How Experience-Led Growth Catapulted Airbnb to Unicorn Status
By João Alves
Before we begin, do me a favour…
...take your phone…
...enter your passcode to unlock it....
...and now, please hand it over to one of your colleagues, a friend, your partner, or a family member…
Hmm, yeah...perhaps not the best idea, is it?
Naturally, we’re all a bit hesitant to share some of our most private possessions - like our phones - even with people who are closest to us.
Now, just imagine opening up their houses to total strangers?!
That’s the type of complex problem that Airbnb has been trying to fix since its founding in 2008. It was by championing customer-centricity that propelled Airbnb to grow from a small startup that allows users to rent out their air mattresses, to today’s ubiquitous, full-service travel and hospitality pioneer.
As they say, desperation breeds innovation. That maxim holds true in Airbnb’s case.
Back in 2008, Brian Chesky and his friends had no money and were going into debt. Amidst the hardship and uncertainty, being scrappy and resourceful as they are, the co-founders transformed the living room of their San Francisco apartment into an [Air]Bed & Breakfast (reference to the air mattress that they used as the luxurious bed) in order to help pay the rent during a weekend where hotels were sold out for a design conference. And so, Airbnb was born (under the domain, airbedandbreakfast.com).
Airbnb has since come a long way. The company now has over 7 million listings in over 100,000 cities spread across 220+ countries around the world. And as of early September 2019, it reported top-line growth of over 1 billion in 2Q19. Designing and operating for customers certainly pays off.
Culture & Leadership: Making People Feel at Home
A whole book could be written about Airbnb’s corporate culture. In an attempt to synthesise all the learnings, it’s key to understand that their entire culture is tailored around their customers, both hosts and guests.
The hollistic customer-centricity is embedded in Airbnb’s culture and leadership.
Values - “Make it unique to you”
“What is different about you, that every single other person, if you could only tell them three or four things, you would want them to know about you." - Brian Chesky
Culture grows not from instant gratification or short-term impulses but a commitment to deeper, fundamental philosophical principles that drive people’s actions day in day out.
This is what Chesky credits Airbnb’s ability to scale successfully, and pioneer customer experience in the hospitality industry.
Airbnb’s make sure that every employee is aligned to the bigger, global mission through the 5 following core values:
- Champion the mission – making sure the value proposition for customers is delivered and the Airbnb is actually solving the problem of accommodation;
- Be a host – specific to Airbnb, uniting the whole company around thinking like and for the benefit of customers;
- Embrace the adventure – be curious, own and learn from mistakes, bring joy and optimising to grow, and demonstrate an ability to grow;
- Be a “cereal” entrepreneur – be a resourceful, relentless and creative self-starter;
- Every frame matters – irrationally paying attention to every detail, which is essential for consistent and exceptional customer experiences.
What these values signal is that every company, with their own identity, should build very clear, idiosyncratic values to unite their teams and clarify their mission. The effects of doing so seem not only to be unapparent at first sight, but also seem to compound in their effect over time.
Put more simply by the founder: “Don’t fuck up the culture.” – Brian Chesky
Pretty simple advice. Indispensable even.
Want to build and maintain a customer-centric culture? Focus on the details and don’t underestimate consistency: “Culture is a thousand things, a thousand times”. Easier said than done. But I’m sure we can all learn from this and apply to our own communities, teams and organizations.
Additionally, as a more concrete example of how Airbnb administers a customer-focused mindset throughout the organization is evident in the way the company organizes and incentivises its workforce itself is critical to their customer-centricity. For example, every new Airbnb employee shadows a support specialist. This gives them the necessary exposure to understand the challenges both guests and hosts face, and to acknowledge the customer’s voice as of paramount importance.
Following the concepts behind this set of core values can be effective in making sure we develop competitive advantages around hiring and retaining the best talent, building systems for how the company embraces opportunities and overcomes adversity, and in measuring and rewarding progress. Most importantly, it builds accountability in staying true to the long-term mission. All of this is essential to ensure the best possible customer experience for users. Afterall, this is essentially what customer success is all about.
It was by making sure that customer-focus was at the heart of everything it does, through clear and thoughtful communication and values, that helped the company succeed in solving trust issues when it comes to hospitality.
Design Thinking: The Foundation of Airbnb’s Tech Fuelled Growth
We live in a world dominated by design and aesthetics. Companies that are able to grasp the extent of how much design matters and that are able to navigate this ecosystem by making experiences swifter and more pleasant will win the hearts and minds of customers.
“The defining moments of the “Airbnb experience” happen in the real world — when they are travelling to their listing, being greeted by their host, settling into the listing, and exploring the destination. These are the moments that make or break the Airbnb experience, no matter how great we make our website.” – Lisa Qian, Data Scientist at Airbnb
That’s where Airbnb built their competitive advantage!
Airbnb’s operations are rooted in their philosophy of designing for trust. This philosophy is rooted in a focus on improving the customer experience - from the products it build for its users to perfecting the services of their hosts - which is what allowed the company to dominate the hospitality sector and surpass it’s incumbent competitors.
Evidence for this can be found in both internal and external examples - the former being the company's website and app, and the latter being the company’s process of ‘storyboarding’ new ideas for products and experiences.
Website & App Technology
The only part of the whole customer experience that Airbnb has full control over is the website. This means that the brand has to place complete trust and faith in the people from around the world who choose to rent their properties on the platform.
