Global unicorn exits hit multi-year high in 2018

Unicorn exits are taking flight.

With the IPO window wide open, an apparent record number of venture-backed companies privately valued over $1 billion have launched public offerings this year. Crunchbase data shows 23 unicorn IPOs globally so far in 2018, well outpacing full-year totals for 2016 and 2017.

Collectively, this year’s newly public unicorns are doing pretty well too. Most priced shares around or above expectations. We’re also seeing a lot of impressive aftermarket gains. At least six are currently valued at more than $10 billion.

Meanwhile, unicorn M&A volumes are chugging along as well, with at least 11 deals so far this year. Big transactions like Walmart’s $16 billion acquisition of Flipkart and Microsoft’s $7.5 billion purchase of GitHub have helped boost the totals.

It all adds up to some enormous numbers. We’ll delve into those in more detail below, focusing on year-over-year comparisons, geographic breakdown, biggest exits and more.

How 2018 compares to prior years

First off, a bit of context. A lot of startup-related metrics are on track to hit multi-year or record highs in 2018. These are lofty times for supergiant funding rounds, venture capital fundraising and unicorn investment, to name a few. Given that pattern, it’s not surprising to see a pickup in unicorn exits too, including some really big names like Xiaomi, Spotify and Dropbox.

That said, if one focuses on anticipated exits, as opposed to the ones that already occurred, even this year’s phenomenal IPO streak may seem comparatively humdrum. There’s mounting excitement around the potential for even bigger offerings next year from UberAirbnb, Didi Chuxing and others.

If markets don’t implode in the next few months, and at least some of these household names make it to market, it’s likely 2019 will be an even bigger year for unicorn IPOs than 2018. Unfortunately, however, we don’t have hard data on the future, so we’re left comparing this year to the prior two in the chart below:

As you can see, we’re already well ahead of last year’s totals. On the IPO front, not only are the 2018 unicorn offerings more numerous, they’re also bigger. In 2017, out of 16 unicorn IPOs, there were two at initial valuations above $10 billion (Snap and online insurer ZhongAn). So far this year, there have been five.

Geography of unicorn exits

The exiting unicorns are also a geographically diverse bunch, with the U.S. and China accounting for the lion’s share and Europe trailing a distant third.

In the chart below, we look at the geographic breakdown in more detail:

While the U.S. produced the largest number of unicorn exits, they weren’t the biggest. Notably, this year’s most valuable IPOs and M&A deal involved companies based in Europe and Asia.

Of the six 2018 debuts currently valued at $10 billion or more, detailed below, only one, Dropbox, is a U.S. company. In the chart below, we look at who topped the rankings:

Adding it up

The grand tally of 2018 exits provides a clear counterpoint to skeptics (your author included), who questioned whether fast-growing unicorn populations and valuations would hold up with acquirers and public market investors.

It appears prices are keeping up nicely. The vast majority of U.S. unicorn exits this year, for instance, were close to or above private market valuations. Among U.S. IPOs the only big fizzle was Domo. While Dropbox looked like a “down round IPO” at first, strong aftermarket performance has the company above its highest reported private valuation.

The year’s largest unicorn IPO — China’s Xiaomi — also managed to slightly top its last reported private valuation, even after pricing shares for its June IPO far below initial projections.

All these giant exits add up. The unicorns that went public this year currently have a collective market capitalization north of $200 billion. Add in roughly $45 billion from M&A deals, and we’re talking close to a quarter of a trillion (!) dollars in post-exit value.

These big exits come as investors continue to funnel record sums into high-valuation private companies. So far this year, investors have poured more than $200 billion into venture and growth-stage startups, with more than $70 billion going into companies already valued at $1 billion or more.

In sum, we’re seeing big numbers all around — going in as investments and coming out as exits. Eventually, all parties wind down. But for now, this one rages on.

AI spots legal problems with tech T&Cs in GDPR research project

Technology is the proverbial double-edged sword. And an experimental European research project is ensuring this axiom cuts very close to the industry’s bone indeed by applying machine learning technology to critically sift big tech’s privacy policies — to see whether AI can automatically identify violations of data protection law.

