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The Airbnb Story summary

Name: The Airbnb Story
Rating: 4.3 (58 reviews)
Author: Leigh Gallagher

Leigh Gallagher

How Three Ordinary Guys Disrupted an Industry, Made Billions . . . and Created Plenty of Controversy

4.3 (58 ratings)

21 mins

Brief summary

'The Airbnb Story' by Leigh Gallagher recounts the founding and growth of the now global platform, exploring the innovative and disruptive approach of its founders and the impact of their idea on the travel industry.

Topics

Entrepreneurial Stories Entrepreneurship Success Memoirs

Table of Contents

The Airbnb Story
Summary of 8 key ideas

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Key idea 1 of 8

What’s in it for me? Learn how Airbnb became the business it is today.

Most of us were taught as kids to never get into a stranger’s car, yet today we have no problem at all sleeping in a stranger’s house. Without Airbnb, this probably would not have become such a common occurrence.

For those unfamiliar with Airbnb, it’s a platform that helps people rent out spare rooms or whole apartments to tourists or other people visiting a city. Though a relatively new company, investors estimated its revenue for 2016 at $1.6 billion, and predict $2.8 billion for 2017, climbing to $8.5 billion by 2020.

So how did this company come about and how did it become a dominant player in the hospitality business? These blinks will tell you the story.

You will also find out

how cereal helped Airbnb in a big way;
why Airbnb spent six months finding their first employee; and
how Airbnb has tackled concerns about safety, discrimination and legality.

Airbnb began as a way for two broke designers to cover their rent.

In October of 2007, Brian Chesky and Joe Gebbia, both graduates of the Rhode Island School of Design, were trying to establish themselves in San Francisco. Despite their design degrees, the two young men were struggling to pay their monthly rent of $1,150, and were faced with a simple choice: make more money or go back to their hometowns.

While studying, the pair had learned that any problem can be overcome through creative thinking and, after some brainstorming, resolved to focus their energy on the upcoming conference of the Industrial Designers Society of America in San Francisco.

They knew there would be a shortage of hotel rooms during the event and decided to rent out some space in their apartment where people could sleep on one of their three air mattresses for $80 a night.

They called the venture AirBed & Breakfast and promoted it on design blogs with ads that focused on their apartment’s features, like its “design library.”

In just a few days, three customers had made bookings. From there, after receiving positive feedback, they started thinking about how to act as middlemen, using other people’s apartments to make money. Their first venues for this project were the South by Southwest festival in Austin, Texas and the 2008 Democratic National Convention, or DNC, in Denver, Colorado.

For both events, the designers wanted to bring in an engineer who would add a user-friendly interface to the operation, as well as the skills of a groundbreaking coder. For this role, the choice was Nathan Blecharczyk, with whom Gebbia had already worked.

But despite their crack squad, the trio had trouble getting people to open their homes up to strangers. They needed an in and, in the case of the DNC, decided to take out ads on small local blogs.

Amazingly, this move resulted in the quirky little service attracting press attention, with great results. In fact, after the New York Times ran an article on it, some 800 people signed up as hosts, resulting in 80 successful bookings.

Airbnb took off after launching a cereal-based marketing stunt and adopting greater flexibility.

The trio had experienced what looked like success as a result of their work around the DNC. But following the event, their website was getting no traffic. They were starting to get desperate.

Since they were technically offering a bed and breakfast service, they came up with the funny idea to serve Obama O’s and Cap’n McCain cereals. They simply reboxed cheap cereal and earned nearly $30,000 selling their new products as collectors’ items.

As Airbnb grew, the company stayed true to its mission, which was central to its success.

So, a couple of guys renting three blow-up mattresses in their San Francisco apartment had turned into thousands of people renting out their living spaces all over the United States. Airbnb had blossomed as an adventurous, offbeat, affordable alternative to traditional accommodation, and was especially attractive for millennials.

To maintain this success, Chesky, who stepped into the role of CEO, made it Airbnb’s mission to put a unique human exchange at the heart of everything the company did. For instance, the company required that each apartment have a kind and personal touch to it, whether it be a homemade welcome packet or a host being on site to greet their guest.

Designing a well-oiled payment and booking interface posed an early challenge for Airbnb.

Airbnb employs around 2,500 people, most of them in San Francisco. But what’s more impressive are the company’s millions of users worldwide.

At this point, there are 3 million active Airbnb offers in 191 countries, with only 20 percent of them in North America. Beyond that, since the company’s launch, 140 million guests have checked in. And finally, even after eight years of steady growth, the company is still expanding its user base, with 1.4 million new users joining per week at the end of 2016.

Safety issues once posed a major issue for Airbnb.

The majority of people operate with positive intentions, but there will always be those who don’t. So, while Airbnb takes safety very seriously, accidents do happen.

For instance, in June of 2011, the San Francisco apartment of an Airbnb host named EJ was trashed by renters. On her blog, she wrote that her spirit itself had been stolen, but she loved Airbnb and, even after the accident, still believed that 97 percent of users were honest.

Racial discrimination has rocked Airbnb.

In 2011, Michael Luca, an assistant professor of business administration at the Harvard Business School, began studying shared market platforms like Airbnb, Amazon and eBay.

All of these sites use personal profiles and user photographs to build trust, a fact that Luca thought might result in discrimination. As it turns out, he was right – and in the case of Airbnb, that discrimination is racially motivated.

As it has grown, Airbnb has faced legal hurdles.

In many places, it’s illegal to rent out apartments on a short-term basis and, as Airbnb scaled, it came up against a number of legal issues.

For instance, certain Airbnb listings violated local rental laws or building regulations. Luckily, the company was able to sign agreements with some municipalities to bring these rentals up to snuff. Such new frameworks for short-term rentals, including the right to tax them, were proposed in cities from Chicago to Paris.

With a rapidly expanding customer base and new products coming online, Airbnb’s future looks bright.

When Airbnb started out, it had a hard time overcoming the general suspicion people had about sleeping in a stranger’s home. But now, those days are long gone; the number of Airbnb users is rising every year and the company is set to become one of the biggest players in the hospitality industry.

Even so, the market research firm Cowen found in a survey that, while Airbnb is pretty big, only half of those polled knew about the company. More significantly, just 10 percent of those surveyed had used Airbnb.

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What is The Airbnb Story about?

The Airbnb Story (2017) tells the extraordinary tale behind the rise of Airbnb. These blinks describe how, within about a decade, three recent college graduates went from being behind on their rent to developing the most popular vacation accommodation platform in history.

Best quote from The Airbnb Story

The moment Sequoia funded us, the rocket ship took off, says Chesky.

—Leigh Gallagher

Who should read The Airbnb Story?

Tech whizzes with a breakthrough business idea
Investors interested in the start-up world
Avid travelers

About the Author

Leigh Gallagher is the assistant managing editor at Fortune. She is the host of Fortune Live and a regular guest on Marketplace, CBS This Morning, CNBC and other programs.

Categories with The Airbnb Story

Biography & Memoir Entrepreneurship

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