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FORTUNE.COM // JANUARY 2020
rental-housing stock by landlords
and bad behavior by renters, have
drawn particularly intense scrutiny,
and have already spurred munici-
palities to clamp down on or even
ban the business. “Now there’s the
scrutiny of the public markets,” saysever presenting a government ID
or undergoing a background check.
But now, as it seeks the validation
of an IPO, Airbnb has to prove that
it can be trusted to monitor its own
platform and lay down the law.
Crime and fraud are problems
for other home-rental services,
too, as well as for hotels. But the
negative effects of Airbnb’s home-
rental business in many markets,
including the gobbling-up of
Kathleen Smith, who has studied
Airbnb as a principal at Renais-
sance Capital, a firm that special-
izes in pre-IPO research. “But
they’ve been in business for a long
time. That they haven’t done this
so far is ... astounding.”
Airbnb faces this trustworthi-
ness crisis even as it seeks to show
that it has a winning long-term
business model. Underwhelming
post-IPO performance by tech
darlings Lyft, Uber, and Slack, and
the pre-IPO meltdown of WeWork,
mean that any Airbnb offering will
be watched particularly closely.
And Airbnb has strived for years
to demonstrate that it can mature
beyond budget home rentals.
In an interview on Oct. 23,
Chesky told me he had wanted to
wait to pursue an IPO until the
company could give investors “a
sense of the future.” His goal is to
build an end-to-end travel service
with varied revenue streams—
where customers can book lodg-
ings, transportation, meals, and
excursions, all under one corporate
umbrella. Experiences are a key el-
ement of this push, but hardly the
only one. Over the past few years,
Airbnb has expanded into luxury
homes and conventional hotel
rooms, while taking steps toward
offering museum and landmark
tours—bolstered by acquisitions of
companies with relevant exper-
tise (see sidebar). But the expan-
sion won’t succeed if consumers,
investors, and regulators mistrust
Airbnb—so the once-humble
startup finds itself at a crossroads.
Airbnb has announced that
it was profitable before interest,
taxes, depreciation, and amor-
tization in 2017 and 2018 (2019
results aren’t in yet). In the near
term, policing itself more strictly
will threaten the bottom line, both
by reducing the number of listings
and by boosting costs. But if the
company is transparent aboutEMPIRE-BUILDER, INTERRUPTED
CEO Brian Chesky’s goal of broadening
Airbnb’s offerings has temporarily had
to take a back seat to safety concerns.