The Unconventional Journey of Airbnb from Cereal Boxes to $100 Billion Valuation
April 26, 2023
Have you ever pondered about the intriguing journey of Airbnb history? How did it transform from offering air mattresses in a modest San Francisco apartment to selling cereals, and finally to providing countless distinctive accommodations and experiences in almost every corner of the world? What are the hurdles and prospects that this revolutionary platform has encountered and can anticipate in the future? Let’s begin with Airbnb history.
Airbnb History: A crazy idea that launched a billion-dollar business
It all started in 2007 when two design school graduates, Brian Chesky and Joe Gebbia, rented a loft apartment in San Francisco but struggled to pay their rent. They saw an opportunity to make some extra cash by offering their spare space to traveler who needed a place to stay. They bought three air mattresses, set up a simple website, and called it “Airbed & Breakfast.” The guests were happy with their experience, and the founders realised they had stumbled upon a potential business idea.
Airbnb’s vision: to make everyone feel at home
Despite their initial enthusiasm, Chesky, Gebbia, and their co-founder Nathan Blecharczyk soon realized that building a successful business was not easy. They had trouble attracting users to their platform, and they were running out of money. They needed to raise more funds, but most investors thought that Airbnb was a crazy idea that would never work.
However, the founders did not give up on their vision. They believed that Airbnb was more than just a way to find cheap accommodation. They believed that Airbnb was a way to connect with people and cultures around the world, and to make everyone feel at home wherever they go. And they wanted to create a community of hosts and guests who share their values of belonging, trust, and hospitality.
Cereal boxes: Airbnb’s creative solution to funding woes
To keep their business alive, they came up with a creative solution that involved cereal boxes. Yes, you read that right. Cereal boxes. They created their own limited-edition cereal brands: Obama O’s and Cap’n McCain’s, and sold them online for $40 each, marketed as a way to support their favourite candidate and get a free night at an Airbnb listing. They managed to sell 800 boxes, raised $30,000, and used the money to pay off their debts and keep their business afloat.
Y-Combinator’s advice: talk to your customers directly
Their cereal stunt caught the eye of Y Combinator’s co-founder, Paul Graham, who eventually offered them a golden ticket to his startup program in January 2009. And one of the most important pieces of advice that Graham gave to the Airbnb founders was to talk to their customers directly. They took the advice and flew to New York City to meet with dozens of hosts. Through this process, they discovered the key factor that influenced bookings was the quality of the photos. So, they offered a free professional photography service to improve the credibility of their listings. This resulted in a significant increase in bookings and revenue and helped establish Airbnb as a major player in the hospitality industry.
Customer obsession: the secret of Airbnb’s growth
Their New York trip sparked Airbnb’s customer obsession. They listened to their hosts and guests and grew like crazy. Everyone was talking about them on social media, and they gave travel credits for referrals. They were awesome at service and support, and they checked and insured users and listings. And they had everything you could want, from accommodation to experiences, adventures, luxury retreats, and more. Airbnb were everywhere, in over 220 countries and regions, over 100,000 cities, over 4 million hosts, over 7 million listings, over 800 million guests, and over 300 million nights.
Covid-19: AirBnb’s biggest challenge and opportunity
However, the Covid-19 pandemic strike. It was a nightmare for the travel and hospitality industry, and Airbnb suffered a huge blow. To survive the crisis, they had to slash costs, raise funds, and they also had to fire 1,900 employees. However, they also use this chance to rethink their business model.
Some of the strategies that Airbnb used were:
- Focusing on local and domestic travel, which increased from 33% to 77% of bookings in 2020.
- Offering flexible cancellation policies and enhanced cleaning protocols to reassure guests and hosts about their safety and comfort.
- Launching new products such as Online Experiences, which allowed people to connect virtually with hosts around the world and enjoy activities such as cooking, yoga, or music
- Rebuilding trust and loyalty with its community of hosts and guests through transparent communication and support.
They saw a surge in demand for their platform, especially from younger traveler who were looking for more affordable, flexible, and authentic options. These strategies helped Airbnb to bounce back from a 72% drop in revenue in April 2020 to a 22% increase in revenue in July 2020, compared to the same months in 2019.
Airbnb eventually launched their initial public offering (IPO) on the Nasdaq stock exchange in December 2020, which valued the company at over $100 billion. It was a testament to Airbnb’s resilience and potential in the face of adversity.
AirBnb Future: what’s next for the disruptor?
So, what’s next for this disruptor? Airbnb has big plans for the future of travel and hospitality. They aim to foster a sense of belonging and connection among their stakeholders while supporting causes and initiatives that promote social good and environmental sustainability. They believe that travel will bounce back stronger than ever after the pandemic and that they are ready to cater to the needs and expectations of future traveler.
Airbnb history has been captivating. Airbnb is not just a company, but a movement. They have become one of the most influential and disruptive companies in the world, thanks to their vision and commitment to customer obsession. They have transformed from offering air mattresses in a modest San Francisco apartment to providing countless distinctive accommodations and experiences in almost every corner of the world. Let’s look forward to more magical travel experiences ahead!
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