Even the company's founders didn't think it would succeed. Nevertheless, by all accounts, Airbnb has grown to be a billion-dollar company and one of the most remarkable business success stories of the digital age.
They're the largest accommodation provider in the world, yet they don't own any real estate, so how the hell did they do it?
Table of Contents
It all started because of unemployment.
The four-day conference netted Brian and Joe about $1,000, which they used to cover their rent and buy some extra time to refine their real business concept. Since we believed it would cover our rent, we believed we would have enough time to come up with the big idea. As a result, Brian and Joe started brainstorming ideas for their ground-breaking new company since AirBnB was never intended to be a serious long-term endeavor.
They didn't have any revolutionary new business ideas, so they went back to their airbed idea, which had been a lot of fun, and they figured maybe other people wanted to make money renting out airbeds in their apartments too, so Rohan and Joe reopened the business with the help of their former roommate Nathan, a computer programmer, who would help them create a more reliable and expert-looking website where people could earn money renting out airbeds in their apartments. Brian had never heard of angel investors, but after his friend explained that they could give him money to support the expansion of the company in exchange for a stake in it, Brian set up meetings with several of them. These meetings, however, were disastrous.
The main issue was that their concept sounded so dangerous: allowing people to rent out space in their homes to complete strangers seemed like it would go horribly wrong, and their business model involved only taking a small transaction fee on each deal. One investor after another rejected Brio because, if you had heard that investment pitch in 2008, you probably would not have invested either. It was one of the best investment opportunities ever; their investment would be worth many billions of dollars. It's just that no one could see that yet, so Brian and Joe were forced to borrow money on their credit cards in order to keep their company afloat.
Sold Cereal to Pay Off Debt
They really felt there was potential in the idea, but seemingly nobody else did; they had a service nobody used, and it was going to take something incredibly unlikely to save the company.
The founder stated,
For me This is rock bottom We're totally in debt, we don't know what to do, and we're desperate late at night. It's midnight, one in the morning, and Joe and I think maybe we'll get an airbed and breakfast The air beds aren't working out. Maybe we could sell breakfast. I mean, everyone needs to eat,
As absurd as it may sound, they made the decision to concentrate on their bed and breakfast's breakfast offering instead, and to take advantage of the upcoming election, they developed two limited-edition cereal brands. A fellow college alumnus with a printing business agreed to print 1,000 cereal boxes for free in exchange for a share of the profits when Obama's O and Captain Mccain's Brian found him. Then Brian and Joe searched every nearby supermarket for the cheapest cereal they could find, purchasing 1,000 boxes to put in their new fancy packaging.
They started folding and gluing the cereal boxes together once they were back in their kitchen. Brian recalled thinking that Mark Zuckerberg had never had to hot glue cereal boxes to launch his company, so the fact that they were having to do this probably wasn't a good sign. However, believe it or not, this strange cereal gimmick actually worked. They distributed some of these cereal boxes to journalists, who inevitably wrote about them. As a result, people began to pay exorbitant prices for the cereal boxes because they were perceived as valuable collectibles.
They received national media coverage as a result, and CNN even mentioned them. Brian Chesky and Joe Gebbia To match convention attendees at both conventions looking for a cheap place to stay with locals who have space on their couch or an extra room, they developed the website airbedandbreakfast.com. As you can see here, the team has now added partisan speeches to its list of contributions to the presidential campaign. Obama's and Captain McCain's shirts were quickly sold out, and some people even began reselling them on eBay and Craigslist for up to $350 per box. The cereal enjoyed tremendous immediate success. It brought in between $25,000 and $35,000 for Brian and Joe, enabling them to
They were back to zero dollars, exactly where they had started, thanks to the cereal box idea, but that was it; selling serial had only been successful because it was a limited edition. They literally couldn't afford to buy other food, so for the following few months, Brian and Joe mostly subsisted on dry cereal because they were unable to make any more. In fact, they had not yet completely sold out of the caps in the McCain boxes. Every morning, Brian would awaken tense, his heart racing. When they learned about Combinator, a startup accelerator that invests in new businesses and offers support, they realized that the airbed idea had a lot of potential, but they needed money and assistance.
Momentum
The interviewer questioned, "Why would anyone want to stay in a stranger's home?" And why, in the first place, would anyone want to invite a stranger into their home? Brian and Joe stood to leave the meeting because they knew they wouldn't be welcomed. The company was now doomed because they had lost their final chance to apply to Y Combinator. As they were leaving the meeting, Joe handed the Y Combinator interviewer a box of Captain McKain's cereal, and the latter was understandably confused. Joe had removed the box from his bag. Joe made it clear that they had made these to raise money and pay off debt.
