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.