Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus(wsj.com)
wsj.com
Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus
https://www.wsj.com/articles/airbnb-racks-up-hundreds-of-millions-in-losses-due-to-coronavirus-11584723498
18 comments
As someone that would like to buy a house one day, I welcome this. People owning multiple houses to rent out to vacationers that people would like to actually live in doesn't upset me at all.
If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.
If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.
Agree. There are stories of people kinking out tenants to let on Airbnb. If these people get fucked by the loss in income, that'll be a simple on my face.
Airbnb as a whole, is a good idea- but some people are doing horrible things to the housing market and at worst AirBNB is complicit.
Airbnb as a whole, is a good idea- but some people are doing horrible things to the housing market and at worst AirBNB is complicit.
>People owning multiple houses to rent out to vacationers that people would like to actually live in doesn't upset me at all.
If people buying houses to rent on Airbnb artificially inflated the housing market
net-net : is n't both the same?
If people buying houses to rent on Airbnb artificially inflated the housing market
net-net : is n't both the same?
Airbnb turns housing into hotels. Typically those are zoned differently, potentially subsidizing housing for locals at the cost of driving up prices for travelers.
Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.
A house is rarely used as an interesting business asset for generating productivity for the rest of the nation. AirBnB is like the height of how commercially productive a home can be. I would argue that the home is most interesting to a nation when it houses a family which is contributing to the economy.
What we're talking about is making the housing market more healthy, where health is viewed from the perspective of the nation.
There is inefficiency being absorbed by the system when very finite housing capacity is being used primarily by vacationers who already have a home, and now that terribly finite supply is being translated to mere vacation enhancement.
What we're talking about is making the housing market more healthy, where health is viewed from the perspective of the nation.
There is inefficiency being absorbed by the system when very finite housing capacity is being used primarily by vacationers who already have a home, and now that terribly finite supply is being translated to mere vacation enhancement.
those are good ideas but imagine someone barely making ends meet on an "inflated" mortgage which then loses a lot of value. the bank expects them to pay back $250K but then their home value collapses down to its true price of $150K. you just created a situation where a household has negative equity - literally worse off than if they had never bought the home at all, and difficult to wiggle out of if they live there (very likely). that obviously has massive effects on their economic outlooks.
Yeah, this is absolutely a problem and people's homes being foreclosed due to this type of situation does upset me. But this is a side-effect of people making money off housing shortages, which is the root cause and due for a correction.
The people with these AirBnbs are no worse than the residents who vote for policies and politicians that create and exacerbate the shortages in the first place.
What will happen is that airbnb hosts with liquidity problems have to fire sell them to lucky speculators and then in a year or two after the speculator has made his profit, they go right back on airbnb.
everyone(1)
There are only so many possibilities for the housing market.
One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.
Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.
And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.
I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.
One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.
Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.
And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.
I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.
I don’t think that’s frightening at all. A bunch of rent seekers lose everything, and everyone else wins. This practice should be, and in some places is, illegal.
Airbnb isn't rent seeking. They're providing a valuable service to tourists. I find it very hard to see how short term rentals should be illegal.
Hotels are a regulated industry for a reason and Airbnb is completely flouting the rules. No one wants to be a next-door neighbor to an Airbnb'ed apartment, and hotels are a more efficient use of real estate for housing a given number of tourists.
So yeah, they're helping out tourists, but they're harming all the people in the city who live there and need a place to live. If you're primarily a tourist then Airbnb is good for you; if you live in a high cost city then it's most definitely not. And more of us are in the latter situation, me included.
So yeah, they're helping out tourists, but they're harming all the people in the city who live there and need a place to live. If you're primarily a tourist then Airbnb is good for you; if you live in a high cost city then it's most definitely not. And more of us are in the latter situation, me included.
Rentals have been a thing since people have been travelers. It's easy to point a finger at Airbnb, but a lack of affordable housing existed long before they were around. You could argue that hotels are using space that could be used for housing locals, too. Is Airbnb a factor in prices going up, yes. Is Airbnb the only factor, clearly no.
I clearly pointed out in my comment how hotels are vastly different from normal apartments that have been converted into short term rentals.
AirBnB is not rent seeking though I’m dubious of its value to society. People buying property in RESIDENTIAL areas to be used exclusively as short term rental units are rent seekers.
This would not be a bad thing. Airbnb has been driving up the cost of housing in many cities.
> It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up.
