Editor's Note: Inc. Magazine announced its pick for Company of the Year on Monday, November 23. It's Slack! See which one Inc. readers chose as their favorite company of 2015. Here, we spotlight Airbnb, last year's Company of the Year winner.
When Inc. named Airbnb its 2014 Company of the Year, the startup's size and breakneck growth were breathtaking: The home-sharing website had 20 million users and more than $794 million in funding. Its website offered over 800,000 places to stay--more rooms than any hotel chain in the world.
Less than 12 months later, those numbers sound quaint. The San Francisco-based startup has now hosted 60 million stays. Its founders, Nathan Blecharczyk, Joe Gebbia, and Brian Chesky, have raised another $1.5 billion, valuing the company at over $25 billion (instead of a mere $10 billion). And there are now more than two million Airbnb listings worldwide.
Airbnb, a startup which is still not yet eight years old, continues to face many of the same challenges it faced last year: It's trying to retain a folksy, community-driven image even as it surpasses multinational hospitality chains in size. It faces public relations crises when bad things happen in Airbnb homes--most recently, a death in Texas and report of a rape in Spain. And it still runs afoul of local governments who say the company's listings are unlawful.
But at least in the last category, Airbnb appears to be reaching a turning point. As more and more citizens become Airbnb users, many cities appear to be reaching the same conclusion: If you can't control Airbnb and its many hosts, tax 'em.
The past year saw Airbnb hammering out agreements with cities across the world, including a few that had previously opposed the startup. The company has signed agreements to collect and remit local taxes in Amsterdam, Paris, San Jose, Chicago, Jersey City, and Washington, D.C. In return for allowing Airbnb to operate, many of these cities limit the number of days every year residents can rent their apartments, so that apartments don't become full-time hotels.
On November 3 in San Francisco, in what amounted to a referendum in favor of Airbnb, voters rejected proposition F, a measure that would have placed stricter rules on Airbnb rentals, by a margin of 55 percent to 45 percent.
Instead of health code and zoning violations, city governments are seeing dollar signs, says Michael Munger, an economist and professor of political science at Duke University. "It's changed from how can we regulate these guys, to how can we make sure they succeed?" Munger says.
To be sure, tensions in other cities still remain high. In New York City, for example, officials are considering a measure that would increase fines for those who violate the state's short-term rental laws, which many Airbnb listings do. The new mayor of Barcelona, which has fined Airbnb in the past, says she will fine Airbnb again if the company markets illegal listings in her city. Paris, Airbnb's largest market, where it hosted a 5,000-person conference this month, continues to fine operators it says violate its housing laws.
The company's more obliging tone toward various municipalities comes at a time when Airbnb is increasingly trying to show the world it isn't just a disruptive upstart but a mainstream travel and hospitality brand. It wants to satisfy business travelers and older travelers, as well as the young and hip and budget-conscious. In March, Airbnb announced it will sponsor the 2016 Olympics in Rio de Janeiro. In July, it introduced software designed to help corporate travel departments. In November, Airbnb announced a partnership with American Express, where cardholders can pay for stays using loyalty points. In effect, Airbnb is growing up.
Still, Airbnb isn't just moving toward the mainstream; the mainstream is moving closer to Airbnb. This summer Hyatt announced it would invest in upscale vacation rental site Onefinestay. Wyndham Hotels, meanwhile, took a stake in London-based LoveHomeSwap, a website that allows users to swap homes.
"In the last year, it's become more of the norm for many more travelers," says Rachel Botsman, co-author of What's Mine Is Yours: The Rise of Collaborative Consumption and visiting lecturer at the University of Oxford, where she conducted a business case study on Airbnb. "People always assumed that this was a cheap alternative to traditional travel. Now people are finding Airbnb fits lots of different situations and uses."
This year, as last, Airbnb's sheer speed of growth is breathtaking. So is the rate at which it's becoming an everyday thing, an accepted part of how people travel. It's hard to believe, but easy to wonder: As we look back next year, will 60 million guests, a $25 billion valuation, two million listings--all sound so quaint and provincial, once again?