Airbnb quietly acquired Eliot, a real-time pricing calculator for rental property owners, in a previously unreported 2018 deal, an Airbnb spokesperson confirmed to Business Insider.
Airbnb had already rolled out a similar tool to Eliot in 2015 called "Smart Pricing." Airbnb did not disclose how much it paid for the deal or what it did with Eliot's team or product. Airbnb has acquired more than two dozen startups in its journey toward becoming a public company, which it said it plans to do in 2020. Visit Business Insider's homepage for more stories.
Airbnb bought up Eliot, an on-demand rental pricing tool, in a previously unreported deal in October 2018, an Airbnb spokesperson confirmed to Business Insider. Eliot, founded in 2017 by Edouard Tabet, analyzed "billions of vacation rental pricing points to accuratly [sic] predict short-term rental revenue, trends and price surge events," its website said in 2018, according to The Internet Archive. On-demand or "surge" pricing, where prices for a product fluctuate as demand ebbs and flows, has been an essential aspect of platform-based companies like Uber, Lyft, and Airbnb, allowing them to make more money during busy times and keep consumers coming during slower periods. In 2015, Airbnb rolled out its Smart Pricing feature, which it said "allows hosts to set pricing controls that automatically adjust to demands in order to stay competitively priced." Since Smart Pricing's debut predated the Eliot by several years, it's unclear whether Airbnb wanted to acquire the company's technology and talent, buy out a potential competitor, or both. Airbnb did not disclose how much it paid for the company or what the terms were, though Tabet's LinkedIn profile lists his current job title as "head of growth, Growth & Traffic" at Airbnb. The domain for Bold's website now redirects to a company called Velo Payments, which says it's "making the payouts process accurate, reliable and easy." Business Insider could not confirm whether there is any connection between the companies. Bold is among several acquisitions made by Airbnb that the company has been relatively quiet about, in contrast to its purchases of companies like HotelTonight and Luxury Retreats. With Airbnb preparing to go public in 2020, investors will be paying close attention to how each of its more than 20 past purchases have paid off.Join the conversation about this story » NOW WATCH: How autopilot on an airplane works
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Venture capitalists reveal the startups that changed everything in the past decade (UBER, SFIX, AMZN, TEAM)
The past decade was an eventful one for the startup world. The rise of smartphones, online...The past decade was an eventful one for the startup world. The rise of smartphones, online marketplaces, the sharing economy, and cheap access to the cloud have enabled entirely new business models — some more successful than others. Business Insider spoke with five venture capitalists about the startups that had the biggest impact on the tech world throughout the 2010s. They noted that companies like Theranos and WeWork demonstrated the pitfalls of "founder worship" and the pursuit of growth at all costs. But startups like Dollar Shave Club and Warby Parker stand out as companies that have successfully built direct relationships with consumers. Stitch Fix and Rent The Runway are showing investors the promise of women-led ventures in an industry that grossly lacks diversity, while Shopify and Atlassian have proven that markets outside of Silicon Valley are taking off. Visit Business Insider's homepage for more stories. The 2010s were a wild ride for startups and the investors who pumped money into them. As the decade kicked off, smartphones were becoming ubiquitous, connecting billions of people to the internet — many for the first time — and paving the way for a wave of innovative business models. Online marketplaces and sharing economy platforms — Amazon, Facebook, Uber, Airbnb, and many more — demonstrated the power of network effects, and in doing so, completely changed how people and businesses interact with each other. Companies seized on the stream of constant, real-time, location-based, and personalized data that consumers volunteered via a growing list of smart devices to provide them with faster and more convenient services. Entrepreneurs had the wind at their backs, thanks to a flood of venture money and access to technical infrastructure — Amazon Web Services — meaning they could spin up and scale up their startups like never before. Unicorns seemed to appear everywhere, and tech IPOs had investors excited. But the tides began to turn in the second half of the decade as a flood of scandals chipped away at the idea that tech companies — and tech founders — are inherently good. Public investors became skeptical of the premium price attached to some tech companies, and the batch that went public in 2019 had a rough go of things. Four months into 2020, the unprecedented