Airbnb's bridge too short

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Airbnb's bridge too short
Airbnb

Hi everyone, welcome back to Trending, Business Insider Prime's weekly newsletter of the latest tech industry developments. I'm Alexei Oreskovic, Business Insider's West Coast bureau chief and global tech editor.

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This week: Airbnb's bridge too short

If Zoom is the global quarantine's tech darling (privacy snafus and trolls aside), then Airbnb is emerging as the collateral damage of our new reality.

It's no secret that the near total suspension of travel, vacations, and general life-as-we-know-it has put a huge dent in Airbnb's bookings. The question is how huge?

brian chesky airbnb sophia amoruso

We got a clue about the severity of the situation this week, with Airbnb's announcement of $1 billion in financing from private equity firms Silver Lake and Sixth Street Partners. The funding press release was an anomaly for Airbnb and no doubt intended to serve as a public vote of confidence in its business. After all, Airbnb didn't feel the need to toot its horn when it raised $1 billion in 2017 - the last time it raised money - in a blockbuster deal that gave it a $31 billion valuation.

This time, the funding values Airbnb at a significantly lower $18 billion, according to the Wall Street Journal. And, Airbnb will pay its PE lenders a junk-like 10% interest on the debt portion of the financing. With that kind of confidence in your business, who needs doubters?

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But the real takeaway, as Troy Wolverton reports, is how little padding this 10-figure cash cushion actually provides Airbnb.

$1 billion is a sexy number if you're the Hollywood version of Sean Parker. But if you're a global company with thousands of employees and a marketplace with millions of listings, $1 billion is ... about one quarter's worth of operating expenses.

If Airbnb can figure out a way to keep some level of revenue coming in - the company is now promoting longer-term rentals for first responders in coronavirus hot zones and for urbanites fleeing to spacious quarantine shelters - it may be able to stretch the money out. But we're still talking quarters, not years.

It's a remarkable place to be for a Silicon Valley unicorn that was expected to be 2020's hottest tech IPO. Airbnb's business model is one of the most powerful and impressive to come out of the past decade's sharing economy. And when life returns to normal, it will almost certainly continue to play a central role in the travel industry.

But it needs to first make it to the other side of this crisis. And the bridge that Airbnb's financiers just gave it doesn't stretch very far.

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Read Troy's full story here:

Airbnb could run out of cash in one year, even with the $1 billion it just raised, because of how devastating the coronavirus is on its business


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A cubicle in every home

man with laptop at home

Chances are that by now you've heard someone pontificate about how the post-coronavirus world will look very different than the one we lived in before.

We won't shake hands anymore, we'll order all our groceries online, and we'll work from home as much as we want.

Personally, I enjoy going to an office every day, if for nothing else than a chance to chase the bus as it invariably pulls away from the stop without me. But if remote work does become more widespread, the change will be a boon to companies with the wares to give your living room a business-class upgrade.

Melia Russell and Paayal Zaveri spoke to a group of venture capital investors to pick their brains about the most promising technology and startups creating "the future of work." Sure there's plenty of video chat in your future, but remote workers will also need new ways to get healthcare, to be onboarded, and to share knowledge.

Read the full story here:

30 startups creating the future of work that will prosper in 2020, according to VCs


The sound bite:

"Right now so many companies are doing layoffs. Our customers want a company that is stable that will stick around for a long time."

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- Notion CEO Ivan Zhao on why the profitable startup decided to raise $50 million in funding at a $2 billion valuation strictly for "perception."


Recommended readings:

Amazon employees learn about their new salaries starting this week - and most will use it to guess last year's performance rating because managers don't usually share it

Google is fighting COVID-19 by monitoring location data in 131 countries. It's a reminder of how much info Google has about us and how easily the pandemic could blow up privacy.

Zoom helped to connect the world, then got slammed for cybersecurity issues - here's why experts say the company deserves a break

Amazon could buy a company like Slack or Zoom to replace its own unpopular chat app Chime and get in on the flood of coronavirus-related customers, analysts say

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Not necessarily in tech:

'Hellbent on making money off of dying Americans': Inside the black market where multimillion dollar orders for masks lead to empty warehouses


That's it for this week. Thanks for reading, and remember, if you like this newsletter, tell your friends and colleagues they can sign up here to receive it.

- Alexei

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