Oh I (living in Munich) hope for AirBnB going belly up. This will free a LOT of apartments back to normal rental markets. The rental markets won't be "hit" at all, the landlords will only lose the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
The winners will be those priced of their own home cities by hipsters and the neighbors of current AirBnBs who don't have to suffer from people running, essentially, illegal hotels in their houses - with people abusing apartments for sex orgies/porn sets, mass parties, or simply losing their keys and mashing on the doorbells.
Oh I (living in Munich) hope for AirBnB going belly up. This will free a LOT of apartments back to normal rental markets. The rental markets won't be "hit" at all, the landlords will only lose the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
The winners will be those priced of their own home cities by hipsters and the neighbors of current AirBnBs who don't have to suffer from people running, essentially, illegal hotels in their houses - with people abusing apartments for sex orgies/porn sets, mass parties, or simply losing their keys and mashing on the doorbells.
> the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
Unfortunately this is huge - it's why rents have shot up in many cities.
Unfortunately this is huge - it's why rents have shot up in many cities.
NYC, same story.
But, as others in the thread have suggested, what will rush in when these leveraged AirBnB hosts lose properties will not be a bunch of normals with jobs and families, it will be a bunch of new investors who can buy cheap with cash.
But, as others in the thread have suggested, what will rush in when these leveraged AirBnB hosts lose properties will not be a bunch of normals with jobs and families, it will be a bunch of new investors who can buy cheap with cash.
But these investors have to rent out at market prices, thus reducing load on rental markets
It’s entirely their fault; no-one asked them to make being a landlord their primary source of revenue.
Airbnb and VRBO have similar revenues (~2.6 billion). So im not sure the hosts will be out of options, but you aren't wrong that a ton of mortgages could be foreclosed due to the lack of revenue for hosts for the foreseeable future
Travel certainly will be hurt. All said, my guess is the hardest hit travel industry will be cruises, followed by resorts, followed by business travel (we've all learned to work remotely better). Vacation rentals will take a hit but will also absorb some of the loss of demand to cruises/resorts.
Consequently, my guess is AirBnB owners aren't hit too long in the medium term (1 year out). Not too much demand hit in rural areas -- and in urban areas they can switch to long-term rentals.
Consequently, my guess is AirBnB owners aren't hit too long in the medium term (1 year out). Not too much demand hit in rural areas -- and in urban areas they can switch to long-term rentals.
Isn't it equally frightening how Airbnb has contributed to the rise of real estate prices and rents?
Airbnb would be “going up” if rentals cratered, losing it doesn’t have that many second-order effects. Vacation properties are going to get slaughtered for the next 2 years because no one wants to vacation.
I'm not sure you're assessing the damage that Airbnb inflicts to locals and the lower/middle class in major European cities - which also happen to be touristic hotspots.
> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?
So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?
> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?
So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?
Many people had been moving from bank deposits into short-term rentals in search of yield. Now they are also learning about value of liquidity.
I have a lot of cash sitting on the sidelines, waiting for opportunities like these in the next few monts.
[deleted]
what do you think happened during the great depression? People before it got greedy and would buy property and mortgage it to buy the next, and so on and so forth. they were highly leveraged and lost it all because of that. The lucky ones were the ones that didn't mortgage nor collateralize the house they lived in, so they didn't become homeless.
They would just switch to VRBO or a similar service.
I was thinking this the other day, it is a special type of vendor lock-in.
Our new reality is getting scarier.
This is fair. A lot of hotel groups have seen their revenue drop 75 to 90 percent. Airbnb was never profitable (I think) and this round of trip cancellations put them deeply in the red.
Why was AirBnB never profitable? How do they even loose anything? All they seemingly do is maintaining a website a small team can maintain. Obviously they also pay for an office, hosting, legal support and ads. I can only see some millions (at most) of expenses per year here. And they are extremely popular, most of the people I meet use AirBnB regularly, they are for short-term living like what Gmail is for e-mail.
Agreed. I don't know how software-based middle-man companies like Airbnb and Uber don't become insanely profitable. I'm sure we're both missing some complexities, but one would think you'd build the initial feature set and then basically be kind of done; is the rest not essentially just some UI/UX tweaks and engagement optimization over time?
As far as I can tell, the functionality offered by Airbnb and Uber hasn't changed at all since they launched over a decade ago. The only things I've noticed them add are "Airbnb Plus" and "Uber Black", which are just "pay some more for a nicer/better-looking place/car".