coronavirus pandemic has rocked the global economy and startup world, leading to at least 30,000 layoffs at venture-backed companies and even impacting unicorn tech darlings like Uber, Lyft, Airbnb, and Peloton as funding and sales have dried up. After speaking with five venture capitalists about how things have evolved since 2010, some clear lessons emerged — as well as some clear examples of those lessons. While it would be impossible to include every important startup, below are the companies that investors said have had the most impact on their industry in the past 10 years.SEE ALSO: These were the people and events that made the internet curious in 2019, according to Wikipedia Uber, Theranos, and WeWork demonstrate the pitfalls of "founder worship" and the pursuit of growth at all costs. Uber's Travis Kalanick, Theranos' Elizabeth Holmes, and WeWork's Adam Neumann: All were considered charismatic and visionary founders who sought to change the world, but each was eventually forced out of their respective companies amid scandal. When Holmes resigned in 2018 in the face of criminal charges and reports of fraud at Theranos, "everyone in venture really questioned their own diligence," Kristin Gunther, a principal at Revolution, told Business Insider. Gunther added that it made her reflect on how she engages as a board member. "Against a background where, for a couple years here, hot deals moved really fast and people could get funded based on two PowerPoint slides, it became even more important to say, 'Hey, fine, this is a hot deal, but I'm going to miss it because it's not worth it to cut the corners,'" Gunther said. Kalanick was also forced out for cutting corners. In 2017, investors orchestrated his resignation at a time when Uber's public image had plummeted. Once a company that every investor wanted in on, critics had started alleging that Uber enabled workplace harassment, skirted local regulations, and that Kalanick's own behavior had put the company on a crash course. Neumann, WeWork's eccentric founder, stepped down earlier this year after the company's failed attempt to go public led to reports of his extensive conflicts of interest, mismanagement, and bizarre behavior. All three companies epitomized Silicon Valley's obsessive focus on growth and a celebration of ambitious founders, which often ignored problematic behavior and business practices. "I just think we abandoned values in terms of, not just how we invested, but managed companies," Elliott Robinson, a partner at Bessemer Venture Partners, told Business Insider. Jet.com, Dollar Shave Club, Glossier, Warby Parker, and Casper stand out as just a few of the many companies that have successfully built direct relationships with consumers. The pervasiveness of social media and digital ads has given companies powerful new ways to connect with their target audience and helped enable the rise of direct-to-consumer brands. Anu Duggal, founding partner at Female Founders Fund, told Business Insider that social media has "enabled brands to have a direct conversation with those consumers and have that impact their actual product design." Duggal highlighted brands like Warby Parker and Glossier as companies that have effectively leveraged conversations with those consumers to inform product development. Jenny Lefcourt, general partner at Freestyle and founding member of All Raise, said another reason these brands have been so successful is that they've created "authentic community" among their consumers. "Maybe you go to Glossier because you love makeup and you start connecting with the community about that and before you know it, you start becoming friends and you're sharing travel tips," Lefcourt told Business Insider. These companies didn't initially seem like sure bets, however. Gunther pointed to online retailer Jet.com and its acquisition by Walmart as an important proof of concept, and said it "showed the exit path for some of these direct-to-consumer companies where that was really a question." Stitch Fix, Rent The Runway, and Away are showing investors the promise of women-led ventures in an industry that grossly lacks diversity. It's no secret that venture capital firms — and, as a result, the entrepreneurs they fund — suffer from a lack of diversity. A recent survey by RateMyInvestor found that the typical founding team was a "two person, 'all male,' 'all white,' U.S. university-educated team residing in Silicon Valley." Over the past decade, however, with several women-led ventures reaching multi-billion-dollar valuations and Stitch Fix founder Katrina Lake becoming the youngest female founder to take a company public, investors are finally taking notice. "Venture capitalists are pattern matchers," Lefcourt said. "Seeing these women take these companies from start to IPO and be incredibly successful enables other venture capitalists — whether they're men or women — to change their view on what successful looks like." Venture capital firms still have a long