The still-in-training privacy policy and contract parsing tool — which is called ‘Claudette‘: Aka (automated) clause detector — is being developed by researchers at the European University Institute in Florence.

They’ve also now got support from European consumer organization BEUC — for a ‘Claudette meets GDPR‘ project — which specifically applies the tool to evaluate compliance with the EU’s General Data Protection Regulation.

Early results from this project have been released today, with BEUC saying the AI was able to automatically flag a range of problems with the language being used in tech T&Cs.

The researchers set Claudette to work analyzing the privacy policies of 14 companies in all — namely: Google, Facebook (and Instagram), Amazon, Apple, Microsoft, WhatsApp, Twitter, Uber, AirBnB, Booking, Skyscanner, Netflix, Steam and Epic Games — saying this group was selected to cover a range of online services and sectors.

And also because they are among the biggest online players and — I quote — “should be setting a good example for the market to follow”. Ehem, should.

The AI analysis of the policies was carried out in June, after the update to the EU’s data protection rules had come into force. The regulation tightens requirements on obtaining consent for processing citizens’ personal data by, for example, increasing transparency requirements — basically requiring that privacy policies be written in clear and intelligible language, explaining exactly how the data will be used, in order that people can make a genuine, informed choice to consent (or not consent).

In theory, all 15 parsed privacy policies should have been compliant with GDPR by June, as it came into force on May 25. However some tech giants are already facing legal challenges to their interpretation of ‘consent’. And it’s fair to say the law has not vanquished the tech industry’s fuzzy language and logic overnight. Where user privacy is concerned, old, ugly habits die hard, clearly.

But that’s where BEUC is hoping AI technology can help.

It says that out of a combined 3,659 sentences (80,398 words) Claudette marked 401 sentences (11.0%) as containing unclear language, and 1,240 (33.9%) containing “potentially problematic” clauses or clauses providing “insufficient” information.

BEUC says identified problems include:

  • Not providing all the information which is required under the GDPR’s transparency obligations. “For example companies do not always inform users properly regarding the third parties with whom they share or get data from”
  • Processing of personal data not happening according to GDPR requirements. “For instance, a clause stating that the user agrees to the company’s privacy policy by simply using its website”
  • Policies are formulated using vague and unclear language (i.e. using language qualifiers that really bring the fuzz — such as “may”, “might”, “some”, “often”, and “possible”) — “which makes it very hard for consumers to understand the actual content of the policy and how their data is used in practice”

The bolstering of the EU’s privacy rules, with GDPR tightening the consent screw and supersizing penalties for violations, was exactly intended to prevent this kind of stuff. So it’s pretty depressing — though hardly surprising — to see the same, ugly T&C tricks continuing to be used to try to sneak consent by keeping users in the dark.

We reached out to two of the largest tech giants whose policies Claudette parsed — Google and Facebook — to ask if they want to comment on the project or its findings.

A Google spokesperson said: “We have updated our Privacy Policy in line with the requirements of the GDPR, providing more detail on our practices and describing the information that we collect and use, and the controls that users have, in clear and plain language. We’ve also added new graphics and video explanations, structured the Policy so that users can explore it more easily, and embedded controls to allow users to access relevant privacy settings directly.”

At the time of writing Facebook had not responded to our request for comment.

Commenting in a statement, Monique Goyens, BEUC’s director general, said: “A little over a month after the GDPR became applicable, many privacy policies may not meet the standard of the law. This is very concerning. It is key that enforcement authorities take a close look at this.”

The group says it will be sharing the research with EU data protection authorities, including the European Data Protection Board. And is not itself ruling out bringing legal actions against law benders.

But it’s also hopeful that automation will — over the longer term — help civil society keep big tech in legal check.

Although, where this project is concerned, it also notes that the training data-set was small — conceding that Claudette’s results were not 100% accurate — and says more privacy policies would need to be manually analyzed before policy analysis can be fully conducted by machines alone.

So file this one under ‘promising research’.

“This innovative research demonstrates that just as Artificial Intelligence and automated decision-making will be the future for companies from all kinds of sectors, AI can also be used to keep companies in check and ensure people’s rights are respected,” adds Goyens. “We are confident AI will be an asset for consumer groups to monitor the market and ensure infringements do not go unnoticed.