Of course building these apps to work as smoothly and engagement-y as possible isn't easy, and I'm sure I sound incredibly naive to many people who've worked at those companies, but my assumption would be that there'd be a lot of upfront investment and work building your one product with its one feature - connecting seekers and providers and offloading all the meatspace work to the providers (and phone manufacturers, for ridesharing) while you take a cut - and then your revenue and profit should just go up and up over time on its own.
Why isn't that what happens? I'm sure one obvious answer would be "wasteful spending and unnecessary hiring", but I have no idea if that's actually the explanation here for either company.
As far as I can tell, the functionality offered by Airbnb and Uber hasn't changed at all since they launched over a decade ago. The only things I've noticed them add are "Airbnb Plus" and "Uber Black", which are just "pay some more for a nicer/better-looking place/car".
Of course building these apps to work as smoothly and engagement-y as possible isn't easy, and I'm sure I sound incredibly naive to many people who've worked at those companies, but my assumption would be that there'd be a lot of upfront investment and work building your one product with its one feature - connecting seekers and providers and offloading all the meatspace work to the providers (and phone manufacturers, for ridesharing) while you take a cut - and then your revenue and profit should just go up and up over time on its own.
Why isn't that what happens? I'm sure one obvious answer would be "wasteful spending and unnecessary hiring", but I have no idea if that's actually the explanation here for either company.
> Airbnb was never profitable (I think)
Do you have any sources for this?
Do you have any sources for this?
AirBnB first announced profitability in 2018, followed by 2019.
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...
That said, I'm not sure how many asterisks are attached to the definition of profitable. Likewise, the fact that a company that holds no substantial assets while operating in the face of most regulations only became profitable in 2018, while clearly being the market leader, makes me wonder what is going on with their financials. It should not take 10 years for a company like AirBnB to become profitable, it should take closer to 5.
I know they had a disagreement with their CFO in 2018, and it took them the better part of a year to find a replacement. Admittedly, the replacement seems incredibly qualified.
https://www.cnbc.com/2018/11/26/airbnb-hires-cfo-dave-stephe...
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...
That said, I'm not sure how many asterisks are attached to the definition of profitable. Likewise, the fact that a company that holds no substantial assets while operating in the face of most regulations only became profitable in 2018, while clearly being the market leader, makes me wonder what is going on with their financials. It should not take 10 years for a company like AirBnB to become profitable, it should take closer to 5.
I know they had a disagreement with their CFO in 2018, and it took them the better part of a year to find a replacement. Admittedly, the replacement seems incredibly qualified.
https://www.cnbc.com/2018/11/26/airbnb-hires-cfo-dave-stephe...
No they didn't. Literally the first sentence of your Bloomberg link includes "based on a common measure that excludes some expenses."
They made an EBITDA (operating) profit. They were not a profitable company.
They made an EBITDA (operating) profit. They were not a profitable company.
What has happened to HN that asking for sources/evidence is now something that gets you downvoted? Asking for supporting evidence should never get downvoted.
Why should Airbnb be making losses at this point?
Are they refunding booking fees to customers while paying hosts?
Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel.
shouldn't Airbnb be making so much money at this point?
Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how they've become a household name all over the world.
Are they refunding booking fees to customers while paying hosts?
Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel.
shouldn't Airbnb be making so much money at this point?
Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how they've become a household name all over the world.
Why would they be making lots of money when their business is tanking? Their reservations have more than halved, so that's a huge drop in revenue without much if a drop in costs (unless they fire half their workforce and walk away from half of their office leases).
He's probably referring to the fact that they were losing tons of money before coronavirus. They recently reported that they lost $276 million in Q4-2019, which was almost double Q4-2018. Which does lead to the question, how is this company losing so much money when they are, essentially, a broker with very few fixed assets and no COGS?
https://news.ycombinator.com/item?id=22561933
https://news.ycombinator.com/item?id=22561933
They should not be tanking. Airbnb is in a highly profitable business with very high operating margin.
For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.
For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.
A company growing as aggressively as AirBnB wasn't taking a 20-30% profit and paying out shareholders.
They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc.
When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs.
Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this.
AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time.
Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.
They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc.
When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs.
Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this.
AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time.
Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.
What I am trying to say is that AirBnb is a solid business that is not at any risk of disappearing. I am moderately sure that they could have turned profitable any minute if they wanted to.
