A YC-backed hourly home rental startup says demand is booming amid city-wide shutdowns, but its future depends on quarantine-weary workers staying put
Globe, an hourly home rental startup backed by Silicon Valley accelerator Y Combinator, said that it has completely reworked its business model during the pandemic-induced shelter-in-place orders across the United States. The new model relies heavily on listings from property managers who have seen a drop in requests for rentals they've previously hosted on Airbnb. Cofounder and CEO Manny Bamfo told Business Insider that the strategy and upfront technical investments paid off handsomely with a significant increase in demand. To comply with local ordinances, Bamfo said Globe is only available for "essential" activities like job interviews or working space that falls within three blocks of a guest's home address. As massive tech companies like Facebook and Shopify embrace long-term remote work, Bamfo said Globe could provide a default office for digital nomads, but his startup's model is dependent on high-density cities that many workers are fleeing. Click here for more BI Prime stories.
An hourly home rental startup is trying to make lemonade out of lemons during the coronavirus pandemic. Globe allows its users to rent empty homes, apartments, and rooms by the hour. When it launched at Silicon Valley accelerator Y Combinator's annual Demo Day in September, cofounder and CEO Manny Bamfo proclaimed that it would become a second space for constrained professionals unhappy with open office floor plans, or traveling workers who wanted privacy instead of coworking spaces. But over the last three months, Globe's entire world spun off its axis as states enacted shelter-in-place orders to stave off the coronavirus pandemic. Offices closed, workers toiled at home, and kitchens and living rooms became the de facto second spaces Globe once wanted to provide. The same tectonic shifts have revealed cracks in the bedrock under Globe's big brother, home-sharing startup Airbnb, as most non-essential travel ground to a halt. All of a sudden, the young startup's future looked a lot less promising. "We worked with hosts that would open up their spaces in the middle of the day while they were at work, but in mid-February through early March, that part of our business tanked," Bamfo told Business Insider. "We were terrified." But Globe's biggest weaknesses, namely that it was relatively young and had less cash in the bank than Airbnb, also made it easier to adapt. In the span of a few weeks, Bamfo said his team had reworked the host process to accommodate property managers fleeing Airbnb. Before February, Globe essentially let anyone with a lease rent out empty space in their homes while they were away. The process of renting out a space on Globe was quick and simple, and almost anyone could do it. Now, Bamfo said they've created an official application and listing process, something the property managers had become accustomed to when listing on Airbnb. The sudden halt in non-essential travel meant that rental managers were often sitting on tens of empty properties and losing money, fast. So they reached out to Globe about listing their city-bound properties on Globe as work spaces, or private places to take calls, or oases for harried parents in need of an hour of silence. According to Bamfo, the pivot worked. "Right now there are 10 million property managers or Airbnb hosts that don't have any demand for travel," Bamfo said. "And then there are all these people that are saying, 'I need space,' so there is an organic pull that we are getting." '100% essential' Operating a functional home-sharing startup is not an easy feat to pull off in a pandemic, and Bamfo said the team has made significant investments in the technical and screening processes to ensure Globe remains compliant with city and state ordinances. Now, guests have to provide what amounts to a temperature selfie — a photo of themselves with their temperature reading on a thermometer — to Globe before they get their booking details. Hosts are provided sanitization kits — a collection of wipes, gloves, and soap sourced from professional cleaning crews — when they list properties on the site. Guests are encouraged to book spaces only for essential activities like job interviews within their apartment buildings, or within three blocks of their home addresses, to help limit travel as much as possible. However, Bamfo said that safeguard is operating on an honor system at the moment. But for Globe to emerge victorious from the current economic environment, it will need to operate fully above board and in good standing with the cities where its spaces are located. "We find mental health to be an essential need and work is an essential need," Bamfo said. "Travel is 100% non-essential, but work is 100% essential. We are in a global economic crisis and we need the opportunity to work, so we find it 100% essential to have space to get work