> What I find most puzzling is how such great founders could lose sight of the wonderful vision they had.

I think it's a lot of naiveté about the nature of financial markets. If you find something that is truly better, the "no arbitrage" principle pops up. First, it's small players renting out a small number of apartments, but once they prove that the business model works, big money in the form of hundred-billion dollar REITs step in and blow everyone away with scale. These REITs already existed; but they were primarily focused on commercial and multi-tenant buildings where hiring a professional management company scales well. Guess what? Airbnb made it scale well to individual properties.

I'll put it this way -- I have significant holdings in various REITs because of Airbnb. At a minimum, they will drive property prices in an area up, which is the entire point of an REIT (find an undervalued area, invest like hell and bring property values in the whole area up). It's just that they can now have very low management fees because of all the ROI they're seeing from Airbnb rentals. It's a great investment if you can find the right local markets. Even locally where I live, there are at least 3 Chinese REITs snapping up dilapidated houses on the cheap, renovating them, and putting them on Airbnb.

A big problem with wealth is that you can't just let it sit in a bank account. You're losing literally millions of dollars a day that way, so you have to find some way to invest that money into assets with growth. Real estate (I'm not talking mortgage-backed securities, but literally owning a large, diversified portfolio of land) has traditionally been considered "safe" -- you're unlikely to totally lose your ass on the property value alone, and any rental income you get covers upkeep of the property and offsets the interest rates on the loans (REITs are in the game for capital asset growth; not operational income).

Airbnb is, in my opinion, a real-estate investment site first and foremost. It provides management (until recently through a network of local management companies, though this article shows airbnb getting into the game themselves) and rental services to investors.

I don't see any way to allow the original vision of "what Airbnb was supposed to be" without also allowing the real estate investment crowd in. The only way would be extensive screening of rentals to ensure they're actually what they say they are -- and this would need to be provided by Airbnb because property managers are really good at deceiving short-term renters. And that would totally break their business model.

IMO it's yet another case of a tech Animal Farm -- we strip an industry down to its core components in an attempt to simplify, but once you try to scale it up you see why the original iteration of the industry had the rules it did: often to protect unsophisticated customers from slimy professionals who cut corners to increase their margins. In some cases, local regulation / corruption was a real issue (see Uber) but in others I'm not sure there really was much of a problem to begin with (Airbnb in most places outside major cities with artificially restricted hotel capacity).