Airbnbs biggest problem I see complained about online is the lack of customer service when your host cancels/you find a spy cam/the place looks nothing like in the photos
Im assuming in this case no income equals no paid customer support? Hard pass. People need support when traveling, and lots of it. I think what would attract more consumers next is some sort of marketplace that promises a human response ready to help you within X minutes
Exactly, but funding can mean no fees to help onboard new customers for the first few years. As I get closer to Series C in 5-6 years, then yes low fees maybe likely but still less than airbnb.
Hope you're going to be clear and upfront about this to your users, not hide it in the small print.
Because otherwise you're going to have lots of justifiably pissed off people posting severely negative reviews everywhere the day the paywall goes up.
Bait and switch is never a good look. You might get away with it if you are excruciatingly clear and upfront about it, I still wouldn't encourage it though.
Why do you believe you'll be able to charge less in fees? At this point you lack the economy of scale, which at least seems to suggest your fees could be higher for a period of time.
Could you share more of your thinking into costs & profitability?
Okay. It would be worth mentioning that now. E.g. "free signup for the first 2 years". Otherwise it feels like a bait and switch.
Regarding the percentage: have you broken down the costs of everything you need to pay for, and still make enough of a profit that it's worth someone's time investing? That would be useful to an investor.
Yes but everyone wants to offer better customer service. In order for that to be your advantage you have to actually be doing that or have a concrete way of doing that in a way that Airbnb isn't doing already. For example, take Netflix (streaming) vs Blockbuster. Netflix wasn't simply Blockbuster but with some things done differently. It was Blockbuster to the end user in that it satisfied the same purposes, but was implemented completely differently so that Blockbuster basically would have had to start from scratch to do things the same way as Netflix.
This is probably one of the most common early founder mistakes I saw in my time in SF (from mostly myself) which is that a founder would think that they could magically say they will improve on some aspect of incumbent, and expect others to just believe that they can execute on it.
Example: We'll be like YouTube, but with better recommendations... Uber but with less assaults. Doordash but with less missing items in orders.
The shortcomings of incumbent offerings are often well known. Simply recognizing them and saying your company will solve them is not in itself an innovation, unless you can actually present a non-obvious solution, and one that is also defendable. For example, even if you recognize that Doordash makes a lot of mistakes in orders, and you come up with a solution such as "hire more quality control personnel," it's not anything that Doordash would have a hard time doing themselves if you prove that it works in a way that solves the problem. It has to still be defendable in a way like proprietary technology or know-how that you have. If you don't have something like that, you'd essentially have to convince investors that you will be able to execute against the competitors better which is a tough sell with anything except traction showing that whatever execution/tactics you have are already working in some way.
In short, if you're raising money on just here's my idea, your idea better be something compelling enough to patent. If not, better get your hands dirty and have traction.
I like people who start companies. It shows a level of drive/passion that I think makes the world a better place. So thanks!
In this particular case, airbnb is having issues as people are starting to run away from them. Having a pitch that is 'basically airbnb but we dont charge money' during a macro-event where companies are trying to focus less on growth and more on maximizing cash flow... this is going to be a hard sell. I wish you luck, but the response you will get today may be very different than 2 years ago.
Airbnb’s killer feature today is brand recognition, which helps renters and landlords recall the name of the marketplace. In many cities, you can get exactly the same room on other sites, and many are literally hotel rooms you might find on booking.com. (In most cases, the deals are better on those sites in terms of refunds and perks).
Even with strong insurances, you’ll need to attract the trust both customers and inventory. You’ll need a strong brand name, endorsements, advertisements—or even some gimmick or feature—to differentiate yourself from the pack of other wannabes.
It's not clear to me that's a viable business model change for them? They compete with a previously entrenched entity, hotels. Anecdotally, people I know already complain about the perception of unreasonably high service fees and are opting for cheaper hotels when possible. This is different than five years ago where people reached for AirBnB first.