done." High density, high risk, high reward As restrictions loosen in some of Globe's current markets, the fact remains that the business is built for cities and the white-collar workers who live there. The current safeguards that limit how far a guest can travel to get to a Globe space are optimized for high density housing like high-rise apartments. Even when the pandemic subsides as a threat, people seeking a private respite for a few hours are likely to look for building close by. But study after study has found that many of those metro-area workers, Globe's target customer base, are gearing up to flee cities once restrictions are lifted. Months cooped up working from kitchen tables or couches in pricey apartments, often with a roommate or partner, have erased some of the appeal of city life. Thursday, Facebook announced that it expects to move roughly half of its 50,000 employees to permanent remote work, a policy that could substantially rework the dynamics of California's pricey Bay Area. "A lot of our hosts were relying on revenue from Globe to make their rent," Bamfo said. "In the markets we are in, rent is expensive." If the predicted urban exodus does in fact play out with young professionals fleeing to the suburbs or small towns, Globe could be looking at a future less favorable than Airbnb's, which profits from the travel market under normal conditions. But Bamfo remains optimistic. "At this moment, our future is bright," Bamfo said. "We are trying to make homes work better for our world right now. We can't all cram into offices and we can't all cram into our homes. We need a middle ground, and that's Globe."SEE ALSO: See the deck that top growth-stage investor Insight Partners is using to prepare its founder network to weather a prolonged economic downturn Join the conversation about this story » NOW WATCH: What makes 'Parasite' so shocking is the twist that happens in a 10-minute sequence
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They are small, ambitious and target savvy travelers. But their main goal is to improve the...They are small, ambitious and target savvy travelers. But their main goal is to improve the home-sharing experience for hosts and renters alike.
Airbnb employees chipped in $1 million from their own pockets to help economically devastated hosts, and that says something beautiful, and scary
Airbnb employees thought that 2020 would be a time of celebration for them as the short-term...Airbnb employees thought that 2020 would be a time of celebration for them as the short-term rental startup was expected to go public in one of the most anticipated IPOs of the year. Instead they found themselves digging into their own pockets to donate to their customers to keep just a small portion of them afloat. Employees contributed $1 million collectively to a $17 million fund that will offer up to $5,000 to badly hurt hosts. (Airbnb founders kicked in $9 million and investors kicked in $7 million). It's a beautiful gesture that points to a bigger problem. The small businesses owners that are the backbone of the sharing economy are shouldering more than their fair share of business risk. But there are some hopeful signs of how this could change, and the sharing economy could truly become a win-win. Visit Business Insider's homepage for more stories. As the COVID-19 crisis brought travel to a screeching halt, the people that rent rooms, condos and all sorts of other abodes on Airbnb suddenly found themselves with little to no income. What's more, Airbnb instituted cancellation policies that allowed guests to get full refunds, a policy that made sense given the situation but which left many hosts with the short end of the stick. GoFundMe campaigns have sprung up across the nation to help small businesses like bookstores and restaurants survive until the virus recedes and people begin to roam about again. And in that vein, Airbnb employees created the Airbnb Superhost Relief Fund, a program intended to help at least some of its highest-rated hosts, known as "superhosts" to survive. The fund is limited to superhosts who can prove Airbnb is their main source of income, have been on the platform for at least a year and have two or less properties (a nod to regulatory pressure to limit hosts building big hotel-like businesses on Airbnb, with multiple listings). The fund is invitation-only; Airbnb chooses who can apply. Superhosts will get up to $5,000 apiece as a grant, not a loan, although they'll be responsible for their own taxes. Airbnb's weathly founders put $9 million into this fund. Company investors put in $7 million. And Airbnb's employees contributed $1 million from their own pockets, the company says. Airbnb has its share of highly paid engineers, but it also has an army of of hourly workers. "While I can't be certain I will receive an invite to apply, I cried tears of gratitude for the @Airbnb superhost grant fund. Losing my sole source of income overnight was tough," one host