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‘It’s truly surreal’: After rough pandemic ride, Airbnb shares soar in public debut

13 years ago, investors laughed at the idea. Now they can't get enough of Airbnb.

‘It’s truly surreal’: After rough pandemic ride, Airbnb shares soar in public debut

The travel startup had entered the year as an IPO darling with set plans to go public that spring. It'll exit the year as an IPO darling, too.

Photo: Airbnb

The news that Airbnb's price was set to double in its long-awaited public offering left its CEO and founder Brian Chesky literally speechless.

The travel startup had entered the year as an IPO darling with set plans to go public that spring. It'll exit the year as an IPO darling, too. The company's share price more than doubled in its trading debut, from the $68 price set the night before to $146 at opening. It ended up closing the day slightly below open at $144.71, up 112% in its blockbuster debut and giving it a market cap of over $86 billion. But its rebound and path to the public markets has surprised even its founders.

"I'm kind of overwhelmed with gratitude, because we did not expect to be at this place given how this year took a surprise turn back in the spring," Airbnb's co-founder Nate Blecharczyk told Protocol. "We had intended to go public earlier this year, and all that was put on hold when March and April came, as a result of the pandemic. If you'd asked me then would we be in a position to go public before the end of the year, I would've been shocked that that was possible."

The path from March to its December IPO includes some of the hardest months the business and the broader travel industry has endured after trips halted amid a pandemic. "One of the hard things about the pandemic has been the fact that it wasn't obvious how long it would go on for and how severe the impact would be. So, in March and April, we were anticipating the worst. We had lost 80% of our revenue in two weeks. And we couldn't really confidently say when that was going to improve," Blecharczyk said.

Airbnb instituted weekly board meetings from March 5, the day Sequoia released its infamous "Black Swan" memo, to May 5. "People who are prepared, they slam on the brakes, they assess the situation until they can see clearly and then they accelerate out of the turn," said Sequoia partner and Airbnb board member Alfred Lin. "We saw Airbnb and DoorDash [another Sequoia investment] do that."

To stay alive, Airbnb quickly raised $2 billion in debt deals. It also had to lay off around 25% of its employees, canceled summer internships and ended up shuttering some of its experimental units like Flights to focus on its core home-sharing business.

"One of the most important things we learned is you can have large ambitions, but you need a unifying strategy across different ideas, rather than separate ideas," Lin said. "These kinds of crises force founders to focus, and they went back to what was most important to them."

Slowly, travel started to rebound, just in a way that was different than before the pandemic. Airbnb saw that people were looking to stay in areas within driving distances near their house and for longer-term rentals, an area that Airbnb doubled down on, much to the chagrin of housing critics. It also reminded the founders of Airbnb's founding days in the last recession where it saw a lot of people who lost their jobs turn toward hosting guests to make extra money.

Airbnb's most recent financial statements show that revenue in the last quarter remains depressed from last year, but is only down 19% year-over-year — much lower than the more than 60% decline faced by competitors like Marriott. But it was still a profitable quarter for the company.

"The scale of their ambition is huge," Lin said. "What the pandemic taught them is to be focused, and I think that's not going to change."

While there are hopes to rehire some of the employees who were laid off as the industry rebounds, Airbnb doesn't plan to immediately dive back into some of its previous ambitious projects in 2021.

"Things like flights, etcetera, are interesting opportunities longer term, but I don't think that's really what's most important right now," Blecharczyk said. "They aren't perishable opportunities, so maybe in the future, someday, but for the foreseeable future, we're going to be focused as a company, and we think there's a lot of opportunity in our core business."

Now that the company's public, Blecharczyk doesn't expect much to change in terms of its operations, but he does hope that the public perception and investor sentiment may realize how much Airbnb has gone mainstream. In fact, some of the IPO buzz around the stock may be a result of investors expecting the startup to enter a major index in the next few years, according to CNBC.

"I think it's a milestone moment and a continuation of Airbnb going mainstream. I've been thinking about that a lot today, because 13 years ago, it was such a crazy idea that people laughed at us," Blecharczyk said.

Now, instead of laughing, people are investing, not only in the belief that a future COVID-free world will mean more travel, but also that they'll be doing it on Airbnb.

"To see the enthusiasm for the future of the company today, whether that be from investors or just in general, it's truly surreal to me," he said. "It takes my breath away a little bit because for so long we've been something that people are skeptical about because it's such a new thing and required so much trust."

Power

Yes, GameStop is a content moderation issue for Reddit

The same tools that can be used to build mass movements can be used by bad actors to manipulate the masses later on. Consider Reddit warned.

