plummeted to $340 million from $1.2 billion in the year-ago quarter. After the tourism industry was frozen, Airbnb took measures such as laying off 25% of its employees, cutting marketing costs and other methods to save itself, and also "reduced its self-price" to $18 billion in financing.
Fortunately, the epidemic eased in the third quarter of 2020, and the company also shifted its strategy to recommend short-haul journeys, helping the company achieve $1.3 billion in the quarter, compared with $1.6 billion last year. With the help of tightening the belt of the pants, a single-quarter profit was achieved, but the market generally believed that this was the company's posing to please Wall Street.
But such a dragonfly quarterly profit, I am afraid it is difficult to cheer up market confidence, so that investors firmly support Airbnb.
2
Take stock of the fallen sharing economy star unicorn
In addition to Airbnb, the sharing economy has also spawned two other star unicorns – Uber in mobility and WeWork in co-working.
But Uber and WeWork, without exception, have fallen miserably when they landed on the secondary market.
Uber's ride-sharing business has struggled to make a profit, and last year it launched other businesses such as Uber food delivery and freight to add color to the income statement.
The slim hope of profitability of the business has affected the unity of the company's operators and investors, and another major factor affecting the company's focus on the development of the business is that because of the continuous injection of capital to support the expansion of the company, the company's founders have less and less say, and even been swept out.
For example, Uber management is no longer the original team. When Uber went public in May 2019, founder Travis Kalanick didn't even attend the bell-ringing ceremony, and as early as 2017, he was "forced" to step down as CEO.
Uber's stock price broke on the day of its listing, and after a long period of time to hand over a quarterly report that was not as good as a quarter, the stock price fell one after another, and the market value in early 2020 was even worse than the previous private placement level.
In the early months of the listing, Uber was also exposed to the news of layoffs, which also triggered a decline in the market's confidence in the company.
And co-working star unicorn WeWork didn't even get a ticket for the IPO. WeWork mainly provides some small and medium-sized enterprises with short-term, small number of workstations, while public areas such as conference rooms are shared to save company operating costs for enterprises.
Such a business model has continued for many years, from the operating data released by WeWork when it hit the IPO in 2019, showing that in the three years from 2016 to 2018, WeWork's revenue doubled year by year, but the loss also doubled year by year, and the operating cost advantage that should be brought about by the expansion of the scale cannot be seen.
In 2019, Wall Street gave WeWork a big cold water to the capital behind it. The sharing economy bubble burst, WeWork was regarded as an ordinary "commercial real estate leasing company", the valuation from $20 billion, on the eve of the IPO had reached a high of $47 billion, instantly fell to $5 billion, and even some people questioned that it was a scam company, WeWork's IPO came to an abrupt end.
But investors' patience has also been worn out, and they have expressed their need to exit. SoftBank, the biggest investor behind it, could only "take over" with a hard scalp, and eventually took over 80% of WeWork's equity for $8 billion.
After SoftBank took control of WeWork, Adam Neumann, the founder of the coworking company, was swept out of the house for the first time, and SoftBank Son Then arranged for a successor.
What about this once-sharing economy star unicorn? The company's current CEO said that after nearly a third of the layoffs, the company's operating costs have shrunk sharply and are on track to be profitable and reach healthy cash flow levels in 2021. At the same time, business in china, South Korea, Singapore and other markets is rebounding strongly or even growing.
The implication is that the concept and business model of co-working are still promising. The current CEO of WeWork also said the company would launch an IPO again.
Finally, Lei Jun wants to say that the essence of the so-called sharing economy is actually nothing more than "saving the total cost of society". For example, Airbnb saves empty space in people's homes, Uber saves vacant seats in cars on the way to work, and WeWork saves vacant conference rooms for merged companies.
The sharing economy has been questioned, and the star unicorns have fallen one after another, the essence is nothing more than that, under the high operating costs in the name of science and technology, can the money saved and the value created really cover the price we pay for it?
After all, if you want to spend $100 to save $10, such a business won't work.
(Some of the pictures in the article come from the Internet, such as intrusion and deletion)