Airbnb’s IPO: A Milestone for the Company and Y Combinator

Every batch of entrepreneurs that goes through prestigious startup accelerator Y Combinator nowadays hears founders from the same company speak: Airbnb.

The co-founders of Airbnb, which is set to go public this year, return to the accelerator where they got their start to speak to founders going through the process they did back in 2009, often staying for as long as four hours.

“They’ll answer question after question. Because if you think about it, you’re in their position in 2009 where you’re just a few founders with an idea and you look at these folks who created this epic company,” Y Combinator President Geoff Ralston said in an interview with Crunchbase News.

Airbnb’s upcoming IPO, expected by the end of the year, is a milestone for the company and for Y Combinator. Airbnb is one of the most high-profile companies to come out of the startup accelerator and will be one of only a handful of YC companies to go public. While around 300 YC companies have had exits, only three have gone public so far, with a fourth in the works via a SPAC.

This year, YC will likely have three of its companies go public: Momentus, a space transportation company via a SPAC, Airbnb through an IPO, and DoorDash reportedly also going public. Airbnb’s IPO is arguably the most anticipated public debut of 2020 and is poised to be YC’s biggest alumnus IPO to date.

“It benefits founders everywhere when you see a company that started with nothing more than an inspiration and at the end they’re ringing the bell at a stock exchange. That shows that belief in possibility matters,” Ralston said. “One of the things we like to tell founders is to be prepared for the hardest journey in your professional career.”

Airbnb’s Financial Journey

Airbnb has raised at least $6.4 billion from investors including Andreessen Horowitz, Sequoia Capital, and General Atlantic. It was last valued at around $18 billion after a $1 billion private equity round in April, down from approximately $26 billion in early March before the COVID-19 pandemic. The company has grown to include over 7 million listings across more than 220 countries and regions worldwide.

Despite the pandemic’s impact on travel and hospitality, Airbnb adapted by focusing on local travel. The company laid off 1,900 employees, cut nearly $1 billion in marketing costs, and slashed executive salaries by half. Co-founders Brian Chesky, Joe Gebbia, and Nathan Blecharczyk also went without salaries. However, on July 8, users booked stays at Airbnbs at pre-pandemic rates, according to The Wall Street Journal.

Airbnb aims to raise around $3 billion through its IPO and will list on Nasdaq. Its IPO could potentially value the company upwards of $30 billion, depending on market conditions.

A Look Back: Airbnb’s Origin Story

Airbnb’s origin story is well-known: Co-founders Gebbia and Chesky needed a way to pay rent, so they set up air mattresses in their apartment to host attendees of a design conference in San Francisco. They used the same idea for the Democratic National Convention in 2012 and even sold custom cereal boxes to pay off their credit card debt. Their resourcefulness caught the attention of Y Combinator, leading to their acceptance into the accelerator.

Y Combinator, founded by Graham, Livingston, Blackwell, and Morris, was about four years old when Airbnb joined. The YC W09 batch, which included Airbnb, was smaller and more intimate. The accelerator’s deal at the time involved investing $20,000 for a 6 percent stake in the company. Airbnb’s current value makes that stake considerably more valuable.

YC’s Ongoing Impact and Alumni Network

The Airbnb founders maintain close ties with Y Combinator, frequently meeting with founders and YC’s team. YC’s alumni network benefits greatly from seeing its companies succeed, whether they’ve gone public or not.

“This sort of validation really matters. That’s why it’s important to us and founders to come back and talk about your story,” Ralston said.