February 4, 2022
Airbnb is an online marketplace for people to list, discover, and book accommodations.
VC, Angel Investors
Airbnb’s Pitch Deck
In 2008, the most disruptive tech startup in the hospitality business managed to raise $600k from an angel round after participating in Y Combinator and pitching their early-stage startup to investors.
Their pitch deck is one of the most famous ones in the business, and for a good reason. Without relying on a lot of bling, Airbnb’s founders manage to communicate extremely clearly their goal and the potential of their innovative business. In hindsight, it’s extremely impressive to notice how accurately the founders were able to predict their upside as well as their main competitive strengths and growth drivers.
More than a decade later, you can definitely use Airbnb’s pitch deck as a template for your own pitch deck. Below, we’ll break down why it works as well as it does slide by slide and hopefully, we’ll help you apply the learning to your own fundraising pitch deck.
Airbnb's 1st Slide: Welcome
The first slide is simple but provides extremely concise and easily accessible information.
The sentence “Book rooms with locals, rather than hotels.” lets the audience comprehend the offering of the business in a few seconds.
Notice that the sentence is as short as it can be and that it doesn’t contain any startup or industry-specific lingo. Some startup founders would be tempted to present the same information along the lines of:
“Airbnb is disrupting the worldwide hospitality industry by allowing business and leisure travelers to book their accommodation in privately-owned residential properties rather than hotels.”
- First, the main point of this slide is to present the offering – what does the company do? Talking about your ambitions (disrupting the hospitality industry) dilutes the information on the slide and takes the attention away from the main point.
- Second, it’s extremely important to be economical with words. During a presentation, the audience would have mere seconds to glance at the slides, so lengthy sentences simply wouldn’t be read. This is true throughout the whole presentation, but it is especially true for slides on which you’ll spend a short time while presenting, like the intro slide.
- Third, some people are used to industry-specific lingo, but some are not. Confusing even a small percentage of your audience isn’t worth it – your future investor might be a person in this group, and you risk losing them. Using industry lingo makes you sound competent, like an insider, which is worthwhile when you talk to other people in the industry. A fundraising pitch deck, however, isn’t aimed at insiders. A large percentage of potential investors would come from different industries, and some of them wouldn’t even be familiar with startup lingo. They would often judge your company from the standpoint of a potential customer, rather than an industry insider. So – use as little lingo as possible. You should strive to make the presentation perfectly understandable to an average Joe.
Airbnb's 2nd Slide: Problem
Again, short sentences and the use of bold to emphasize the problem of your target customers that you are solving.
The problem should be as obvious as possible – convoluted claims and assumptions don’t bear a lot of weight.
Front-loaded sentences are easier to digest. Seeding the bold Price at the start of the first sentence and the bold Hotels at the start of the second lets you understand the gist of the problem without even having to read the whole text. Hiding those keywords in the middle of the sentence and not bolding them will make the slide harder to skim-read.
Airbnb's 3rd Slide: Solution
Notice that they don’t start describing the features of their unique solution, but emphasize the benefits of using the solution. The features could change and are unimportant for such a high-level overview. The benefits, however, need to provide real value to your target customers.
When talking about the problem and solution, the most important thing is to put forward realistically sounding assumptions. Later into the presentation, your job is to defend those assumptions and to provide convincing evidence.
In the case of Airbnb, the main assumptions are:
- Owners are willing to rent out rooms in their properties for short-term stays to earn money.
- Travelers are willing to sleep in someone’s apartment or house to save money and to be more in touch with the culture.
- Rooms on the platform would be cheaper than in hotels.
Airbnb's 4th Slide: Market Validation
They pull out numbers that support their claim from similar services. Namely - temporary housing listings on Craigslist and couchsurfing.com users. These numbers support the hypothesis that the market they are targeting exists.
This strategy is fine if your business has little traction. However, in 2021 getting investors excited based on a purely theoretical analysis is hard. It would be better to run some form of validation experiments and to showcase numbers that are directly related to the solution you are building.
The goal is to convince your audience that you are on the right track to product-market fit.
Airbnb's 5th Slide: Market Size
Startups are extremely risky - more than 90% of startups fail. Because of this, being ambitious is a requirement. Lifestyle businesses (small and medium enterprises) don’t get funded by startup investors. VCs and startup angels are looking for highly scalable businesses.
Because of this, the main goal of this slide is to convince investors that in the long run, your company has a theoretical chance to be a unicorn.
Airbnb achieves this by starting from a huge TAM (total available market), in this case - all trips booked worldwide.
Then, they shrink this to a serviceable available market, which in their case is budget & online. Last, they assume a 15% market share of this available market to reach 84M trips booked at Airbnb.
The goal of this slide isn’t to show that you have your feet on the ground, it’s simply to show your future investors that their minority stake in the company can theoretically reach a valuation of hundreds of millions of dollars, which would justify their outsized risk.
Airbnb's 6th Slide: Product
Here they show how the service works. Again, they don’t go into details, listing features, requirements, etc. The information is digestible at a glance and the user flow of the platform is condensed into three steps.
The screenshots of the product showcase that they have a working prototype.
Airbnb's 7th Slide: Business Model
How is the business going to make money?
