Monday, February 11, 2019

How Airbnb Started and Two Lessons it Teaches Us

I came across this story while reading the book- Platform Revolution – How Networked Markets Are Transforming the Economy–and How to Make Them Work for You

Here is the summary:
1. In October 2007, there were two gentlemen named: Brian Chesky and Joe Gebbia. They were finding it difficult to pay their lofts rent. After much deliberation, they came up.with a novel idea.

2. There was a design conference happening in San Francisco. These guys put up an ad in the conference newsletter about the availability of a rented space at their loft. They positioned the ad as a unique opportunity to network with conference participants in a casual setting.

3. The ad fetched them 3 guests and 1000 USD, they were all set till next month. The first taste of success made them wonder if they can routinely offer such facility to other conferences. By not just lending their space but by also enabling others in the community who wished to lend their space.

4. Soon they had a website to help facilitate this interaction. And not so later they realized that the demand for such space isn't restricted to conferences but for general purpose stay. It was then they onboarded a new partner (Nathan Blecharczyk) to take care of business aspects.
Thus, the idea of Airbnb was born.

What learnings can one draw from this fascinating story ?

Hiring is the single biggest determinant of success of an enterprise:

One part of this story that struck with me was the hiring of Nathan Blecharczyk. Let me get to why in a moment and share a couple of stories from my recent interactions and work.

I recently met my previous boss and now a dear friend. He started his entrepreneurial stint not so long ago. We were discussing the challenges he was facing and he told me that he has already fired an employee from a key position. He admitted it was a hiring error. Good thing that this error got caught in the early days, bad thing that this error happened in first place.

One of the roles that I play in my organization is that of an innovation champion. One of the things that we teach the teams engaged in innovation projects is the team formation. Each team is expected to have a hacker (programmer), hipster (designer) and hustler(customer facing).In years of running these programs, I can safely conclude that the teams that get the right people in the right role early, emerge as having the most impact. The teams that get role formation wrong struggle to make fast enough progress.

Citing these examples and what Airbnb did with getting Nathan Blecharczyk on the team early, I can safely convey that hiring is the single most important decision that an organization can take. No idea remains the same as it was at the time of conception. All it takes is the right people with laser sharp focus to drive pivot and give idea a shape.

Vitamin vs Painkiller:

Was the solution that Airbnb chose to unveil- a vitamin or a painkiller?
The startups that find a customer pain point and attempt to solve them (aka painkiller) are often well-recognized than the startups that are solving for problems users don't know it exists (aka vitamins).

The case of Airbnb in that context is interesting because it solved founder's own problem. With some iterations and experiments, the founding team were able to extrapolate and figure out that the problem of affordable accommodation is somehow associated with most of the travelers. This was something traditional hotels with huge operations cost didn't even dare to solve.

Summary of learnings:

1. Hiring is single most important decision that any organization can undertake. Don't make mistake of treating hiring as just another activity.
2. To be successful at building a start-up, find a real customer pain. Make your solution outside-in (pain discovery first, solution later) and not inside-out (solution first, pain discovery later)

Image source:

#hiring #customerpain #rightpeople #rightproblem #airbnb #turningpaintoopportunity

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