With a current valuation of approximately $2.5 billion it is difficult to believe that the site is only 5 years old. AirBnB was started in 2007 with the humble enough goal of letting Brian Chesky and Joe Gebbia pay their rent. By 2013 it had booked over 10 million guest nights and is available in over 19,000 cities. Below you will learn how AirBnB grew their business so quickly and what it can tell us about growing our own companies.
Here are the 8 business lessons from AirBnB that you need to know:
Find A Big Problem And Solve It
AirBnB had its start after the founders Joe Gebbia and Brian Chesky were finding it difficult to come up with their rent money. At the time they were living in San Francisco and by coincidence there was a design conference on that weekend so all of the hotel rooms were booked. They placed three airbeds on the floor and setup a website named airbedandbreakfast.com. The beds were quickly taken up by people looking for available and affordable accommodation.
They realized that there was a massive opportunity here. Some people had available space but no easy way of renting it on a short term basis. Other people needed to find inexpensive accommodation. By introducing the two parties AirBnB could solve both of their problems.
When the average person encounters a problem they will become frustrated and wonder why no one has come up with solution before. However when a true entrepreneur confronts that same problem they will want to come up with a solution. All successful businesses are built on the premise of solving problems that many people are experiencing.
You Can Transform Bad Publicity
In 2012 one of AirBnB’s users, a woman using the pseudonym EJ, reported that after renting her apartment on AirBnB it had been burglarized and badly damaged. The experience was so intrusive that she said that she no longer felt comfortable living in her apartment and would leave. She also blamed AirBnB for not doing enough to protect its users or to provide information about potential guests.
Trust is critical with a sharing service such as AirBnb and so this was terrible publicity for the new company. However AirBnB was able to turn this negative and transform it into a positive. AirBnB founder Brian Chesky said that any user that listed their property would by insured up to $500,000, that customer service agents would be established and he gave out his own personal email address. AirBnB went from being viewed as a risky proposition to one which offered plenty of guarantees.
Later that year another AirBnB customer claimed that his apartment was robbed. AirBnB completely reimbursed him and he said publicly that he would use the service again.
Embrace Social Search
One clever change that AirBnB made was to allow its wish lists to be shared on social networking platforms such as Facebook. A wish list is a compilation of the locations that people would like to visit on AirBnB. By making those lists shareable it adds a social component to the search. People discover places that they might want to stay, from their friend and family’s wish lists.
Become A Two Sided Business
AirBnB is a two sided business in that it fills a need for space and a need for additional income. However the participants on either side will often switch roles. For example someone who has rented out their space may now have the additional income to travel and rent from another user.
On the other side someone who was once a guest might decide that they want to rent out their own place after seeing how easy it is. And of course some people are guests and renters at the same time. They will rent their own home when visiting someone else’s. This allows AirBnB to grow organically even if their user base doesn’t increase.
Be Part Of A Larger Mission
When the founders of AirBnB were considering their next business venture they had a clear intention to stay away from starting anything that would lead to more unneeded products and waste. They wanted to take something that was already available and allow it to be more widely shared. This is known as collaborative consumption and includes other companies such as Netflix and Zipcar. The idea of collaborative consumption is something that AirBnBs demographic identify with and support. By tapping into a larger mission that the founders genuinely believed in, they were able to create a deeper sense of connection with their users.
Small Changes Can Make a Big Difference
One of the features that AirBnB users love is the wish lists. A wish list is created by the user and keeps a record of all the places that they would most like to stay. Originally when you wanted to tag a property for your list it would be denoted with a star. However when AirBnB changed the symbol to a heart the user engagement with wish lists rose 30%. This shows how even very small changes to the user experience can sometimes have a very big impact.
Focus On One Person
When Brian Chesky was asked what was the best piece of advice he had ever gotten, he replied it was when Y Combinators Paul Graham told him to focus on creating something that 100 people will love rather than something that one million people will sort of like. By narrowing your focus down to one person and creating a perfect experience for them, you have something that can go viral.
Be Creative With Your Hustle
In the early days of AirBnB Chesky and Gebbia struggled for a way to monetize the site. In order to come up with enough money to keep the enterprise going they designed and manufactured Obama and McCain cereal boxes to coincide with the Democratic National Convention. They ended up grossing $30,000 from the sale of the cereal boxes. This was enough to keep AirBnB going until they received funding. When you are starting out you will sometimes need to creatively hustle if you want to keep afloat.
About the Author: Tom writes for valuator – click here to see their business tips. He is a freelance writer from Portland USA.