In the case of Airbnb – a 10% commission. They use their market size projections to calculate an achievable revenue of $2.1B.
Having this number in their head, investors can easily make a rough estimate of the value of the company in case it is successful. Tech startups often trade at a revenue multiple upward of 10x, which means that if Airbnb truly reaches $2.1B in revenue per year, it’s conceivable that the business would be worth north of $20B.
Throwing out such numbers at such an early stage doesn’t seem serious and is hard for some founders to do. However, you need to keep in mind the goal of the presentation. Investors know that you are most likely going to lose their money. Because of this, you need to convince them that the upside is worth the risk. You aren’t doing anyone a favor by limiting your upside projections to seem more grounded in reality.
To return to Airbnb – let’s say they are advertising a best-case scenario of ~$2.1B revenue and ~$21B business value.
At the time of writing this, the market cap of Airbnb is $88.89B, and they generated $4.7B as revenue in 2019 (before Covid hit, which reduced their 2020 revenue to $3.4B).
In that sense, their audacious projections turned out to be conservative.
Airbnb's 8th Slide: Adoption Strategy
How are they going to attract new users?
In their case, they would market for events, do partnerships, and cross-post their listings on craigslist, making use of the established platform’s user base while drawing visitors to their website.
In retrospect, the Craigslist dual-posting strategy turned out to be Airbnb’s key to early-stage growth.
In reality, your exact strategy doesn’t matter that much. If it’s not successful, you can change it anytime. What’s important, however, is to convince your audience that you have a strategy and that it is realistic and actionable. Ideally, it should be scalable and cheap. Early-stage startups don’t have big marketing budgets if they have any.
Airbnb's 9th Slide: Competition
The biggest mistake here is to claim that you have no competition. If this is true, then investors would conclude that there simply is no need for what you are offering. Otherwise, at least some companies would be doing something similar.
The goal of this slide is to showcase that while there is competition, you are sufficiently differentiated to carve out your own niche in the market.
In this case, Airbnb is claiming they are the cheapest online solution.
Airbnb's 10th Slide: Competitive Advantage
This is one of the busiest slides in the deck, showing 6 distinct competitive advantages.
In case you choose to do this in your own presentation, make sure to spend enough time on the slide while presenting and to touch on each point. If you don’t have the time to do it, it’s better to focus on your 2-3 biggest competitive advantages.
Notice how Airbnb puts the advantages in context. E.g. the monetary host incentive is an advantage over couchsurfing.com, while list once is an advantage over Craigslist.
Airbnb's 11th Slide: Team
One or two sentences on each founder. Here the investors are trying to quickly judge if the founding team has the needed skills to pull off what they are aiming to do. In the case of most tech startups, investors are searching for a technical person, a marketing person, and ideally domain knowledge.
Airbnb's 12th Slide: Press
This is not a mandatory slide, but in case you’ve seen favorable press attention, then it’s not a mistake to include it. It serves as a form of validation. It’s inferior to usage traction or revenue growth, but it’s better than not showing any validation.
Airbnb's 13th Slide: User Testimonials
Another form of validation, but the testimonials also showcase something else that is very important: the founders have interacted with their customers. This helps them understand the needs and problems of their target market and slowly but surely make the needed adjustments to find product-market fit.
A startup that is detached from its users, especially in the early phases, is a big red flag. You need to make sure this isn’t the case for you.
Airbnb's 14th Slide: Financial
AKA what they need – the ask.
Airbnb was looking for $500K that would support the business for 12 months and help them grow to 80k transactions translating to $2M in yearly revenue.
Notice that they don’t say that $500k would be enough to make Airbnb a unicorn. It’s a seed round, and the goal is clearly set at $2M per year. Afterward, the business could become self-sustaining, or the more likely outcome – it could raise further VC rounds to boost growth.
Notice how the money they need is presented as an investment opportunity. The choice of words showcases that the focus is not on what the company and founders need, but rather on what they represent for their investors – an opportunity to invest $500k in a business that has the potential to be worth billions.
Investors don’t invest out of their desire to help struggling entrepreneurs – the main driver is the financial incentive.
Things to consider:
14 slides are OK for a 10-15 minute presentation, but a lot of startup events restrict their participants to 2-5 minutes. If this is the case, you’d have to trim down the presentation significantly. The main topics are - problem, solution, upside, validation (traction), team, and ask. This means it’s realistic to reduce the slide number to 6-10 slides.
When restricted by time, the goal isn’t to crunch as much information into as little time as possible. A 2m presentation is like a trailer or introduction to your startup. Touch on the main points, and leave the details for follow-up conversations, etc.
Pitch Deck Design
The content of the presentation is much more important than the design. That said, in 2021 the standard is higher than it was in 2008. Tools like Canva make it easy to make a professionally-looking presentation without the need to be a good designer. Use a template and change the colors to fit your company and you are generally speaking good to go.
Make sure, however, to keep things as simple as possible. Don’t include lots of elements or hard-to-read fonts, etc. It’s never a good idea to sacrifice clarity for aesthetics.
The main benefit of Airbnb’s presentation is simplicity and clarity. It does exactly what it is supposed to do – nothing more, nothing less.
More than a decade later, you won’t regret using it as a template for your own startup early-stage fundraising pitch deck.