There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics.
Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger.
They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.
There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics.
Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger.
They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.
There is NO WAY they have 15K employees!
edit:
Wow, ok, so the number appears to be 12,736 - incredible.
Well, I'm speechless.
Good for them for passing money down to staff, but my goodness, how does it make financial sense, no clue.
Good for them for passing money down to staff, but my goodness, how does it make financial sense, no clue.
You're right, the correct number is around 13k.
Why shouldn't they be tanking? Everything in the travel sector, including hotels, is tanking right now. They're not highly profitable; indeed they've never turned a profit.
> whereas the fixed costs to run a website are ridiculously low
This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs.
It sounds like you're arguing from hypotheticals, none of which actually apply to Airbnb as it exists in the real world.
> whereas the fixed costs to run a website are ridiculously low
This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs.
It sounds like you're arguing from hypotheticals, none of which actually apply to Airbnb as it exists in the real world.
Not turning a profit is a meaningless metrics for a silicon valley company. They could burn endless amounts of (VC) cash with zero relations to how well the business is doing or how solid it is.
I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.
I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.
I think the OP's point is they don't have to pay for the real estate regardless of occupancy unlike traditional hotels. This is more lost opportunity cost than revenue being taken away.
What? This doesn't make any sense. Of course they're losing massive amounts of revenue. Their business model is to make a cut off each booking, and bookings are down massively.
At the same time, they have large fixed costs because they have a lot of employees and leased office space. So money coming in goes down massively while money going out doesn't.
EDIT: It sounds like others are talking about pre-coronavirus times whereas I'm talking about now (like the linked article is).
At the same time, they have large fixed costs because they have a lot of employees and leased office space. So money coming in goes down massively while money going out doesn't.
EDIT: It sounds like others are talking about pre-coronavirus times whereas I'm talking about now (like the linked article is).
I don't mean making money during this very pandemic. Rather, making money overall.
What are they doing besides providing intermediary service all around (most of) the world throughh their website.
I presumed they would be profitable by now, just as Facebook was profitable before IPO. Not saying they should be as profitable as Facebook but they should be profitable from taking a cut off every booking.
What are they doing besides providing intermediary service all around (most of) the world throughh their website.
I presumed they would be profitable by now, just as Facebook was profitable before IPO. Not saying they should be as profitable as Facebook but they should be profitable from taking a cut off every booking.
They're just doing what almost all VC-funded private tech companies do: Spend massive amounts of money to grow faster than if you limited yourself to what could be accomplished while maintaining profitability.
And the comparison to Facebook isn't really fair; not everyone can be a Facebook. They're an exceptional success story. Airbnb isn't.
And the comparison to Facebook isn't really fair; not everyone can be a Facebook. They're an exceptional success story. Airbnb isn't.
Airbnb takes approximately 15% off every booking.
What are they doing as an intermediary that 15% on each booking isn't enough to pay salaries, rent and server costs?
What are they doing as an intermediary that 15% on each booking isn't enough to pay salaries, rent and server costs?
I don't understand the point of your questions. Are you disputing the fact that Airbnb is not profitable? Because they very clearly and obviously aren't.
Or are you saying that their business isn't well run, that their costs are too high, etc.? Because I can't answer this part of it; I don't work for them, I don't set their strategy, etc. I can't defend them on that mark. But it is true. They are spending more than they are earning. Just because you don't understand how or why doesn't mean that it isn't in fact happening.
Or are you saying that their business isn't well run, that their costs are too high, etc.? Because I can't answer this part of it; I don't work for them, I don't set their strategy, etc. I can't defend them on that mark. But it is true. They are spending more than they are earning. Just because you don't understand how or why doesn't mean that it isn't in fact happening.
How does this submission drop from top 10 to 3rd page in about 20-30 minutes? Not allowed to mention anything negative about YC co's?
The opposite: we moderate HN less when YC or YC startups are involved.
Obviously the trust of the community is critical and we would be dumb to risk that.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
It doesn't mean that we don't moderate such threads at all, though. We penalized this one the same way we've been penalizing almost every coronavirus story, because if we didn't, HN would have consisted of nothing but coronavirus for the past week. I don't see this story as significant or interesting enough to rise above the threshold. "$Company is losing money" is a dog-bites-man story right now, especially in that industry. No?