WallStreetBets' behavior may not be illegal. But that doesn't mean it's not a problem for Reddit.

Image: Omar Marques/Getty Images

The Redditors who are driving up the cost of GameStop stock just to pwn the hedge funds that bet on its demise may not be breaking the law. But this show of force by the subreddit r/WallStreetBets still represents a new and uncharted front in the evolution of content moderation on social media platforms.

In a statement to Protocol, a Reddit spokesperson said the company's site-wide policies "prohibit posting illegal content or soliciting or facilitating illegal transactions. We will review and cooperate with valid law enforcement investigations or actions as needed."

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Protocol | China

Everything you need to know about the Kuaishou IPO

Kuaishou could raise just over $6 billion at a $60 billion valuation.

Kuaishou's livestreaming platform is part Twitch, part QVC.

Photo: Visual China Group/Getty Images

Kuaishou has more daily active users than Twitter and Snapchat. Still, it wouldn't be all that surprising if you've never heard of the short-form video and livestreaming platform; Kuaishou maintains a relatively low profile outside of China. Within China, the Beijing-based company has charted an ambitious plan to create a platform that seamlessly blends ecommerce, livestreaming, short-form video and gaming distribution.

In the lead-up to its Hong Kong stock exchange trading debut slated for Feb. 5, Kuaishou could raise just over $6 billion at a $60 billion valuation. If Kuaishou succeeds, it will have pulled off one of the largest IPOs in recent years.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Power

Everything you need to know about the Roblox direct listing

The company is expected to go public via direct listing on the New York Stock Exchange in February.

Roblox CEO David Baszucki is taking the company public.

Photo: Ian Tuttle/Getty Images

Roblox is a video game platform, though it describes itself alternatively as a "metaverse," "human co-experience platform" and "new category of human interaction." It's expected to go public via direct listing on the New York Stock Exchange in February.

In simpler terms, Roblox enables developers to build games within the Roblox virtual world, which looks like a crossover between Minecraft and Lego. Developers publish and distribute their games through Roblox to an audience of some 31.1 million daily active users.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
Protocol | China

More women are joining China's tech elite, but 'Wolf Culture' isn't going away

It turns out getting rid of misogyny in Chinese tech isn't just a numbers game.

Chinese tech companies that claim to value female empowerment may act differently behind closed doors.

Photo: Qilai Shen/Getty Images

A woman we'll call Fan had heard about the men of Alibaba before she joined its high-profile affiliate about three years ago. Some of them were "greasy," she said, to use a Chinese term often describing middle-aged men with poor boundaries. Fan tells Protocol that lewd conversations were omnipresent at team meetings and private events, and even women would feel compelled to crack off-color jokes in front of the men. Some male supervisors treated younger female colleagues like personal assistants.

Within six months, despite the cachet the lucrative job carried, Fan wanted to quit.

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Shen Lu

Shen Lu is a Reporter with Protocol | China. She has spent six years covering China from inside and outside its borders. Previously, she was a fellow at Asia Society's ChinaFile and a Beijing-based producer for CNN. Her writing has appeared in Foreign Policy, The New York Times and POLITICO, among other publications. Shen Lu is a founding member of Chinese Storytellers, a community serving and elevating Chinese professionals in the global media industry.

People

Poshmark made ecommerce social. Wall Street is on board.

"When we go social, we're not going back," says co-founder Tracy Sun.

Tracy Sun is Poshmark's co-founder and SVP of new markets.

Photo: Poshmark/Ken Jay

Investors were keen to buy into Poshmark's vision for the future of retail — one that is social, online and secondhand. The company's stock price more than doubled within a few minutes of its Nasdaq debut this morning, rising from $42 to $103.

Poshmark is anything but an overnight success. The California-based company, founded in 2011, has steadily attracted a community of 31.7 million active users to its marketplace for secondhand apparel, accessories, footwear, home and beauty products. In 2019, these users spent an average of 27 minutes per day on the platform, placing it in the same realm as some of the most popular social media services. This is likely why Poshmark points out in its S-1 that it isn't just an ecommerce platform, but a "social marketplace." Users can like, comment, share and follow other buyers and sellers on the platform.

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Hirsh Chitkara
Hirsh Chitkara (@ChitkaraHirsh) is a researcher at Protocol, based out of New York City. Before joining Protocol, he worked for Business Insider Intelligence, where he wrote about Big Tech, telecoms, workplace privacy, smart cities, and geopolitics. He also worked on the Strategy & Analytics team at the Cleveland Indians.
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