way to go both in terms of who they invest in and who is doing the investing, especially when it comes to racial and educational diversity. But, at least when it comes to women-led ventures, Duggal said investors are "recognizing the fact that there are real returns to be made." Shopify, Atlassian, and Waze proved that markets outside of Silicon Valley are taking off. RateMyInvestor's survey also found that venture funds have a strong geographical bias, with nearly half of all investments in the past five years going to startups based in Silicon Valley. But in recent years, several companies have revealed the untapped potential of other markets, particularly outside of the US. "There were always great companies and great innovation outside of the US," Victoria Treyger, general partner and managing director at Felicis Ventures, told Business Insider. But prior to Shopify, she said, "there was a belief that VC-backed companies outside of the US exited earlier." Shopify, which is based in Ottawa, Canada, is notable for its outsize role in empowering small and medium businesses. Robinson, who invested in Shopify, said that by building ecommerce tools and "multiple revenue streams off of a really large user base, that just really changed the way people thought about [software as a service]." Atlassian, an enterprise software company out of Sydney, similarly put Australia on the map. "I just see the number of [Atlassian] alums that are in that ecosystem," Treyger said, noting how employees of pioneering companies like Shopify and Atlassian often go on to start their own ventures. Israel has also become a hotbed of entrepreneurial activity. It has produced household names like Waze (which was acquired by Google) and, in 2018, 61 companies exited at an average deal size of $81 million. Within the US, cities like Chicago, Seattle, Denver, Portland, Atlanta, and Washington, D.C., have also seen massive increases in both investment and startups. Stripe, Square, Lending Club, SoFi, and Robinhood are just some of the key startups flipping the financial services industry on its head. Fintech was another sector this decade that saw major disruption and a flurry of new companies achieving massive valuations. Startups took advantage of the rise of smartphones, digital banking, and machine learning to bring more consumers into the financial system and upend how people spend, make, borrow, and exchange money. "When you look underneath, there is true technological innovation," Treyger said. "It's really exciting to see that the dollars went into companies that have truly transformed the financial service sector." As just a few examples, Stripe and Square helped change the way businesses get paid, Lending Club and SoFi took on incumbents in the personal loan space, and Robinhood reinvented how everyday consumers invest.
Some large Airbnb investors have slashed their internal valuations of the company by more than 30% as the pandemic halts travel
The home-sharing startup Airbnb was most recently valued at $31 billion in a 2017 funding round....The home-sharing startup Airbnb was most recently valued at $31 billion in a 2017 funding round. It's had its valuation cut by a couple of its investors recently — the mutual-fund managers Principal Global Investors and Hartford Funds. The coronavirus pandemic has shut down travel, cutting into Airbnb's revenues and raising questions about if people will want to open their homes to strangers once a vaccine for COVID-19 is introduced. Despite the pandemic, one mutual-fund investor, Macquarie, has increased its valuation of Airbnb since the virus broke out in the US. Visit Business Insider's homepage for more stories. Several mutual-fund managers have slashed their internal valuations of the $31 billion home-sharing unicorn Airbnb. The startup, founded by Joe Gebbia and Brian Chesky, has been hit hard by the coronavirus pandemic, which has halted travel worldwide. A recent story in The Wall Street Journal said Airbnb hosts who are reliant on the app for income were in danger of defaulting on their mortgages, and the market-research firm AirDNA estimated Airbnb saw $1.5 billion in bookings canceled in mid-March. The startup's equity is held by several mutual funds, though not all mutual-fund investors have updated their portfolio holdings since the end of March, when the virus' impact was felt most intensely in the US. The mutual-fund managers Hartford Funds and Principal Global Investors, however, have made significant cuts to their internal valuations of the startup. Hartford's $744 million International Equity Fund said Airbnb's shares were worth $85.27 each at the end of March — a decrease of more than 32% compared with fund's valuation of the startup in the fall. Read more: Airbnb says it's going to focus on longer-term stays, but analysts worry its short-term rental roots will make it hard to grab a piece of the $18 billion market Principal's $9.7 billion Large Cap Growth Fund, which Morningstar rates as five