“We expect companies to respect consumers’ privacy and the new data protection rights. In the future, Artificial Intelligence will help identify infringements quickly and on a massive scale, making it easier to start legal actions as a result.”

For more on the AI-fueled future of legal tech, check out our recent interview with Mireille Hildebrandt.

Airbnb creates $10M fund to cover cancelled reservations in Japan after regulatory shift

Airbnb has been one of the breakthrough stories in the wave of shared-economy startups that have emerged out of Silicon Valley, with a valuation of $30 billion for its travellers platform that lets people book private homes as accommodations, as well as other services. But even so, it’s not immune to the force of regulation and the impact it can have on its business.

Airbnb has had to cancel a swathe of reservations in Japan, after a change in local laws required hosts to have specific licenses, but some have failed to get these ahead of the deadline set by regulators.

It’s not clear how many people or hosts have been impacted — the numbers are shifting as hosts receive their licenses — but Airbnb says that it has set up a fund of $10 million to cover any travellers who might get put out as a result of the rules. Some have estimated that as much as 80 percent of bookings have been impacted by the changes.

As Airbnb notes, the cancellations and its resulting moves are a result of changes to the country’s Japanese Hotels and Inns Act. Modified last year to include people using private homes for tourist accommodation for up to 180 days/year, those hosting now have to register and display a license number alongside their listings. The tourism authority (JTA) had set a deadline of June 15 to do this, and those who hadn’t received a license by June 1 had to cancel reservations booked before June 15, and Airbnb has extended this to cover the gap of other travellers so that they have time to make alternative arrangements:

“Any reservation scheduled for guest arrival between June 15 and June 19 at a listing in Japan that does not currently have a license has been cancelled,” Airbnb writes. “Going forward, unless the government reverses its position, we will automatically cancel and fully refund any reservations at listings in Japan that have not been licensed within 10 days of guest arrival.”

The $10 million fund, Airbnb said, will cover “additional expenses for guests who are scheduled to travel to Japan and have had their plans interrupted due to a cancellation.” Those whose reservations are cancelled on or after June 15 because of the license situation will get a full refund and a coupon worth “at least 100% of the booking value” to use on a future Airbnb trip. They will also receive a $100 coupon for an Airbnb Experience. 

Those who are unable to find alternative Airbnb places to stay for their trip will be put in touch with a travel agency in Japan, JTB, to find alternatives.

For those who are impacted by this news, Airbnb will be sending you step-by-step instructions of what to do next, or you can find them here.

This is not the first time that Airbnb has had a stumble on the heels of regulatory changes. In Amsterdam, regulators are preparing to halve the number of nights a property can be let out to 30 nights per year starting in 2019, from 60 nights currently. Berlin and Barcelona have also tried to limit the platform’s growth with their own regulations.

Airbnb CEO said company will ‘be ready to IPO next year’ but might not

Airbnb brings in billions of dollars of revenue annually and is profitable on an EBITDA basis, so many wonder if and when the home-sharing company will go public. At the Code Conference today, Airbnb CEO Brian Chesky said the company will “be ready to IPO next year, but I don’t know if we will.”

He added that he wants to make sure it’s a major benefit to the company when Airbnb does go public. Following some more probing, Chesky said he has “no issues with [going public] at all. It could happen.”

Meanwhile, Airbnb has been struggling from a regulatory standpoint since at least 2010. Specifically, San Francisco and New York are two of the most difficult cities from a regulatory standpoint, Chesky said.

In New York, for example, there has been a standstill since 2010. At this point, Chesky said he expects it to take a few more years to overcome the challenge in New York.

“It doesn’t seem like the end is in sight with that challenge,” Chesky said. That challenge, Chesky said, involves the hotel industry and unions that “have galvanized people in these perpetual battles.”

Another general critique of Airbnb is its effect on rising rent costs and displacement. Chesky added that if it was simply a business decision, “it probably wouldn’t be worth it to stay there” in New York. But Chesky said there are hosts who have come to rely on Airbnb to earn income.

