Transcript

Hi, this is Viram from Vested and today we are going to be talking about five interesting growth tactics Airbnb used to scale its business.

First, let’s look at how Airbnb actually started

In 2008, founders Brian Chesky and Joe Gebbia couldn’t afford their San Francisco apartment rent. So they thought when the conference was happening in the city and people needed to stay, they decided why not make some extra money by renting out 3 mattresses at $80 each to other people. The offering was simple, you get a place to stay, wifi, breakfast and the opportunity to meet people.

Turns out, this idea actually worked and that was the birth of Airbnb. While the idea was good, but both of the founders still didn’t have any money to turn it into an actual business! And that’s when the duo decided to leverage their design skills to raise some initial capital to grow.. They designed limited edition cereal boxes around the presidential elections that was happening that time in the US.

Turns out the campaign was a hit, and they raised $30,000 from selling cereal boxes! This will probably go down as one of the best startup fundraises in history and is also the first growth tactic that Airbnb applied which is pure hustle.

Now let’s look at the second growth tactic that Airbnb applied to kick start it’s business.

For the founders to grow Airbnb, they needed two things:

  1. Hosts to put up properties
  2. People that were looking for those properties

To find this initial traffic of hosts, they found an amazing hack via Craigslist. In the US, Craigslist is one of the largest marketplaces for posting listings online. To get hosts, what the Airbnb team did was it channels Craigslist users onto the Airbnb platform by sending automated emails to homeowners who had already created listings on Craigslist. They solved one side of the marketplace which is the hosts.

The third growth tactic Airbnb adopted was to identify what their customer’s main pain points were, and leverage solutions to that to boost growth.

The team realised that while the Airbnb listings were better than Craigslist, they were still lacking visually. The images uploaded by homeowners were low-quality images, often clicked on cell phones.

So, they did two things to solve this problem:

First, they mapped out the locations of all the homes in the US on Airbnb, purchased a $5000 camera, and set out to personally click professional photographs for all these homes.

On seeing how helpful this was, Airbnb actually launched a Photography as a service product for all of its homeowners, which is still operational to this day. This service has grown into a large network of independent photographers across the globe!

Let’s look at the 4th growth tactic which Airbnb used which was to leverage the power of community to deepen trust & improve user experience at the same time.

What they did was they launched this feature called The Social Connections which was integrated with Facebook. It recommended properties to users via mutual connections who would have stayed there at those properties, it also recommended hosts based on common characteristics like the university they have gone to.

So, wouldn’t you be more excited about living in an Airbnb in France if you knew that your friend from college was its host? It’s a win-win! It builds trust in that ecosystem.

Lastly, let’s look at Airbnb’s 5th growth tactic which transformed the way users interacted with this platform. Do you open the Airbnb app and ‘heart’ properties in Greece or Italy to make dreamy plans for the next time you’re allowed to travel? It’s a brilliant move by Airbnb to keep you engaged even when you aren’t travelling.

At the time, travel sites were still using a ‘star’ feature for customer feedback, which Airbnb utilised as well. As an experiment, Airbnb broke out of the traditional ‘star’ feature common among travel sites, and ventured to the ‘heart’ button. This increased engagement by 30% for the platform, indicating the aspirational difference between a ‘star’ & a ‘heart’.

Wishlists which the heart button creates act as aspirational keepsakes for future travel plans. Users were now not only using Airbnb when they wanted to book a room, but also when they were bored at work, or stuck in traffic, or dreaming about their next vacation.

To sum it up, here are the 5 major tactics that drove Airbnb’s user growth across different phases:

  1. Early founder hustle
  2. Leverage traffic on an existing platform which was successful in a unique way which was Craigslist
  3. Understanding a customer’s pain-point & providing an immediate solution which is their photography as a service solution
  4. Using community to build trust & improve engagement. Remember the Facebook integration?
  5. And lastly, understanding human behavior and getting customer insights to improve on what the industry practices and set your product apart from the rest

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Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.

This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.

This video is meant to be informative and not to be taken as an investment advice and may contain certain “forward-looking statements” which may be identified by the use of such words as “believe”, “expect”, “anticipate”, “should”, “planned”, “estimated”, “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success of or lack of success of particular investments (and may include such words as “crash” or “collapse”.) All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.