Simon King on Airbnb culture
It’s early 2009 and Airbnb is struggling. The three friends who launched an accommodation revolution from their apartment in San Francisco a couple of years earlier are doing it tough.
So Nate Blecharczyk, Joe Gebbia and Brian Chesky sign up to an innovative accelerator program run by the US start-up funder, Y Combinator. The advice they receive will change the focus of their business – and the way the rest of us think about travel.
Y Combinator founder Paul Graham tells the young men: “It’s OK to do things that don’t scale when you’re trying to find product market fit; as it’s OK to do things that don’t scale; go and meet your users – they’ll give you insights; and it’s better to have a hundred users who love you than a thousand users who like you – go find your evangelist and really get to understand them.”
On the back of that, recalls Blecharczyk, the focus became New York to meet “every single” host signed up to their fledging rental business. There were only 40 in the city then, which made the exercise feasible. In New York, Gebbia and Chesky offered to take photographs of all the properties. They talked the hosts through how to use the website, bought them a drink.
“Over a beer they’d tell them the story of the last year, the entrepreneurial journey and really get it so they were rooting for us,” says Blecharczyk. “Then they would ask them to do things like lower the prices … and helped them write descriptions.”
The founders were finding their evangelists as visitors carried the message back home to Sydney, Paris, or Berlin.
“Not only did we see amazing uptake in New York but then we started seeing little pockets of this pop up all over the world based on people who had gone back home and spread the word,” says Blecharczyk, now the company’s chief technology officer. “That was the Eureka moment.”
The growth of the business since then, Blecharczyk admits, seems “almost impossible”. He is reminiscing in what is known as the President’s Room at Airbnb headquarters. It is the most lavishly decorated space in a vibrant office built around a central atrium. Workers on scooters and roller blades buzz around five levels of funky break-out spaces and meetings rooms often replicating the company’s listings from around the world. Some of them are accompanied by their dogs. Staffers can work wherever they like in standing or seated work spaces. The Airbnb founders sit among them in the former industrial building that’s been given the dot-com makeover. Hanging on the walls are photographs of the first ever Airbnb guests – three people who helped change the way we sleep around the world.
Blecharczyk, who like his co-founders still rents out his home on the site, has just come from the staff restaurant – where it’s all about zero waste, local produce and beer 24/7. The boss did his time in the queue like everybody else waiting for breakfast.
It has been an astonishing journey for Chesky, the CEO, Gebbia, the chief product officer, and Blecharczyk. Chesky and
Gebbia met while studying at the Rhode Island School of Design. Blecharczyk, who grew up in Boston, met Gebbia in 2007 when he answered an ad on Craigslist. When Blecharczyk was unable to pay the rent, Chesky moved in. Then he too ran out of money. Desperate, Gebbia dusted off three air mattresses and rented them out to visitors to the Industrial Design Society of America conference. The rest is the sort of history that shows just how far the internet and word of mouth can take an idea that now seems obvious – use spare capacity as part of a new economy, the shared economy.
Airbnb lists more than 1.5 million properties in more than 34,000 cities in 191 countries. On average it manages stays for more than one million people every month. Around 40 million travellers regularly use the site, and following one of the biggest private-funding rounds in June, which raised $US1.5 billion, Airbnb is now valued at around $US25bn. The numbers are astounding, even in a relatively small population like Australia’s. There are 40,000 Airbnb properties listed locally, a figure that doubles or triples every year, depending on the city.
Earlier this year Sydney joined Paris, New York and London in the top-10 cities for most properties listed on Airbnb – with inner-city Darlinghurst at the top of Australia's list. Every week about 25,000 Australians use the platform to book accommodation. “It helps to understand the mechanics of how that continues doubling each year,” says Blecharczyk in the first interview given to an Australian journalist by an Airbnb founder. “What’s driving that growth is the fact that people, when they come back from travel, generally speaking, they always talk about their travels with their friends and so if they stay on Airbnb, it becomes a part of their travel story and usually a very good one. And what better way to hear about something which requires a little bit of a leap of faith than from a trusted friend.”
The growth in the service is the tip of the iceberg, according to Blecharczyk – who taught himself how to program computers at age 12. By 14 was being paid to write code online. In high school he sold his online marketing program to more than 20 countries before taking a computer science degree at Harvard and working as an engineer at companies such as Microsoft.
He says there are still a lot of people in the world who have not yet tried Airbnb: “It’s a huge market – almost everybody travels – we’ve had maybe 15 million or so unique travellers on Airbnb, a small number relative to the overall opportunity, about 40 million guests.
“So when you think about the world population of travel and the internet, usually you have much bigger numbers, so there’s a lot of headroom yet for growth.”
Much of that growth is likely to come from strategies to target particular markets – a sign of maturity in an organisation that has always had a culture of being a community, not a corporation. In June, the company launched its solution for business travellers.
“We know that business travel is a huge opportunity, it’s a multi-hundred-billion dollar piece of the market – so that’s something we’re very interested in,” Blecharczyk. “Most medium and large corporations have a duty of care to their employees – they want to be able to know where their employees are at any given time, they want to be able to handle the billing, so the employee doesn’t have to use their credit card. And there’s now a platform by which companies can partner with us and do that.”
Airbnb has several hundred partners, including big names such as Google, and believes business customers can account for much more than the 10 per cent of bookings they represent.
Another growth area, led by Australian Shaun Stewart – who at 36 says he is one of the oldest members of staff – is the holiday rental. Stewart was hired in August as the global head of vacation rentals and Blecharczyk says that while vacation rentals have been on Airbnb for a long time, the aim is to better tailor the product. Australia, with its beaches, is well placed to increase sales. We already love Airbnb it seems: France and Australia have the highest rate of adoption of the service by users.
“This company was launched in the US – it quickly spread to Europe and more than half of our business is in Europe now,” Blecharczyk says. “(But) Australia was also one of the first major countries to break out.”
The concept has taken longer to catch on in Asia but it is the fastest growing region, and the founders have big plans, especially for China.
“Travellers coming out of China are looking to go to Australia, Japan and all the surrounding nations – that is our fastest growing country in terms of outbound travel,” Blecharczyk says. “Japan is our fastest growing destination as a country – so we’re seeing a lot of acceleration in Asia and that’s really exciting because Asia is a large part of the future of travel. China’s the Number One spender on international tourism with more than $US100 billion each year and that has increased very rapidly and they expect that to double in the next five years. Compare that to the next largest, the US and Germany tied at $US80bn.”
“We're seeing a lot of acceleration in Asia and that's really exciting because Asia is a large part of the future of travel”
Nate Blecharczyk, Airbnb co-founder, says the accommodation company's astounding growth is just the tip of an iceberg