Why The Craigslist Hack is Only AirBnb’s Second Best Growth Hack

Our previous blogs touched on a step by step plan for early stage companies to get initial traction , and listed out some major customer acquisition channels that they may utilize to get that initial traction.

This blog is simply a quick attempt for us to analyze AirBnb’s early growth strategies (which is an overused case study TBH) and see if it echoes with the framework we had just posted in any ways.

TL;DR — Growth hacking does not always have to be a marketing behavior, as there are SO MANY MORE metrics related to growth than just traffic! This is why I disagree with many other articles online: although the craigslist hack is the most commonly discussed “Growth Hacking” technique implemented by AirBnb, the Photography act more closely correlates with the true essence of Growth Hacking. The qualitatively improvement of their listing’s photo quality led to the quantitative explosion of multiple key metrics on their platform: booking conversion, referral rate / viral coefficient, and traffic — which ended up acting as a keystone to their hockey stick growth later on.

Before starting on how they got traction, a few fundamental mechanisms should be stated out.

  1. Being a two sided marketplace, AirBnb had to solve the chicken or egg problem. They optimized one side first, so that growth on the other side was triggered.
  2. The growth strategy of the company is usually identified by its growth engine: Sticky, Viral, or Paid. Usually companies adopt a combination of all three but with one playing a dominant role.
  3. They had achieved two pre-requisites before hitting hockey stick growth: They verified Problem Solution Fit through their first few rentals (had a need, and got paid) ; and validated business models / unit economics (cash-flow positive).

In our second blog on popular launch channels, I identified the following major channels for most app launch campaigns:

Organic Growth

  • Organic Traffic: SEO, ASO, redirected traffic
  • Content Marketing and online presence
  • Community Engagement
  • Natural Growth / Referral / Virality
  • Traffic Hacks & Growth Hacking

Traditional Funnels:

  • Launch Platforms (product hunt, app store featuring etc…)
  • Press Release
  • Paid Advertisements
  • Third Party platforms
  • Partnerships

Now The AirBnb Story:

Comparing our findings to AirBnb’s growth strategies, we learned the following things:

Most people tend to claim the craigslist hack as the source of their success— but that’s only half (or even less) of the story.

It is true that by “integrating with Craigslist” (or redirecting craigslist vacation rental traffic to their own site through a few web hacks), and “poaching Craiglist visitors” (by setting up traps with automated emails), they were able to kickstart their initial traction on the Renter side.

However, this approach truly shined after 1 tipping point: when they offered free photography services to bring legitimate pictures to every listing in NYC, and optimized the crap out of their “contents”. (As shown with the chart below). As PG said, they “build a product that scaled, but did the things that didn’t.”

Looking back now — AirBnb focused their efforts on optimizing one key aspect: significantly increasing attractiveness of their listings. The qualitatively improvement of this one aspect on their website led to the quantitative explosion of multiple key metrics on their platform: booking conversion, referral rate / viral coefficient, and traffic - which ended up acting as a keystone to their hockey stick growth later on. In a nutshell, optimizing 1 metric or quality to boost other correlated metrics, is the essence of “Growth Hacking” (an over-used term by the internet nowadays). Growth hacking does not always have to be a marketing behavior, as there are SO MANY MORE metrics related to growth than just traffic! This is why I disagree with many other articles online: although the craigslist hack is the most commonly discussed “Growth Hacking” technique implemented by AirBnb, the Photography act more closely correlates with the true essence of Growth Hacking.

Secondly, as a result of their high quality travel related content, and incentivized referral program ($25/$75 travel credits for renters and hosts), natural growth seems to have contributed most of their traffic after initial growth hacks had been implemented. Metrics tracking and optimization definitely played a key role in this process — without optimized activation, conversion, and viral coefficient, organic growth would not have exploded and sustained.

Lastly, there are other factors that had allowed them to gain early traction, including:

  • Community building & engagements through meet-ups and events
  • Content marketing on travel materials
  • Early hacks and marketing strategies like the cereals during Obama’s campaign

However, these factors did not seem to contribute as much as the two mechanisms mentioned above. Although they are indeed proof to AirBnb’s heavy focus on organic traffic sources early on.

Relating back:

With all these listed, one can see that AirBnb (early stages) focused big on 3 growth channels I had listed above, which all belong to the organic side. (The traditional paid routes definitely came into play later down the road though.)

  • Organic Traffic (directed from craigslist)
  • Natural Growth
  • Marketing Hacks & Growth Hacking

The Viral Growth Engine played a dominant role, with the Paid Engine (more effective unit economics than hotels) and Sticky Engine (due to product market fit and good UX) coming second.

However, it is very possible and likely that they have transitioned toward the paid growth engine, with increased efforts on traditional funnels and paid channels as their business had matured and balance sheet improved.

Learning from this case? Organic traffic may be your best friend in your early stage, but growth engines are only temporary. Never be satisfied with a plan that has worked well for you, because a new plan will be required along every phase of your company.