stars, cut its valuation of the startup by more than 30% from the end of February to the end of March. The manager values its equity in Airbnb at $81.36 per share. Some of the industry's biggest players, such as Vanguard and Fidelity, own the startup's equity in their funds but have not yet updated their holdings to reflect the managers' view on Airbnb after the pandemic. One fund though, Macquarie's Optimum Large Cap Growth Fund, believes the startup is worth more now than it was in the fall, when equity markets were near all-time highs. The $1.6 billion fund valued its shares of Airbnb at $116.03 each at the end of March — an increase of about $3 a share since the firm's report at the end of September. Hartford and Principal declined to comment, and Macquarie did not immediately respond to requests for comment. Airbnb saw a huge upsurge in cancellations right after the outbreak was declared a pandemic and COVID-19 cases started to rise in the US. It's also seen a big drop-off in new bookings as governments around the world have limited the movement of their citizens to try to contain the disease. Read more: Airbnb is facing an unprecedented threat from the coronavirus. Here are the veteran execs on Airbnb's board of directors who will be critical to CEO Brian Chesky's success or failure. In recent weeks, Airbnb has raised $2 billion in debt financing as it tries to stay afloat during the crisis. It's also been trying to keep its property managers above water, pledging some $265 million to them in the form of grants and partial reimbursements for cancellations. In a statement to Business Insider, Airbnb said: "The global pandemic has required the country to shelter in place, upended the economy, led to unemployment figures last seen during the Great Depression and impacted everyone, including restaurants closing, hotels shuttered, airlines grounded, amusement parks shut, access to beaches and parks denied, conferences and festivals canceled, sporting events and concerts postponed, schools closed and graduations delayed. We believe that this is temporary: travel will bounce back over the long term and we are well-positioned to weather the storm and come back stronger."SEE ALSO: Airbnb and RXR Realty are scrapping a partnership at Rockefeller Center that the home-sharing giant's CEO touted as a '21st-century hospitality model' DON'T MISS: Companies in ailing sectors like energy and retail are adopting poison pills as their shares tank. We tracked down 41 recent moves — and the activist investors they're fighting off. Join the conversation about this story » NOW WATCH: Why electric planes haven't taken off yet
Airbnb-backed corporate housing startup Zeus Living is asking landlords to renegotiate their leases and withholding April and May rent until they sign
Airbnb-backed apartment rental company Zeus Living has been asking landlords to renegotiate leases into revenue-share agreements...Airbnb-backed apartment rental company Zeus Living has been asking landlords to renegotiate leases into revenue-share agreements or cancel their contracts, according to documents viewed by Business Insider. Zeus has also told landlords that they wouldn't be paid their April or May rent without signing the new revenue-share agreements, according to an email viewed by Business Insider. Last Monday, CEO Kulveer Taggar hosted a Zoom conference for landlords, where he said that the company had $2.5 million in cancellations in March. Visit Business Insider's homepage for more stories. Airbnb-backed corporate home rental company Zeus Living has been asking landlords who let their homes to the company to renegotiate or cancel their leases to protect the company's dwindling cash reserves. According to documents viewed by Business Insider, up to 404 landlords have been asked to renegotiate their leases to a revenue-sharing model that doesn't guarantee payment unless the spaces are occupied. Additionally, the company told landlords that if they didn't sign the new contracts, they wouldn't be paid April and May rent, according to a separate email viewed by Business Insider. A representative for Zeus confirmed that the company has asked for rent abatements and to swap leases for revenue-share agreements. Zeus rents furnished properties for stays of longer than 30 days in six metro areas around the country, catering specifically to business travelers. Like many hospitality businesses, the company has been heavily impacted by the coronavirus pandemic. The company laid off 30% of its staff at the end of March. The company raised a $55 million Series B round at a $205 million valuation in December of last year from a range of backers, including Airbnb and Comcast. $2.5 million worth of cancellations in March Zeus CEO Kulveer Taggar hosted a Zoom conference with 130 landlords last Monday to explain the decision, according to a source who attended the meeting. He told landlords that those who have a resident in their home will be paid. He also said that the company had $2.5 million worth of cancellations in March, and was already looking to raise money this year. A representative for Zeus confirmed the details of the Zoom meeting, and noted that the company has experienced more cancellations since March. "This has been a surreal time and everyone is hurting in this crisis," Taggar wrote to Business Insider in a statement. "Like so much of the country, we're experiencing liquidity challenges and have made difficult choices to adapt so our company and community can make it through." Typically, Zeus signed leases with landlords that guaranteed payment every month, regardless of occupancy. The company brought in furniture to make the space move-in ready, and then charged their clients a premium over the rent that they were paying for the homes. The new revenue-sharing model splits revenues between the landlord and Zeus. The exact splits depend on the contract and the amount of money that Zeus is getting paid to rent the space out, but generally Zeus gets a larger share of the profit as the property brings in more money. Business Insider reviewed the terms of one new contract. If the property receives 0-50% in revenue of the previous rate Zeus was leasing the property at, Zeus receives 4% of revenue, at 50-100% of the lease rate, Zeus gets 10% of revenue, and above 100%, Zeus gets 55% of revenue. Zeus confirmed these rates to Business Insider. Business Insider also reviewed the force majeure clauses in a pre- and post-coronavirus contract. Before coronavirus, potential events that trigger force majeure (such as strikes and natural disasters) would allow the company to delay payment without penalty. After coronavirus, these same events would allow Zeus to cancel the lease agreement if events make it "commercially unreasonable" to pay rent. A Zeus spokesperson told Business Insider that "every company is adapting in real-time to a new and volatile business environment, and our industry is no different but we don't comment on contract terms." Coronavirus continues to cripple the hospitality industry This mirrors a change happening in the flex-office world, where companies looking to reduce their financial obligations have moved away from leasing space from a landlord to entering a revenue-sharing partnership. While this can mean the company takes in less profit when spaces are full, it also protects them if profits dip. On the call last Monday, Taggar explained that the company has applied for a PPP loan to deal with the short-term cash crunch, which the firm has confirmed it had been approved for. On the call, Taggar said that the company had plans to fundraise in the second quarter of this year. A spokesperson for Zeus confirmed that the company is still fundraising. Taggar also said on the call that 52 of the 390 landlords that work with the company have agreed to sign the revenue-share agreement. A spokesperson for the company said that the company has 404 single-family owners, and that nearly two-thirds of owners have decided to continue working with Zeus so far. "The pandemic was a hard blow to our business and meant we had to adapt quickly," Taggar said in a statement to Business Insider. "But Zeus has always been nimble and I'm proud of how quickly the team shifted gears to attract new types of residents such as displaced students, healthcare professionals, government employees, grounded tech workers, and early responders. Since March there has been positive traction across marketing campaigns, we're booking more six and twelve-month leases, many residents are extending their stays, and we are beginning to see bookings pick up significantly." While the pandemic accelerated the adoption of revenue share contracts, the move was in the works before the pandemic. The company signed its first revenue-share agreement in Washington, DC earlier this year. Short-term apartment rental companies have been hit hard by coronavirus, as many of them continue to carry lease obligations while business and leisure travel has slowed to a halt, stifling almost all demand for their inventory. Lyric, another hospitality company that has raised money from Airbnb, cut 20% of its staff in March, according to a report from The Real Deal. Sonder, a venture-backed hospitality and rental company, laid off or furloughed more than 400 people or one third of their staff in March as well, The Information reported. Even Airbnb, on the eve of its likely IPO this year, has had to raise a $1 billion in cash to keep its operation running.SEE ALSO: Airbnb-backed Zeus Living just laid off 30% of staff as the coronavirus upends travel and hospitality startups SEE ALSO: Vacation home owners are turning properties into quarantine havens by beefing up amenities to include protective masks and large cases of wine SEE ALSO: What to expect when you're back in the office: 7 real-estate experts break down what the transition will look like, and why the workplace may never be the same Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America