March 2011Yesterday Fred Wilson published a remarkable post about missingAirbnb. VCs miss good startups all the time, but it's extraordinarilyrare for one to talk about it publicly till long afterward. Sothat post is further evidence what a rare bird Fred is. He'sprobably the nicest VC I know.Reading Fred's post made me go back and look at the emails I exchangedwith him at the time, trying to convince him to invest in Airbnb.It was quite interesting to read. You can see Fred's mind at work as he circles the deal.Fred and the Airbnb founders have generously agreed to let me publishthis email exchange (with one sentence redacted about somethingthat's strategically important to Airbnb and not an important partof the conversation). It's an interesting illustration of an elementof the startup ecosystem that few except the participants ever see:investors trying to convince one another to invest in their portfoliocompanies. Hundreds if not thousands of conversations of this typeare happening now, but if one has ever been published, I haven'tseen it. The Airbnbs themselves never even saw these emails at thetime.We do a lot of this behind the scenes stuff at YC, because we investin such a large number of companies, and we invest so early thatinvestors sometimes need a lot of convincing to see their merits.I don't always try as hard as this though. Fred must have found me quite annoying.from: Paul Grahamto: Fred Wilson, AirBedAndBreakfast Foundersdate: Fri, Jan 23, 2009 at 11:42 AMsubject: meet the airbedsOne of the startups from the batch that just started, AirbedAndBreakfast,is in NYC right now meeting their users. (NYC is their biggestmarket.) I'd recommend meeting them if your schedule allows.I'd been thinking to myself that though these guys were going todo really well, I should introduce them to angels, because VCs wouldnever go for it. But then I thought maybe I should give you morecredit. You'll certainly like meeting them. Be sure to ask abouthow they funded themselves with breakfast cereal.There's no reason this couldn't be as big as Ebay. And this teamis the right one to do it.--pgfrom: Brian Cheskyto: Paul Grahamcc: Nathan Blecharczyk, Joe Gebbiadate: Fri, Jan 23, 2009 at 11:40 AMsubject: Re: meet the airbedsPG,Thanks for the intro!Brianfrom: Paul Grahamto: Brian Cheskycc: Nathan Blecharczyk, Joe Gebbiadate: Fri, Jan 23, 2009 at 12:38 PMsubject: Re: meet the airbedsIt's a longshot, at this stage, but if there was any VC who'd getyou guys, it would be Fred. He is the least suburban-golf-playingVC I know.He likes to observe startups for a while before acting, so don'tbe bummed if he seems ambivalent.--pgfrom: Fred Wilsonto: Paul Graham,date: Sun, Jan 25, 2009 at 5:28 PMsubject: Re: meet the airbedsThanks PaulWe are having a bit of a debate inside our partnership about theairbed concept. We'll finish that debate tomorrow in our weeklymeeting and get back to you with our thoughtsThanksFredfrom: Paul Grahamto: Fred Wilsondate: Sun, Jan 25, 2009 at 10:48 PMsubject: Re: meet the airbedsI'd recommend having the debate after meeting them instead of before.We had big doubts about this idea, but they vanished on meeting theguys.from: Fred Wilsonto: Paul Grahamdate: Mon, Jan 26, 2009 at 11:08 AMsubject: RE: meet the airbedsWe are still very suspect of this idea but will take a meeting asyou suggestThanksfredfrom: Fred Wilsonto: Paul Graham, AirBedAndBreakfast Foundersdate: Mon, Jan 26, 2009 at 11:09 AMsubject: RE: meet the airbedsAirbed team -Are you still in NYC?We'd like to meet if you areThanksfredfrom: Paul Grahamto: Fred Wilsondate: Mon, Jan 26, 2009 at 1:42 PMsubject: Re: meet the airbedsIdeas can morph. Practically every really big startup could say,five years later, "believe it or not, we started out doing ___."It just seemed a very good sign to me that these guys were actuallyon the ground in NYC hunting down (and understanding) their users.On top of several previous good signs.--pgfrom: Fred Wilsonto: Paul Grahamdate: Sun, Feb 1, 2009 at 7:15 AMsubject: Re: meet the airbedsIt's interestingOur two junior team members were enthusiasticThe three "old guys" didn't get itfrom: Paul Grahamto: Fred Wilsondate: Mon, Feb 9, 2009 at 5:58 PMsubject: airbnbThe Airbeds just won the first poll among all the YC startups intheir batch by a landslide. In the past this has not been a 100%indicator of success (if only anything were) but much better thanrandom.--pgfrom: Fred Wilsonto: Paul Grahamdate: Fri, Feb 13, 2009 at 5:29 PMsubject: Re: airbnbI met them todayThey have an interesting businessI'm just not sure how big it's going to befredfrom: Paul Grahamto: Fred Wilsondate: Sat, Feb 14, 2009 at 9:50 AMsubject: Re: airbnbDid they explain the long-term goal of being the market in accommodationthe way eBay is in stuff? That seems like it would be huge. Hotelsnow are like airlines in the 1970s before they figured out how toincrease their load factors.from: Fred Wilsonto: Paul Grahamdate: Tue, Feb 17, 2009 at 2:05 PMsubject: Re: airbnbThey did but I am not sure I buy thatABNB reminds me of Etsy in that it facilitates real commerce in amarketplace model directly between two peopleSo I think it can scale all the way to the bed and breakfast marketBut I am not sure they can take on the hotel marketI could be wrongBut even so, if you include short term room rental, second homerental, bed and breakfast, and other similar classes of accommodations,you get to a pretty big opportunityfredfrom: Paul Grahamto: Fred Wilsondate: Wed, Feb 18, 2009 at 12:21 AMsubject: Re: airbnbSo invest in them! They're very capital efficient. They wouldmake an investor's money go a long way.It's also counter-cyclical. They just arrived back from NYC, andwhen I asked them what was the most significant thing they'd observed,it was how many of their users actually needed to do these rentalsto pay their rents.--pgfrom: Fred Wilsonto: Paul Grahamdate: Wed, Feb 18, 2009 at 2:21 AMsubject: Re: airbnbThere's a lot to likeI've done a few things, like intro it to my friends at Foundry whowere investors in Service Metrics and understand this modelI am also talking to my friend Mark Pincus who had an idea likethis a few years ago.So we are working on itThanks for the leadFredfrom: Paul Grahamto: Fred Wilsondate: Fri, Feb 20, 2009 at 10:00 PMsubject: airbnb already spreading to prosI know you're skeptical they'll ever get hotels, but there's acontinuum between private sofas and hotel rooms, and they just movedone step further along it.[link to an airbnb user]This is after only a few months. I bet you they will get hotelseventually. It will start with small ones. Just wait till all the10-room pensiones in Rome discover this site. And once it spreadsto hotels, where is the point (in size of chain) at which it stops?Once something becomes a big marketplace, you ignore it at yourperil.--pgfrom: Fred Wilsonto: Paul Grahamdate: Sat, Feb 21, 2009 at 4:26 AMsubject: Re: airbnb already spreading to prosThat's true. It's also true that there are quite a few marketplacesout there that serve this same marketIf you look at many of the people who list at ABNB, they listelsewhere tooI am not negative on this one, I am interested, but we are stillin the gathering data phase.fred
