Airbnb’s humble beginnings
Airbnb has changed the way people book their holidays and business trips. This is the feel-good tale of how it came about
TAKE two penniless guys, a few blow-up mattresses and a smart idea. What do you get? A rags-to-riches story that embodies the American dream and has changed the way people live when they’re away from home. Online accommodation platform Airbnb, which started out 10 years ago with the humblest of beginnings, is today a billion-dollar business.
The amazing story began in 2007 when two broke flatmates in San Francisco, America, were battling to pay their rent.
Joe Gebbia and Brian Chesky, both 26 at the time, hit on the idea of renting out three mattresses on the floor of their apartment. A major conference was coming to town and accommodation was devilishly difficult to come by.
The two industrial designers cobbled together a website and before they knew it, three strangers were fast asleep on their floor.
Fast forward a decade and the former flatmates certainly no longer need to scrimp and scrape for their rent. These days Joe is product head and Brian is executive head of their company, which is worth a cool $30 billion (R390 billion), and the canny duo have each pocketed about $3,8 billion (R49,4 billion). Talk about a nice little earner!
But Airbnb wasn’t an overnight success. Soon after their first three guests left, Joe and Brian quit their jobs to start working on Airbnb full time. The company was officially launched in August 2008 but initially investors were sceptical about Joe and Brian’s idea and the young entrepreneurs struggled to find backers for their enterprise. They’d maxed out all their credit cards and needed funding.
So the ever-resourceful duo came up with another bright idea to finance their start-up. It was election year in America and they decided to repackage cereal boxes into political-slogan boxes.
The boxes of Cheerios and Cap’n Crunch were adorned with images of the presidential hopefuls, Democrat Barack Obama and Republican John McCain, and renamed Obama O’s and Cap’n McCain’s.
They were sold as mementoes at political rallies and the plucky pair ended up on national television.
At about $40 (then R380) apiece the boxes brought in around $30 000 (then R285 000). Their gumption impressed one big-league Silicon Valley investor, Paul Graham, who said at the time that
the two men’s plan was like “a cockroach that just won’t die”.
This all happened in the time of the financial crash and Paul told Brian he was looking for start-ups with staying power. The guys had the funding they needed and Airbnb was a go!
Brian and Joe couldn’t have known at the time that by 2017 more than 150 million people would have booked accommodation through their platform.
HERE’S how it works. As a host you create a profile on the Airbnb website and upload pictures and details of your home. Would-be guests click on the website, use search functions to state their preferences and contact you if they’re interested.
The visitor pays the fee to Airbnb, which keeps a share of it for its service. When your guests have ended their visit, Airbnb pays the money over to you. In this way everyone remains accountable and crooks can’t do you in because the host is paid only once the guest has returned home satisfied, Airbnb says.
Guests and hosts also submit reviews of one another afterwards so everyone has a good idea what they’re letting themselves in for.
“We’re helping people to be more resourceful with the space they already have and we’re connecting people around the world,” Joe says.
Airbnb isn’t only for young people. “We’ve got more people aged 55 and over on the site than those aged 18-25, who only make up seven percent,” Brian says.
And it’s precisely for older homeowners that Airbnb offers welcome extra income. Brian tells of Harrison, an American man who now rents out a treehouse he built when his son was a little boy. With the $82 (about R1 065) a day he makes with it he paid off his mortgage.
But there have been hiccups and problems. In August 2014 American tourist Jacob Lopez, then 19, accused his Spanish host of locking him up in her flat and sexually assaulting him.
A man from Barcelona, Spain, was also jailed for 12 years for raping his two American guests.
People have also had nasty accidents, such as the family who rented a house in Texas in the southwest of America and lost their father and husband when a tree in the backyard uprooted and fell on him. In Argentina a man was attacked by his hosts’ dog.
There are also scams in which crooks asks guests to pay the fee separately instead of using Airbnb’s payment system, or where guests promise to pay cash at the end of their stay but then just vanish.
And then there are the guests from hell who destroy the accommodation, make a mess and steal items or even run brothels during their stay.
Because Airbnb establishments aren’t run as hotels or guesthouses, hosts and their guests aren’t subject to many of the regulations that have to be adhered to by the hospitality industry. These traditional establishments have been hit hard since Airbnb started dominating the market.
Apartment buildings’ governing bodies also complain that strangers don’t respect their rules like permanent residents do.
In an attempt to regulate Airbnb some authorities in, for example, New York, Germany and Canada now impose minimum periods for stays or stipulate that permission to rent out the premises excludes Airbnb.
BUT the brains behind the venture remain confident in their product. Brian still rents out his own flat on Airbnb and for three years he lived in others’ places so he could continuously test the platform.
The company has also stepped up security and has teams working with guests and hosts to guarantee their safety.
The business branched out at the end of last year by launching Experiences, which now allows people to book unique experiences along with their accommodation. Flamenco dancing in Spain, surfing in Hawaii or eating boerie in true South African style are now also just a mouse-click away.
“People want to do, they don’t want to see. They want to experience and make friends. They want to talk to people who don’t call them ma’am and sir,” Brian says in commenting on why, despite all its risks, Airbnb remains his first choice.