I am not a rocket scientist, just a designer and builder. Even so, they do seem to be doing well, 6,000 employees and 70bn market cap doesn't sound like a bad deal...
The issue isn’t airbnb charging fees, it’s what problems can they solve by investing those fees. And unfortunately for a free site like this, there are lots of things airbnb can do to stay ahead. AirCover is one of them and I am sure more are coming. Top of mind could be free esim for your destination during your days stayed in an airbnb.
The market doesn’t care that airbnb charges fees. The market just wants their problems solved by using those fees.
I will say there is a UX problem with fees in terms of how total price is revealed. Hosts don’t always separate cleaning fees and just up the price of their stays. Fees are shit but they are a reality of life. I have fee items on my ce phone bill and and “resort fees” when I stay in a hotel in Hawaii. Fees suck. But at the end of the day, just show me what I get for them. Are you going to put a few chocolates in my room and slippers? Or something a little extra? It’s all about the business behind the fees
I am just one person vs 1,200 full time airbnb developers, and just spent a weekend working on this vs the 15 years airbnb has had to work on their idea, and I spent zero dollars vs the 6.4 billion in funding they have had.
Please be gentle on me, it is only a demo, and I am doing my best. :)
Gonna be blunt here. Almost no one is going to care that the service is from a new small company. Nearly everyone will expect the same level of quality, reliability and service that your competitors (i.e. airbnb) provides. If anything, people will expect better than them as your firm is the newcomer.
I'm afraid this is just the cold, harsh, reality of the world. If you go out into the market hoping that customers and property owners will cut you some slack, your firm will not develop the great reputation you probably want.
Try not to take the criticism personally. I know when you post something like this online it can seem very disheartening, but much of it is good advice.
Based on what everyone is saying I think it's worth rethinking your business model to try and come up with some other features that would differentiate you from Airbnb.
It is a demo and investors have been nicer than people on here lol. They know this is the early days and they were impressed it was done in a weekend without any funding while working full time. They loved the pitch deck which was visually rich.
- pay for a domain name. Show an investor you're serious enough that you at least put in $10 of your own money
- when I click on a photo let me use left / right arrow keys to go to the next photo
- let me click on the header photo to start going through photos
- when you show me amenities also show me what amenities aren't included like AirBnB does. I always like how they show the crossed out dryer or whatever so I notice right away before renting something without a feature I need
I'm not sure if the main issue property owners have with Airbnb is their 17% fee, but I might be wrong about that as I'm not in that business myself. Did you do any specific research that indicate that this is one of the main pain points for those who rent out their properties with Airbnb?
Guests are tired of crazy high fees, yes I did extensive market research on this. Even on reddit users are posting about these "high fees"-- and I agree.
Yes, I am an avid traveler (Nomad) -- I've been to 85 countries and lived in around 30 of those, and Ive relied heavily on airbnb in the past. I did market research for six months.
Airbnb didn't make money first two years. I am open to fees, just not 17% in fees like airbnb, maybe half that or less I am comfortable with...something reasonable you know?
I'm not familiar with Airbnb's detail, but I'm guessing "didn't make money for first two years" is the usual thing of "profit-making company burning through VC money for a few years", not "Airbnb gave everything away for free for two years".
Airbnb didn't even have a demo, they got funding basically on just an idea. I wanted to at least provide a demo of what it could be, its just v0,1. It is still very early days.
They put together a website that offered short-term living quarters and breakfast for those who were unable to book a hotel in the saturated market. The site Airbedandbreakfast.com officially launched on August 11, 2008. The founders had their first customers in the summer of 2008, during the Industrial Design Conference held by Industrial Designers Society of America, where travelers had a hard time finding lodging in the city.
After the founders raised $30,000 by selling cereal named after the two candidates of the 2008 United States presidential election, Barack Obama and John McCain, mostly at the 2008 Democratic National Convention, computer programmer Paul Graham invited the founders to the January 2009 winter training session of his startup incubator, Y Combinator, which provided them with training and $20,000 in funding in exchange for a 6% interest in the company. With the website already built, they used the Y Combinator investment to fly to New York to meet users and promote the site. They returned to San Francisco with a profitable business model to present to West Coast investors. By March 2009, the site had 10,000 users and 2,500 listings.
