It's no surprise that Airbnb clinched the No. 2 spot on this year's CNBC Disruptor 50 list. The global growth of the home-sharing giant, valued at $25.5 billion, continues to impress, painting an interesting picture of the Silicon Valley unicorn's expansion: It's become much less about the U.S. market.
The United States makes up just 16 percent of Airbnb's listings globally, with just two of the top 10 markets — New York City and Los Angeles. From March 2015 to March 2016, New York grew by 38 percent and Los Angeles by 32 percent, according to data from Beyond Pricing, a dynamic pricing service that helps hosts figure out how to price their listing.
But that's nothing compared to what's occurring overseas.
"Their expansion into Europe was spectacular," said Airbnb board member Alfred Lin, a partner at venture capital firm Sequoia Capital. "It is amazing to see this company grow up the way it has."
Hosts in Europe collectively made nearly $3 billion in 2015, Airbnb co-founder Nathan Blecharczyk said at the Start-up Fest conference in Amsterdam in May.
In traditional vacation-rental markets — including Orlando, Vail and Aspen — the company has invested to steal market share from traditional rental sites, like Expedia-owned HomeAway and VRBO, said Beyond Pricing's co-founder and president, Ian McHenry.
That investment appears to be paying off: Growth in those markets is much higher, ranging from 170 percent to 180 percent, over the same time period. Foreign markets offer more opportunity for organic growth because penetration is lower and internet adoption is rising.
Airbnb's fastest-growing cities are largely in Asia, according to Beyond Pricing data. Osaka, Beijing and Tokyo make up three of the top five fastest-growing cities for Airbnb in terms of new listings. Osaka grew an astounding 542 percent, Beijing 294 percent and Tokyo 210 percent from March 2015 to March 2016. Shanghai is Airbnb's 11th fastest-growing city — the company grew listings there 161 percent over the same time period.
Paris is the city with the most Airbnb listings, and new hosts are signing up fast: Airbnb's pool of places to stay in Paris grew 64 percent, to 71,852 listings, between March 2015 and March 2016, according to Beyond Pricing. In recognition of the city's importance, Airbnb held its annual host get-together in Paris in November, which was unfortunate timing: The event coincided with Islamic State's strikes on the city.
Piper Jaffray ranks penetration of the Chinese market among Airbnb's top three priorities.
"Airbnb's stated goal of $10 billion in revenue by 2020 will likely come from a variety of categories — namely, vacation rentals, China and business travel," said Piper Jaffray analyst Michael Olson in a note to investors in March.
In November the company raised a $1.58 billion Series E round of funding, bringing the total funding raised to $2.49 billion, resulting in its current valuation of $25.5 billion, according to PitchBook, with annual revenue at the time of funding headed to $900 million.
Disruption at this scale — which moved Airbnb up three spots from No. 5 to No. 2 on the 2016 CNBC Disruptor 50 list — comes with equally large challenges.
Airbnb continues in hypergrowth mode, while at the same time drawing intense scrutiny from regulators and opposition from incumbents.
"The regulations that were written in cities around the world never really contemplated this business model," said Andreessen Horowitz partner Jeff Jordan in a phone interview as he made his way to stay at an Airbnb in Napa, California. "It is the same for many of the classically disruptive business models," he said.
Airbnb is spending large sums of money to engage with municipalities across the globe. Like a game of whack-a-mole, as soon as the company addresses regulatory concerns in one city, another issue pops up somewhere else, Jordan said.
Airbnb has succeeded in Europe because its founders have evolved the company's mission and grown the community as the company has scaled, all while battling well-funded local competitors, Lin said.
"They were head to head against Wimdu in Berlin, and there was this ground war and eventually — and smartly — they figured out how to win Europe from Berlin out," the Sequoia Capital investor said. "The hosts love them, the guests love them — I think that customer love on both the host and the guest side is very, very rare," he said.
The company is in conversation with more than 100 European cities about taxes and already collects taxes on behalf of 30 cities, including Paris and Amsterdam. Other negotiations have been less successful — homeowners in Berlin can no longer rent out entire properties to tourists, a measure enacted to preserve affordable housing for Berliners.
"Some companies approach it in more of a sledgehammer kind of a manner: 'We are in; deal with it.' Their regulatory approach is engaging," Jordan said.
Last Thursday the European Commission released new guidelines for sharing-economy companies, stressing the opportunity for consumers and entrepreneurs and the European economy overall. The European Commission stated that implementing bans on sharing-economy services like Airbnb and Uber "should only be a measure of last resort."
In its hometown of San Francisco, the company is now facing a new challenge: On Tuesday legislators approved a new ruling requiring short-term rental websites to only post listings by residents registered with in the city or face daily fines of up to $1,000. Similar bills have been proposed in Los Angeles and Chicago.