Airbnb

Airbnb the company is worth over $80 billion. Owning an Airbnb property is, according to the show’s most prolific business ranker, a D-tier business model. The gap between those two facts contains most of what you need to know about the difference between building a platform and operating on one.

On My First Million, Airbnb appears in two entirely distinct conversations that almost never overlap. There is Airbnb the startup story — the canonical tale of founders who sold cereal boxes to fund their company and grew it into a generational platform. And there is Airbnb the business model — the idea that regular people can build wealth by listing properties on the platform. The show treats the first story with admiration and the second with polite skepticism.

”We Were Inventing the Market”

Brian Chesky has a quote that circulates in the MFM universe as a kind of mantra for founders who are told their market is too small: “We didn’t know the size of the market because we were inventing it. If we listened to market research, we would have just made a better Couchsurfing app” (5 Startups That Looked Dumb Until They Didn’t).

Sam paired this with an equally defiant quote from Elon Musk: “I don’t care about the market size. I care about if we can make something fundamentally different because if you make something great, the market will come.” The juxtaposition is deliberate. Both founders ignored the market-sizing exercise that every VC and every MBA program teaches as fundamental. Both were right.

The lesson MFM draws is not that market sizing is useless. It is that market sizing measures what exists, not what could exist. Airbnb did not take share from hotels. It created a category of travel accommodation that did not previously have a name. The total addressable market was zero until it was enormous, with nothing in between.

This pattern — zero to enormous with no intermediate step — appears across the show’s favorite startup stories. It is the inverse of the boring businesses thesis, where the market is well-defined and the opportunity is execution. Airbnb represents the other path: the market is imaginary until you prove it is real.

The D-Tier Business Model

When Andrew Wilkinson came on to rank business models from S-tier to F-tier, he placed owning Airbnb properties at a D — just above restaurants and just below freelancing. His reasoning was precise: “There’s like a thousand variations of how you do this” — multi-family, commercial, cash flow, fix-and-flip — but the fundamental problem is that you are trading time and capital for moderate returns in a market where regulations can change overnight (Worst Business Models).

Shaan pushed on this, asking specifically about the short-term rental model. Andrew’s answer was that the “really rich Airbnb guy” story is a survivor bias narrative. For every person who built a portfolio of 50 profitable listings, there are hundreds who own three units and spend their weekends cleaning bathrooms and responding to guest complaints at 2 AM.

The critique is structural, not personal. Short-term rentals combine the capital intensity of real estate with the operational intensity of hospitality and the regulatory risk of operating in a legal gray zone. New York has effectively banned most Airbnb listings. Other cities are moving in the same direction. As Sam noted in a separate episode about 5-under-the-radar-trends: “One negative inflection is like New York bans Airbnb. So there’s an inflection where short-term rentals are just going to go to zero.”

Samara and the Design Instinct

Chesky’s post-Airbnb venture tells you something about how he thinks. Rather than starting another technology company, he launched Samara — a company that builds backyard guest houses (ADUs) for $50,000to$100,000. The units are, by all accounts, beautifully designed. This is not an accident. Chesky is a designer by training (he graduated from RISD), and his instinct is to take a category dominated by cookie-cutter, cheap-materials construction and apply the same design sensibility that made Airbnb’s listing photos look aspirational (How Fortnite Made Me a Millionaire).

The Samara play is interesting because it collapses the distinction between Airbnb-the-platform and Airbnb-the-operator-opportunity. If you can manufacture beautiful ADUs cheaply enough, you are simultaneously creating housing supply and creating potential Airbnb inventory. The guest house in someone’s backyard becomes both a housing solution and an income-generating asset.

The Platform vs. Operator Divide

The deeper lesson MFM draws from Airbnb is about which side of the platform to be on. Airbnb the company captures a percentage of every booking. Airbnb the operator bears all the costs — mortgage, cleaning, maintenance, insurance, regulatory compliance — and keeps whatever margin is left after the platform takes its cut.

This is the same dynamic that appears in the Shopify and Uber stories. The platform creates enormous value by aggregating supply and demand. The individual operators on the platform face intense competition, thin margins, and platform dependency. Shopify merchants compete with millions of other merchants. Uber drivers compete with every other driver in their city. Airbnb hosts compete with every other listing in their neighborhood.

The MFM conclusion is consistent: if you must choose, build the platform. If you cannot build the platform, at least understand that operating on one is a different game entirely from owning one. Chesky is a billionaire. The median Airbnb host is a person with a spare bedroom and a cleaning service.

The Silicon Valley Landmark

Airbnb’s office appears in the show as a physical artifact of a specific era. When Sam and Shaan discussed the iconic offices of Silicon Valley — the buildings that became synonymous with the companies that occupied them — Airbnb’s headquarters was part of the landscape. It shared a building (or was adjacent to) another company, and the office itself became a destination (Silicon Valley OG Shares Crazy Stories).

This is a small detail, but it connects to a larger MFM theme about how physical spaces create culture and brand. Airbnb’s office was designed to look like an Airbnb listing — conference rooms modeled after real properties on the platform. The meta-commentary was literal: the company’s workspace was a marketing asset, a recruiting tool, and a product demonstration simultaneously.

What Airbnb Teaches

The Airbnb story on MFM distills to a tension that applies far beyond travel:

The company proves that inventing a market is possible and enormously valuable. It vindicates founders who refuse to accept existing market definitions.

The business model proves that operating on someone else’s platform is a structurally difficult position, regardless of how attractive the unit economics appear in a spreadsheet.

The gap between those two truths is where most business decisions happen. Most people cannot build the next Airbnb. The question is whether operating on Airbnb is the best use of their capital and time, or whether that energy is better directed elsewhere. Andrew Wilkinson’s D-tier rating suggests the latter.

Sources

• 5 Startups That Looked Dumb Until They Didn’t — Brian Chesky “inventing the market” quote
• Worst Business Models ft. Andrew Wilkinson — Short-term rentals rated D-tier
• How Fortnite Made Me a Millionaire — Samara ADU business, Chesky’s design instinct
• 5 Under the Radar Trends — Regulation inflections, NYC Airbnb ban
• Silicon Valley OG Shares Crazy Stories — Airbnb office as SV landmark

See Also

• Real Estate Investing — The broader asset class Airbnb operating sits within
• Boring Businesses — Contrasting model where market is known
• Uber — Parallel platform-vs-operator dynamic
• Shopify — Another platform that creates operator opportunities
• Network Effects — The mechanics behind Airbnb’s platform moat