Latest great guest post from the Digital Skills Academy, see more about them here. Image courtesy of Suitelife
Airbnb are a good source of inspiration for Startups. Airbnb was founded in August 2008 by Brian Chesky, Joe Gebbia and Nathan Blecharczyk and now has over 2,000,000 listings in 34,000 cities and 191 countries. The founders of Airbnb showed all the right qualities in terms of persistence, inspiration and entrepreneurial know-how. They understood where their audience was, and reverse engineered a way to access them. They were also creative in how they initially fund-raised to buy themselves enough time to develop the Airbnb idea – even selling special edition Obama-O’s and Cap’n McCain breakfast cereals in the process and raised $30,000 to cover their incubation period.
Airbnb’s founders have responded well to challenges that have emerged, and they are also acutely aware of the need to broaden their revenue streams so as to avoid the risk of being overtaken by newer, even more disruptive ideas.
Here are some of the biggest lessons startups can learn from Airbnb and its founders.
1. Creative Fund-raising Can Get You Attention and Kudos – Even From VCs!
Like most startups, Airbnb were very stretched for funds in the beginning. At the time, it was during the election campaigns for the 2008 US presidency. They came up with the ultimately successful idea of creating specially branded boxes of cereal for the election. Wisely they offered these in both Democrat and Republican varieties, and sold them for an impressive €30 per box. These funds made a massive difference in helping them have the resources to develop their proof of concept, despite numerous hot glue burns as they individually stuck the relevant picture on the front of each box of cereal. They knew this might not be an ideal long term strategy, but it worked temporarily and gave them enough money to keep growing the company. They did not falter after numerous rejections by VCs and investors, including one who, without a word, simply got out and walked away from a meeting with them in a cafe. Their ingenuity around raising funds and hustling impressed Paul Graham from Y combinator enough to offer them a place in the startup incubator. The rest, as they say, is history.
2. Know Where Your Audience Is And How To Reach Them
While reverse-engineering access to their target group via Craigslist was perhaps cheeky, and not something that can be easily repeated by others, they saw their opportunity and they grabbed it. The important lesson here is not to lament the impossibility for your business to do same, but rather to keep an opportunistic state of mind. In this way, you will be better able to respond when your own unique opportunity emerges, and you will hopefully recognise it when it does.
Image courtsey of Distractify
3. Respond Quickly When Something Bad Happened
Whenever a new business starts up there are lots of ‘what ifs?’ They might not all happen, and other unexpected ‘black swans’ may also appear on your path too. It is not possible to plan for every unfortunate occurrence which may or may not take place. However, when it becomes clear that you are in the middle of one of those situations, you face the challenge of letting it define the ultimate success or failure of your business. Airbnb were taking a step into the unknown by hoping to tap into the ‘sharing economy’.
Why would you let strangers stay in your home? Suppose they completely trashed your place? Unsurprisingly this unfortunate turn of events came to pass. This potentially could have marked the end of Airbnb.
Who wants to risk the destruction of their home by complete strangers, who one willingly allows into their home? When the inevitable vandalism of a home did unfortunately take place, the host complained about the damage done to their home, however Airbnb initially did not reply, then later said they would not refund the cost of the damages. This provoked a huge wave of negative publicity against them. Airbnb saw this for the huge risk that it was, and then responded with a general policy to deal with this, and also something specific to compensate the poor individuals who actually suffered this experience.
Image courtesy of Distractify
4. Grow, Develop or Expand Your Proposition
Only time will tell if Airbnb will succeed in all the new services it is now offering. The founders know that to stay relevant and competitive, they need to stay open to new revenue streams, and to try new things out. It will always be a tricky balance between maximising the revenue on current successful income streams, and looking at other potential future opportunities too. However, if your own business has emerged by disrupting another more traditional industry, it is only to be expected that within a surprisingly short space of time, you too will find your business under threat from newer, even more disruptive business ideas.
In 2016 Airbnb had several rounds of additional funding as they continued to grow and develop their business. As recently as December 2016, TechCrunch reported Airbnb had raised even more funding for future developments, giving the company a valuation of approximately $30 billion.
Airbnb’s first decade has proved to be an interesting one, with many lessons for other startups to learn from so far. With future developments under way, the ever rising sharing economy, and the company’s leadership position, it will be very interesting to watch Airbnb’s moves in the future.
— DigitalSkillsAcademy (@DigitalSkillsAc) January 20, 2017