Airbnb Seed Stage

This is the Airbnb pitch deck to raise their $600k seed round.

It is fairly basic, but it gets the point across. It took them a looooong time to raise. They also had NO idea what they were doing. They changed their market size from an ‘m’ to a ‘b’ as Sam Altman told them that’s what investors wanted to hear! So don’t think this deck is here to teach you anything based on them having experience! These guys were as clueless as you may be now. Actually, it’s not a bad deck tbh, you just don’t believe it (if you forget how large they are now).

I have some angel investor friends in the valley that know the guys. One played basketball with Joe. Joe obviously pitching him. My friend told me:

Haha, air bed and breakfast, who the hell is going to use that. It was ridiculous!

Guess the joke is on him. Shows you how hard it is to pick some of these big winners as an investor!

About Airbnb

Airbnb is a two-sided marketplace that matches people that own real estate properties with people interested in renting short-term lodging.

Founded in August 2008 by Brian Chesky and Joe Gebbia and based in San Francisco, California, the company was privately owned. By 2009, it had more than one thousand customers and by mid-2011 more than one million. As of 2015, it had over 1.8 M listings in 34,000 cities around the world.

Airbnb is a community marketplace for people to list, discover and book unique spaces around the world through mobile phones or the internet. Whether an apartment for a night, a castle for a week, or a villa for a month, Airbnb connects people to unique travel experiences at any price point.

With a growing community of users, Airbnb also provides an easy way for people to monetize their extra space and showcase it to an audience of millions. Airbnb has acquired several of its competitors, including Accoleo, CrashPadder, NabeWise, and Localmind.

In 2008, after hosting their first three guests in their San Francisco apartment, Gebbia and Chesky began receiving emails from people around the world requesting Airbnb in their own cities and in places they would like to visit. As Gebbia put it, “People told us what they wanted, so we set off to create it for them.” Indeed, much of Airbnb’s growth could be attributed to the fact that people asked for the service Airbnb offered.

Photographer story

You may have heard of ‘do things that don’t scale.’ This lead to the Airbnb photography program.

(Source: HBS Professor Thales S. Teixeira)

According to Gebbia

The photos were really bad. People were using camera phones and taking Craigslist-quality pictures. Surprise! No one was booking because you couldn’t see what you were paying for.

Their solution to this problem was low-tech but effective. According to Chesky

A web startup would say, ‘Let’s send emails, teach [users] professional photography, and test them.’ We said, ‘Screw that.’

Instead, they rented a $5,000 camera and went door to door, taking professional pictures of as many New York listings as possible. This approach led to two to three times as many bookings on New York listings, and by the end of the month, Airbnb’s revenue in the city had doubled. As it turned out, what drove stunting growth in New York also helped in Paris, London, Vancouver, and Miami.

Though this initiative was not cheap for the cash-strapped startup, the founders felt that the long-term benefits-improved listings were two and a half times more likely to be booked—were well worth the cost. By 2012, there were more than 2,000 freelance photographers employed by Airbnb to photograph 13,000 listings on six continents.

As Chesky explained

We start with the perfect experience and then work backward. That’s how we’re going to continue to be successful.

This approach extended beyond revamping listing photos. The founders looked at the characteristics users valued and worked to engineer those into the entire site. With initial traction, came new scrutiny from the media and the established hospitality industry.

I find this image fascinating!

Date	Amount / Round	Valuation	Lead Investor	Investors
Mar, 2017	$447.8M / Series F	—	CapitalG TCV	4
Sep, 2016	$555.46M / Series F	—	CapitalG TCV	5
Jun, 2016	$1B / Debt Financing	—	JP Morgan Chase & Co.	4
Nov, 2015	$100M / Private Equity	—	FirstMark Capital	1
Jun, 2015	$1.5B / Series E	—	General Atlantic Hillhouse Capital Group Tiger Global Management	14
Apr, 2014	$475M / Series D	$10B	—	6
Oct, 2013	$200M / Series C	—	Founders Fund	5
Jul, 2011	$112M / Series B	—	Andreessen Horowitz	8
Nov, 2010	$7.2M / Series A	—	Greylock Partners	8
Apr, 2009	$600k / Seed	—	Sequoia Capital	2
Jan, 2009	$20k / Seed	—	Y Combinator	1

Structured summary review

Words

It’s anemic if you have perspective. It only seems fitting from the design. If you restructured the slide and changed font sizes, you would see things differently.

