How Early Adopters Saved AirBnB

After graduating from Rhode Island School of Design, Joe Gebbia and Brian Chesky were living in California when they came up with the idea of AirBnB. It was time for the design conference, and all hotels were fully booked. Joe and Brian had some extra spaces, and they decided to throw a couple of air beds on the floor to create sleeping spaces for the guests.

They actually went to design the entire experience, from picking the guests up from the airport to offering them breakfast in the morning. The idea was to create a holistic experience for the guests, not just a place to stay.

Birth of Air Bed and Breakfast Website

Not too late after the above-mentioned incident, Joe Gebbia, along with his cofounders, started a website known as Air Bed and Breakfast. There was no Craigslist posting as the website wanted to be a brand in its own right. The focus stayed on creating a holistic guest experience.

AirBnB Hosts are its Celebrities

Unlike other brands like Nike showcase photos of celebrity athletes using its products, AirBnB showcases giant pictures of its hosts as celebrities. Initially, the business started with the idea that this would be a model for conference business for those who are starting companies.

During the first year and half of its operations, nobody knew about AirBnB. The company launched four times, and people know about the fourth one because the first three didn’t work, which were:

· In 2008, launched for SXSW (South by Southwest).

· Relaunched for Democratic National Convention.

· During a huge hotel shortage in 2008 in Denver, Colorado, where the business did tremendously, but once the political convention was over, the business crashed, and there was no political convention every weekend.

The Product Market Gap

No matter how passionate you feel about your product and market, it won’t work for you if they aren’t connected. At this point, the company was only making $200 per week living in San Francisco. The founders decided to go to investors but got $0 investment.

So, the founders relied on their credit cards to fund the business. While brainstorming to boost the business, the cofounders came up with the idea to serve politically-themed breakfast with grocery store cereals repackaged as Obama O’s and Cabin McCain’s. The guys ended up making $20,000 from the cereals, and that was enough to break even with their losses.

The Way Forward

While the graphs, spreadsheets, and statistics kept saying, “STOP,” Gebbia believed there was something exciting and potentially profitable in this business. Later the guys applied for Y-Combinator, and Paul Graham gave them the best advice to go to their potential market, which was New York City.

Calling it the best advice they ever got, Gebbia and his cofounders moved to New York City and went door to door to talk to their early adopters. So, they gathered up all 30 hosts and looked at their listings, and saw that the photos of hosts’ homes weren’t that great.

They offered to take pictures of the hosts’ homes for free and put them on the site to attract customers. The ethnographic research observing the hosts in their natural environment helped Gebbia and his partners realize how people use their services to check messages and gaps in the product/service they were offering.

The Outcome

Based on all the feedback Gebbia calls “gold nuggets”, AirBnB created options and features that helped the business revenue grow by addressing the market’s pain points. This saw the company’s revenue double with every passing weekend to where it stands today.

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