- Clean, minimalistic, very visual, user-friendly and personalized
- Powerfully intuitive UX design, through frictionless on-boarding, facile and guided profile creation, and engaging listing and booking experiences. Through the on-boarding process there are only five screens that users pass through, all governed by a conversational tone makes for a less generic and more engaging experience. This easy process is intensified by all the customized and personalized filters that the website and apps provide users, with calls to action at every point, making the UX not only intuitive and facile, but effective as a conversion tool.
- The main source of additional trust on the Airbnb network are the reviews from other guests who look like real people. Online reviews are tricky. The incentive to game them is just too high so platforms like Yelp and TripAdvisor frequently become victims of fake reviews. Airbnb has also suffered from this problem but initially took several measures to prevent this from happening.
Overall, Airbnb pioneers design thinking through it’s seamless, but powerful technology stack. The company promotes its innovative brand with an easy-to-use website and seamless mobile app, where users are welcomed with easy navigation as well as empowered to set communication preferences, including instantaneous texts or emails, to ensure quick, safe and reliable connections for booking management.
Storyboarding Customer Experience:
Customers don’t simply buy products or services. They experience, feel and choose between alternatives. Therefore, a company’s job is to create the right set of experiences for its customers. Those experiences have profound emotional effects that may be even more powerful than functional ones.
Airbnb’s founders understood this. While reading Walt Disney’s biography, Chesky learned about a strategy employed by Disney creators, where they created comic-book-like outlines to help them understand the vision and design of a respective narrative.
Chesky connected the dots and began to use storyboarding to understand their customers. They identified in great detail the main 45 different emotional moments for Airbnb hosts and guests.
“One thing that's really helped is a storyboard we created that depicts the different steps someone goes through from the time she first hears about Airbnb to the time she leaves post-visit feedback...We then had a roadmap for figuring out what a customer expects in each of those situations, what we were doing to meet those expectations and where we had an opportunity to create a "wow" moment.” - Nathan Blecharczyk
This was central to understanding their customers’ journey, and consequently, building their CX strategy. Airbnb storyboard strategy reflects the importance of the customer experience to scale sustainably.
Furthermore, storyboards serve as an organization tool, where team members can allocate resources efficiently and prevent anyone from overlooking crucial details.
Blecharczyk explains: “Whenever there's a question about what should be a priority, we ask ourselves which frame will this product or idea serve. It's a litmus test for all the possible opportunities and a focusing mechanism for the company...One product we created as a result is our Neighborhood Guides. Our goal was to provide context on what different neighborhoods are like so someone can decide whether one is right or wrong for him. The Neighborhood Guides, which we now have for every single neighborhood in a set of cities, are very visual and make people feel more comfortable in that frame of the Airbnb experience.”
Strategy & Tactics
Airbnb is clearly a forward-looking company that understands how mixing speed with the foresight to consolidate the right tools will drive innovation, and ultimately, growth.
Airbnb applies multiple methods to build a consistent, transparent system, which includes controlling reviews, measuring the correct metrics, as well as providing rewards and recognition, all to ensure exceptional experiences for both hosts and its guests users.
Recognizing the network effects of reviews:
Perhaps the most important element here are reviews, which is what guides users through the platform. Airbnb is able to moderate reviews - reviews only come from actual guests and hosts and only appear once both sides had their say. The significance of this in regard to their goal of building for trust cannot be underestimated. Furthermore, users have the option to send private feedback to hosts, which opens different avenues for useful contact between both sides of the marketplace, skipping any need for advertising or filtered writing. This freedom enhances trust and gives more options to deal with issues.
Measuring what matters:
As we all know, if we measure the wrong thing we’ll be sailing in the wrong direction. Airbnb is aware and makes sure to measure the essentials: hosts are measured on completed trips, commitment rate, response rate, and overall customer experience; and homes are evaluated on accuracy, communication, cleanliness, location, check-in, and value.
Watching the incentives:
Airbnb is also very mindful of incentives. The company rewards those hosts who perform exceptionally on reviews, specifically response rate, the number of five-star reviews, the number of hosting experiences, and commitment to the reservations. Those who achieve “Super Host” status obtain a badge displayed on their profile, a $100 travel coupon for the year, priority help desk support, as well as preliminary insight into product releases and events.
Long-term oriented, intelligent investing:
Regarding acquisitions, Airbnb has built its tech stack very strategically and positioned itself to truly improve and capitalize on successful users’ and hosts’ experiences. Granted, Airbnb has vast funding, so not much of the following can be modelled on. Nonetheless, what matters here is the foresight and strategic vision behind these acquisitions. Companies, regardless of size and stage, are making small daily investments into organization focus, tools, whatever they may be. We can all learn from how Airbnb allocates capital, which is always with the customer in mind first and foremost. We all need to search for the correct tools to solve for your critical pain points with maximum efficiency and least investment. This is a critical belief to buy-into in order to build a truly customer-centric, problem-solving culture within our respective organizations.
The customer-focused philosophies and tactics that propelled Airbnb to grow enviably, are subjects we should all aspire to study and learn from.
The very idea and business-model is customer-centric; a gig economy model allows for income opportunities and diversification.
That’s how Airbnb built this billion dollar brands with such loyal customers that we all work so hard to accomplish. Let’s take a page off of Airbnb’s book and put customers first - everywhere and always!