Airbnb, a website that helps users find short-term accommodations in the living rooms and recreation rooms of cities around the world, announced today that it has raised $112 million in second round funding from Andreessen Horowitz, DST Global, and General Catalyst on a valuation of $1 billion. The company’s previous round of funding totaled $7.8 million.
There was no intermediate round of funding because of the rapid rate of the company’s growth, says Brian Chesky, CEO and co-founder of Airbnb. “This round was obviously so much bigger because the growth is exponential,” Chesky says. “We’re going to experience the same amount of growth in the next month as in the last few months combined.”
Jeff Jordan, now a partner at Andreessen Horowitz after serving as CEO at OpenTable and an executive at PayPal and eBay, helped lead the funding round. He agreed with Chesky’s assessment of the company’s rapid growth. “I think the business grew so fast between the $7 million and this round that it is clear it is striking a chord,” Jordan says. “It is also clear that it has been rapidly emulated in other markets.”
The company is now offering short stays on couches and in apartments in 16,000 cities and 186 countries. What that means, Chesky says, is that the company has properties available in those locations, from Chattanooga, Tennessee, to Chenai, India. The foreign market in which the company has expanded the most to this point, Chesky says, is Germany. Airbnb acquired foreign competitor Acceleo there earlier this year, and has assimilated its operations.
The company’s operations both foreign and domestic are managed out of its San Francisco offices for the moment, except for the company’s presence in Germany. There Airbnb has established its first foreign team, with the former Acceleo CEO at the helm. “We have 30 people in Germany,” Chesky says. “They’re focused primarily on awareness and user acquisition.”
Brand awareness is especially critical for Airbnb as the company prepares its most concerted move yet into foreign markets. Foreign competitors and imitators, colloquially referred to as clones, have appeared. Wimdu, a company with offices in Berlin, offers accommodation services similar to Airbnb’s, and has a website that bears a close resemblance to Airbnb’s.
Otherwise, Chesky says that he doesn’t spend too much time thinking about these imitators. He recalls some sage advice given him by Paul Graham, serial entrepreneur and founder of tech start-up incubator Y Combinator. “Start-ups die from suicide, not homicide,” Chesky says Graham told him. “They almost always die of self-inflicted wounds.”
Airbnb doesn’t have any plans to fall on its own sword. Last year, the company booked one million overnight stays, a number the company has doubled in the past four months. As the company expands into new markets, it plans to continue to establish local teams that will work to ensure that company practices don’t conflict with local courtesies and mores, not to mention legal restrictions on subletting spaces.
The company has had plenty of opportunity to work out legal kinks through its New York market, Chesky says. Manhattan and the boroughs get notoriously prickly about landlords trying to do things like turn rent-controlled apartments into single-occupancy hotels. Chesky says his company does everything it can to help the local authorities enforce the law.
“The way we’re thinking about it, we view ourselves like a community marketplace,” Chesky said. “We’re a channel for people to rent out whatever they like as long as they respect local rules and regulations, and if local jurisdictions reach out we’re very cooperative.”