Earlier this morning Expedia announced the acquisition of Pillow, a startup we’ve had good fortune to work with since leading its seed round in 2014. Sean Conway, Pillow’s CEO and cofounder, shared the news in his own blog post, but we thought it was appropriate to add two things.
First, the outcome. While every startup builds to be a profitable, independent company, the reality is that the best path for many of them will be an acquisition. Credit to Sean and team for building a company that was sought after by the industry and a set of relationships within the hospitality/travel community that turned into an offer to join forces. Sean will be helping to lead a very important initiative within the Expedia family of companies and in the process he also made money for his investors, which we thank him for.
Second, the journey. When we first backed Pillow it was operating in a slightly adjacent space, helping average people rent out their apartments or homes on Airbnb with a combination of software tools and on-the-ground operations (cleaning, maintenance, etc). This business was growing quite nicely but about 24 months in, Sean saw that there was a bigger strategic opportunity to help bring new supply to the short-term rental market. Namely, to work with large multi-unit apartment owners and create a product that let their tenants rent their apartments out for short-term stays, while also giving property managers the necessary visibility into rental activity within their buildings. The aligned incentives clicked right away and Pillow was able to sign up a large number of partners, bring differentiated rental inventory to the platforms in exchange for a cut of the revenue.
Without this insight and the willingness to take one step backwards to take two steps forward during the transition, I don’t believe Pillow would have been as valuable in this acquisition. It’s a nice example of a team and their VCs collaboratively supporting a change in strategy and I give a lot of credit to Sean, his exec team and our fellow Board member, Tim Chang of Mayfield, for seeing it through.
Congrats to both Pillow and Expedia!