How to grow your business the Airbnb way
The seemingly overnight success of Airbnb has other would-be entrepreneurs green with envy. Dozens of articles have been published like this one and this one about the story behind its success and how to emulate it.
With recent reports citing Airbnb’s net worth at over $31 billion and boasting their 3 million listings in 65,000 cities, it’s clear why people are eager to obtain and replicate Airbnb’s recipe for success.
While there’s no accounting for being the right thing at the right time, there are still important takeaways from the Airbnb success story that every business owner can learn from and apply to their business. We’ve identified a few to share.
The Entrepreneur’s Playbook
- Play to your strengths
- Disrupt the market
- Go big or go home
- Hustle for investment capital
- Partner and collaborate
- Never stop improving
How to play to your strengths
When Airbnb founders Brian Chesky and Joe Gebbia found themselves broke and down on their luck in 2007, they decided to use the only asset they had to make a profit—their rented apartment in San Francisco. Their connection to the graphic design world as alums from the Rhode Island School of Design led them to a realization that attendees of the International Design Society of America conference were having trouble finding rooms in nearby hotels during the conference. They decided to help themselves and the attendees by offering to host three of them in their apartment on airbeds with breakfast for a fee. Dissatisfied with the experience offered by Craigslist for room rentals, they decided to build their own website to attract renters, and Airbnb (airbed and breakfast) was born.
By taking a dubious asset (their apartment) and combining it with their network (the conference) and applying their skills (web design), they created something unique and useful—the key components of a new product. Subletting an apartment or renting a room isn’t a groundbreaking idea. But by making it easy for hosts and guests to connect, the founders discovered a needed niche and exploited it in the best way.
Key takeaway: think about what you’re good at, what likeminded people need or want, and what you can leverage to deliver it or improve upon it.
What disrupting the market looks like
Disrupting the market is another way of saying “think outside of the box” to improve an existing product/service or bring a product/service to a new demographic.Booking a room in a private home or renting the home itself isn’t a new invention. It just breaks the norm of travelers automatically looking to hotels for accommodations and home owners looking to property managers and brokers for renters. Airbnb breaks the mold of traditional behaviors and exists in a previously neglected space between real estate and the hotel industry.
All Business defines market interruption as offering products or services that are cheaper, faster, better quality, more efficient, and/or more durable. Successful disruption happens when the existing product or service exceeds the performance demanded by customers.
Image credit: Dr. Clayton Christensen , posted on AllBusiness.com
Key takeaway: Innovation is great, but if you don’t have a brand new idea or technology, you can still succeed by disrupting existing markets with an enhanced, optimized, or otherwise revolutionized product or service.
Go big or go home means don’t compromise your vision
If you think about the perfect optimization or market disruption but find it challenging to create or deliver it, don’t give up or make compromises in the end product. You want to keep that vision front and center at all times, and work backwards from there to bring it to life.
Focusing on that perfect experience that you’re striving to deliver is the key to entrepreneurial success. If you start compromising on that vision, you’ll rob yourself of the full potential of your idea.
When Chesky and Gebbia struggled to build an audience for their airbed and breakfast exchange business, they didn’t give in and just create a Facebook group to reach users. They worked to build a network city by city, sending people to the area to personally recruit hosts and build excitement for their platform. They didn’t settle for the catch all user-managed listings offered by Craigslist, they retained their vision and tackled one problem at a time to build it out the way they wanted.
Key takeaway: Flexibility is good when it comes to solving the problems you encounter, but be inflexible about the end result. Keep the inspiring vision you’ve conjured at the forefront of your efforts at all times.
Hustle for investment capital to support your idea
When Airbnb encountered a funding problem, Chesky and Gebbia came up with a brilliant fundraising endeavor to seed their Airbnb project with start-up cash. Putting their design skills to work, they created and sold special edition cereal at political conventions featuring cartoon renderings of 2008 presidential candidates Barack Obama and John McCain. At $40 a box, they raised nearly $30K and invested it in the business.
Cereal may not be the answer to every entrepreneur’s startup cash woes, but it’s a great example of leveraging whatever assets or talents you have to generate the capital you need for a new business venture. Even if you don’t quit your job and go all in on your big idea like Chesky and Gebbia, you’re going to have to hustle in one way or another to infuse your business with some sweat equity and to inspire potential investors with your dedication and drive.
The ingenuity of the campaign cereal fundraiser can be largely credited for the founders’ acceptance into the Y Combinator start-up program which resulted in an additional $20K in funding. In turn this would inspire the large investments from Sequoia Capital and Y Ventures of $600K that eventually launched Airbnb into the big leagues of dot com fame.
Key takeaway: Don’t expect your new venture to turn a profit for reinvestment in the early stages. Instead, get creative and dedicate some time and energy to fundraising for your project on the side and attracting investor interest.
Partner and collaborate with complementary services and ideas
One important ingredient in the Airbnb recipe for success is the photography program they launched in 2010. The idea came after Gebbia and Chesky came to the realization that listings were underperforming due to bad photography of the spaces for rent.
They set out to solve this problem by taking professional photos of listings in New York with a high-performance camera. Within a month, the newly photographed listings were bringing in double what they had made previously. Eager to repeat this success in other cities, they hired thousands of photographers and rolled out professional photography to other cities including Miami, London, Paris, and Vancouver.
Photography wasn’t part of the original business plan, but by being nimble and responsive to hurdles, Airbnb managed to leverage a complimentary service in order to enhance their main offering. The lesson here for would-be entrepreneurs is to make connections to other products, companies, or ideas to enhance your own. Further evidence of this premise exists in Airbnb’s unauthorized growth hack of the Craigslist platform.
Key takeaway: Fast-track success by copying complimentary elements of other successful businesses, and look for partnerships and collaborations that can enhance your core business.
Leverage challenges as opportunities for growth
By 2011, Airbnb had already experienced a great deal of success, being valued at over $1 billion and having attracted big name investors and expanded to international markets. However, bad publicity over significant damages to a host’s home threatened to halt growth.
Rather than treating it as a PR crisis in need of image control and waiting for the storm to pass, the company approached the problem as a product flaw. They created a Trust and Safety department, created a Host Education Center with safety tips for people hosting properties, enhanced user profile verification, staffed a 24-hour help line, and instituted a $50K damage guarantee program to help cover damages from vandalism of theft. They later upped the damage coverage to their current $1 million Host Guarantee program.
Now, what was once a major vulnerability is one of Airbnb’s greatest assets. Entrepreneurs can learn from this experience by being thoughtful about end users’ needs, and responding quickly to negative experiences. This type of responsiveness and course correction is crucial to growing a start-up venture. Don’t be hesitant to act on negative feedback and leverage it to your advantage.
Key takeaway: Approach challenges as an opportunity for meaningful change that can impact growth in a positive direction.
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