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They had the website built and running well before Y Combinator saw them.
> Airbnb didn't even have a demo, they got funding basically on just an idea.
and
> YC saw them nearly two years after. They started in Oct 2007 and got funded by YC in 2009
These statements are in conflict with each other.
All the info about them that one can find shows that they had something working with some paying customers prior to getting funding from outside sources.
No, I am just saying for now it is no fee, but investors down the road pressure me into charging fees, then by that point, it wouldn't matter what I say...
This is an interesting idea and I truly wish you the best of luck! Committing from the early stages of late night conception to sitting down and hammering out a demo is no small task.
Your premise reminded me of another startup I read about recently, washbnb. Probably just because it's adjacent to your concept, but it's nice to see continued expansion and iterations in the short-term rental market.
One thing I will add, the 'trips' page had a few additional trips planned for 1970's. Not sure what this indicates but thought you may like to know.
Here's a screenshot: https://i.imgur.com/5s3ukOx.jpg
Am hoping some investor who may be lurking here might want to participate in our seed round. We have gotten some offers last week of 1.5-2m for 15% but terms not founder friendly.
Airbnb did not establish this business model. That was done by VRBO. Airbnb had an app (instead of just a website), looked much nicer (in my opinion) and suspect was easier to use particularly by the hosts.
Your offering is Airbnb but cheaper. It is possible that it can work (the market seems large enough that there could be room for three competitors), but I would suggest trying to understand why Airbnb charges 17% while still losing money. Are they simply inefficient operators or are there hidden costs that you haven't been thinking about. Also, talking to hosts about what aspects they do not like about Airbnb (other than price) is likely a good idea.
Also, I would suggest making it easy for hosts to list / operate their properties on Airbnb, VRBO and your system (if that is possible - I'm not certain if exclusivity is needed). If you can beat Airbnb at this, then you will automatically create a market for your system and can eventually start eating away at VRBO / Airbnb market share. Basically, commoditize the space and be the lowest cost participant. Just some thoughts.
Yes, but high risk in a different way. Airbnb was high risk because it was a largely unproven business model. Nomad is high risk because it is entering a very crowded market without a killer feature.
Funding: Cereal sales; Y Combinator incubator
Amount raised: $30,000 from cereal; $20,000 from Y Combinator
Launched: August 2008
> Months later, the AirbnB team was accepted by the Y Combinator incubator, which gave them three months of support and training and an additional $20,000 to fly to New York -- their biggest market at the time -- to meet users, throw launch parties and promote the site. By the time they exited the incubator and presented their project to investors, AirBnB was profitable. In return, Y Combinator took an equity stake in the company. AirBnB's founders won't say exactly how much they gave up, but Y Combinator's typical deals involve a 2% to 10% stake.
The business model was valid before YC noticed them and they were profitable when they left after the incubator.
If someone is asking about your monetization strategy, you can't point to another company in the space and say "they did it so we can", you actually should have a strategy.
Not making any money is very different from not having any monetization plan at all.
When asking for money, the most crucial thing to address is how you’re going to produce a return on that money. So many entrepreneurs miss this very basic point.
Investors are not impressed by shiny demos unless if you also show them how you plan to make a profit.
If your USP is no fees, then I doubt anyone wants to touch this.
Airbnb likely had a business plan on how to make money... and they might not have had any profits but they likely had some revenue as soon as they had listings back in '09.
> In February 2008, Nathan Blecharczyk, Chesky's former roommate, joined as the Chief Technology Officer and the third co-founder of the new venture, which they named AirBed & Breakfast. They put together a website that offered short-term living quarters and breakfast for those who were unable to book a hotel in the saturated market. The site Airbedandbreakfast.com officially launched on August 11, 2008. The founders had their first customers in the summer of 2008, during the Industrial Design Conference held by Industrial Designers Society of America, where travelers had a hard time finding lodging in the city.