posted on Twitter. The employees' $1 million-worth of contribution to the fund is especially noteworthy given that Airbnb employees thought 2020 would be a jubilee year for them, as the company was expected to go public in one of the biggest IPOs of the year. That IPO is now on ice, and their employer is scrambling until the travel industry comes back. Airbnb has had to obtain $2 billion in two new financing deals this month. Such generosity by people who are facing their own uncertain future is beautiful. But it also shows a scary side of our the so-called sharing economy. It's not really sharing. You take the risk, I take the money The so-called independent workers running their own businesses are beholden to the tech company that owns the platform. The tech company assumes very little of the business's risk. In Airbnb's case, it doesn't hold the mortgages or clean the rooms or pay the utilities or the taxes. In Uber's case, it doesn't make the car payments or pay for the maintenance. For Amazon's third party sellers, the retail giant doesn't pay for the products. These platforms are built on the backs of these small business owners who don't share the power. If the platform changes a policy (which they have been known to do), they can devastate the people who risk it all to provide the platform with the products it sells. Because Airbnb has been so lucrative, some people have leveraged themselves to the hilt with many mortgages, an unwise risk in hindsight. Those people won't be helped by the Superhost Relief Fund, as one angry host points out in a tweet. "@Airbnb I don't understand [the] superhost relief fund NOT including the hosts who have dedicated everything to being AirBNB hosts (those w MANY listings). We are the ones whose sole income is #airBNB and we are the ones with HUGE mortgage costs sitting on our necks during #COVID2019" Airbnb says these hosts may have qualified for small business loans under the emergency funding CARES Act, but the $349 billion federal relief program for US small businesses ran dry on Thursday, the SBA said. If there were no Airbnb, those landlords would likely have been renting their rooms and apartments to long-term tenants. Airbnb properties are now flooding onto the rental market, which could lead to falling rents and, some say, will exacerbate an impending real estate collapse. Power to the suppliers Obviously, no one wants to go back to a world where there are no tech platforms and no opportunities to build a global small-businesses accessible with the tap of the smartphone. The platforms provide the software, hire the engineers and pay the bills for the big cloud services that link everyone together. But we may not want to go back to a world where the economic risk is not shared more equally by everyone. Whatever happens to the Airbnb property owners or the Uber drivers or other gig workers, the founders of these platforms are already billionaires and the well-paid engineers will likely land on their feet at other jobs. There may be two outcomes after COVID-19. We may see the rise of some form of a union for platform suppliers where suppliers can band together and, in essence, collectively bargain. The platform will be forced to consult with the suppliers before it tinkers with policies that could badly hurt them. We've already heard whisperings of tenant associations forming in some parts of the real estate world. Another intriguing potential outcome of the current crisis is the emergence of a new type of tech platform in which gig workers — that is, the "suppliers" in a platform business model — have greater control of their individual business. For instance, a startup called Dumpling is doing this for grocery delivery workers. It offers software that lets personal shoppers build a grocery shopping client base, independent of, say, an Instacart. Dumpling was named by VCs as one of the startups that will thrive in the post coronavirus world. Supply-side platforms like this would allow sharing economy workers to use the broader platforms — whether for grocery delivery, transportation or home rentals — while also building their own, truly independent businesses. Are you an Airbnb employee or insider with insight to share? Contact Julie Bort via email at firstname.lastname@example.org or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188. Now read: Airbnb hosts will be charged fees if they cancel summer bookings due to coronavirus concerns Tech CEOs say they plan to scale back on real estate for offices now that they know everyone can work from home, and it's not good news for WeWork 18 startups that VCs say will thrive this year despite the economic crisis SEE ALSO: Airbnb hosts will be charged fees if they cancel summer bookings due to coronavirus concerns Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button
Airbnb's hosts aren't impressed with the company's $260 million package to make up for coronavirus cancellations . 'People see it for what it is — it's PR.'
