Top 5 takeaways from Airbnb’s S-1
Airbnb’s prospectus dropped this week, giving investors their first glimpse at the company’s books. What did they find? Nearly 350 pages detailing a rollercoaster of revenue and losses.
Airbnb’s gross bookings totaled $38 billion in 2019, up 29 percent year over year, with $4.8 billion in revenue, compared to $3.7 billion in 2018. It lost $674.3 million last year. Below are 5 more highlights:
1. Covid made a big dent. Even with a rebound in local travel, bookings totaled $18 billion as of Sept. 30, a 39 percent year-over-year decline. Revenue for the same period was $2.5 billion, a 32 percent year-over-year drop.
2. Airbnb’s still chasing profits. The company lost $674.3 million in 2019. And for the first nine months of this year, it lost a whopping $696.6 million. There was a glimmer of light in Q3: $219 million in profits.
3. March was madness. Pre-pandemic, Airbnb had gross bookings of $3 billion in February 2020. But refunds to customers pushed that number down to negative $900 million in March, the S-1 shows. Monthly bookings were back up to $2.5 billion in September.
4. Chesky has a charitable streak. CEO Brain Chesky’s base pay will be $1, but he’ll get stock valued at $120 million over 10 years. He plans to donate that money to “charitable causes.” The S-1 shows Chesky owns 15.4 percent of Airbnb. Top executives together control 43 percent of the company.
5. Fun financial facts: Airbnb lured CFO Dave Stephenson with a $600,000 salary and $2.4 sign-on million bonus. Ex-COO Belinda Johnson, who stopped down earlier this year, sold 933,648 of her shares for $27.4 million, which covered the exercise price of her stock options.
“Without us, the hosts, Airbnb is nothing.”
Nipping at Opendoor’s heels?
iBuying startup Offerpad is shaking up its C-suite as it chases industry leaders Opendoor and Zillow.
The five-year-old company, which has raised $155 million from investors, named Steve Johnson as COO. In a statement, CEO Brian Bair said Offerpad is targeting “aggressive growth.” In addition to Johnson, Offerpad last week hired David Connelly as chief growth officer and Ben Aronovitch as chief legal officer.
Although Offerpad came onto the iBuying scene at the same time as Opendoor, the company has lagged behind its top rival, which is going public via a $4.8 billion merger with a blank-check company. In 2019, Offerpad sold an estimated 4,600 homes, generating $1.2 billion in gross revenue, according to data from industry analyst Mike DelPrete. But its market share dropped to 16 percent in 2019, from 26 percent in 2018. Offerpad recently inked a deal with a relocation service to boost business. And it launched a home-selling service.
Overall, iBuying numbers for 2020 aren’t looking great. DelPrete projected a 50 percent drop in sales volume for 2020, thanks to a pause in transactions this spring. Opendoor’s sales are projected to drop nearly 60 percent, compared to Zillow’s 21 percent drop and Offerpad’s 24 percent drop.
Is Domio over, or isn’t it?
Embattled hospitality startup Domio is open for business, according to the company’s interim CEO Jim Mhra. His rebuttal came on the heels of a report that Domio laid off its staff after failing to raise $10 million.
But in an email, Mhra said Domio’s demise was exaggerated. Instead, it’s undergoing a “planned financial re-engineering.”
Founded in 2016, Domio has raised more than $100 million from investors to lease portions of buildings and rent out furnished units to travelers. But in August, the Information reported that Domio had a longstanding practice of renting out short-term units under pseudonyms via Airbnb, in violation of Airbnb’s policies. The disclosure prompted CEO Jay Roberts and Chief Strategy Officer Adrian Lam to resign. Domio currently has 1,000 spaces in Chicago, Miami, Nashville and New Orleans, according to its website.
Susquehanna pours $22M into video startup
Here’s a story about a profitable startup that just raised $22 million.
Indiana-based Realync sells video software to property owners. Founded in 2013, it had 300 properties on its platform before Covid. Today, it’s pushing 1,500. To keep up with demand, Realync raised $22 million from Susquehanna Growth Equity. CEO Matt Heirich Realync has only raised $1.4 million in outside funds to date, and the company is profitable with $4.5 million in recurring annual revenue. Customers use their smartphones to record video tours and send personalized clips to prospects.
STAT OF THE WEEK
Estimated surge in demand for flex-office space by 2025, per Colliers
Better.com’s CEO goes off the rails
But CEO Vishal Garg is ensnared in a rash of lawsuits, alleging financial mismanagement at prior startups and misappropriation of “tens of millions” of dollars, reported Forbes. His volatility spilled over into emails with employees, according to an email obtained by Forbes. “You are a bunch of DUMB DOLPHINS,” Garg wrote. “DUMB DOLPHINS get caught in nets and eaten by sharks. SO STOP IT.”
According to Forbes, Better.com investor Goldman Sachs accused entities controlled by Garg of “flagrant self-dealing” before quietly dropping the suit in October. And Garg’s former business partner, Raza Khan, said Garg took $3 million from a joint business account to start Better.com. Khan also said Garg threatened to burn him alive.
Garg later apologized for letting his emotions get “out of control.” A spokesperson for Better.com called the accusations “baseless,” and said “lawsuits are an unfortunate fact of life for successful startups and their CEOs.”
Beefing up the board
Compass is adding financial firepower to its board.
The SoftBank-backed residential brokerage said it added LinkedIn CFO Steve Sordello to its board. He’ll bring “invaluable perspective” to Compass, CEO Robert Reffkin said. The firm, last valued at $6.4 billion after raising $370 million in July 2019, appears to be laying the groundwork for an IPO. Sordello is the fourth director to join this year, in addition to former Oracle Corp. President Charles Phillips; Bridgewater Associates co-CEO Eileen Murray and media exec Pamela Thomas-Graham.
This startup will pay your rent on time
What if rent wasn’t due on the first of the month?
Chicago-based NestEgg, started by former Expedia CTO Eachan Fletcher, “decouples” when tenants pay and when landlords get their check by essentially fronting the money itself. Now, the company has raised $7 million to hit the gas on new offerings.
NestEgg bills itself as a tool for individual landlords who can use its app to coordinate administrative tasks, maintenance jobs and rent collection. For $5 per unit per month, NestEgg will draw on a line of credit to pay landlords on the first of the month. Tenants then pay back NestEgg over the course of the month.
In conjunction with the funding round, NestEgg launchd NestEgg Pay, which landlords use to finance maintenance jobs, interest-free for six months. Fletcher said the new capital will allow NestEgg to double its 18-person team in the next three months.
? A NYC real estate lawyer launched InstaClosing, a digital closing startup.
? Digital notary startup Notarize is partnering with Zillow-owned Dotloop, a transaction manager. Agents using Dotloop can get documents notarized with the click of a button.
? Urban Ladder, an Indian furniture marketplace that raised $100M from Sequoia Capital and others, was bought for $24.5M by retail giant Reliance Retail.
✋ HelloOffice, a tech-focused commercial brokerage that raised $20 million in June, rebranded as Raise.
? Dominic Penaloza, WeWork’s ex-head of innovation in China, launched REinvent, a “startup studio” where teams of engineers work on several new ventures.
? Ex-Apple exec Greg Leung is the new CEO of Connect Homes, a startup that builds prefab starter homes (460 sf to 3,200 sf), for $174,000 to $825,000. The company recently raised $5M.
? Microsoft is investing $65M into affordable housing units in Seattle, including $40M into a fund operated by Urban Housing Ventures.