You are currently browsing the monthly archive for August 2009.
Travel 2.0 is a crowded arena. But that of course doesn’t mean there’s no room for innovation as is the case with AirBnB. In the following interview with Joe Gebbia, learn about the humble beginnings of one of the hour’s most popular travel startup!
Allentrepreneur: Good to have you here with us Joe! First, tell us about yourself and the AirBnB team. Who does what and why?
Joe Gebbia: I’m one of three co-founders on the team along with Nathan Blecharczyk (developer) & Brian Chesky (biz dev/design). Together the three of us run Airbnb.com – the eBay of space. We’re an open platform that allows anyone to rent out extra space, from a futon to a full house, vacation rental to bed & breakfasts. Together the company has grown very quickly to include listings in 1120 cities and 82 countries. Each of us plays an important role, and like in most start ups, our roles overlap. Brian will work on a partnership deal, while I handle customer service, and Nate keeps the site’s architecture afloat. The team continues to grow as we ramp up certain areas of the company.
Allentrepreneur: Right after your “ah-ha” moment came when you realized the need for genuine hospitality and cheap rental, what ultimately convinced you that this was an idea worth persuing? What kind of market research did you undertake?
Joe Gebbia: We started the company by accident – in 2007 our rent went up for our San Francisco apartment and we had to figure out a way to bring in some extra income. There was a design conference coming to the city, but hotels were sold out. The size of our apartment could easily fit airbeds on the floor, so we decided to rent them out. We didn’t want to post on Craigslist because we felt it was too impersonal. Our entrepreneur instinct said “build your own site”. So we did. It wasn’t much of a site to start out – a couple pages, and pictures of our apartment. 3 people stayed with us, and we cooked them breakfast each morning. We became friends by the end, and they were grateful to have saved hundreds of dollars on their trip, and connect with actual people. We netted close to $1000!
After that first weekend when we hosted people on our airbeds, we received emails from all around the world asking when we would make the site available in place like Buenos Aires, London, and Japan. At that point we started to brainstorm what a larger, international version of the site would be. That was basically our market research. People told us what they wanted, so we set off to create it for them. Ultimately while solving our own problem, we were solving someone else’s problem too. We were at a point professionally where we were very ready to pursue our own idea. We were anxious though, like waiting in line for a roller coaster. We didn’t know exactly what was ahead, but we knew we were in for a ride.
Allentrepreneur: How was AirBnB funded?
Joe Gebbia: We used the money in our wallets, some credit cards, and small loan from our parents. Along the way we funded ourselves through the sales of a cereal we created around the time of the 2008 presidential election called Obama Os’ (www.obamaos.com). 500 boxes later, we had our rent and expenses paid for a few months. Not long after that, we were accepted into the Y-Combinator program. They provide a small amount of seed money to get your company to the next level. Since then, we’ve been a profitable operation.
Allentrepreneur: Which aspect of your business strategy would you say is more important at the moment and why?
Joe Gebbia: Awareness. We spent the last year figuring out the product, and filling our ‘shelves’ with awesome listings. The system works like a charm – you can have a listing live in less than 2 minutes here http://www.airbnb.com/airbeds/new, and the booking process isn’t far away from that on Hotels.com or other major travel site. With the operation in full tilt, our job is to let people know about the thousands of options that await them on Airbnb.
Allentrepreneur: As a user-generated website, what simple technique(s) did you and your co-founders use to reach out to potential travelers and space renters at first?
Joe Gebbia: Word of mouth has been very kind to us. We have an original idea, and really easy to use process that people like sharing with their family and friends. People feel comfortable using the site because they know we’re an email or phone call away. Our customer service is pretty fanatical. When they return from a trip and a friend asks how it went, the conversation is usually around how cool the apartment was that they rented through this web site called Airbnb.com.
The story that we tell has a very human element to it – people connecting online, meeting in person, being resourceful – that it garners press like this 2 page write-up in The Washington Post. Coverage like that or our piece in Time Magazine puts the idea in front of millions of people. Obviously not everyone who reads about us jumps onboard, but those articles do generate a significant amount of traffic and users.
Buyers want to go where the sellers are, and vice versa. The Airbnb marketplace is becoming that destination for property owners and sellers alike. As it grows, it organically attracts those buyers and sellers looking to connect.
Allentrepreneur: As with any business, there are a number of risks involved. One question that came to mind is how you would handle petty theft, or bad service for example. Does AirBnB take any level of responsibility?
Joe Gebbia: If you compare Airbnb to Craigslist, where thousands of people have been renting rooms long before us, you’ll find that we have a pretty transparent process. Messaging stays on the site, transactions are handled through our payments system, and we have a full paper trail of every reservation. Craigslist is quite anonymous. Our responsibility is in creating an environment where people feel comfortable disclosing as much information as possible about themselves, and their place. After that, it’s up to you and your comfort level whether you want to book or not. You can choose to book with someone who has reviews earned form our reputation system, or not. To prevent fraud, travelers pay us, and we hold the money until after check in. On the host end, they can charge a refundable security deposit.
Allentrepreneur: You recently applied and got accepted into Y Combinator. Can you share with us a little of your experience there as well as what motivated you into applying?
Joe Gebbia: I highly recommend Y-Combinator to companies interested in developing their site in a very focused and dedicated environment. Each week at dinner meet the who’s who of Silicon Valley, and we’re in the company of some really smart people. We applied due to the advice we received from another YC company. Brian, Nate, and I worked very hard together. The months during YC were some of the most intense, and consequently productive, of my life.
