How AirBnb Is Different From Other Tech Startups
Another year another tech startup that seemingly comes out of nowhere and completely changes society. It is a story that has been told over and over again to the point where many of us feel like we could write the script for the next one that comes along. It typically goes something like this:
Company X decides to invite a new technology that completely revolutionizes the way that we as consumers do Y. The technology has a bumpy start at first but with a wave of advertising (both traditional and word of mouth) the technology begins to take off. There are some rules broken along the way, but before long the company is so powerful and influential that it seems that regulators can’t keep up anymore. Company X is headed for a multi-billion dollar valuation whenever it decides to go public.
That is the script, and it is not at all the story of tech darling Airbnb. The only thing that remains the same is the fact that Airbnb has revolutionized our lives.
Airbnb Did Not Create A Need, It Filled An Existing One
Companies from decades past always sought to find a need in the market and fill it themselves with an excellent product or service. If that company could stay a step or two ahead of the competition then they could ride their cash cow all the way to the bank. That was the way that things used to work. However, companies of today seem more eager to create a need from scratch and then just make consumers crave it. Airbnb preferred to stick to the old way of doing things.
What Airbnb founders noticed was that there was a need for affordable and flexible lodging for the lower and middle class citizen. He or she would have a limited budget on which to enjoy a vacation and it is important to not blow it all on a place to stay. That is where Airbnb comes in. They provide a variety of options for virtually any location on Earth for people of limited means to stay. This makes them innovative and also filling a need at the same time.
Airbnb Came Along At Just The Right Time
The company benefited from the economic climate in its early days. They benefited not because the economic climate was rosy but exactly the opposite. If that leaves you scratching your head let me explain.
The time period between about 2008 and 2015 was a period of sluggish growth in the economy. There was the massive recession of 2008 and 2009 followed by years of slow growth. People were pinching pennies left and right and trying to find alternative sources of income wherever they could. In steps Airbnb and the ability to rent out your home or at least some rooms in your home and make some money from it.
During this time people were cutting back on travel to be sure, but they were not completely eliminating it from their sources of activity and entertainment. Many were just cutting back of seeking out more affordable ways to travel. This played to Airbnb’s advantage as well since they could provide some low-cost alternatives to a traditional hotel room. All of these factors help fuel the growth of Airbnb in the early days.
Slashing Overhead And Focusing On Customer Experience
The traditional hotel chains had grown complacent in their status as industry leaders in the lodging industry. Not only did they not see the competition coming, but even once they did it was difficult for them to adjust.
Airbnb did not and does not have the overhead costs of a company like Mariott International for example. They don’t have the buildings nor the staff that a company like that has. They partner with the hundreds of thousands of Airbnb hosts and simply take a cut of the cost of the rental as their profit. It is a pretty straightforward business that gets right to stacking up those dollars at the bottom line.
There are things that Airbnb has to contend with that are not as big of headaches for the established players such as various regulations put up by cities to try to curtail the company. This is something that could have stopped a lesser company, but not Airbnb.
Getting Past Regulations
Many cities around the world were not too keen on the idea of Airbnb coming to their communities. They were concerned about an unregulated business like this resulting in people getting hurt or ripped off. They also worried about losing out on tax dollars that they typically charge to the traditional hotel companies for every room that those hotel companies book. That meant that many cities started to throw up regulations that could have stopped Airbnb right in its tracks.
Airbnb decided that they needed to work with these cities to help show them the value that they provided to people in the communities. They pointed to the fact that their hosts were able to earn significant incomes in many cases that could then be used to spend in that city (thus increases sales tax revenues). They also pointed out that having more people staying in Airbnb rooms in those various cities meant that there would be more tourists to the cities, and that could be a big win for those communities as well.
The company took this approach as well as simply making themselves incredibly popular with customers who then started to demand that Airbnb be let in. That was a nice one-two punch that resulted in Airbnb being larger and available in more cities than ever before.
Hosts Are Getting Better And More Handsomely Rewarded
The final point to this story is to say that it is working out well for everyone involved. The company is growing by leaps and bounds, and the hosts are appreciating the income that they can make. Many of the hosts are seeing a lot more revenue from their properties than ever before as many more people become familiar with the service and start to use it.
Hosts are getting better at what they do by providing small perks such as a bottle of wine or some tips and recommendations of great places to eat locally. This is all encouraged by the company and is helping make the guests feel more welcomed. Guests love it, hosts love it, and the company loves booking more and more stays.
The future of Airbnb looks very bright as the company is rumored to go public any time now. It could start bringing in a whole lot of money from new investors very soon, and that money could help provide for the next step in the growth of this intriguing company.
