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What’s Behind Airbnb’s $31B Valuation?

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Pitched to be worth a staggering $31B, Airbnb is now valued higher than Expedia and Hilton.  Last year, Airbnb reported sales of $2.6B with a net profit of $100M or 4%. This indicates that Airbnb is valued 12x sales. Is the rental startup’s valuation inflated or justified?

Airbnb is no longer a one trick pony. It started off as a platform connecting homeowners to travelers. The company has now partnered with Resy in the restaurant reservation space. Airbnb is also offering guided tours and experiences.

Total addressable market is $150B

The total addressable market for hotel lodging stands at a humongous $150B. Over 50% of hotel bookings are online and Airbnb accounts for 35% of total online bookings, up from 10% in 2014, according to this Pitchbook report.

Airbnb listings are now available in 191 countries and in over 81k cities. Its growth is dependent on the number of hosts and guests it can attract on the platform.

Airbnb’s CEO Brian Chesky wants the company to become the Amazon for travelers. He expects 1B people to use the platform by 2028, a monumental jump from the 400M customers in the first 10 years since launch.

Airbnb’s listings have grown rapidly from 500k in 2013 to over 5M in 2018. The company has successfully scaled up and is also profitable. Now the challenges are maintaining a robust growth rate with a focus on enhancing customer experience.

Over $1B in quarterly revenue

Last week, Airbnb reported that its quarterly revenue for Q3 2018 was substantially over $1B. This marked Airbnb’s strongest ever quarter. The holiday quarter this year is likely to shatter revenue records for Airbnb.

Q3 was the first quarter where Airbnb reported sales over $1B. This revenue growth was driven by key overseas markets, coupled with growing demand in smaller towns and suburban cities.

The number of booking’s in Beijing rose 91%, followed by Mexico at 79% and Birmingham at 70%.

Risks impacting Airbnb

Though Airbnb has been a goldmine for investors and founders, it is also fraught with business risks. Local authorities have now started to crack down on listings. There have been charges that owners are using Airbnb’s platform to create unregulated hotels.

The company has also been accused of creating housing shortages. According to data analysis firm AirDNA, cities such as Berlin, San Francisco and Santa Monica all experienced a drop in listings after strict regulations were passed.

Further, online portals such as Booking.com have started advertising home rentals and apartments on their website and are now a direct competition to Airbnb.

Operating profits might reach $3.5B by 2020

This Fortune report had predicted Airbnb’s operating profits to reach $3.5B by 2020. In case the company manages to achieve this target, it would put Airbnb in the top 15% of companies in the Fortune 500.

Airbnb is just not banking on growth. It knows profits are equally important. Investors remain buoyant as Airbnb is one of the few unicorns to achieve sustainable profitable revenue growth.

Airbnb is eyeing an IPO (initial public offer) in the next twelve months. It might very well be the most anticipated offering of 2019.

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How To Launch Your Business In Less Than 30 Days

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Got a great business idea that you think might be the next big thing? Despite the uncertainty and the risks tagged to becoming an entrepreneur, you wouldn’t know until you try. Besides, it takes less than a month to launch a product or service. Here’s how you make that happen.

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Millennials To Gen Z: 5 Ways They Differ In The Workplace

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(Editor’s Note: The following article is a guest post by superstar entrepreneur and tech investor Jonathan Schultz.) 

There has been plenty of focus on millennials in the past few years, but it’s now time to redirect our attention to Gen Z. Right now Gen Z is entering the workforce and are ready to become the face of corporate America.

While there are plenty of similarities between Gen Z and Millennials, let’s look at a few ways they differ.

Gen Z is more competitive

Millennials have been said to be collaborative and teamwork focused and want to operate in an environment where they feel included and part of something bigger. Gen Z is said to be more competitive and want to be judged based off of their individual performance.

Gen Z also understands that there is a need for consistent development in skills in order to compete. This generation will do whatever it takes but certainly wants to reap rewards for it.

Gen Z is highly idependent

Gen Z typically likes to work alone and many of them would rather have their own office space as opposed to working in open and collaborative environments. This generation also prefers to manage their own projects, so their unique skill sets can be exposed.

Gen Z does not want to depend on others to get things done.

Gen Z prefers face-to-face communication

Millennials love to communicate via email, text, and anything other than face-to-face. The Gen Z group are huge in-person interactors and prefer it over the less personal email or text.

Millennials have received a lot of “bad press” for being so attached to their phones and Gen Z wants to transition out of that shadow. This generation will want more in-person meetings to discuss projects, etc.

Gen Z knows technology

Gen Z has known nothing other than technology their entire lives. They grew up with Facebook, texting, etc. Millennials still grew up with landlines and dial-up internet.

While Millennials are tech-savvy, Gen Z has been living in a world of smartphones for as long as they can remember. This generations relationship to technology is almost instinctual rather than learned.

Gen Z expects the workplace to conform to their needs

Gen Z wants everything to be catered to their needs. This is why companies have had to re-think the amenities they offer and how they structure their offices in order to meet the needs of this young workforce.

Companies now have to appeal to this younger mindset and have a less cookie-cutter approach to the environment they create for their employees. While millennials also expect the workplace to conform to their needs, for Gen Z, it could mean the difference between accepting a job offer or not.

There are obviously very clear differences between these two generations. Yes, every member of a generation will have their own unique traits and characteristics, but overall you will see that Gen Z is a more independent and technologically-advanced group in comparison to Millennials.

Jonathan Schultz is an entrepreneur, real estate tech investor and influencer. He’s the co-founder of Onyx Equities, a leading private equity real estate firm, and has been voted one of the most powerful people in real estate. Follow Jon’s blog here

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GRAPH: 63 Fintech Startups That Are Targeting Millennials

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Many fintech startups are leveraging existing technologies already popular among young adults such as social networks and mobile messaging.

Project crowdfunding sites GoFundMe and Andreessen Horowitz-backed Tilt, for example, mirror or take advantage of social networks and are largely popular among college audiences. Google Ventures and General Catalyst-backed HelloDigit transfers money directly via text message.

The graphic below breaks down the set of primarily US-based fintech companies appealing to the millennial generation including RobinhoodAcornsWealthfrontEarnest and more. (As we’ve also highlighted separately, startups in the digital banking market have attracted more than $10B since 2010.)

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