It says very little. If I got this back in the day, I would absolutely have deleted it. If you are younger, you might be giggling right now thinking “silly Boomer, just doesn’t get it“. Nah, bro. You don’t know what it was like to have to call your father when you were 7 to ask the syntax for a DOS command prompt to play Spider-Man (We were playing Leisure Suit Larry, and the calls were actually to answer what was in a Screwdriver).

Airbedandbreakfast was weird as F as you can get back in the day.

There should be about 3x the number of words.

Slide length

The 10 slide thing is such a joke. It is 100% fine for an accelerator application. I don’t know who the purveyor of  10 slides is, but they are whack.

The deck really isn’t good if you go back in time. You look at it now and you’re like yeah! But it all played out. But imagine the deck was for light strobing dildos for non-binary squirrels that only get off from nut-powered batteries, and it was now worth what Airbnb is you would be like obviously, but for now, you’re still wondering how I came up with that.

Headers

Worst ever. They got a checklist and they forgot they were like, meant to change the template…

Appearance

For what it is, it’s solid and it fits the purpose perfectly. Argh, it’s just structured wrong.

LA girls make sense in LA with their Matcha tea. But move them anywhere else and it’s weird. Just like some of my shoes. In Ireland, my Balanceagas look like clown cars, but in London, they look trendy. And my mother wants to throw out my LVs when she sees them, but Crystal at the club says she has them too, and “OMG!!”

For design, I like boring decks and this is a boring deck. They are easy to read. I want a consistent structure where everything is in the same place so the eye knows where to read.

Narrative

There is zero narrative. The slides are broadly in the right order.

You construct a narrative in the headers. Their headers are problem, solution…

Structure

For how it is structured, it is 100% consistent. It’s just not right. If you are a lazy founder and need a deck out and done, then pay attention. They are boring. Things stay in their place other than in the body. Reliable is good.

Slides

To me, this is a teaser deck (which I hate). It’s super lightweight.  Don’t get me Keith Sweat Twisted, they explain simple things simple and that’s hard to do. But it’s super lightweight. I can opine on why things make sense a the stage they are at, but if you take per se, it’s a crap deck. People give it credence because it’s Airbnb. You have no comprehension how clueless the founders were back then when they made the deck.

Slide-by-slide review on their deck

Problem slide

Depending on your narrative (Take the pitch deck thinking course), the problem is generally a safe place to start.

You could start with an overview slide with an ‘x for y’ and brief summary to really explain what the hell you do though. I prefer that.

You have the most investor attention in the first minute (and drops off exponentially then) so make sure to get the key bits at the front.

The problem is absolutely key! What the hell are you solving? Should your startup exist? Seriously…

I love how they start with how expensive hotels are. I hate having to rely on hotels. I couldn’t be nomadic without Airbnb! This is a pain point I relate to as an investor and a person.

The ‘disconnected from culture stuff’ is hippy-dippy stuff I don’t care about. It’s like saying you are going to be a B-corp and give profit away to charity. Investors only care if that leads to greater profitability not less (and a fuzzy feeling). It’s not a terrible point though.

The ending point on booking with a local immediately leads me to guess what their business model is. The ‘no easy way exists’ is a bold statement though. Never tell investors you don’t have competition! In this case the idea is so nuts it’s actually core to the investment thesis.

Solution slide

I like how few words they use. It’s to the point. There is a great use of space (seriously, more white space will suddenly 10x the appearance of any deck you do! ess is so much more).

I’m not sure if ‘web platform’ should be bolded, but that could be time relevant. The world today is different. Could write ‘two-sided marketplace’ instead. But doesn’t matter.

‘Space’ could be better termed. Bedrooms might be more apt.

One thing to note is the ‘rule of three’ is applied throughout the deck. You can always bucket things into 3. People like three. I learned this from an MD when I was in M&A.

There are 3 problems and 3 solutions. It’s clean and memorable.

The font sizing is also apt. SAVE MONEY is the third thing you see, then MAKE MONEY and SHARE CULTURE. Your eyes are then drawn to the subpoints ‘when traveling’ etc. This is a great example of eye path control. Understand how psychology works and how eyes dart across a slide. Lead investors to how they consume your content. It’s a micro-narrative on each slide.

