When you think about someone who may have a few regrets in life, billionaire investor Warren Buffett is probably not the first who comes to mind. Those who know Buffett well, however, will tell you that he is not a conceited person, which means that he is always ready to admit that he has made mistakes; this also means that expressing regret is not something he is shy about. In 2015, Buffett was interviewed by Fortune magazine about the rise of Airbnb, the online platform for sharing residential properties, rooms, cabins, and even backyards on a casual rental basis similar to the hospitality industry. Not only did Buffett admit that he wished he had come up with the idea, he also felt that Berkshire Hathaway should have funded the project.
As we approach the final days of August, Wall Street is getting ready for the initial public offering of Airbnb. This will undoubtedly be one of the hottest IPOs of 2020, and it will be taking place in the middle of the terrible coronavirus pandemic, which seems to have fueled investor hunger in the financial markets. The pandemic has not impacted Airbnb operations as much as some analysts believe it would have; in fact, the company reported revenues in excess of $1 billion during the first two quarters of the year. For Airbnb, the time to go public is definitely now, and there is still a chance that Buffett may become an investor in the future.
The Buffett-Airbnb Connection
Buffett is not the type of person who will be found eating sour grapes when the Airbnb IPO goes hot on Wall Street; he will more than likely read news reports, preferably hard numbers, on the day following the IPO, and he will be happy for CEO Brian Chesky. It so happens that there is an interesting story involving Chesky and Buffett, who formally got together for a lunch meeting in 2014.
Chesky flew to Omaha to meet the legendary Buffett, and their lunch extended to four hours. Buffett essentially became a mentor to the Airbnb CEO; there were no strings attached because the Oracle of Omaha had already decided that he would not pursue a similar business idea. Chesky is the first to admit to have been dazzled by the meeting because he learned a lot about Buffett’s style of investment analysis and portfolio management. We know that Buffett is a voracious reader, and we also know that he does not allow distractions such as television news broadcasts; this deeply impressed Chesky, and he wrote up a 3,600 report about his long lunch meeting while waiting for his return flight at the airport.
How Much Does Buffett Like Airbnb?
The Buffett lunch report became a sort of management manual for the Airbnb executive board. As for Buffett, he was impressed with Chesky’s dedication and enthusiasm. Since Buffett is not the type to keep business secrets, he was kind enough to share his thoughts about Chesky and Airbnb to Berkshire Hathaway shareholders during their classic annual meeting, which is kind of like a festival for Wall Street investors. This alone will probably guarantee that the Airbnb IPO will be a major success this year.
Since Buffett is known to be a succinct man when he gives interviews, he boils down his admiration for Airbnb as follows: No other company offers such a great diversity of accommodations, and prospective guests do not run into the three-night minimum stay that many hotels and resorts have been imposing over the last few years.
As for the current state of the Wall Street financial markets, Buffett has clearly stated that he does not like what is currently happening. He senses irrational behavior when he sees major benchmarks such as the Dow Jones Industrial Average hitting record high levels at a time when the coronavirus pandemic has severely impacted the global economy. Buffett has gone as far as selling some banking stocks in his portfolio and invested in a Canadian gold mining company, an unusual move on his part.