At Code, Chesky also touted Airbnb’s experiences product and how it’s growing 10x faster than its homes product. Airbnb Experiences sees 1.5 million bookings a year, Chesky said. Experiences, which Airbnb started testing in 2014 and officially launched in 2016, is Airbnb’s product that helps travelers find things to do in cities throughout the world.

When it first launched, Airbnb didn’t verify the experiences, but after some bad experiences, Airbnb has started verifying them.

“They’re doing incredibly well,” Chesky said. He added that the “experience economy” is growing and “there will probably be a massive economy around experiences.”

Shared housing startups are taking off

When young adults leave the parental nest, they often follow a predictable pattern. First, move in with roommates. Then graduate to a single or couple’s pad. After that comes the big purchase of a single-family home. A lawnmower might be next.

Looking at the new home construction industry, one would have good reason to presume those norms were holding steady. About two-thirds of new homes being built in the U.S. this year are single-family dwellings, complete with tidy yards and plentiful parking.

In startup-land, however, the presumptions about where housing demand is going looks a bit different. Home sharing is on the rise, along with more temporary lease options, high-touch service and smaller spaces in sought-after urban locations.

Seeking roommates and venture capital

Crunchbase News analysis of residential-focused real estate startups uncovered a raft of companies with a shared and temporary housing focus that have raised funding in the past year or so.

This isn’t a U.S.-specific phenomenon. Funded shared and short-term housing startups are cropping up across the globe, from China to Europe to Southeast Asia. For this article, however, we’ll focus on U.S. startups. In the chart below, we feature several that have raised recent rounds.

Notice any commonalities? Yes, the startups listed are all based in either New York or the San Francisco Bay Area, two metropolises associated with scarce, pricey housing. But while these two metro areas offer the bulk of startups’ living spaces, they’re also operating in other cities, including Los Angeles, Seattle and Pittsburgh.

From white picket fences to high-rise partitions

The early developers of the U.S. suburban planned communities of the 1950s and 60s weren’t just selling houses. They were selling a vision of the American Dream, complete with quarter-acre lawns, dishwashers and spacious garages.

By the same token, today’s shared housing startups are selling another vision. It’s not just about renting a room; it’s also about being part of a community, making friends and exploring a new city.

One of the slogans for HubHaus is “rent one of our rooms and find your tribe.” Founded less than three years ago, the company now manages about 80 houses in Los Angeles and the San Francisco Bay Area, matching up roommates and planning group events.

Starcity pitches itself as an antidote to loneliness. “Social isolation is a growing epidemic—we solve this problem by bringing people together to create meaningful connections,” the company homepage states.

The San Francisco company also positions its model as a partial solution to housing shortages as it promotes high-density living. It claims to increase living capacity by three times the normal apartment building.

Costs and benefits

Shared housing startups are generally operating in the most expensive U.S. housing markets, so it’s difficult to categorize their offerings as cheap. That said, the cost is typically lower than a private apartment.

Mostly, the aim seems to be providing something affordable for working professionals willing to accept a smaller private living space in exchange for a choice location, easy move-in and a ready-made social network.

At Starcity, residents pay $2,000 to $2,300 a month, all expenses included, depending on length of stay. At HomeShare, which converts two-bedroom luxury flats to three-bedrooms with partitions, monthly rents start at about $1,000 and go up for larger spaces.

Shared and temporary housing startups also purport to offer some savings through flexible-term leases, typically with minimum stays of one to three months. Plus, they’re typically furnished, with no need to set up Wi-Fi or pay power bills.

Looking ahead

While it’s too soon to pick winners in the latest crop of shared and temporary housing startups, it’s not far-fetched to envision the broad market as one that could eventually attract much larger investment and valuations. After all, Airbnb has ascended to a $30 billion private market value for its marketplace of vacation and short-term rentals. And housing shortages in major cities indicate there’s plenty of demand for non-Airbnb options.

While we’re focusing here on residential-focused startups, it’s also worth noting that the trend toward temporary, flexible, high-service models has already gained a lot of traction for commercial spaces. Highly funded startups in this niche include Industrious, a provider of flexible-term, high-end office spaces, Knotel, a provider of customized workplaces, and Breather, which provides meeting and work rooms on demand. Collectively, those three companies have raised about $300 million to date.

