The Fascinating Growth Story of Airbnb

Airbnb has grown from 400,000 listings in 2008 to 5 million today and hosts have earned over USD 2 billion. The key question is what did the company do right? Airbnb’s focus on community invites guests into a shared experience with locals that can be tailored for them individually.

The “airbnb story” is a fascinating account of how Airbnb has grown. It’s success can be attributed to its focus on customer service, the power of word-of-mouth marketing, and the need for affordable housing. Read more in detail here: the airbnb story.

When you first heard about individuals renting a room in someone’s house via the internet with only an email, you probably thought it was a crazy concept. It’s perhaps even creepy. 

It’s one thing to get your phone and call an Uber. It’s one thing to go to someone’s house and sleep on their bed. Or, even worse, giving your home keys to a stranger you met on the internet. Airbnb’s founders, Joe Gebbia, 33, and Brian Chesky, 33, have persuaded tens of millions of people to do exactly that.

What Was the Origin of Airbnb?

When you think about entrepreneurship, you probably think of someone who had an awesome light bulb moment while sitting in a Chili’s, and then grabbed a napkin and started sketching out their company strategy.


Isn’t it true that movies are adorable? Most entrepreneurship, on the other hand, does not take place in this cliched manner. Great ideas are sometimes born out of desperation rather than inspiration. 

The Airbnb founders were jobless in 2007 and had just leased a flat in one of the most expensive cities in the world. They were depressed, and they were often late on their rent. 

They weren’t seeking to start a billion-dollar company at the moment. Their only concentration was on preventing the loss of their house.

Joe had an idea while seeking for a method to generate money. They decided that if San Francisco was too costly for them, it was likely too costly for others, particularly visitors and travelers.

“Aha!” moment…

He saw that their city was hosting a design conference, and he knew that some individuals would be struggling to find affordable lodging. Joe and Brian both had excess room in their homes and believed they may be able to rent it out to strangers for a nominal price.

They were well aware that persuading individuals to remain in their houses would be difficult. As a result, they solved the issue by establishing a fantastic website that showcased their properties and their amenities.

The website wasn’t too complicated or flashy. Nothing like the modern-day sleek layout. There is no option to choose a location, calendar, or timetable. The website was created with one goal in mind: to establish trust in order to persuade people to stay at a stranger’s house.

Guests were given an air mattress in their living room, free breakfast, free Wi-Fi, and the promise of meeting interesting people. All of this for a fraction of the cost of a hotel in San Francisco.

The concept was a hit! It not only assisted them in paying their rent, but it also accomplished something much more significant. It confirmed their suspicions that individuals were prepared to pay money to remain in a stranger’s home.


Watch this video to see how AppSumo verified their concept.

The Beginnings of the Airbed and Breakfast Industry

They ended up creating what would subsequently be known as Airbed and Breakfast despite not intending to be businesses. Airbed and Breakfast has eclipsed major hotel companies as the leading one-night booking app by 2014, around 7 years later. Airbnb had about 10 million guests and over 550,000 listings globally by the spring of that year. They were also valued at $10 billion, making them more valuable than rivals like as Hyatt and Wyndham.

“But what led to the expansion of Airbnb?” you may be wondering. Joe and Brian didn’t go from a few air mattresses and Wi-Fi to being a well-known tale for startup growth hacking.” You are correct. Let’s take a step back.

How Airbed & Breakfast Transformed To Airbnb

Following the success of the first event, they began getting letters from all around the globe. People want that their services be provided in other locations. So they enlisted the aid of Nathan Blecharczyk, a former roommate, to develop the technology they’d need to expand their company.

Many tourists seemed to be quite content to stay with strangers all around the globe. Step 1 has been completed. Let’s go on to the next phase. Were there individuals ready to let strangers stay in their houses all across the world?

Airbnb sought for a huge event where a large number of people would want reasonably priced short-term lodging to put this theory to the test. Fortunately, the Democratic National Convention was taking place around that time in 2008, and they viewed it as an ideal occasion to put their theory to the test.

Approximately 80,000 individuals were anticipated to attend. However, there were insufficient hotel rooms to fulfill the demand. Given that participants may get desperate, Airbnb regarded this as an ideal chance to test their product. They updated their website two weeks before the event to include a map of all the possible lodging options for guests.

