Pil­low talk

Si­mon King on Airbnb cul­ture

The Australian - The Deal - - Front Page -

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

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