At first glance, it may seem shared housing startups are scaling up at an off time. The millennial generation (born roughly 1980 to 1994) can no longer be stereotyped as a massive band of young folks new to “adulting.” The average member of the generation is 28, and older millennials are mid-to-late thirties. Many even own lawnmowers.

No worries. Gen Z, the group born after 1995, is another huge generation. So even if millennials age out of shared housing, demographic forecasts indicate there will plenty of twenty-somethings to rent those partitioned-off rooms.

The formula behind San Francisco’s startup success

Why has San Francisco’s startup scene generated so many hugely valuable companies over the past decade?

That’s the question we asked over the past few weeks while analyzing San Francisco startup funding, exit, and unicorn creation data. After all, it’s not as if founders of Uber, Airbnb, Lyft, Dropbox and Twitter had to get office space within a couple of miles of each other.

We hadn’t thought our data-centric approach would yield a clear recipe for success. San Francisco private and newly public unicorns are a diverse bunch, numbering more than 30, in areas ranging from ridesharing to online lending. Surely the path to billion-plus valuations would be equally varied.

But surprisingly, many of their secrets to success seem formulaic. The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and ability to post massive, sustained losses; high-powered investors; and a preponderance of easy-to-explain business models.

No, it’s not a recipe that’s likely replicable without talent, drive, connections and timing. But if you’ve got those ingredients, following the principles below might provide a good shot at unicorn status.

First you conquer, then you earn

Losing money is not a bug. It’s a feature.

First, lose money until you’ve left your rivals in the dust. This is the most important rule. It is the collective glue that holds the narratives of San Francisco startup success stories together. And while companies in other places have thrived with the same practice, arguably San Franciscans do it best.

It’s no secret that a majority of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations. Uber, called the world’s most valuable startup, reportedly lost $4.5 billion last year. Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that. Even Airbnb, whose model of taking a share of homestay revenues sounds like an easy recipe for returns, took nine years to post its first annual profit.

Not making money can be the ultimate competitive advantage, if you can afford it.

Industry stalwarts lose money, too. Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history. Square, valued at nearly $20 billion, has never been profitable on a GAAP basis. DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year (and more than $100 million in each of the two preceding years). Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.

We could go on. But the basic takeaway is this: Losing money is not a bug. It’s a feature. One might even argue that entrepreneurs in metro areas with a more fiscally restrained investment culture are missing out.

What’s also noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits themselves. Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business. Today, Uber and Lyft have decimated the value of taxi medallions.

Not making money can be the ultimate competitive advantage, if you can afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share. Then, when rivals are out of the picture, it’s possible to raise prices and start focusing on operating in the black.

Raise money from investors who’ve done this before

You can’t lose money on your own. And you can’t lose any old money, either. To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously backed valuable, unprofitable Northern California startups.

It’s not a mysterious list. Most of the names are well-known venture and seed investors who’ve been actively investing in local startups for many years and commonly feature on rankings like the Midas List. We’ve put together a few names here.

You might wonder why it’s so much better to lose money provided by Sequoia Capital than, say, a lower-profile but still wealthy investor. We could speculate that the following factors are at play: a firm’s reputation for selecting winning startups, a willingness of later investors to follow these VCs at higher valuations and these firms’ skill in shepherding portfolio companies through rapid growth cycles to an eventual exit.

Whatever the exact connection, the data speaks for itself. The vast majority of San Francisco’s most valuable private and recently public internet and technology companies have backing from investors on the short list, commonly beginning with early-stage rounds.

Pick a business model that relatives understand

Generally speaking, you don’t need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does. Instead, it’s more along the lines of: “They have an app for getting rides from strangers,” or “They have an app for renting rooms in your house to strangers.” It may sound strange at first, but pretty soon it’s something everyone seems to be doing.

It’s not a recipe that’s likely replicable without talent, drive, connections and timing. 

list of 32 San Francisco-based unicorns and near-unicorns is populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and Airbnb. While there are some lesser-known enterprise software names, they’re not among the largest investment recipients.