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
It doesn't mean that we don't moderate such threads at all, though. We penalized this one the same way we've been penalizing almost every coronavirus story, because if we didn't, HN would have consisted of nothing but coronavirus for the past week. I don't see this story as significant or interesting enough to rise above the threshold. "$Company is losing money" is a dog-bites-man story right now, especially in that industry. No?
Thanks for explaining.
> we've been penalizing almost every coronavirus story
Only you know the actual volume of coronavirus-related stories, and whether leaving them as-is would cover the entire top 10, entire first page, or entire first 3 pages.
However IMO the adjustment, or "penalization," being applied seems too severe. CV is obviously the most important news topic in the world right now, the situation changes extremely rapidly, making the comments section, with contributors from around the globe, highly relevant and informative. My opinion is that up-to-date CV-related content on HN has been difficult to find, and the lack of such, in favor of random, often whimsical topics, trivializes HN.
As I write this, the only CV-connected stories on page 1 are at #19: "Chloroquine, past and present" and at #28: "State projections for Covid-19." While its understandable not wanting HN to be totally dominated by CV, I think there is a better balance to be had.
> we've been penalizing almost every coronavirus story
Only you know the actual volume of coronavirus-related stories, and whether leaving them as-is would cover the entire top 10, entire first page, or entire first 3 pages.
However IMO the adjustment, or "penalization," being applied seems too severe. CV is obviously the most important news topic in the world right now, the situation changes extremely rapidly, making the comments section, with contributors from around the globe, highly relevant and informative. My opinion is that up-to-date CV-related content on HN has been difficult to find, and the lack of such, in favor of random, often whimsical topics, trivializes HN.
As I write this, the only CV-connected stories on page 1 are at #19: "Chloroquine, past and present" and at #28: "State projections for Covid-19." While its understandable not wanting HN to be totally dominated by CV, I think there is a better balance to be had.
There's an eternal tug of war about which stories belong on HN's front page. No one is ever pleased; frontpage space is the scarcest resource HN has [1], so there's never enough for the topics one is interested in [2].
The principles we try to apply are the "significant new information" test for major ongoing stories [3], and optimizing for intellectual curiosity [4]. One thing we don't do routinely is moderate by which stories are most important in the world. There are always many things going on that are far more important than the topics that appear on HN. If importance were a leading factor, HN would become a regular news site and cease to exist as HN. Important stories tend to drown out the quieter, odder, or deeper ones that gratify curiosity. HN is mostly a site for the latter. That's how a biography of George Gershwin can be at the top of the front page in the middle of a global pandemic.
In practice, a crisis like this is inevitably going to show up on HN a lot. But it will show up in unpredictable ways (because predictability is the enemy of curiosity), not like it does on a regular news site.
[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
[2] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
[3] https://news.ycombinator.com/item?id=22527396, https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
[4] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
The principles we try to apply are the "significant new information" test for major ongoing stories [3], and optimizing for intellectual curiosity [4]. One thing we don't do routinely is moderate by which stories are most important in the world. There are always many things going on that are far more important than the topics that appear on HN. If importance were a leading factor, HN would become a regular news site and cease to exist as HN. Important stories tend to drown out the quieter, odder, or deeper ones that gratify curiosity. HN is mostly a site for the latter. That's how a biography of George Gershwin can be at the top of the front page in the middle of a global pandemic.
In practice, a crisis like this is inevitably going to show up on HN a lot. But it will show up in unpredictable ways (because predictability is the enemy of curiosity), not like it does on a regular news site.
[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
[2] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
[3] https://news.ycombinator.com/item?id=22527396, https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
[4] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
On any given day, most of the world's most important news topics aren't on the HN front page, and don't belong there. There are plenty of other sites that do a better job of reporting on the entire world.
> most of the world's most important news topics aren't on the HN front page
because they don't gain traction among the HN audience. CV has, and to a very large degree, according to dang's comment above.
because they don't gain traction among the HN audience. CV has, and to a very large degree, according to dang's comment above.
> because they don't gain traction among the HN audience
That's a bit of a misperception. They do gain traction. If we didn't moderate them, HN's front page would consist of the hottest topics of the moment and would be a different site altogether.
The strongest force on the internet is indignation—orders of magnitude stronger than curiosity—so there need to be countervailing mechanisms (like software and moderation) to contain its effects and allow HN to be HN. Upvotes alone don't do it, unfortunately.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
That's a bit of a misperception. They do gain traction. If we didn't moderate them, HN's front page would consist of the hottest topics of the moment and would be a different site altogether.
