Airbnb

= using the Internet to help people rent out a room, or even a couch, to frugal travelers

Description

"How it Works: Instead of searching for a room in a hotel, travelers can book an extra room in a house or a vacant home for their trip directly from property owners.

How it Makes Money: Airbnb collects a 3 percent fee on each reservation and a 6 to 12 percent booking fee." (http://www.inc.com/ss/7-start-ups-changing-peer-peer-commerce#3)

History

"after receiving funding as well as mentoring from incubator Y Combinator in 2009, the startup exploded. Airbnb -- the name was originally Airbed and Breakfast in a reference to the use of airbeds for guests -- has listings in 16,000 cities around the world and has booked more than two million nights." (http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=2714)

Discussion

Funding Issues

"the financial community is recognizing the power of collaborative consumption. Airbnb, after struggling to raise early seed capital, announced in June that it had raised $112 million from three venture capital firms, a deal which valued the company at more than $1 billion. And in early 2011, angel investor and entrepreneur Craig Shapiro started the Collaborative Fund, an investment vehicle for funding startups tapping into the collaborative consumption trend. "New technologies -- from advances in smartphones, GPS technology and social networks -- are enabling the sharing and exchange of all kinds of assets in ways and on a scale that was never possible before," Shapiro says.

Those investors are eyeing a market that is expanding rapidly. Car sharing revenues alone are projected to hit $3.3 billion by 2016, according to business research and consulting firm Frost & Sullivan. Rachel Botsman, author of the book, What's Mine Is Yours: The Rise of Collaborative Consumption, expects the consumer peer-to-peer rental market to become a $26 billion industry." (http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=2714)

Security Issues

"Airbnb recently received negative press when a few consumers went public with stories of their homes being robbed or damaged by renters found through the site. Airbnb responded with a new policy where it will cover loss or damage from guests up to $50,000. In an apology note posted to the company's blog on August 1, CEO Chesky also announced plans to start a 24-hour customer hotline to provide safety tips for guests and hosts and to let hosts set parameters for bookings that include verified phone numbers and location information." (http://knowledge.wharton.upenn.edu/arabic/article.cfm?articleid=2714)