scorecard'Too dangerous': Here are 6 reasons investors gave for passing on Airbnb more than a decade ago
  1. Home
  2. stock market
  3. news
  4. 'Too dangerous': Here are 6 reasons investors gave for passing on Airbnb more than a decade ago

'Too dangerous': Here are 6 reasons investors gave for passing on Airbnb more than a decade ago

Matthew Fox   

'Too dangerous': Here are 6 reasons investors gave for passing on Airbnb more than a decade ago
Stock Market3 min read
  • Investors see strong long-term potential in Airbnb, as evidenced by its eye-popping IPO spike of 115% in its Thursday trading debut.
  • The company now sports a valuation of more than $100 billion, which is bigger than the 7 largest publicly traded US hotel chains combined.
  • But not all investors saw the potential in Airbnb over a decade ago when it was looking for early-stage seed money.
  • Here are 6 reasons why prominent investors passed on investing in Airbnb over a decade ago.
  • Visit Business Insider's homepage for more stories.

Enthusiasm for Airbnb surged on Thursday after it spiked as much as 143% in its IPO trading debut, illustrating that investors are confident in the long-term prospects for the home sharing company.

But this wasn't always the case for Airbnb, as prominent investors who were pitched on the company more than a decade ago weren't sold on the idea of renting out one's home to strangers.

In a 2015 blog post, Airbnb co-founder and CEO Brian Chesky outlined the reasoning behind 5 investors who turned down the opportunity to buy 10% of Airbnb for $150,000 in the summer of 2008.

That 10% stake would have been worth as much as $11.5 billion based on Airbnb's intra-day high of $165 in Thursday trades, representing a gain of 7,651,371% if the stake was held through Thursday's trading debut.

Here are five e-mail responses Chesky received from "prominent" investors who turned down the opportunity to invest in Airbnb in 2008.

Read more: We spoke with Wall Street's 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market - and compile the biggest bets they're making for 2021

1. "Thank you for the introduction. Brian good to meet you -- while this sounds interesting it is not something we would do here -- not in our area of focus, do wish you best of luck."

2. "Hi Brian, Apologies for the delayed response. We've had a chance to discuss internally, and unfortunately don't think that it's the right opportunity for [identification omitted] from an investment perspective. The potential market opportunity did not seem large enough for our required model."

3. "Brian: I ran this by my partner. First, it's not in one of our prime 5 target markets so it's a long shot for our involvement. Also, since it's not an area where we are currently investing, getting us involved doesn't give you the expertise that would be best for your company. My recommendation is to keep us posted. If you get to the point of a Series A investment please let us know and we'll take a look."

Read more: Cathie Wood is beating 99% of fund managers this year. The ARK CEO and her team share their outlooks for 2021 - including thoughts on Tesla's $5 billion stock sale, the Salesforce-Slack tie-up, and bitcoin's meteoric rise.

4. "Brian: Thanks for the follow up. I was unavailable to get on the call today as I'll be out of town through end of day Thursday. I really like the progress you guys have made, but between issues outstanding with ABB and my current time commitments to other projects, specifically existing investments, I'm not going to be able to proceed with an investment at this point. My biggest remaining concerns are: significant ramp up in traction post the DNC and RNC, technical staffing, investment syndicate."

5. "Brian: We've decided yesterday to not take this to the next level. We've always struggled with travel as a category. We recognize its one of the top e-commerce categories but for some reason, we've not been able to get excited about travel related businesses."

Read more: Morgan Stanley is warning that the stock market's economic recovery trade may soon be over. Here are 4 strategies they recommend for finding the returns that still exist.

Former Shark Tank host and early-stage investor Chris Sacca also chimed in on why he (regretfully) didn't invest in a seed round of Airbnb.

In response to Chesky's 2015 blog post, Sacca tweeted: "I passed on @Airbnb because renting a room in a house while owners were still home was "too dangerous"."

On Thursday, Sacca congratulated Airbnb's founders via tweet and said: "I feel extreme FOMO because I passed on their seed deal telling them 'someone will get murdered and the blood will be on your hands.'"

Sacca added, "I let the worse case keep me from seeing the likely case. Every platform will have some bad actors, but most humans are good people. They knew that. I didn't listen. I've admired the company for a long time and I'm looking forward to finally being a shareholder."

But hindsight is always 20/20, as there was no telling over a decade ago that Airbnb would be the major success it is today.

"The investors that rejected us were smart people, and I am sure we didn't look very impressive at the time," Chesky said.