HouseTrip: The Untold Lessons of an Economic War
I talked to HouseTrip co-founder Arnaud Bertrand, who shared his view on why they lost the war against Airbnb.
HouseTrip, the European holiday booking scale-up, was acquired by TripAdvisor in 2016, after having raised USD 60 million from top Venture Capital firms (Index Ventures, Balderton Capital, and Accel Europe). Co-founders Arnaud Bertrand and his wife, Junjun Chen, left the company eighteen months before the sale and settled down in Shanghai. Although their initial market vision was right, their main competitor, Airbnb, has progressively become the dominant leader in the industry.
"When I learned about Airbnb's IPO in December 2020, I was left with a feeling of regret—not only for us but also for Europe," Arnaud said. "This IPO reminded me that Airbnb was the clear winner of a war that only a few in Europe knew even happened." In Arnaud's mind, it was a war not only between two companies but also between two economies. "Macroeconomic factors were at play against HouseTrip and in favor of Airbnb." Despite the European ecosystem's progress over the last five years, "there is still an economic gap, and Europe should debate it."
The US propaganda
"When Airbnb arrived in Europe, they were already more popular than us. It was over. We had lost the war." With thousands of specialized blogs, newspapers, and magazines, the US is incredibly efficient at promoting its champions worldwide. "It was hard for us to compete against this continuous flow of free advertisements." He added, "It was sad that the European media were also diffusing this US propaganda rather than creating original content about European tech."
In China—a country that Arnaud and Junjun know well—the media do just the opposite. They are more "hermetic to the US propaganda" and promote their champions. Europe is still behind compared to China and, more dramatically, the US. While most European entrepreneurs see the US as an Eldorado to scale their businesses, Arnaud also sees it as "a great megaphone" for American start-ups to expand internationally. "If I had to do it all over again, I would consider going to the US just for this reason," he said.
The government’s role
After the end of the Cold War, President Clinton reportedly refocused America's intelligence agencies towards economic espionage to benefit American companies. Arnaud referred to this to assume (without proof) some invisible support from the US government: "I would not be surprised that the US economic intelligence supported Airbnb in their international expansion." He also mentioned the French law ALUR, which aimed at "weakening HouseTrip's business" (by forbidding the rental of entire properties), but with exceptions that favored Airbnb (exempting shared rooms from the law).
"In China, there are people from the Communist Party in charge of helping each company." Chinese authorities have a plan to create smart partnerships with foreign corporations and build value chains in key verticals, like the automobile (e.g., Tesla) or electronics (e.g., Apple) industries. In Europe, public authorities still lack business understanding, economic vision, and political commitment to fight on an equal footing with China or the US.
The investors' profiles
While HouseTrip raised USD 60m, Airbnb raised USD 800m in the same period—13 times more. I thought financial power matters, if only to kill the competition, but may be limited in Europe. Arnaud disagreed: "We never had problems in raising funds; successful start-ups can easily fundraise even in Europe. And if it does not work with European VCs, they can still approach American VCs". Therefore, finance is not a cause. It is a consequence.
According to Arnaud, the difference between the US and Europe is related to the investor's profiles. In Europe, the influential venture partners have a pure financial background. They mostly come from investment banks. Financiers know how to pick the right companies and make deals, but they don't support entrepreneurs in other ways. "I was naïve, as I thought we could get more than capital." On the other side, many American investors have an entrepreneurial track-record and can further help entrepreneurs with a peer-to-peer relationship.
After HouseTrip, Arnaud went on a meditative trip to Nepal for four months. There, he wrote a book to "reflect on his own mistakes," which he completed but never published. When I asked him why, he said: "Success is a public affair. Failure is a private funeral" (a quote from Rosalind Russell and an elegant way to keep secrets).
I finally asked Arnaud why they moved to Shanghai and how their life was. He told me that they wanted to offer their two daughters a dual Chinese and French education that could be found in neither France nor Switzerland. "In China, education is a religion, and Shanghai is one of the best places in the world to educate children." Businesswise, they have been active investors and entrepreneurs in various projects, but not at the same scale (see the Me & Qi project).
He finally confessed that the HouseTrip experience was "traumatic" in some aspects because it was very intense and continuously stressful for five years. Today, they have recovered, lost weight, and healed with this bonus of living a multi-cultural life.