Case Study: Airbnb’s Instinct-Driven Approach to Strategy
In 2009, the now-wunderkind Airbnb was struggling.
They had a solid idea—skip the costly hotel and rent a room in someone's house—but people just weren’t booking rooms. Things looked dismal. Revenue flatlined at $200 per week and the founder’s credit cards were maxed out.
Identify the root of the problem.
Supply wasn’t the issue—the site had plenty of listings.
Awareness wasn’t the problem—web traffic was great.
Why weren’t people booking? The team stepped back and took time to analyze the issue.
While doing a deep dive in Airbnb search results in NYC, they noticed a pattern. Listings that performed well had great photos. Listings that performed poorly used badly shot and lit images captured by cell phones.
Was this the possible issue?
Posit a working theory.
The team formed a theory that the images were a significant issue.
Even though rooms were cheaper on Airbnb, people couldn’t see what they were paying for. Ultimately, it was a stranger’s house. It’s natural that people would ask: will I be safe? Will it be nice?
So they took action. They didn’t obsess over the data seeking to back up their hunch. They started moving on the problem immediately. The team traveled from SF to NYC, rented a camera, and captured well composed, properly lit, high-resolution images that could truly show off the properties. It was a scrappy experiment that wasn't suffocated by questions of scalability and long-term impact.
A week later, the results backed up their theory. Replacing amateur images with professional ones doubled their weekly revenue. This was the beginning of seeing Airbnb grow into what would eventually become an 82 billion dollar company.
Scale the solution.
After their scrappy experiment showed significant impact, it was time to scale the solution. The Airbnb team hired photographers in key locations to take high-quality images of listings at no charge to the owners.
Properties that were shot professionally booked 2.5x more frequently than those that weren’t. And today, Airbnb partners with more than a thousand photographers to make sure properties are represented in the best light.
It’s easy to connect the dots backwards. Any of us could say, “duh, better photos” but we have knowledge of the field and the service as it stands today. It’s never that easy standing at the other end of time.
Key takeaways:
Fast forward through many other challenges and solutions and it’s now common lexicon to “book an Airbnb.”
While the leadership team would face much bigger challenges (hello Covid), the fact remains, if they hadn’t overcome the right challenge at the right time, they likely wouldn’t have lived to fight another day.
Here are three great strategy lessons to learn from their story…
Identify the right problem. There were other problems and there would be more around the corner. But for that moment in time, customer trust was the biggest challenge preventing Airbnb from moving forward. Understand how your problems cascade and choose the right one to attack.
Trust your gut. In the age of data, trusting your intuition gets a bad rap. In reality, when you approach a decision with your intuition, your brain is partnering with your gut and its network of more than 100 million neurons to assess all your memories and past learnings to make the wisest decision given the context. Trust your gut.
Do the unscalable before the scalable. Most of us sit behind computers day after day. It’s easy to look for solutions in systems, processes, automations, or code. But often, our challenges are solved out from behind the computers; by searching for the human problem and a solution to match.
