If Airbnb goes IPO in the next 6 months, one thing would become evident: products which have market-fit, even if not evidently coronavirus pandemic-fit, will thrive, provided the pandemic has not shifted the market frictions to the point where those products become misfits.
The tech IPO market is beginning to move again. While there had been a slowdown since March, some firms — particularly those that have weathered shutdowns — are once again gearing up to go public. A slew of firms have already filed for IPOs, including Vroom, SelectQuote and ZoomInfo. Palantir, a digital surveillance company, is also reportedly prepping a public offering. Tech darling Airbnb, which has struggled during the pandemic, hasn’t ruled out going public, says a report in The New York Times.
The challenge before founders is to make sure that the post-pandemic frictions are still relevant in their missions. I noted how some people are giving up coffee, after surviving lockdown without Starbucks. Yes, nothing bad happened without the coffee rituals. So, post-pandemic, they are now saving that $6 per cup of coffee, causing massive dislocations in the friction space for some coffee providers like Starbucks. So, even though coffee remains a market-fit product, the pandemic has changed it, at least for now.
Starbucks, a coffee chain, is experiencing two dislocations: lockdown might have changed people’s coffee-drinking habit, and lack of drive-thru in its stores may be discouraging patrons from visiting, over social distancing. So, some people were indoors for weeks and were able to go through the hibernation without Starbucks, saving about $6 per cup of coffee during any indulgence encounter. Now that the lockdown is over, not many people want to restart that lifestyle again.
Also, for the few people who are interested in going, they would prefer a drive-thru over entering the store. Starbucks does not have many stores with drive-thrus, and that is hurting it right now. The implication is that the company is closing stores as sales plummet, even when some competitors are seeing improving growth. Of course, the premium nature of Starbucks (yes, it is expensive) could be a major factor why it is struggling. During recession, expensive coffee drinking habits become secondary to most people, who are trying to just survive before normalcy returns!
You cannot afford to be pursuing pandemic-fit opportunities, losing insights on the durable market-fit ones. You need to think long-term even as you take care of today’s opportunities. If investors welcome Airbnb, you can see what matters: long-term (not ephemeral) value creation RULE.
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