The interviewer questioned, "Why would anyone want to stay in a stranger's home?" And why, in the first place, would anyone want to invite a stranger into their home? Brian and Joe stood to leave the meeting because they knew they wouldn't be welcomed. The company was now doomed because they had lost their final chance to apply to Y Combinator. As they were leaving the meeting, Joe handed the Y Combinator interviewer a box of Captain McKain's cereal, and the latter was understandably confused. Joe had removed the box from his bag. Joe made it clear that they had made these to raise money and pay off debt.
Ideas can change along the way, but investing in unconventional thinking and the determination to succeed no matter what is worthwhile. Another important discovery was that users were terrible at taking attractive photos of their apartments. As a result, Airbnb agreed to send out professional photographers to help people take better photos of their homes. This was expensive for AirBnB but paid off immensely as the number of bookings for properties increased dramatically once the photo quality improved. From 50 bookings per day to 100 bookings per day to 1000 bookings per day The momentum was quickly increasing.
Many people had grown weary of how identically designed hotels have become as a result of mass commodification; for instance, a hotel room in Egypt could look exactly like one in your own country, despite the fact that people yearned for an authentic experience. They wanted to fully immerse themselves in the nation's distinctive culture and live like locals, and AirBnB made it possible for them to do so.
Some people make the point that before AirBnB, there were websites like Couchsurfing, HomeAway, and even Craigslist where people could find short-term rentals. However, one of the major factors contributing to AirBnB's success was their focus on streamlining the procedure and making it much more user-friendly. In addition to putting a lot of effort into their review system, where both hosts and guests would rate each other, Airbnb worked hard to improve the design so that it felt more professional and trustworthy. Then, Airbnb directly stole clients from its rivals. They created software that would send an automated email to anyone who listed their property on Craigslist, asking if they would also like to list it on Airbnb.
Additionally, Airbnb launched right after the 2008 recession, when many more people were looking for a way to earn some extra money by renting out extra space and travelers were looking for less expensive accommodations. As a result, AirBnB simply matched these two groups together. Because they thought that strangers opening their homes to strangers would inevitably lead to disaster—that people's homes would be vandalized or their possessions would be stolen—some people had doubts about AirBnB. But I'm happy to say that AirBnB is a shining example of how good people can be because, despite all these years, there has never been a significant incident. Just kidding, this isn't a Disney movie, so brace yourself. Things are about to get dark J was a freelancer who decided to rent out her apartment on AirBnB while she went away on a trip. Her income as a freelancer was inconsistent, so after hearing people rave about AirBnB, she was keen to try it herself to help cover her bills.
Crisis
Ej referred to her residence on the platform as her own personal haven, a cozy, sunny place in her life where she felt secure and safe. However, her home had been destroyed when she got back from her trip. Everything had been completely destroyed by the AirBnB visitors who had stayed there. Ej was devastated. She detailed how the visitors even pried open a locked closet door and discovered her passport, money, credit cards, and her grandmother's jewelry inside. Her camera, iPod, laptop, and an external backup drive containing journals and photos were all taken. Many of the items she owned were burned in the fireplace throughout her entire life, leaving ash all over the space. Her desk, bed, and printer had all been.
Ej felt violated, terrified, and unable to live in her own home because so many of her belongings had either been stolen or were in a broken-beyond-repair pile on the floor. She disclosed on her blog that she was currently experiencing frequent panic attacks and that she spent her afternoons searching through pawn shops in an effort to locate some of her stolen personal items. She asserted that the thieves had taken the spirits instead, which were irreplaceable. Ej's post was quickly picked up by several news organizations, and it quickly became popular at the AirBnB offices.
The team was at a loss as to what to do; some thought they should own up to their mistakes and make an effort to make amends in public, while others were concerned that denying responsibility would expose them to a variety of liabilities in the future. The legal team for AirBnB advised Brian to use extreme caution when speaking, and they made an effort to handle the situation discreetly. AirBnB initially took a while to respond and issued a rather generic statement claiming to have been in close contact with eJ, which she later claimed wasn't really the case. The opposition to AirBnB grew more intense. Brian had trouble falling asleep. His chest felt tight all the time. He didn't know what to do, so he disregarded all the legal counsel he had received and sat down in front of his laptop to write down how he truly felt. He started off by saying that AirBnB had let EJ down before announcing a $50,000 guarantee protecting hosts against damage, effective retroactively, and implying that EJ would be fully reimbursed with lots of additional compensation on top.
