Tag: airbnb

Not just trendy

The founders of Airbnb, Brian Chesky, Nathan Blecharczyk, and Joe Gebbia, (see yesterday’s post) were not looking to sell a trendy item like beanie babies. They were looking to change the framing of travel lodging. This entailed getting people to use their platform while having their new method benefit from all the classic institutional supports. Both hosts and visitors require safety, for instance. What are the ways people monitor for safety? They report objections. The site allows both parties to provide feedback.

A fad can take off when it strikes people’s fancy at a particular moment. When the Twins baseball team headed to the World Series twice in a handful of years, fans took to Homer Hankies as a sign of their support. The whole stadium flutter with the white kerchiefs. It’s a simple transaction: an object for cash. No further servicing or support is needed. It’s a perfect private market trade.

The sharing market, whether house sharing or car sharing, has added dimensions of safety and property damage. My son’s friend ran some cars through Turo while in college. One rental went awry when the leasor passed off the vehicle to an acquaintance. Fortunately, there was a tile in the trunk, so it was easy to track down at a nearby strip mall. The boys gained access to the parked car and waited. When the dude came out of the store, he saw the vehicle was occupied and realized his ride was over. The boys drove by him slowly to emphasize the game was up.

Some transactions, like selling stock out of your Merrilyn portfolio, are private. And then some require engaging circles of cooperative action to enforce the rules of the trade.

Group problem, group solution

Often, when people discuss problems that occur in group transactions, they single out an individual experience and hold it up as a representative example. That’s out of line. If you want to talk about individual outcomes, stick to that setting. If you want to talk about group outcomes, don’t exemplify one individual’s experience.

That’s what I like about the following clip from the Airbnb founders. They’ve come up with their house-sharing idea and worked out the logistical aspects to take it to market. Now, they just need people to try it. Not one person. That won’t make the platform start humming. They need a group.

https://twitter.com/StartupArchive_/status/1884285320029692413

They are trying to link the two groups of people with rooms to rent and the people who are taken with the idea and feasibility of renting from a homeowner. But they need something more. They need a common cause, an affinity that overlays the group and makes them feel like one. This elevates the sense of trust and is the little push needed to overcome the hesitancy of a new experience.

In groups, no one host can make the system move, no one guest. The individual is nothing on its own. Group analysis has group features, including an underlying group shared value.

Complete text:

Brian Chesky explains how Airbnb solved the chicken-and-egg problem “Marketplaces are incredibly defensible at scale, and maybe it’s because they’re incredibly hard to start. And the problem is simple – they call it the chicken and egg problem.” As Brian explains, it was tough to bootstrap Airbnb in the beginning because travelers couldn’t book homes if there was no inventory, and homeowners didn’t want to list their homes unless people were going to book them. “We didn’t know what to do for a while .We tried a lot of different things. And I can tell you what worked. Summer of 2008, the press announces that Barack Obama is moving from a 20,000 seat basketball arena to an 80,000 seat football stadium. And we said, that’s our shot. You have 60,000 people that don’t have housing, surely at least a few of them are going to need a place to stay… And so we literally started with local people in Denver. Then we started emailing bloggers. We got the bloggers. Then the Denver Post and the Rocky Mountain News covered us. Then the local ABC and NBC and CBS affiliates. And then the Wall Street Journal. Then the New York Times and CNN are in our living room… We did that in a matter of three weeks.” Brian continues: “We started these little infernos. You start getting a few users here, a hundred here, fifty there… And we did the same thing with the inauguration. And when you have a hundred people here and there, then you obsessively meet them… Paul Graham, our first investor, said it’s better to have a hundred people love you than a million people kind of like you. And the reason why is it’s really hard to build off of a really wide but shallow base. But with a hundred people, you can find out everything they want… You meet them, you spend a ton of time with them, and once they fall in love with your product, they’ll tell every one of their friends. That’s why [Airbnb] took a really long time to start, but it grew much faster later on.”