Market validation slide

This is simple. Two blocks of text and a heading.

I don’t like it, but it is ok. Never ‘label’ slides. Joe is basically filling out a Sequoia-like flow template.

Your heading should make the point of any slide. ‘Market is validated by impressive demand in tangential startups‘ or something as an example. Don’t let investors think. Thinking is bad. Do the thinking for them. Tell them what to think. Frame it.

Referencing tangential competitors is fab. Showing numbers is brilliant. You could ideally add a sub-bullet point explaining a bit more and providing context (such as why they are not doing the same thing).

Market size slide

This is a prototypical TAM, SAM, SOM format. Don’t worry. No one really understands what these terms mean and how to properly do them. If you want to f*** with an investor, try getting them to explain it in detail with an example. Tumbleweeds. Lol.

Investors understand one concept, ‘big market.’ I was chatting with one mentee today. He said the investors are passing as the market ‘is only $800m.’ So your market matters.

The way they do the numbers is not standard at all though. It’s based on trips, not revenue. What Joe says basically is a

• shite tonne of people book a lot
• A quarter of those people are cheap
• 15% of the cheap people could book on Airbnb

84m trips is fairly large. So slap on an imaginary booking number and intuitively the market is large.

Look, writing decks is a balls. You need to get them done. If you can hack this and illustrate it like this, do it. If investors get hung up on how you did a slide like this, then make it better. The slide is decent, but not perfect. But done is better than perfect.

I like the fact Joe adds the ‘source’ for each number. So many founders don’t do this. Yes, the best practice is to make the source super small. I use font size 8 as the default. I normally put the source where the contact details are aligned left.

Product slide

I like how simple this is. Understand investors are shitting all over the concept at this point in time. They don’t need to get super detailed! They need to buy into the idea, not the tech platform.

So:

1. Search in your city (makes it fell global)
2. Review listings (Explain that you can pick and choose)
3. Book (Simple!)

Again, rule of three!

You ‘could’ have 10 steps, but adding more steps makes things feel harder. I learned this in my behavioral psychology class at university. Make things seem simple and it seems easier to do and plausible.

Competition slide

This is a standard format.

They got the axis right. You need to think about your axis on your competitor slide. Picking the wrong ones makes it seem like you are selling too much and not logical.

I personally like adding some commentary here in call-out boxes. It adds narrative, preempting investor thoughts and showing how you think about the competition.

Competitive advantages slide

I know founders hate writing this slide… The truth is there are only 3 competitive advantages that are truly sustainable. One is a brand (and f*** me that is expensive!).

The vast majority of founders write on this slide is total BS.

Basically, everything they have written is a product feature that can be replicated easily.

First mover advantage is often bad. The fast follower is often a good strategy. Market education costs a fricking bomb. Anyway. They innovated.

They do list 6 things that don’t sound stupid though. I don’t launch at this slide.

Team slide

Team is sooooooooooooo important.

The slide follows a lot of best practices. The one thing they should be doing is explaining why they are awesome, why they are the best team. Nathan is the one who does this really well. No one really gives a shit about your university degree…

 “I am fond of quoting that about 70% of my investment decision of an early-stage company is the team. My rationale is simple: everything goes wrong and only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like.”

– Mark Suster, Upfront Ventures

Press slide

If you don’t really have traction to base your deck around, you need a proxy… PR is one good example.

What they did well that most founders don’t do is include the quotes like this. I like it.

The quotes help remove some fear they probably had about the business idea. Something is better than nothing.

 User testimonials slide

This is just another proof point that the idea isn’t dumb. If you have growth metrics you wouldn’t really need this slide. Or it would be appendix material at best. User testimonials talk, numbers walk.

This could be better if they had some celebs using it, otherwise the content is fine.

Financial slide

My guess is that this is the teaser deck, not the full one. Well could be, I don’t know.

There are none of the typical sources and use information (get the free runway calculator here). This slide is basic, but not terrible.

I like they state they want 12 months runway and have a clear, singular milestone of 80k transactions. Presumably, that is a logical number/milestone for your series-a??

So $500k gets them 80k transactions and $2m revenue. As usual, they break out the high-level detail, such as average fee and runway. It is nicely structured, if not minimalistic.