Part of the consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center. If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less space-constrained suburban setting.

Reading between the lines of red ink

While it can be frustrating to watch a company lurch from quarter to quarter without a profit in sight, there is ample evidence the approach can be wildly successful over time.

Seattle’s Amazon is probably the poster child for this strategy. Jeff Bezos, recently declared the world’s richest man, led the company for more than a decade before reporting the first annual profit.

These days, San Francisco seems to be ground central for this company-building technique. While it’s certainly not necessary to locate here, it does seem to be the single urban location most closely associated with massively scalable, money-losing consumer-facing startups.

Perhaps it’s just one of those things that after a while becomes status quo. If you want to be a movie star, you go to Hollywood. And if you want to make it on Wall Street, you go to Wall Street. Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while losing eye-popping sums of money, then you go to San Francisco.

New York City report pins millions in rent hikes on Airbnb

A report from the New York City Comptroller’s office asserts that New York residents are paying hundreds of millions in extra rent linked to the effects of Airbnb . Naturally, the company bitterly rejects these findings.

The report, which you can read here, is fairly straightforward. It looks at hundreds of neighborhoods and their various demographics and characteristics, along with how much their rents rose over the last 10 years or so. It finds that when controlling for other variables, Airbnb contributes to a part of the rise on its own:

We find that as the share of units listed on Airbnb goes up by one percentage point, rental rates in the neighborhood go up by 1.58 percent, after controlling for neighborhood level demographic and economic changes. The result is statistically significant at the 1-percent level.

By the researchers’ calculations, the total cost of these increases across the city amounted to about $616 million. That came from running their numbers with Airbnb rentals set to zero instead of the actual tens of thousands of listings and seeing what rents would be in that alternative universe.

The amounts of rent increases and the number of Airbnb listings are tightly and reliably correlated, the Comptroller’s office explained. They were careful to control for other factors, for instance a neighborhood becoming trendy or new housing changing the supply. The hypothesis is that Airbnb listings, contrary to the company’s assertions, do in fact reduce housing supply, which has a knock-on effect on rent in remaining rentals.

The increases, the report and its accompanying press release say, are concentrated in midtown and lower Manhattan, where 20 percent of the rent increases were attributed to Airbnb effects. The effect was much weaker in the outer boroughs, as you might expect, where density is lower and fewer listings are available.

Airbnb, of course, calls it a pack of lies and takes the opportunity to pontificate a bit (which, to be fair,  Comptroller Stringer did too):

Unfortunately, this report is wrong on the facts, falsely asserting that middle class New Yorkers who share their space are responsible for the rising cost of housing in New York… Pandering to the powerful by attacking middle class families won’t do a thing to make New York more affordable. It’s time to stop the scapegoating and work with us on a solution.

Its criticisms are a mix of reasonable objections and straw men. It rightly points out, for instance, that Airbnb hosts are most frequently just renting out a room a few nights a month for some extra income, which logically should improve affordability, not harm it. Then there’s the idea that Airbnb units tend to pop up in fashionable areas, which are inherently more likely to see rents increase.

Some of Airbnb’s gripes are less reasonable, however.

“The notion that less than 1 percent of housing stock — much of which is only occasionally shared with short-term renters — is the sole source of New York’s housing affordability challenge is simply not credible,” the company writes. That’s true — which is probably why the report doesn’t say anything like that.

“We never blamed the whole increase in housing costs on one factor – we quite clearly said that Airbnb was just one factor and explained that it’s 9.2% of the increase,” wrote Tyrone Stevens, the Comptroller’s press secretary, in an email to TechCrunch.

Airbnb also criticizes using 2009 as the starting year for its data, saying the financial crisis changed the whole housing market. Then it cites a report showing that a one bedroom in Williamsburg cost the same in 2018 as it did in 2011.

“We picked 2009 as our base year because that was the year prior to Airbnb’s presence in NYC, and it made sense to measure the full impact of the rise of Airbnb. But the choice of base year is utterly irrelevant to measuring the contribution of Airbnb to rent increases,” Stevens wrote. “And randomly picking an industry report on 1-bedroom apartments in one neighborhood over a different time period doesn’t refute a citywide analysis.”