The strongest force on the internet is indignation—orders of magnitude stronger than curiosity—so there need to be countervailing mechanisms (like software and moderation) to contain its effects and allow HN to be HN. Upvotes alone don't do it, unfortunately.
https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
I appreciate your thoughts in this thread, and more importantly, your willingness to explain your decisions. Your diligent moderation throughout the site ensures it remains a terrific, unique and much-needed resource. Thank you!
Thank you too! It's important feedback to hear that the explanations are helpful, because otherwise I need to recalibrate how I do it, or just (if it's not working) do less.
People are most welcome to ask further questions if there's something we haven't explained yet. I'm slowly building up a corpus of links to previous explanations, which is why my answers are so full of HN Search links. Eventually we might compile all that into some web pages.
People are most welcome to ask further questions if there's something we haven't explained yet. I'm slowly building up a corpus of links to previous explanations, which is why my answers are so full of HN Search links. Eventually we might compile all that into some web pages.
It's mostly because they're not what HN is for. Sometimes things that are mostly not what HN is for gain traction on HN while still being mostly not what HN is for.
Came here to say the same thing. This is ridiculous.
If you didn't know this already. "Poor" AirBnb here is simply letting customers cancel their stays without even letting hosts know and is then not paying hosts [1].
Note that a lot of these "hosts" are often small guesthouses that barely make rent and now have basically nothing for the next months. Of course you have your fair share of "rent hackers" on AirBnb but beyond that a lot of people run genuine small businesses around the platform and care a lot about their guests.
[1] https://www.forbes.com/sites/johnkoetsier/2020/03/15/airbnb-...
Note that a lot of these "hosts" are often small guesthouses that barely make rent and now have basically nothing for the next months. Of course you have your fair share of "rent hackers" on AirBnb but beyond that a lot of people run genuine small businesses around the platform and care a lot about their guests.
[1] https://www.forbes.com/sites/johnkoetsier/2020/03/15/airbnb-...
Airbnb was for people to make extra cash with extra space. I highly doubt people are going to be in ruin over a couple months of cancellations.
Weren't they already losing money prior to this? Seems like a lot of companies are attributing losses to the Coronavirus masking the actual problem behind it all.
They lost close to $300M last quarter. And those were the good times.
well that's a little disingenous. they have been profitable before.
from where i stand they attempted to turn their platform into an entire travel experience (w/ business travel "certifications", spending lots on verifying pictures/host setups/etc., experiences) as opposed to just sharing homes. i believe they have large M&A associated with this, buying up some longer-term rental sites who may have been competitors in the future as well.
from where i stand they attempted to turn their platform into an entire travel experience (w/ business travel "certifications", spending lots on verifying pictures/host setups/etc., experiences) as opposed to just sharing homes. i believe they have large M&A associated with this, buying up some longer-term rental sites who may have been competitors in the future as well.
I'm a little baffled, how is this possible? Surely their core business is profitable and the losses are because of investments in new growth areas?
I also wonder this, isn't Airbnb your typical venture capital company.
We recently bought a small condo in Portland for our weekend use and as we were shopping around it seemed like the whole Airbnb-triggered rental market was already hopelessly overheated. With the capacity that's there I can't imagine occupancy rates averaged over the year being worth it for the condo owners. I'm guessing there will be a glut of condos available after the virus, many of them in foreclosure.
I'm not very surprised, most of the travel industry is getting hit hard. On a side note, I had a very bad experience with Airbnb. I found out, because it happened to me, that they remove negative reviews of hosts. I lot of the rating on their site are goosed.
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this reminds me of the quote "You never know who's swimming naked until the tide goes out." by Warren Buffet
It will be interesting to see what happens to all these VC-backed companies that have been losing money for years and are still not profitable.
When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security.
Maybe the bay area will be hit much harder than other companies.
When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security.
Maybe the bay area will be hit much harder than other companies.
A lot of the herd will be thinned out for sure. Customers of ours are starting to lay folks off.
Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.
Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.
This isn't winter kill thinning the herd though, it's more like the mass extinction of American Buffalo during the push to the west.
Companies with good fundamentals are laying people off en masse and burning their cash reserves rapidly. It's not just the VC backed companies, or the low marging/highly leveraged mom-and-pop, big box retail, airline, whatever.
