Has Airbnb Acquired Pencil Labs?

  • Airbnb has reportedly acquired Pencil Labs.
  • Pencil Labs owns Wyth, a calendar plus messaging and scheduling app.
  • Pencil Labs could add value to Airbnb offerings and resources.

Airbnb, the San Francisco based shared accommodation renting site has reportedly acquired Pencil Labs for an undisclosed purchase price. Pencil Labs’ Wyth, is a scheduling and messaging app that helps users plan and co-ordinate their get-togethers, and could turn out to be a good acquisition in the run up to the Airbnb IPO. The app, which has access to the user’s calendar, allows users to route their communications through the app and suggests suitable dates, times and places for meetings, and adds them to your calendar, once the specifics are finalized.

Pencil Labs' Wyth App

An article on Wyth by BetaBoston from June 2014 has more details about Wyth:

“The idea behind the app is that if you use it to communicate with friends or business contacts, it can consult your calendar to suggest times when you’re available on a given date. (When you type, “Let’s have brunch on Sunday,” it can propose a good time in that brunch-y time frame.) After the usual back-and-forth, when you’ve settled on a time and place, the app makes it easy to add the event into your calendar. The app’s page on iTunes says it can even suggest locations for get-togethers that are convenient for all of the members of a group.”

Pencil Labs Acquisition Cost Estimate

Pencil Labs, the company that owns Wyth, has reportedly been funded by Matrix Partners and Charles River Ventures in 2013, when it raised $1 million. As per FindTheBest, the estimated annual Pencil Labs revenue is about $130,000. There is no official word on the Pencil Labs acquisition cost by either Airbnb or Pencil Labs, but if Pencil Labs valuations are anything like Airbnb valuations, then the acquisition could have cost Airbnb upwards of $2.5 million.

As per Airbnb revenue estimates, the company doubled its revenue in 2013 to reach $250 million. Assuming the company doubles its revenue again in 2014, Airbnb revenue should come in at $500 million. Airbnb’s last round of funding valued the company at $10 billion, translating to a Price to Sales ratio of 20. A recent report suggests that Airbnb valuations could touch $13 billion, implying a price to sales ratio of 26.

At 20 to 26 times the revenue of $130,000, Pencil Labs acquisition costs could range from $2.6 million to $3.38 million. Looking beyond the cost, the Pencil Labs acquisition could turn out to be a good move for Airbnb, as the calendar integration and collaborative scheduling expertise could help the site by adding a social element to its current offerings.

Airbnb Acquisitions

Airbnb has made several acquisitions in the past.

  • June 2011, Airbnb acquired Accoleo, a business identical to itself, located in Germany
  • Jan 2012, Airbnb acquired Dailybooth, which had at the time already raised over $7 million from investors including Airbnb investors, Sequoia Capital and Y Combinator. This was basically a talent acquisition, with the Dailybooth team scheduled to join Airbnb’s mobile team
  • March 2012, Airbnb acquired Crashpadder, an identical (to Airbnb) business dominant in the UK
  • July 2012, Airbnb acquired NabeWise, an app that helped users identify suitable neighbourhoods
  • October 2012, Airbnb acquired Fondu, a local reviews app
  • December 2012, Airbnb acquired Localmind, a Q&A platform for those seeking location specific information

Airbnb Legal Challenges

Apart from enjoying very generous valuations, Airbnb also has an admirable list of investors ranging from the likes of Sequoia Capital and Y Combinator to Jeff Bezos and Ashton Kutcher. However, in recent times, the company has been faced with legal challenges that could threaten its core business model. As per a report by New York’s Attorney General Eric Schneiderman, over 75% of Airbnb listings in New York have been deemed to be illegal. According to the report, out of Airbnb fees of $60 million, earned over the last 4 years, $40 million was from illegal listings, and Airbnb owes the state of New York, $33 million in hotel taxes over the same period. The shared accommodation listings site has taken nearly 2000 listings off its site since the investigation was launched.

If Airbnb is asked to make good the taxes, the company could end up paying as much as $100 million, including the penalty and revenue earned from illegal listings. Interestingly, Airbnb’s legal challenges in New York have mounted after San Francisco legalized Airbnb listings in October 2014.

Upcoming tech IPOs like the Box IPO have generated a lot of interest following the record breaking Alibaba IPO, and Airbnb is one of the companies that are expected to get publicly listed in the near future. Ahead of much anticipated Airbnb IPO, much will depend on the settlement that is reached with the state of New York, since regulations could end up hurting Airbnb’s business in other locations as well.

Our latest coverage of upcoming IPOs in 2015 covers popular IPO candidates like Uber, BOX, DropBox, Spotify, Airbnb and more.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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