Additionally, he stated that they were doubling customer support and introducing a 24-hour customer hotline. The long-term cost of these changes would be prohibitive, but it was a turning point for AirBnB, which would now fully support its hosts and strive to go above and beyond what was necessary. For Airbnb to succeed, supporting hosts in this way was essential, and the risk paid off, but as soon as one crisis was resolved, another one appeared.
Is Airbnb illegal?
Let's use regulation to address the root of the issue. Yes, you are experiencing some difficulties in each major city. It appears that the entire purpose of AirBnB is to provide short-term rentals of your residence. It was illegal in many places, and the laws can change drastically.
AirBnB collaborated with regulators to find a solution in many locations so they could operate legally, but it wasn't always that easy. In New York, the hotel industry is incredibly powerful, and hotel unions have really inspired people and sparked this type of never-ending conflict. One very well-known location where they have encountered significant opposition and restrictions is New York.
Another illustration is Berlin, where it was made unlawful to short-term rent entire houses and apartments in 2016. Residents were urged to anonymously report people who violated the law and were using services like AirBnB. However, the people who benefit the most from AirBnB have run into a lot of resistance in some cities, which is part of the reason.
Furthermore, some locals believe they can no longer afford to live in their hometown and blame AirBnB for this. There are up to 1.1 million AirBnB listings in the US, of which about 600,000 are from hosts who have at least two other listings. The top hosts have anywhere between nine and 272 different listings, according to data from AirDNA. Many landlords started specifically banning AirBnB visitors because they were so dissatisfied with their tenants' subletting. Some AirBnB hosts started advising visitors to pose as visiting relatives rather than paying guests after they installed cameras in some cases to try and catch tenants who were renting out their homes.
After researching prosperous businesses like Amazon and Apple, Brian came to the conclusion that for them to be successful in the long run, they needed to expand into new markets. Brian made the decision that until AirBnB introduced the experience marketplace, a new feature of their website where hosts with a particular skill could offer various experiences to visitors, such as sitting in meditation with a Buddhist monk, enjoying afternoon tea on an alpaca farm, taking a spooky late-night walking tour, or even having an expert fire spinner teach you the art of fire bending, he wanted AirBnB to play a bigger role in people's travels.
Vergre To Collapse Due To Pandemic
This year, the COVID crisis has had a significant impact on a wide range of industries because the virus forced many businesses to close their doors.
One business model that is based on people visiting new places and staying in strangers' homes is one that you really don't want in a pandemic. In fact, the phrase "Airbnb apocalypse" caught on. When the pandemic strikes, people are unable to travel, and a large number immediately cancel because they have cancellation policies. As a result, we received cancellation requests totaling more than $1 billion from guests. We had to choose whether or not to override the host cancellation policy because there were about a billion dollars in requested cancellations but the hosts wouldn't allow them to cancel. Guests wanted refunds, but hosts didn't want to cancel and lose their money, so it was a very difficult situation.
In the end, AirBnB decided to take the side of the guests and permit cancellations because they believed that this was the best course of action in terms of health and safety, but naturally, AirBnB hosts felt betrayed. The hosts suffered the most, especially those who had multiple properties that sat completely empty during lockdowns, contrary to popular belief, which held that the pandemic would completely destroy AirBnB. AirBnB did lose some booking fees, but since they do not own the vacant properties, they were not responsible for any maintenance costs. Some people wonder if the biggest issue facing AirBnB is simply the possibility that their primary business model won't be profitable. The fact that AirBnB is a contemporary "rags to riches" story is undeniable, even though the truth is that it remains to be seen.
When you give it some thought, it's actually quite amazing. Because two guys couldn't afford to pay their rent, Airbnb was created. Even Brian acknowledged that the concept was bizarre and that only his grandfather would likely find it to be a good idea. Nevertheless, Brian and his two co-founders managed to create this enormous international business. Given that Brian only managed to save AirBnB by writing an Obama theme song to raise money to pay off his credit card debts, Brian's appointment by Obama as an ambassador of global entrepreneurship was a surreal full circle moment. There aren't many businesses that have grown as quickly as AirBnB, but one comes to mind that is even more divisive.
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