I'm terrified what's going to happen on May 1 when rent checks and mortgage payments bounce.
Companies with good fundamentals are laying people off en masse and burning their cash reserves rapidly. It's not just the VC backed companies, or the low marging/highly leveraged mom-and-pop, big box retail, airline, whatever.
I'm terrified what's going to happen on May 1 when rent checks and mortgage payments bounce.
We were brainwashed that sharing economy (uber, wework, airbnb) was going to be our savior. We were renting because assets were too high to own, better to do short rent; cheaper and less commitment. Looks like those sharing economy model cannot solve the root cause. The coronavirus acts as a RESET to the whole society. We may see a collapse in housing price, business bankruptcy, and stock market. If we have to think positively, the current situation will only stop when all of these apply
-stock price reflects 8-10x true profit, not EBITDA
-average housing price in Manhattan will be be 3x working class income.
-young people get decent job, not survival gig, not blocked by increasing retiree or union.
If this virus was artificially made or by natural evolution, I can say it was meant to reset the society. It will actually prevent WW3.
If this virus was artificially made or by natural evolution, I can say it was meant to reset the society. It will actually prevent WW3.
How? What are they spending their money on? They need to put people on leave and "pause" their business as quickly as possible!
They've massively overbuilt their product, and I'm sure wasted millions in the process.
I recently booked and I had to actively avoid CTAs for things I wanted nothing to do with: tours, food offers, I don't even know. Finding a place to rent practically meant looking below the fold.
Also, pretty sure they developed their own fonts and I shudder to think what they paid for the new utero-logo.
I recently booked and I had to actively avoid CTAs for things I wanted nothing to do with: tours, food offers, I don't even know. Finding a place to rent practically meant looking below the fold.
Also, pretty sure they developed their own fonts and I shudder to think what they paid for the new utero-logo.
They’re losing revenue due to the massive amount of recently cancellations.
They're honoring a massive amount of refunds. There's also a lot of logistical work to be done for hosts which will probably be expensive.
I think the OP was asking, why is income negative on any revenue (they lost in Q3/Q4 of FY19), what are the expenses that can't be covered?
They employ a lot of people and have office space. Any big company has a large amount of fixed costs that will drag you under when income dries up.
Airbnb has over 5 million listings and 150 million customers around 190 countries and they don't make enough in commissions to pay rent, salaries and server costs?
They don't. Period. That's a simple fact. No questions need asking here; they do NOT make enough money from their listings to cover all of their costs, full stop.
Then they're indeed not fit to run their business, period.
you forgot marketing costs. Airbnb is a household name for a reason.
At what point does Management not realise that they need to balance their books and so at least, expenditure = revenue for them to break even?
Airbnb is 12 years old. If they haven't figured out that they shouldn't spend more than they earn by now, I don't think the current management will be able to figure it out in another 12 years.
Airbnb is 12 years old. If they haven't figured out that they shouldn't spend more than they earn by now, I don't think the current management will be able to figure it out in another 12 years.
Is WeWork still worth something ... guess co-working is a bum idea right now.
Isn't it hilarious looking back, people were making the argument "In the next recesion co-working spaces are going to explode as a great way of managing costs". Turns out... maybe not this recession.
Who the hell was saying that? It was pretty universally acknowledged that if there was a recession WeWork would be the first one to go bust. Of course, they did it before the recession actually happened.
Guess you've not been reading Money Stuff - they were already imploding, with lots of borderline fraud by the CEO, but this has really killed them.
Makes me wonder if they will start to offer "trip protection" or the like. The economics of it checks out.
[deleted]
I watched Airbnb places ruin Nashville. I feel for the employees of Airbnb, but Im not exactly sad to see this .
Why don't they borrow given we're at 0 percent rates?
I suppose the serious answer is it depends on (a) can businesses borrow at 0% (actually no, not even banks can, the fed rate is not 0). And (b) if they could borrow at 0% what would the term be? The fed rate is only an overnight rate so it requires constant refinancing. If AirBNB could borrow for 20 years at 0% it might make sense, but in terms of how it able to borrow in reality, probably not so much.
That's the rate the fed loans to the banks, which can't fail.
The banks aren't going to loan AirBNB at a low interest rate when it looks like they're on the edge of insolvency.
The banks aren't going to loan AirBNB at a low interest rate when it looks like they're on the edge of insolvency.
animalnewbie(1)
Edit: Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.