There were some obvious risks to the announcement from Airbnb Inc. CEO Brian Chesky, back in February, that his company won’t go public in 2018. Tech workers are a notoriously restless bunch, and by further postponing an initial public offering, Chesky took a chance that his most talented employees could defect during Airbnb’s home stretch as a private company.
Riley Newman is one executive who got away. One of the first 10 employees at the company rose to run its data science unit and then left last summer to start a San Francisco venture capital firm called Wave Capital. This month, another well-regarded executive, Sara Adler, Airbnb’s head of corporate development, quietly left the company and joined Newman as a general partner.
And one of Wave Capital’s first investments? A startup founded by another former Airbnb executives: Dan Hill, who was director of product and performance marketing. Hill’s company is tentatively called Give Local and aims to connect prospective donors with local philanthropies.
All of this sounds rather grim for the decade-old home-rental startup, currently valued by investors at about $31 billion. But I’d argue that amid all the recent hand-wringing over the health of Silicon Valley, Wave Capital demonstrates one of this tech community’s unique strengths.
Wave Capital has raised around $50 million, say two people familiar with the firm’s financing, and will soon become one of hundreds of Bay area investment firms focused on providing seed funding for startups. But Wave Capital also has a more specific mission: Newman, Adler and their third partner, David Rosenthal, a former principal at Seattle-based Madrona Venture Group, aim to back exiting Airbnb employees who are eager to start their own businesses.
Airbnb, they are predicting, will produce an “Airbnb mafia” akin to the notorious network of founders and investors who sprang out of PayPal 15 years ago, Peter Thiel and Elon Musk among them. “There are a ton of these people that are raring to go,” says Adler. They are “mulling over their decisions and the time horizons they want to spend [at the company.] It feels like there is a ton of excitement for people to do what’s next.”
Already, Airbnb has helped birth two high-profile startups. Cryptocurrency exchange Coinbase Inc. was founded by Brian Armstrong, who worked for two years as a software engineer at Airbnb; and database company Mesosphere Inc. was started by Florian Leibert, who also spent time at Airbnb.
Wave Capital wants to help create more of these Airbnb-lings. It wasn’t the first to pursue the idea of creating an Airbnb mafia. There was another fledgling firm trying to raise money in the last year to back the dreams of Airbnb employees. That effort—initiated by Jonathan Golden, Airbnb’s former director of product, and Andrew Swain, its former CFO—was recently abandoned when investors coalesced around Wave Capital, say people familiar with the behind-the-scenes machinations, who asked not to be identified because the details are private.
You’d think that all of this would be creating massive headaches for Chesky and his crew. An Airbnb spokesman didn’t immediately respond to a request for comment outside regular business hours, but there’s evidence they may be OK with Wave Capital. Nathan Blecharczyk, Airbnb’s co-founder and chief strategy officer, has invested in Wave Capital and is advising it, say people close to the firm. It’s conceivable that Chesky himself could invest.
One way to think of the firm is like a bee performing a vital role in the ecosystem, taking some of Airbnb’s entrepreneurial pollen and helping to spread it elsewhere in the community. And that is where Silicon Valley is unique. People here tend to realize that talented engineers and executives will pursue their own startup dreams once they vest their stock, regardless of IPO timelines or questions of loyalty. There’s a natural tension between companies like Airbnb and efforts like Wave Capital, of course, but everyone just agrees to live with it and sometimes even to exploit it.
Plus, Newman and Adler at Wave Capital are promising not to take it too far because each has a stake in Airbnb’s success. “Sara and I are both shareholders,” Newman says. “We don’t want to plunder it.”
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