The team had to pay a lot of money to achieve this. They came up with the concept of designing election-themed cereal boxes to earn money for this new feature to their website. During the conference, they sold over 500 boxes for over $40 each, netting over $30,000!

Unfortunately, that was the only success they saw. They didn’t get nearly as much traffic to their website as they had hoped, and it demoralized the entire team. Growth stagnated and the founders kept selling what had remained of their election-themed cereal boxes. Then, a miracle happened. The team happened to get the attention of Paul Graham, Founder of Y Combinator, a startup accelerator based out of Mountainview, CA. In 2009, they had an opportunity to join a winter class with Y contributor, and the team received $20,000 in funding. The team changed their name from Airbed & Breakfast to Airbnb and received another $ 600,000 from Y Ventures and Sequoia Capital.

 How Airbnb Stole Craigslist’s Customers

Joe and Brian agreed that listing their flats for rent for the next design conference should not be done on Craigslist when they originally got the notion. Both founders were adamant about not being affiliated with the impersonal and rife with scams platform. However, as they expanded Airbnb, they found something Craigslist lacked: users.

Craigslist was flooded with individuals wanting to rent their homes. Craigslist’s problem was that it lacked trust. Nobody wanted to stay in a home that had been advertised on Craigslist.

As a result, Airbnb contacted Craigslist property owners and offered them the opportunity to sell their houses on Airbnb. 

The creators created a bot that would go to Craigslist, establish a unique URL, update the listing information, and submit it to a user for Airbnb publication. It wasn’t flawless, and there were a few glitches, but the procedure was smooth enough that many Craigslist users also listed their homes on Airbnb.

 How Airbnb’s Integration With Craigslist Fueled Its Rapid Growth

Airbnb postings were better than Craigslist in every regard since Brian and Joe came from a design background. They provided greater details, photographs, and a more personalized experience. They also charged a lower listing fee than Craigslist, motivating listers to use Airbnb’s platform exclusively.

Airbnb gained popularity in the rental market by connecting Airbnb with Craigslist and snatching Craigslist visitors. Airbnb focused hard on offering outstanding customer value as their growth began to speed up. They even went so far as to give complimentary photographic services to add authentic photos to every NYC advertisement, and they optimized their ads to make them more simpler to find than Craigslist listings. As seen in the graph below, bringing in photographers is thought to be their tipping point.

1647573810_369_The-Fascinating-Growth-Story-of-AirbnbMedium of Origin

To top it off, Airbnb created a referral program in which users could earn travel and host credits for referring others to the site.

Important Points to Remember

Airbnb’s tale is taught in business schools all around the nation. Their concept was fantastic, but what truly stands out are the different growth techniques they adopted along the way. The following are the most crucial:

  • Validate before you launch: Nowadays, many businesses will have a concept and proceed to construct it. They may wish to introduce a course, product, or service, but instead of assessing demand, they will just launch it. Airbnb proved their concept first, then launched the platform after they recognized demand for their offering.
  • Understand supply and demand: Airbnb was well aware of the obstacles they had to overcome in order to expand. They needed to ensure that there was a high enough demand for people to stay in strangers’ houses, as well as a strong enough supply of strangers prepared to let people stay in theirs. If even one aspect of this equation is missing, the firm will fail. To understand more about studying competition in an industry, see our article on Porter’s 5 forces.
  • Creating a balanced team: Initially, the team consisted of two designers, Joe and Brian. They didn’t merely recruit a buddy when they needed to hire extra staff. They choose a companion who is a good match for their skill set. Nathan Blecharczyk was an excellent addition since he provided a solid technical basis to a squad that lacked it.
  • Establishing user trust: “You can’t manage what you can’t measure,” Peter Drucker is quoted as saying. Although this is true, it doesn’t imply you shouldn’t pay attention to things you can’t quantify. There’s no way to know how many more users Airbnb attracted since their website was better designed than Craigslist’s, but it was undoubtedly a role in developing trust with its consumers.
  • Last but not least, and maybe most crucially, offer more than you ask for. In its early days, Airbnb did all it could to help users. They assisted them in optimizing their listings, supplied free photographs, provided options for them to earn travel credits, and facilitated a smooth move from Craigslist to Airbnb, among other things. They were able to fast grow their user base and escape their competitors by concentrating on the client rather than income generating.

Airbnb is a company that has made a name for itself in the world of online travel. Their success factors have been their focus on community and trust, which have helped them grow at an exponential rate. Reference: success factors of airbnb.

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