FROM $80 RENTAL PLAN TO A 113 BILLION DOLLAR COMPANY: SUCCESS STORY OF AIRBNB
5 Fantastic Facts About Airbnb:
- Airbnb stands for AirBedandBreakfast, conceptualizing the business by putting an air mattress in their living room while turning their apartment into a bed and breakfast.
- 34 cities around the world have Airbnb offices with more than 7 million Airbnb listings.
- Airbnb host demographics show that 56% of hosts are female, while 44% are male.
- Every second, approximately 6 people will have checked in as Airbnb guests, whereas millennials are the generation that uses Airbnb the most.
- Statistics from 2016 showed Airbnb had more listings than any hotel chain had rooms available around the world.
Introduction
Revolutionizing the hospitality industry, Airbnb is an online marketplace that connects people who want to rent out their homes with people who are looking for accommodations in specific locales. Prior to 2008, travelers would have likely booked a hotel or hostel for their trip to another town, many of these same people are opting for Airbnb.
How Airbnb Started
The $113 billion business started with the founders, then youngsters Brian Chesky and Joe Gebbiatrying trying to earn some extra dollars to pay their rent. Back in 2007, after noticing that most hotel rooms in New York City were mostly booked at high prices with New York being one of the most traveled cities in the world. They took this opportunity, bought a few airbeds, and quickly put up a site called “Air Bed and Breakfast.” The main concept was to offer the travelers a place to rest or sleep and have breakfast in the morning. They started to charge $80 per night. The idea was a success as the first Airbnb guests walked in a 30-year-old Indian man, a 35-year-old woman from Boston, and a 45-year-old father of four from Utah. After their first guests, Airbnb’s founders realized they were on to something big, Soon, Harvard graduate and technical architect Nathan Blecharczyk joined the team as the third co-founder. Although they faced rejection plenty of times at first, they believed in themselves and created their way to success after working hard to build a big business in the past nine years. A turning story of how they turned their idea to rent out an air mattress into a business that has become a tough competition for the whole hotel industry.
Story Behind the Name and Logo
The Airbnb co-founders Joe Gebbia and Brian Chesky came up with the name “Air Bed and Breakfast” for their new endeavor which is the combination of the words Air-Bed (Air Mattress) and Breakfast, as a reference to the air mattresses the guests would be staying on and the breakfast that will be provided to the guests alongside the sleeping accommodations.
Airbnb has successfully created a unique and attractive logo design that is not only easy to remember but has a meaning to the core mission and services of the company. The interesting-looking symbol in the current Airbnb logo design is actually a combination of four other symbols. The teardrop shape is meant to represent a person’s head, conveying the idea that Airbnb is a people-oriented company, the same teardrop shape also represents the location icon, associated with travels/destinations, whereas the inner teardrop shape of the logo is meant to represent two different things, for one, it stands for the “A” in Airbnb, mimicking the first letter in the name of the company, the heart-shaped design of the outward symbol represents a heart that conveys the idea of love and compassion. The logo and the name itself are easily recognizable in today/s world and act as a very useful tool for the company’s brand awareness.
First Model of Airbnb
The first model was exactly the initial idea that Airbnb is still working on. It started with nothing but a loft and three mattresses. Two friends were having issues with paying rent and needed income to make rent. And that’s how the idea was born, the idea to keep paying guests and of course to serve them BREAKFAST after a good night’s sleep. It was in 2007 and the friends were Joe Gebbia and Brian Chesky. They named it Air Bed and Breakfast, opened a website named airbedandbreakfast.com, and started the journey. They introduced themselves as a tour guide business and within the first few hours, they got guests from India, Boston, and Utah for $80 each.
Tough Time of Airbnb
The tough time for Airbnb was in the very recent time when the pandemic hit the world. COVID-19 shook the global travel industry and it was very visible to every business out there. In Airbnb, 2Q2020 revenues dropped by 67% and they were forced to lay off a quarter of their staff, discontinue all marketing, and all projects that weren’t in the main offering, the core concept of home-sharing.
At the time, Chesky raised an emergency $2 billion in debt and equity just to get through this storm caused by the Covid 19. And fortunately, the black clouds were slowly getting cleared as they entered the 3rd quarter of the year.
Future of Airbnb
Airbnb was already facing the hardest problems due to Covid but they bounced back and the bounce gained pace throughout the year just because of the vaccine that gave everyone hope, a hope to get back the life everyone was wanting. And the interesting thing was, people started using Airbnb in a different way. It was no longer for weekends and weddings only because millions of people shifted to remote work and remote life and the new normal was started.
Chesky, while being on a nationwide tour of Airbnb stays in an effort to “improve the experience” for customers and said he expects sustained adoption of remote work will create a new segment of working travelers.
“They can do what I can do — I’m running a pretty large company off of a laptop with another person’s WiFi in their home,” Chesky said on TechCheck. “If I can do my job from a house in Atlanta, that means a lot of people could travel all over the world and live, not just travel.”
Basically, Chesky’s plan is to capture this new segment and generate experiences and make customers feel like they’re not traveling to any temporary place, it’s the way of their living and the world is their living place.
Key milestones of Airbnb
2008: Along with Brian Chesky and Joseph Gebbia, Nathan Blecharczyk, Chesky’s former roommate, joined as the Chief Technology Officer and the third co-founder of the new venture, which they named AirBed & Breakfast.
The site Airbedandbreakfast.com officially launched on August 11, 2008.
2009: In January 2009, the company received $20,000 in venture funding from Y Combinator.
2010: In November 2010, it raised $7.2 million in a Series A round of funding led by Greylock Partners and Sequoia Capital.
2011: In October 2011, Airbnb established an office in London, its first international office.
At the 2011 South by Southwest conference, Airbnb won the “app” award.
2012: In June 2012, Airbnb announced its 10,000,000th night booked, doubling business in the previous five months.
2014: In April 2014, the company closed on an investment of $450 million by TPG Capital, with the company value estimated to be approximately $10 billion.
In July 2014, Airbnb revealed design revisions to the site and mobile app and introduced a new logo.
2015: In June 2015, Airbnb raised $1.5 billion in Series E funding led by General Atlantic, and joined by Hillhouse Capital Group, Tiger Management, Kleiner Perkins Caufield & Byers, GGV Capital, China Broadband Capital, and Horizons Ventures.
2016: Airbnb Experiences, launch: “one-of-a-kind activities hosted by locals.”
2018: Airbnb Plus, launch: a “tier of homes on Airbnb that have been personally verified for quality and comfort.”
2020: Airbnb announced its plans to go public 2020 on Thursday.
