The Airbnb Success Story: Never Give Up
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The Airbnb Success Story: Never Give Up

By Judy J. Beasley

Backpack through Europe’s cities, explore the vineyards of Santorini, or pop into Manhattan for New York Fashion Week.

With the world ready for your trip, if you miss booking Airbnb accommodation, you’re missing out on one of the unique vacation rentals.

Airbnb. Inc is a vacation rental company that connects people looking for short homestays with people looking to rent their homes. It’s a lucrative way to earn income from your property.

Although Airbnb is a hit today, it wasn’t always well received in its early days. So how did a startup grow into a company with a net worth of $61.4 billion over 11 years? Here’s a timeline of one of the hospitality industry’s most inspiring pioneers.

HOW THE AIRBNB SUCCESS STORY BEGAN

Founders of Airbnb. (Image credit: Airbnb founders)

Airbnb’s success story began in 2007 when two roommates from the Rhode School of Design couldn’t afford the rent for their cozy loft in California.

Brian Chesky and Joe Gebbia thought they needed to make some extra money. A conference of industrial designers was to be held in San Francisco.

When they saw a shortage of existing hotel stays, they came up with their multimillion-dollar business concept: housing people by renting their homes with inflatable mattresses and the assurance of a home-cooked breakfast at the cost of $80 a night.

They created their website, airbedandbreakfast.com and attracted its first three guests, a man from Utah, another from India and a woman from Boston, by becoming tour guides.

The original screenshot from the “AirBed&Breakfast” website.

Gebbia and Chesky felt they had created a distinctive concept and invited their former roommate Nathan Blecharczyk to start a full-fledged business. They modified it into a platform that connected people looking for roommates until they came across another website implementing the same idea. So they started to rebuild on the original idea.

AIRBNB’S STRUGGLES AND REJECTIONS:

The trio did their best to launch the company with media attention at conventions and conferences, but a positive response from users did not follow. They decided to get financing when they were knee deep in debt.

They also tried it at SXSW. They redesigned the website to make it easier for users to book in just 3 clicks. They organized meetings with about fifteen angel investors but in vain.

They understood that the “bed” angle of their concept was not very well received. So, with the upcoming 2008 election, they handcrafted a limited-edition presidential-themed cereal box, priced at $40: Obama-O’s, The Breakfast of Change, and Cap’n McCains. This venture earned them $30,000 and national media coverage.

Y Combinator founder Paul Graham invited them into his company. He was a venture capitalist, and his company could be described as a startup accelerator investing like shark tank.

Yet they have been repeatedly rejected. Famous angel investor Fred Wilson rejected them and regrets it to this day.

Our greatest weakness is giving up. A certain way to SUCCEED in life is always to try one more time.

Airbnb’s journey of success continued because the founders didn’t give up. Instead, they kept recreating their website to make it more user-friendly.

In March 2009, they decided to shorten the name to Airbnb.

Plus, they went door to door to stay with hosts, wrote reviews on their site, and took professional interior and exterior photos of the homes. High definition photographs and enhanced profile pages have been uploaded to Airbnb.com.

THE AIRBNB SUCCESS BREAKTHROUGH:

The fruit of hard work is always sweet. By the end of the YCombinator program, the founders had built strong relationships with their customers. With seed funding of $20,000, they traveled to New York to found their target demographic community. With more exposure, within a month they secured $600,000 in funding from Sequoia Capital.

After four years of bumps, Airbnb has been a huge success. In 2011, various venture capitalists invested $112 million in the company, which transformed Airbnb’s valuation to $1 billion as a Silicon Valley startup Unicorn.

In 2013, 7 million travelers booked through Airbnb’s website and mobile app.

A FEW MORE OBSTACLES:

Many hosts have complained that guests leave the house in an “unruly” manner. For this, Airbnb has implemented a new coverage policy. The “host guarantee” was $1 million in 2012.

But, the problems were not over.

Various cities in the states have started banning Airbnb. Restrictions such as fining the host and prohibiting renting a unit for more than 30 days were imposed.

Despite the setbacks, Airbnb has not stopped its gradual ascent. Studies have also found that users are unwilling to book hotels after booking once on Airbnb.

In a Average item published by Chesky, it explains the 7 times Airbnb was rejected and attaches emails from different investors.

The next time you have an idea that gets rejected, I want you to think about those emails.

AIRBNB’S PROGRESS OVER THE YEARS:

Some of the marketing messages shared by Airbnb:

2007: Forget the hotels.

2008: Travel like a human.

2013: Belong anywhere.

2016: Don’t go there, live there.

2021: Focus on the real experience.

In 2018, Airbnb had 34 offices worldwide and annual revenue was $3.6 billion. Few of the countries that found an impact on their economy with Airbnb were USA, Canada, Italy, France, UK and more. A report also suggested that customers were spending at their Airbnb’s neighborhood restaurants and cafes.

During the 2020 IPO process, the company was registered to raise $25.9 million through funding rounds, bringing its cash on hand to $3.5 billion. In the same year, they entered into agreements with 400 local and national governments to automate the collection of tourist taxes. The taxes amounted to over $2 billion.

Due to the pandemic, Airbnb faced a 67% drop in revenue and a staggering loss of $637 million. As a result, they were forced to lay off 1900 of their 7500 employees.

Over the years, Airbnb has acquired various companies such as LocalMind, Accoleo, Luxury Retreats International and Tilt.com.

Airbnb Success Stats
Airbnb is growing. (Image credit – Airbnb)

As of March 2022, Airbnb is present in more than 220 countries with more than 4 million hosts.

PROS AND CONS OF HOSTING ON AIRBNB:

ADVANTAGES

More profitable than the traditional rental system

One can charge more on a nightly basis rather than renting it to a single long-term tenant.

Various types of tenants

If the long-term tenant is financially unstable, this can hamper the regular source of income. With Airbnb, many tenants pay a significantly higher price.

THE INCONVENIENTS

Restrictions

In San Francisco, a host cannot rent out any part of the property unless it is their primary residence. A 90-day Airbnb rule has been introduced for the same. It is illegal to have more than 90 nights of unhosted rentals in the absence of the host.

High expenses

Providing high-quality decor, appliances, food, WiFi, and other amenities is essential for an Airbnb host. A long-term tenant doesn’t expect housekeeping to be done by the landlord, but with an Airbnb home, the host is also responsible for cleanliness.

Progressive success

An owner needs a reputation to receive more bookings, and a guest’s occupancy time is relatively short to consider an appropriate rating. Thus, the success of an Airbnb host is incremental. And income is irregular.

WHAT STARTUPS CAN LEARN FROM AIRBNB’S SUCCESS STORY

  • Finding solutions to existing problems at the right time can be beneficial in the long run.
  • Even with challenges, inspiring Airbnb success is proof that you should never give up on your dreams.
  • Every founder needs to be creative to make their business profitable.
  • Think of unique ways to create funds for your startup.
  • Delivering the best experience takes hard and diligent work.
  • Focus on the MVP of your product or service and make it user-friendly. Think of ways to scale to thrive more.
  • Even if people don’t believe in you, believe in yourself and your ideas.

Judy J. Beasley
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