Airbnb to earn $183M in 2012 (I think)

Today Airbnb released a very impressive infographic celebrating 10M nights booked through the service. It is an incredible accomplishment by a fantastic team. If you haven't already, be sure to check it out here.

Given my love for numbers and a desire to better understand the growth of the sharing economy I decided to take and hour, fire up excel, and see what I could derive from the various Airbnb data points across the web.

I was curious about their growth in rate of booking per month. What velocity is the service growing at? Based on the data points within their info graphic I derived a bookings per month number which has dramatically increased in 2012:

Perhaps the most astonishing aspect of their annoucement is the rate at which they climbed from 5M to 10M bookings in only a 143 day period. An average of 34,965/day. If that rate continues they will be on target to book between 12.7-15.7M rooms in 2012 assuming a 0% growth rate.

Looking at the growth rates between major announcements (1M  May/2011, 5M Feb/2012, 10M Jun12) their Compound Annual Growth Rate (CAGR) is around 227%, or ~19% month-over-month growth. If this continues, Airbnb will be booking 3M nights per month by the end of 2012 likely hitting the 22M bookings by the end of December.

 

So what does this mean for Airbnb revenue? Assuming a 13% commission with an an average rate of $80/night based on 17.6M nights book in 2012 Airbnb will earn ~$183M in 2012 (after host payments before all operating expenses). I really don't have any insight into operating expenditures so I'm not going to speculate about valuation, but a company with revenues of $180M+/year running a CAGR of 227% will not having any trouble finding investors (if they are needed). 

As a founder of a collaborative consumption company, ToolSpinner, it is extremely encouraging to read about the continued success of those who are leading the way. I wish Airbnb the best and look forward to their 20M booking announcement on Thanksgiving.

Sources: 

http://techcrunch.com/2011/01/06/airbnb-2010/

http://www.airbnb.com/10-million

http://www.airbnb.com/global-growth

http://blog.airbnb.com/airbnb-celebrates-1000000-nights-booked

Motivating Employees through Goal Setting

Currently at work we are setting our personal objectives for 2009. Employee goals are often overlooked or underutilized. While goal setting can be viewed cynically I personally feel goal setting is the most effective means of employee motivation which is critical for performance. I thought I would take a moment to share some thoughts regarding goal setting and specifically how goals motivate employees towards performance. First the principle based largely on Vroom's expectancy model combined with some great insight from a professor of mine :







Employees are productive when they have the necessary support, proper abilities, and motivation. We will look at each component individually:

1. Support: Do your employees have appropriate resources to be productive? Is there enough time, money, and equipment to perform the tasks? Asking a lumberjack to drop a tree would be impossible if given only a pocketknife. Equally import is the employees perception of support, does that employee believe he possess required support (software, hardware, access, etc)?
   
2. Ability: Is the level of required performance within the ability of the performer? Is the goal honestly attainable by the employee or are you expecting a level of unattainable performance? It is not reasonable to assign the human genome project to the office secretary.
   
3. Motivation: An employee with abundant support and dazzling ability with do very little unless motivated. There are many models and theories regarding motivation ranging from financial, social, relational, etc. I am convinced goals are the most effective means for motivation

Next we will explore motivation through goal setting. Gary Lathham in The blackwell Handbook of Principles of Organizational Behaviour discusses the theory of goal setting stating "the simplest most direct motivational explanation of why people perform better than others is because they have different performance goals." Motivation can be broken down into three necessary components:

1. Expectancy - If I work, I will succeed. Also called self-efficacy, this is a belief held by the employee that they can accomplish the goal. A lack of expectancy can be addressed in multiple ways such as enactive mastery (progressive small goals to build confidence), modeling (matching the employee with a role model), or peer motivation (co-workers can accomplish the tasks).
   
2. Instrumentality - There is some reward. This reward does not have to be financial compensation but rather could be recognition, a successful project launch, a promotion, Winning the presidents acknowledgment award for increasing revenue, etc.
   
3. Valence - A belief held by the employee that the reward is worth it.

An employee must feel that a goal is within their reach, carries a reward, and that reward is of value. Remove any one of these three variables and you are left with a demotivated employee. Recycling is easy, it saves 10 trees, but I don't care. No motivation.

Superior performance is achieved when support and ability is pared with a high level of motivation. Motivation alone without actual ability or support leads to frustrated employee. Similarly support and motivation without ability is a chasing after the wind.

Do you agree?