The fact that rents are leveling out lately doesn’t hold much water, either — arguably that might have occurred sooner but for Airbnb’s alleged contribution to their increases in the first place.

Ultimately the difference comes down to whether or not Airbnb effectively removes housing from the market. The company swears up and down that isn’t the case, and cites user numbers to support that position. The city says there’s little other possible explanation for the close correlation between listings in certain neighborhoods and the specific rent increases it sees in them.

Both, however, seem to agree that the lack of regulation puts everyone at risk. Hopefully that common ground will lead to a fruitful collaboration on new rules in the future.

Y Combinator is going after Chinese startups with its first official event in China

High-profile U.S. startup accelerator Y Combinator is making a push to bring more China-based startups into its program after it announced its first official event in the country.

YC has made a push to include startups from outside of North America in recent years. That has seen it bring in companies from the likes of India, Southeast Asia and Africa, but China remains underrepresented. According to YC’s own data, fewer than 10 Chinese companies have passed through its corridors. YC counts over 1,400 graduates.

“Startup School Beijing” is scheduled for May 19 in the Chinese capital at Tsinghua University. The event will be free to attend — though attendees might apply for a ticket — with the goal of showing the benefits of participation in its U.S. program.

To help make its case, the organization has pulled in star graduates like Airbnb and Stripe while its president Sam Altman himself is scheduled to appear.

The event will include sessions with graduates, YC partners and “live on-stage office hours.” That’ll see three companies picked from the audience to get advice and tips from the attending partners, as happens in the program. Sessions will be in both English and Chinese with live translations available.

YC partner Eric Migicovsky, who founded Pebble, is leading the event, which will include the following speakers:

In addition to helping U.S. hardware founders, Migicovsky was brought on specifically to make inroads into China and he is optimistic that there is strong demand.

“We’re hosting Startup School in Beijing to meet local entrepreneurs and start a dialogue about how YC can help,” he told TechCrunch. “The event and the founders we meet will help to inform our strategy going forward. Naturally, we hope to find Chinese startups to apply to our core Y Combinator program in Silicon Valley.”

Migicovsky added that he sees particular value for China-based startups that seek access to global markets for customers, partners, hiring and more.

YC officially announced the event today but the organization’s brand is so strong that word already got out in local media once it began sending out invitations, as our Chinese partner Technode reported.

You can find full details on the Beijing event at

Tentrr is turning private land into glampgrounds, with the help of VCs

If you’ve ever gone camping and found yourself thinking it kind of sucks, likely because you’re too close to other campers, you might be interested in learn about Tentrr, a three-year-old, 47-person company that’s promising to make it “dirt simple” to enjoy the great outdoors. How: by striking deals with private landowners who are willing to host semi-permanent campsites on their property.

What do these look like? Picture elevated decks with Adirondack chairs, canvas expedition tents, wood picnic tables and sun showers, not to mention a fire pit, lanterns, dry food storage, cookware, a camping toilet and air mattresses that, courtesy of most hosts, will come with fresh linens.

Venture capitalists certainly appreciate the startup’s pitch. Tentrr — founded by one-time investment banker turned former NYSE managing director Michael D’Agostino —  has raised $13 million to date, including a newly closed $8 million Series A round led by West, a San Francisco-based venture studio that both funds startups and helps them market their goods and services.

No doubt the investors are looking at the overall market, whose numbers are compelling. According to one trade association, for example, the outdoor recreation industry represents a $887 billion opportunity, with Americans shelling out $24 billion annually on campsites alone.

Still, it’s easy to wonder how scalable the company will be. Tentrr had 100 campsites up and running in the Northeastern U.S. as of the end of last year. D’Agostino expects it will have 1,000 sites by year end, including on the West Coast, where it will begin installing camps this summer, but this assumes that Tentrr can convince enough families with sufficiently large properties that partnering with the company is worthwhile.

D’Agostino says its landowner partners need to have 15 acres at least and that the average property on the platform currently is much larger than that. He also says they keep 80 percent of whatever they decide to charge campers to stay on their grounds.

