So, all the valley news lately has been the AirBnB crisis – EJ, an host, had her home ransacked by vandals. Won’t go into details, everyone knows them.

AirBnB is a Titanic. It will fail no matter what. But, whereas Titanic was brought down by an iceberg, AirBnB is brought down by an inadequate business model. No, it’s not that vacation rentals are a bad idea.  It’s the way AirBnB does it that’s the problem.

AirBnB has copied the Ebay model – handle the financial transactions between guests. Unfortunately, this model does NOT work for vacation rentals for many reasons! Compared to Ebay, transaction amounts are large, there are huge privacy issues, and countless regulations involved. Because of the fact that transaction amounts are high and the fees are high as well buyers and sellers have a lot of incentive to handle the transaction outside of AirBnB. AirBnB, on the other hand, is trying to prevent that by limiting communication between members. What could be stupider?? So, now, renters can’t even find out anything about who rents their place? The model that works for vacation rentals is employed by VRBO, HomeAway and the like – charge owners annual listing fees and let the owners themselves handle the rest. This model is proven and it works.

Now, it doesn’t take a genius to see this. But look at the supposedly, millions of dollars that has been poured into this loser of a venture! I mean, the people who invested in this (Andreesen Horowitz, etc) must be shaking in their heels, because the ship is going down! It just hilites the fact that Silicon Valley capitalists with millions of dollars are often extremely stupid in the way they make their investments. I personally have pitched projects to the valley VC’s. Any my projects (job search sites) were a much better idea. Yet, I got turned down. Well, I hope they are happy where they invested instead.