Airbnb, the online accomodations marketplace that has been shaking up the hotel industry, is headed for an IPO, but not before the San Francisco-based company snagged former Coca-Cola executive Jonathan Mildenhall to be its new CMO.
Life at Airbnb will likely be a bit of culture shock for Mildenhall, as Ad Age notes that the company spent only $300,000 on measured media in 2013, according to Kantar Media reports. That’s pocket change for Coke, which plans to boost its media spend up to $1 billion by 2016. However, Mildenhall may have made a smart move since Coca-Cola is going through a shakeup of its own. An internal Coca-Cola memo obtained by Ad Age has it that the changes “will accelerate the profitable growth of Coca-Cola through world class marketing—both in North America and markets around the world.”
Meanwhile, Airbnb pulled in $450 million in funding last month in its latest round of financing, increasing its lifetime investment to $776.4 million and its valuation to $10 billion. But all that new cash doesn’t have Airbnb rushing its IPO.
“Going public is a means, not an end goal,” CTO and co-founder Nathan Blecharczyk told Yahoo! Finance. “It’s a way of raising capital, and our company is currently very well capitalized, so there’s no need to think about an IPO right now.”[more]
The service is even gaining some high-powered users. Warren Buffett encouraged people to use it during the most recent Berkshire Hathaway investors meeting, Reuters reports, CNBC reports that Airbnb is showing up more and more on business expense reports. While that number is still relatively small, it is growing rapidly and could eventually put a dent in the hotel industry.
“With a multibillion-dollar valuation, Airbnb is not going anywhere and is establishing itself as a competitor for hotel demand,” Jan Freitag, the senior vice president for strategic development at hotel research firm STR, wrote on the company’s website. “Once millennials, who today use Airbnb for leisure travel, move up in their companies to positions that can dictate travel policy, Airbnb is on its way to being a legitimate accommodations choice for Fortune 1,000 corporations.”
Still, the lodging service has a few kinks to work out. The New York Post reports that prostitutes are using Airbnb rentals as brothels, while the service is still battling local zoning laws—even in its home city of San Francisco—and industry associations hoping to restrict short-term rentals.
The pushback hasn’t slowed entrepreneurs like Stu Waddell, who opened the eight-room Drift San Jose in the Mexican state of Baja California, which is only bookable through Airbnb, or the investors of StoreFront, a business that is essentially the Airbnb of popup shops.
Like it or not, the sharing economy—and Airbnb—are here to stay.