How Airbnb reached 1.5 Million Reservations in 3 Years
When Joe Gebbia and Brian Chesky founded Airbnb in 2007, it was just 3 airbeds at their home.
So how did it grow to 1.5 million reservations in less than 3 years?
We can’t talk about Airbnb and not mention how they got their initial $40k funding.
It is 2008, and the presidential elections were on their way, Joe and Brian were drowning in credit card debt and needed a way out.
The solution: selling Barack Obama and John McCain-themed cereal boxes at $40 each. Why would anyone pay $40 for a cereal box? Those were limited edition boxes. They made 500 of each. And just like that, they made $40 k!
Seeding The Platform
How did Airbnb convince people to stay in strangers' houses?
They launched in cities with big events, where hotel rooms were either fully booked or too pricey, leaving travelers with no option but to try Airbnb.
They had a brilliant PR strategy to introduce their service to travelers.
At first, big media outlets didn’t pay attention to Airbnb, so they went to local blogs when launching in new cities. Then, they reached out to local newspapers and soon got covered by CNN and TechCrunch.
Creating The Perfect Experience
Airbnb managed to bring in customers but struggled to retain them. To grow, they had to step up their game for both hosts and guests.
In Spring 2009, Airbnb joined Y Combinator. Paul Graham (Y Combinator’s cofounder) advised them to meet their hosts in New York where they had the most users.
They offered the hosts free professional photos to get them to talk.
This visit helped them identify the hosts' pain points. They started fixing them one by one, which helped them create a roadmap for the platform.
To improve the guest experience, Brian started by asking "What can we do, not to make this better, but to make you tell everyone about it?"
He created different levels of experiences with star ratings:
1-star: you arrive at your Airbnb and no one is there.
5-star: someone welcomes you and lets you in, nothing special.
11-star: Elon Musk picks you up and tells you "you're going to space".
The goal was not to create the 11-star experience but to push the limits and scale back to the best possible one.
Airbnb even hired a Pixar illustrator to improve the experience.
Anyway, within 2 years, the founders went from selling cereal boxes to keep the company alive to making over 1.5 million reservations and raising funding at a $1 billion valuation!