Three years before you could rent your fancy 5th Ave Manhattan apartment or luxury seaside mansion in Thailand on Airbnb, travel social network CouchSurfing was the place to fill up your sofa or spare bed with broke college kids or adventure seekers. Originally started as a non-profit, the company has since gone if not corporate, capitalist, raising $22 million in venture capital, the bulk of which came in a $15 million round announced this week. That’s a lot of couches.
CouchSurfing says it plans to use the money to overhaul its website, giving it all the faster, sleeker, better help it can. The company is also planning to spend some of its VC cash to hire developers to build mobile apps for couch surfers on the go. Still, for a former non-profit that was run by volunteers, $22 million is a lot of money. Which begs the question: Where’s the business in people sleeping on couches for free?
If you have ever crashed at a friend’s place, you’ve already got the basics of CouchSurfing, but since the host and the traveler in this case aren’t friends there are few more twists to the service. Each host and traveler creates a profile including age, gender, interests and location. Pictures of hosts far out number pictures of their accommodations, reinforcing the idea that you’re not staying with someone for their questionable couch or lumpy twin bed, you’re camping out with them for the experience they can offer.
For that reason travelers can’t expect the polish of some of the nicer Airbnb rentals, but then again, travelers aren’t paying for their CouchSurfing stay. The entire service, whether you’re offering space to a traveler or looking for a place to crash, is free, though its recommended that you give something back to your host. Paying your host could be in the form of a nice bottle of wine, a home cooked dinner, or just helping clean, but you won’t have to offer up any cash for your accommodations.
CouchSurfing gets paid by charging users $25 to verify their real identity, something many serious hosts and travelers are eager to do – though it’s not required. The way to think about CouchSurfing’s business is more like a social network that charges for certain benefits, rather than a vacation rental service like Airbnb. That difference is why one of the newest investors in CouchSurfing in the most recent round, General Catalyst Partners, is also an investor in Airbnb. “Airbnb is about hosting and accommodations,” says General Catalyst partner Jonathan Teo. “CouchSurfing connects you with people in the community that can show you the local experience.”
And that experience is worth something, Teo says, above and beyond the $25 some people pay for identity verification. So rather than try and figure out some advertising supported business model, for example, Teo thinks it is likely CouchSurfing will grow its business around offering more paid services to the community, even possibly some sort of elevated membership for which people would pay extra. “We are not exactly clear what the real monetization engine is going to be, but we have seen that community is willing to pay to support the organization,” says Teo. “Our investment is for the company to play around with different ideas to make money.”
CouchSurfing says it had 3.6 million users as of January 2012. If it can keep those numbers growing, and grow the number of people who are willing to pay $25 or more to be a part of its network, it could very quickly get into some real money. The paying for premium service strategy is a promising one, especially when you look at Facebook. The world’s largest social network has grown to almost 1 billion users by keeping its service free, but according to its latest earnings report, it only makes $1.23 per user per year. Part of Facebook’s struggle now is finding ways to wring more money out of its users without alienating them. CouchSurfing may not have that problem.
For those who cringe at the thought of sleep on a stranger’s couch, it might seem downright crazy to expect the CouchSurfing will grow, until you start talking to people who have used it. “As a host, you have a massive variety of people stay with you who bring culture and community with them,” says CouchSurfing member Gabriel Stempinski who has both shared his San Francisco home with CouchSurfing travelers and surfed on other people’s couches. “I’ve made so many friends around the world, so anytime I travel I have friends I can contact – it builds an excellent community.” Stempinksi even has proof to back up his statement. After posting a video to his profile, he met a lady couch surfer whose been sharing his couch as his fiancee ever since.
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