For what it’s worth, Tentrr doesn’t seem to have much in the way of direct competition if you exclude state campgrounds. Venture-backed Hipcamp, for example, which raised a small amount of seed funding back in 2014, partners with private landowners to help arrange camping experiences, but it mostly acts as search engine. Meanwhile, industry giant Airbnb offers unique experiences that include camping, but Tentrr is largely about offering a standardized experience. The idea is to leave fewer questions about what to expect. In fact, D’Agostino says that roughly 40 percent of Tentrr customers are first-time campers.

We know that if the service makes it way to California, we’re likely to try it, having suffered through some fairly crummy camping experiences. If you’re also interested in learning more, you might check out our conversation with D’Agostino, edited for length. We chatted yesterday.

TC: You were a banker, then you traveling around the country and world, trying to convince companies that they should list on the NYSE instead of Nasdaq. How did this company come to pass?

MD: When I was a little kid, we’d sometimes stay at a family friend’s farm in Litchfield, Connecticut. I assumed that every kid had a Litchfield farm where they could camp, which isn’t the case obviously. Meanwhile, working 100 hours a week as an investment banker, it just became harder and harder to get out of the city and have great experiences.

After a couple of disastrous camping trips at noisy, dirty campgrounds with my girlfriend and now wife, Eloise, we just realized the idea [of camping as it’s known today] is stupid. It’s taking a bunch of people who are living on top of each other in a city and moving them to a campground where they’re living on trop of each other in flimsy tents.

The legacy campground industry hasn’t changed since the Civil War. It’s run by the government — which I’m happy to compete with all day long. And these are just terrible businesspeople. We want to wipe away this infrastructure by distributing it among rural landowners.

TC: So you’re building these semi-permanent camping sites. How standardized is the pricing?

MD: Pricing is variable and set by the landowner who keeps 80 percent of that fee. We keep 20 percent; we also charge a 15 percent fee on top of that nightly rate. Right now, the average price per night is $140, but we’re introducing more features for [hosts], including minimum-night stays, and [surge] pricing if they have demand for a bunch of bookings at the same time.

They can also offer extra amenities and experiences that will allow you to have a personalized experience. For example, landowners or “campkeepers” as we call them can offer extra bundles of wood or luxury bedding or horseback riding or skeet shooting. It’s really only limited by the imagination. We’ll also soon allow third parties to provide curated activities so that when you log on to our app, you can book a white water rafting trip, for example, or reservations at the best farm-to-table restaurant nearby.

TC: What happens is something goes wrong? Who insures what?

MD: Every campsite is covered by a $2 million commercial insurance policy. It’s a benefit not just in terms of liability but in making people feel more comfortable during these stays — both the hosts and guests.

TC: Where are you building these sites, exactly, and how long do you estimate that they will last?

MD: We build them ourselves, right now in places from southern Maine to eastern Pennsylvania.

We get our tents from a family company in Colorado that’s been around for 90 years and that still receives requests to repair tents they’d built 30 years ago [meaning they’re durable]. We also use pressure-treated lumber and marine-grade plywood, so we expect they’ll last for 10 to 20 years.

TC: You’re having to convince people to let strangers onto their properties, sprawling as they may be. What’s that sales process like?

MD: It used to look like me putting 45,000 miles on my Jeep Cherokee and explaining to families why they should have a Tentrr campsite in their hayfields. Today, direct mail campaigns work beautifully. [Hosts] are also hearing about us from other [hosts] and we make it easier for them to [apply] to join the platform. You click on a link that says “List my property” and you’re walked through a 20-point checklist, including about accessibility and how secluded a property is, and using that feedback, we know with 90 percent accuracy whether or not a property is appropriate. If we think it is, we’ll send out a scout.

TC: Are there sometimes more than one campsite on a property?

MD: No, and we ensure the sites are secluded from neighbors, as well as the landowners, as well as other possible distractions.we run installation trucks.

TC: What does the clean-up process look like?

MD: It’s relatively maintenance free. There’s no maid service. No keys. No worries about someone stealing silverware. Homeowners have to make sure there are no beer cans left behind, but we place a high priority on land stewardship and emphasize a leave-no-trace approach when it comes to our guests.

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