Airbnb, the craziest and most unbelievable business model of the century – yes, someone will rent his room to a stranger for peanuts – has reached the mountaintop. Airbnb has gone public, and is now worth over $100 billion, and possibly by the end of next week, would have a market cap that is bigger than $111 billion IBM. How do you explain turning a lemon into a lemonade through the combinatorial power of software?
Hail the innovators who can find value in anything. The Airbnb business model on paper would have scored “D” from me, but people, it is an A+ company, in the real world. Nations advance when innovators rise! America creates many of them at scale.
Shares of Airbnb soared in their debut Thursday, closing slightly lower than their opening price at $144.71 in the home-sharing company’s IPO. Airbnb’s market value shot past $100 billion and makes Airbnb the 10th best debut in 2020 based on price gain from its IPO, CNBC reports. It’s the latest sign of 2020’s hot IPO market as Airbnb follows DoorDash, which began trading Wednesday. While the pandemic has decimated the travel industry, Airbnb posted a $219 million profit in the third quarter due to an uptick in local bookings. Airbnb acknowledges local laws and opposition from neighbors could slow its growth. Cities like Boston, Denver and Santa Monica, California, have tightened rules on vacation rentals. (LinkedIn)
Airbnb is an aggregator and runs a potent business model of the 21st century.
Under the aggregation construct, the companies that control the value are not usually the ones that created them. Google News and Facebook control news distribution in Nigeria than Guardian, ThisDay and others. Because the MNCs tech firms “own” the audience and customers, the advertises focus on them, hoping to reach the readers through them. Just like that, the news creators have been systematically sidelined as they earn lesser and lesser from their works. But the aggregators like Facebook and Google smile to the bank. The reason why this happens is because of the abundance which Internet makes possible.
Everyone has access to more users but that does not correlate to more revenue because the money goes to people that can help simplify the experiences to the users who will not prefer to be visiting all the news site to get any information they want. They go to Google and search and then Google takes them to the website in Nigeria with the information. Advertisers understand the value created is now with Google which simplifies that process.
In the hospitality industry, Airbnb reduces the friction between the landlord and renter by using software to build trust and remove information asymmetry. More than 80% of the leading technology companies in the world run a bit of aggregation.