Back in 2007, Brian Chesky and Joe Gebbia were struggling.
They were living in San Francisco.
With no jobs, they were having trouble paying rent.
They needed some extra money…quick. And, that’s when they noticed something.
There was a big design conference happening in San Francisco, and all the hotels were full. So, they quickly grabbed the opportunity.
They bought a few air mattresses and set them up on their living room floor. They then built a website called ‘Airbedandbreakfast.com’. Hence, Airbnb was born.
The idea was to offer guests a place to sleep and cook them breakfast in the morning.
And it worked.
Soon enough, three people were sleeping under their roof, and paying US$80 each.
As they said goodbye to them, they realised there was something big there.
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Airbnb’s newest venture
As they told The Telegraph, they both wanted to be entrepreneurs, but they didn’t want to ‘create more stuff that ends in landfill’. That’s why the idea of making a website to rent something that already existed appealed to them.
Since then, Airbnb has become the biggest hotel in the world…without owning a single piece of real estate.
But now, Airbnb is expanding.
The company just announced Backyards, ‘an endeavour to design and prototype new ways of building and sharing homes.’ With this new initiative, they are looking to start designing houses.
It’s not yet clear what backyards is all about. As reported by Fast Company:
‘Backyard isn’t a house, it’s an initiative to rethink the home. Homes are complex, and we’re taking a broad approach–not just designing one thing, but a system that can do many things. [said Gebbia]…
‘But the initiative also represents a significant opportunity for Airbnb to diversify its business. The company is a digital product, after all, ever vulnerable to being replaced by a hungry competitor. Buildings are physical entities. They’re real estate and the world’s infrastructure. A software company that wants to future-proof itself could do worse than investing in buildings.’
But, don’t get confused by the name. As Fast Company continued, they will be building more than just granny flats for your yard:
‘The name “Backyard” might imply that Airbnb just wants to build Accessory Dwelling Units (ADUs), those small cottages that sit behind large suburban houses and are often rented on Airbnb. Gebbia clarifies that is not the case. “The project was born in a studio near Airbnb headquarters,” he says in an interview over email. “We always felt as if we were in Airbnb’s backyard–physically and conceptually–and started referring to the project as such.”
‘Backyard is poised to be much larger than ADUs, in Gebbia’s telling. Yes, small prefabricated dwellings could be in the roadmap, but so are green building materials, standalone houses, and multi-unit complexes. Think of Backyard as both a producer and a marketplace for selling major aspects of the home, in any shape it might come in.’
And while there are no specifics, Airbnb shared some hints on what they will be releasing next year:
‘The spaces will be designed to be shared, from the ground up. What exactly that looks like remains to be seen, but the suggestion is clear: They will be optimal Airbnb rentals to anyone who is interested in hosting, or perhaps even investing in the big business of backyard cottages.
‘They will also be adaptable. That doesn’t just mean adding a few guest bedrooms and an extra bath to rent out. It means creating spaces that evolve and even reconfigure to the occupants’ changing needs.’
What can you take from Airbnb’s Backyard initiative?
Don’t get me wrong, I am not suggesting you invest in Airbnb’s coming initial public offering. Or that you start setting rooms up for rent on Airbnb.
Instead, there is something, in my opinion, that we could all be taking on board from Airbnb’s new venture.
For years now, people in Australia have been making money by buying property and then holding on to it to sell later at a higher price.
But, that’s over now.
Property prices in Australia have been falling. According to Corelogic, Sydney’s market is down 9.5% from its peak last year. And Melbourne has decreased by 5.8% since its peak.
Making money from increasing property prices may not happen again for a while.
Airbnb’s new project is looking to create adaptable spaces that ‘can do many things’.
And, in my opinion, that’s the way we should look at assets. Not only as something that will appreciate over time, but as something that can ‘do many things’ that will generate you income.
It may seem a simple concept, but it is one that is easy to forget.
That is, those luxury cars and big properties with big mortgages may be nice, but they could be losing you money.
The best assets to have, always, are income generating assets.
In other words, assets that will do the work for you, not assets that make you work more to maintain them.
Editor, Markets & Money
PS: If you want to protect your family wealth, you need to know why this financial expert is predicting economic collapse. Find out more.