Property managers who list accommodations on Airbnb weren't overly impressed with the plan the company announced...Property managers who list accommodations on Airbnb weren't overly impressed with the plan the company announced Monday to help them out. The $250 million fund the company set up to reimburse hosts for cancelled reservations will only cover a portion of lost revenue, and some property managers may see no benefit at all. The separate $10 million pot that Airbnb set aside for its so-called superhosts will likely offer help to only a small number of property managers, because of the difficulty in achieving and maintaining superhost status and because only certain subgroup of superhosts are eligible for the grants. Some hosts told Business Insider that the plan doesn't address the underlying problem — Airbnb's policies are tilted too much in favor of travelers, to the detriment of property managers. Visit Business Insider's homepage for more stories. Property managers whose businesses have been hit hard by the coronavirus crisis had a mixed reaction to CEO Brian Chesky's apology Monday and his company's decision to set aside $260 million to assist them. Some hosts who were appreciative that Chesky acknowledged their collective furor over a sudden change to cancellation policies that hosts say had left them with the short end of the stick. But others criticized Airbnb's $260 million peace offering as little more than a public-relations stunt that won't do much to help most property managers and doesn't address the underlying problems. "I think people see it for what it is," said Annie Switzer, who lives in Bethesda, Md., and manages three properties, two of which she lists on Airbnb. "It's PR." Airbnb has been struggling for much of the last month to respond to the coronavirus crisis. It initially allowed property managers to decide on their own how to handle cancellations related to the outbreak. But earlier this month, it decided to supersede those policies and allow all guests to cancel reservations and get a full refund for bookings made on or before March 14, if the check-in date was before April 14. That move infuriated many hosts. About 88% of the amount that guests pay for accommodations on Airbnb goes to property managers. So, hosts were forced to bear the vast majority of the cost of the policy change the company made. And Airbnb made the change without consulting them first. Airbnb's help for hosts has limitations On Monday, Chesky tried to address their ire. In an open letter to hosts and in a video message, he apologized for the lack of consultation, and announced four steps the company was taking or had taken to help them. The company set up a $250 million fund to reimburse hosts for some of their booking revenue lost due to coronavirus cancellations. It's offering another $10 million in grants to so-called superhosts — those with popular destinations and top ratings from travelers — to help them pay their mortgages and rent. The company is also is setting up a way for guests to sent money directly to hosts of properties that they've booked in the past. And Chesky noted Airbnb and property managers had successfully lobbied Congress to include help for hosts — such as giving the access to small-business loans and to expanded unemployment insurance — in its recently passed stimulus package. "Although it may not have felt like it, we are partners," Chesky said in the letter. "When your business suffers, our business suffers. We know that right now many of you are struggling, and what you need are actions from us to help, not just words." But hosts were quick to note the limitations and shortcomings of the company's moves. Airbnb is using the $250 million fund to pay property managers 25% of the revenue they lost due to cancellations. But in most cases, it's not going to pay out a quarter of the lost booking revenue a host incurred. Instead, it's offering to pay 25% of whatever a host would have been entitled to under their particular cancellation policies. So, if a host's policies would have allowed her to keep 50% of the booking revenue because of the timing of the cancellation, Airbnb will reimburse her a quarter of that 50% — or just 12.5% of the total booking amount. "I appreciate the apology," said Keith Dorsey, who lists a handful of properties on Airbnb with his wife. But, he added, "I believe more money should be given back." Hosts with guest-friendly policies might get nothing In the past, Airbnb has encouraged hosts to offer more flexible policies that allow guests to get a full refund even when they cancel shortly ahead of their check-in dates, said Linda Misner, who rents out a house in Tampa, Fla., through Airbnb. But by basing its reimbursements on what hosts were due to receive under their own cancellation policies, it appears the company will be offering more monetary help to those who ignored that recommendation, she said. Those who had flexible terms might get nothing from Airbnb for their cancellations, while those that had ultra-strict policies, might get as much as 25% of their cancelled booking revenue. "People who have flexible policies will be lucky if they get anything back," Misner said. The fund does nothing to replace revenue from bookings that likely would have been made but weren't because of the crisis. Delia Gilligan rents out a private room in her house in Aptos, Calif., a coastal community south of San Francisco. Last year, it was booked out for nearly half the year, but guests often make reservations there at the last minute. Because of that she only had three bookings that were cancelled because of the crisis. "So what am I going to get, a few hundred dollars?" Gilligan said, in reference to Airbnb's reimbursement program. She continued: "It almost doesn't matter." At the same time that Airbnb announced the reimbursement plan, it also extended the period during which travelers could cancel reservations and get a full refund. Previously, that policy was only for reservations with a check-in date on or before April 14. Now guests can cancel reservations with check-in