Allentrepreneur: You have recently decided to offer vacation rentals as a complementary service after being overwhelmed by suggestions and requests from your users. How important has been such feedbacks to the growth of your startup and which tools/techniques would you recommend using to keep track of them?
Joe Gebbia: Our site has developed primarily from user feedback, and user behavior that we observe. Y-Combinator has a simple motto, “Make something people want”. We’re in constant contact with our users, both from the office, and also out in the field. We’ll frequently go visit with them in cities all around the country. You can learn a lot by listening to their problems, and watching them use the site. It’s an open platform, so you’ll find people renting boats, coworking space, water villas, treehouses, and even a castle!
Allentrepreneur: It seems to me that AirBnB’s timing couldn’t be better, with more and more people looking not just for good experience but great value as well. What further innovations do you see coming to the peer-to-peer travel industry? How about AirBed and Tour Guide?
Joe Gebbia: It’s funny, as the economy gets worse, we see our traffic and reservations go up. It makes complete sense – we offer a compelling alternative to overpriced hotels, and a mechanism to earn substantial income for a resource you’re already paying for.
In regards to tour guides, people are already doing that. We have listings on Airbnb where you can join the host for skiing, surfing, food tasting, or a bike ride through the city. It’s an open platform, so people can get as creative as they want.
Allentrepreneur: Thanks for having us Ed! First, tell us what was the problem you were out to solve with a startup like Diddit?
Ed: Hi Tien, thanks for having us, we appreciate the opportunity to chat with you about Diddit. We set out to build a fun and engaging consumer Web site that in parallel could generate business value. From a consumer perspective, Diddit is a fun place to discover, aspire and share your passions. Simply check off experiences from our giant database of places to go and things to do that is organized into interest channels, or get recommendations and reviews for new experiences. Diddit is your engaging guide to a life well lived.
From a business perspective, Diddit is a social objects platform for the experience economy. Ludic Labs is building the world’s largest database of “things worth doing”, coupled with engaging, sticky social machinery around passion-point social objects. User interactions yield vast quantities of content, ratings, recommendations, and psychometric data around communities of interest.
Allentrepreneur: So if I’m not mistaken, Diddit is an innovative way to socialize your bucket list. You can not only list things you want to do (wannados) and things you did (diddits), but by exposing the content to a community of like-minded doers (!) this can easily culminate in helpful reccomendations. Was this always the plan or did the reccomendations part something of an afterthought?
Ed: We always envisioned Diddit as a place to discover interesting new things to do. In fact, we have used the expression “Amazon.com for your life” for that very reason. Diddit is a place to go and get recommendations based on what you have done and wanna do!
Allentrepreneur: What would you say are the main reasons that make the Diddit experience so addictive?
Ed: There are a few and they often happen in sequence – First, the experience of simply checking off things you have done is somewhat of a nostalgic experience. You start recalling all the great things you have done and that is a compelling reason to discover and share more experiences. Second, is what we refer to as social game play. You start looking for new things to check off because you are trying to build up an impressive list of life accomplishments either for your own gratification or because you have friends you are sharing your diddits with. You can level up in each of our over 20 channels of interest. For example, you can be in Top 10 % in Sports and Top 25% in Travel, etc. Finally, it is always fun to discover something new to do by either watching what other people like you are doing or based on our recommendations.
Allentrepreneur: While on the topic of community, what would you say makes Diddit an important player in a field dominated by the likes of Facebook and Twitter?
Ed: We are not a social network like Facebook, in fact we use Facebook and Twitter Connect because we hope our users will maintain their friend or follower lists on those respective properties. We are a social application or utility where our users share their diddits or wanna dos by tweeting or posting to their Facebook wall.
Allentrepreneur: Behind every great product is a great team. Can you tell us a bit about your co-workers and how important it is to find the right people for the job in a startup?
Ed: My co-founders and I all worked at a company called Inktomi (Yahoo! Search pre-Bing). Starting a new venture is a great adventure that requires a lot of trust and support. Working with people who fit that profile and are very skilled is extremely important. We are still a very small team and for the next year will grow slowly as we find the right people to fill roles required to take the product and business to the next level. And equally as important to sourcing the right people is letting go of people who do not fit or are ready for something new.
Allentrepreneur: I’ve read that Diddit was in private beta for six months before opening up. What can you tell us about your marketing strategy? Which methods did your startup use to engage and more importantly, retain users?
Ed: We used that time to build a registered user community and refine the user interactions on the site. In addition were building a database of social objects that the community revolves around. So it was much more a product and business strategy more so than an external marketing tactic.
Allentrepreneur: Diddit has a solid user base. Around 10, 000 people are now hopping around Diddit, checking things off. With such a growing user base, are there any plans to monetize the site other than advertising? Can you let us in on your business model plans?
Ed: We actually just passed 30K registered users and 100k unique monthly visitors! We are looking into both onsite and offsite monetization plans that are anchored around the database of social objects – think of it currently as a half million worthwhile things to do – story-worthy experiences for people. There are quite a few interesting business models we are exploring and testing right now that we will be talking more about in the fall.
Allentrepreneur: Finally, care to give us a preview of what we can expect from you guys in the near future? What benchmark can we expect from Diddit next?
Ed: We plan to have to have some interesting partner, database, and community engagement news in the fall. We will be continuing to drive both viral and SEO traffic to the site over the coming months and building the database. The next milestone will be to validate a business model based on leveraging those two things in conjunction with partners that we are working with. Please stay tuned for more on that in the coming months.
Thank you for the opportunity to share the Diddit story and plans with you today.