It wasn't until after that that YC noticed them and invested.
Wishing you good luck with this. Succeed or fail, you will come away with plenty of key learnings that can be applied to future projects. The trick is to listen to and learn from feedback, but not let it dissuade you from your entrepreneurial journey. Gradatim Ferociter
Buidling an Airbnb competitor is fine as an idea but the 'no fee' angle isn't a big differentiator. Especially when you say in other comments that you will probably charge fees in the future.
Thank you for this. This is not an airbnb competitor only, I want to have Nomad be a place where landlords and tenants can pay/exchange rent without legal contracts, credit checks, etc. Make it easier to stay long term, without all the legal bullshit.
You're going to run into a ton of regulatory issues (that shouldn't dissuade you, but you need to be prepared). Airbnb has run into plenty just offering short stays. Long-term rentals usually have even more strict rental laws.
I'd actually look pivoting to building a long-term rental platform where everything is done online (listings, appointment booking, credit checks, contract signing, maintenance requests, transferring a tenancy, etc.). That seems easier than directly taking on a tech giant.
Long term stays get into complications that you can become a tenant and then fall under tenant protections.
The problem of Airbnb squatters who have gained tenant protections from a sufficiently lengthy stay and then refuse to leave... and needing to go through formal eviction proceedings is a real problem.
Have you spoken to any AirBNB hosts that your $2500 month fee would be less than would they currently pay AirBNB, and if so, what did they say? How do you plan to deal with hosts that are unable to justify $2500 monthly subscription cost?
No it is not 2,500 subscription. It is based on an average rent, Nomad Pass is essentially a way for Nomads to pay their rent, through the app without fees, without legal contracts or credit checks.
Some people (like myself) can afford a 2,500 rent but can't seem to be approved for a 2,500 mortgage, due to credit and this "Feature" of Nomad Pass is for people in my shoes.
> ... Nomad Pass is essentially a way for Nomads to pay their rent, through the app without fees, without legal contracts or credit checks
I would go that very carefully with a lawyer. The contracts and credit checks are a way for the landlord to mitigate risks. You need to identify where the risks are and who is assuming those risks if you not doing contracts or credit checks.
So you’re planning to cover expenses with investor funds — then switch on fees at series C after having built up user base that assumes the service is no fees?
That is the plan eventually, but airbnb charges 17% in fees, we hope to charge half that or less if investors ask us to eventually implement fee structure
Ending your sentences with "lol" multiple times in this thread looks childish to me. Also, your title says "no fees" and your comments say otherwise. Having "we'll charge maybe"-like attitude doesn't inspire confidence and says to me that you don't have a plan.
It has only been a week, I am doing my best despite working 60 hours a week, I did this in a weekend, and without any money. It is my first time trying. Please be gentle :)
That's cool, I respect honest work. I'm sharing my thinking/feedback and apologies if that sounded ad hominem - it wasn't my intention at all. I hope you'll succeed in your endeavors whether it's Nomad Pass or something else.
Thank you for the kind words, and it is called Nomad. :)
Nomad Pass is an opt in subscription model -- but really another term for a lease, but without credit checks or income requirements, and no legal binding contract.
Because airbnb charges 17% in fees from every booking, guests are hurting. We wont charge a separate cleaning fee either. All listings are mandatory self check in as well.
I hurt because of risks/customer support or lack thereof, not because of a 17% fee. Last thing I want is to arrive somewhere 8k miles away to a closed door/canceled booking.
Airbnbs biggest problem I see complained about online is the lack of customer service when your host cancels/you find a spy cam/the place looks nothing like in the photos
Im assuming in this case no income equals no paid customer support? Hard pass. People need support when traveling, and lots of it. I think what would attract more consumers next is some sort of marketplace that promises a human response ready to help you within X minutes