dates on or before May 31. That extension is likely to trigger a whole new round of cancellations that, again, will largely come at property managers' expense, Misner said. Airbnb's announcements of the reimbursement and superhost funds seemed like a way to distract attention from that extension, Gilligan said. "I think they offered this up to try and smooth it over with hosts in some way," Misner said. "I think this is more of a public-relations effort," she continued, "than it is to provide any monetary relief for the hosts." The superhost fund has limitations too Property managers also weren't super impressed by Airbnb's $10 million fund for superhosts, in part because of how difficult it can be to get and maintain that status. To be designated a superhost, property managers need to have cancellations at fewer than 1% of their bookings, have a guest rating of 4.8 or higher, and operate a popular destination, with at least 10 individual bookings or 100 days worth of stays in the last year. But even property managers that meet those requirements and have that designation, might not qualify for the grants. The fund is only available to those who have been a superhost for at least a year and offer just one or two properties through Airbnb. Misner doesn't qualify, because she's been on Airbnb for less than a year. Dorsey was a superhost but said he lost the status after guests gave him bad reviews in retaliation for him complaining about them. Airbnb's decision to limit the $10 million fund to superhosts "sucks" said Dorsey, who makes about 80% of his income from his Airbnb listings and has helped other property managers get set up on the system. "We work really hard at Airbnb." Others property managers were dismissive of Airbnb's planned guest-donation feature. People are losing their jobs. They're worried about getting sick. Helping out Airbnb hosts is probably not at the top of their minds right now, Switzer said. "I thought that was hilarious," she said. "I've never had a guest donate money to me before." Regardless of how helpful the policies will be for property managers, they don't fix what hosts see as Airbnb's underlying problem. Airbnb operates a marketplace with two groups of customers — travelers and property managers — and it needs to balance the needs of both. But the company has consistently favored guests over hosts, property managers said. Airbnb is enabling bad behavior by guests Long before the coronavirus, the company made it far too easy for guests to cancel and get a full refund, overriding hosts' cancellation policies and sticking property managers with the cost, they said. That's enabled and encouraged people to game the system or to take advantage hosts, they said. People complain about non-existent bedbugs or that a pool is unusable because the host hadn't had a chance yet to clean up the leaves an overnight storm blew into it, and want a full refund, they said. Or they try to cancel a reservation at the last minute because one member of a large party is sick or because a flight is cancelled, even though they could fly out later in the day or the following day. And oftentimes Airbnb accommodates them, they said. Some guests have even tried to take advantage of current crisis. They've used it as an excuse to cancel accommodations and rebook nearby for less money — or tried to pressure property managers to discount their stays by threatening to do just that, said one host who asked to remain anonymous for fear of retribution from Airbnb. "Talk to almost any host on Airbnb. Someone has tried to play them or take advantage of them," said Switzer. The company's policy of putting guests' needs before those of hosts, she continued, "encourages people who are dishonest or bad actors." Many hosts depend on their income from Airbnb, a fact that the company itself has promoted. But its policies before and during the pandemic have hurt those very same property managers whom it likes to showcase, said the unnamed host. When travelers cancel reservations, the money at stake for them is typically discretionary income; losing it won't make or break them, said the property manager, who lists several dozen properties in Southern California and the Caribbean on Airbnb. For many property managers, though, that money represents the funds they use to pay their mortgages, rent, utilities, and maintenance costs. Every cancellation hurts. But getting hit with multiple cancellations at once and being forced to give full refunds on all of them — as has happened during this crisis — is "a game changer" for the lives of many hosts, said the host, who has lost some $200,000 in bookings due to coronavirus cancellations. While the $250 million fund will help somewhat, it would have been much more equitable if Airbnb and spread the pain around more evenly among guests, hosts and itself, the host said. "I 100% appreciate ABB trying to rectify past wrongs," the property manager said. "But in order to ever trust Airbnb again ... they have to address their underlying [cancellation] policy." Got a tip about Airbnb? Contact Troy Wolverton via email at email@example.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop. Read more about Airbnb: Airbnb's CEO compared the coronavirus crisis to Hurricane Maria, saying its business will bounce back, just as it did after the storm that ravaged Puerto Rico Airbnb is paying hosts $250 million after they criticized the company for leaving them on the hook for coronavirus cancellations Airbnb hosts are furious that the company is sticking them with the cost of letting guests cancel due to the coronavirus crisis Airbnb is asking Congress to help out its hosts, after it just hit their revenue by overriding their cancellations policies due to the coronavirus crisis SEE ALSO: The coronavirus crisis has exposed a crucial weakness in Airbnb's business model and it's likely to haunt the $31 billion company's IPO plans Join the conversation about this story » NOW WATCH: Apple just revealed its AirPods Pro for $249, which feature noise cancellation. 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