Hey there, and welcome back to Urban Tech. Hope you are having a great week and staying safe đđđ
Personally, it's been a pretty strange week for me. Yesterday morning, I tested positive for COVID. I'm feeling okay for the most part. I initially thought my symptoms were from very little sleep over the last week.Â
It's finals week at USC right now, so there have been a few late nights studying. Also, Urban Tech launched our new Monday morning format this week, so I've been a bit all over the place.Â
To be honest, I went back and forth on whether to disclose my positive test in Urban Tech. I recognize most of you are here for cities and tech analysis â not a personal newsletter.Â
That said, when I created Urban Tech, I decided I would always do my best to disclose any of my life experiences that inevitably shapes how I think about the topics we examine.
As someone who is going to be thinking about COVID's impact on cities for a long time, how can I think about topics like its disproportionate impact on urban communities and communities of color, or tech innovation in testing, without my own positive test somewhat coloring my perception?
To me, it just doesn't seem possible, so I wanted to share the information with you, so you always know where I'm coming from when I write on these topics.
Please stay safe out there, everyone. Wear a mask. Listen to the experts.Â
Okay, let's get to some more positive stuff. I originally planned to write a piece for today about the innovation happening in the accessory dwelling unit space.
However, given this week's events, I'm still putting some final touches on it.
Instead, I've curated some of the most compelling stories and comments I saw this week about Airbnb's upcoming IPO. I'm hoping it will provide some interesting context you might have missed this week.
Since today's edition is shorter than usual, I highly recommend going back to check out one of our previous essays. I like to think there's a little bit of something for everyone in the Urban Tech archive:
Urban Techâs Q&A with post-car real estate developer Culdesac
Our essay about why Allbirds â a sneaker company â is urban technology
An exploration of why Waymo leads the race for autonomous cars
Finally, our most recent Q&A conversation with Electric Avenue's Ashwini Chhabra.
Finally, the best part of the week by far for me was this amazing shoutout Urban Tech got from Polina Marinova Pompliano, founder of one of my favorite newsletters in the world The Profile:
If you donât already read The Profile, I highly recommend checking it out. It has the best pieces and insights on the most fascinating people in the world. Also, Polina is the best and deserves the support!
Okay, letâs look at the S1 now.
Here are the main details from the S1 drop:
On Monday, home-sharing company Airbnb dropped its IPO prospectus (S1) as part of the IPO process.
30 billion appears to be the expected valuation for the IPO.
Airbnb will trade under âABNBâ on the Nasdaq exchange. Itâs expected to begin trading in mid-December.
The major focus of discussion this week and for the last several months is COVIDâs impact on Airbnbâs business.
âThe company made $219 million in net income on revenues of $1.34 billion last quarter. That was down nearly 19% from $1.65 billion in revenue a year prior.â [source]
Airbnb S1 Stories Worth Reading
CNBC: Airbnb files to go public, turned a profit last quarter
If you want a high-level, quick read, CNBCâs Sal Rodriguez wrote a great one that explains many of the challenges ahead for Airbnb.Â
âThe Covid-19 pandemic and the impact of actions to mitigate the Covid-19 pandemic have materially adversely impacted and will continue to materially adversely impact our business, results of operations, and financial condition,â the company listed as its first risk factor.â
âAirbnb has endured a tough 2020. As the coronavirus decimated travel around the world, the company raised $2 billion in new debt funding at a valuation of $18 billion and announced major cost-cutting initiatives, including plans to lay off 25% of its staff, or nearly 1,900 employees. The company also slashed marketing costs and raised billions of dollars in debt.â
The New York Times: Airbnbâs Biggest Problem
New York Timeâs Shira Ovide makes an incredibly thoughtful argument identifying Airbnbâs biggest hurdle:
Airbnbâs biggest problem is not necessarily the resentment of people who use it but the resentment of people who donât. This is unusual.
If restaurants hate handing over large fees to delivery app companies like DoorDash or if people book what turn out to be incompetent babysitters on Care.com, it doesnât necessarily affect people outside those transactions. With some exceptions, the hatred of middlemen tends to be confined to those who buy or sell goods or services through those service providers.
But if people throw destructive parties or shootings occur at a house rented on Airbnb, that might make the neighbors furious with the company. So, too, if communities or cities believe Airbnb rentals contribute to unwanted tourist influxes or rising housing prices. In some cases Airbnb may be a scapegoat for gentrification or other neighborhood problems.
TechCrunch: Airbnb files to go public
If you really want to get into the financial weeds of the S1, Alex Wilhelm at TechCrunch has an excellent piece for you. A few interesting points:
âAs expected, Airbnbâs year has not been tremendous. Indeed, the company is on track to match its 2018 size, if we have our math correct.âÂ
âWhat changed from the first three quarters of 2019 to the first three quarters of 2020? The biggest thing, apart from expected lower revenue costs â less revenue costs less â is the huge decline in sales and marketing spend at the company. Airbnb slashed S&M outlays from $1.18 billion in the first three quarters of 2019 to just $545.5 million in the same period of 2020.â
âItâs hard to put a firm grade on this S-1. It contains what we expected, but how investors weigh the companyâs year-over-year revenue declines in Q3 2020 against its rapid comeback from Q2 2020 should help decide its eventual value. On the whole Airbnb has managed something incredibly impressive â bouncing back from so low a low.â
The Real Deal: Airbnb is offering hosts company shares. But millions may miss out
Sylvia Varnham O'Regan and E.B. Solomont at The Real Deal explain why the news of Airbnb offering shares to hosts needs to be taken with additional context:
âThe startup is offering a portion of its shares to people who rent homes on its platform through a directed-share program, a rare move that means those eligible could reap rewards when Airbnb goes public.â
âBut Airbnb has not said how many shares it will offer and the criteria is narrow. Only U.S. hosts are eligible â 86 percent of its 4 million hosts are based outside the US, according to the companyâs S-1 â and the offer is only being extended to those who were active within the past two years.â
The Wall Street Journal: Airbnbâs IPO: Everything You Need to Know
Preetika Rana and Maureen Farrell published a great piece answering all of the big questions going into the IPO. I learned a lot from it:
How did Airbnb come back from the brink?
Mr. Chesky pivoted quickly to raising capital to keep the business afloat, laid off a quarter of staff and shed noncore businesses.
The CEO had drawn criticism for spending big before the pandemic. But he cut 54% of marketing costs through the nine months ended Sept. 30, compared with the year-earlier period. Total expenses over the period declined 22%.
Mr. Chesky separately ordered a redesign of Airbnbâs app and website so the company could focus on local stays during the pandemicâa strategy that paid off as people ventured into neighboring communities so they didnât have to fly. Many users viewed staying in stand-alone properties as safer than using shared facilities in hotels. Mr. Chesky spoke to The Wall Street Journal last month about steering the company out of its worst crisis.
CNBC: Airbnb says Googleâs competing travel sites push its listings down in search results
One of the curveballs from the S1 filing was an antitrust angle!Â
In the S1, Airbnb claimed its search results have been adversely affected by the launch of competing Google services like Google Travel and Google Vacation Rental Ads.
Interesting S1 Tweets
Thatâs all for this week. Talk to you on Monday. Donât forget to share Urban Tech with your friends and colleagues.
âď¸ JT