Case Study: Airbnb
In this series of case studies we are looking at widely known companies in the tech industry. In the last post I looked at Slack, and here I will be exploring Airbnb. The goal is to understand the values that underlie each company, as well as the dynamics that they enforce. Take a look at the intro to the first case study if you would like further insight into my approach.
Description
Airbnb is an online platform that allows people to rent short term accommodation. This ranges from regular people with a spare bedroom, to property management firms who lease multiple rentals. However, the platform has expanded by partnering with car rental services, restaurants, entertainment and tour sites, among others to become an all-in-one travel site. They brand themselves as an online ‘travel community’, allowing guests to have a local experience in exotic locations.
Impulse
The original idea for the company began in 2007 with roommates Brian Chesky and Joe Gebbia. They had recently moved to San francisco and were looking for interesting opportunities. Chesky, a graduate of the Rhode Island School of Design, noticed that all of the hotel rooms in San francisco were booked due to a local design conference. The two friends saw this as an opportunity and decided to host guests in their apartment for the weekend.
They bought three air mattresses and Airbnb was born. Though this is a nice founding anecdote, the two friends had been looking for a good startup idea for a while, so when the moment presented itself, they were conditioned to view it from potential business perspective.
Manifestation
The idea did not really take off for another two or three years. The friends went through many different models before the company became successful. In fact, their first round of funding was a creative plea of slight desperation. A fellow RISD alum printed 1,000 exclusively designed cereal boxes that they sent to hosts so that they could fulfil the ‘bnb’ part of the brand. This was in 2008, and two options were Obama O’s and Cap’n McCains. This made them their first $30,000 upon which they have built a company worth $31b in 2019.
Shortly after the cereal box adventure, they were noticed by VC Paul Graham, and invited to join Y Combinator, a prestigious start-up accelerator. They were famously rejected many times even after joining Y Combinator, but by 2009 they had a seed investment of $600,000 from Sequoia Capital. By 2011 they had reached 89 countries, and 1 million nights booked.
Brand
Brian Chesky has done a valiant job at marketing Airbnb as a community of people interested in creating a home away from home, where travelers feel that they really ‘belong’. He talks about trust, sharing, and creating a more open world space. In the era of hotels most people would rarely see the normal aspects of life in a foreign location. They would have a highly catered and curated experience. Airbnb offers a middle ground in which many can experience a more residential life-style, at a cost much lower than hotels.
However, Chesky’s very ‘green’ image of Airbnb does warrant some prodding. He claims that this world community can be created simply by renting rooms and homes. Hosts are not even required to meet their guests. There is a decisive difference between the image that Airbnb presents, and the reality that users experience. Most of the time, when you rent an Airbnb, it is not much more than what you would experience at a hotel. The personal touch that the company promises is not enforced, and I think we would find it strange if it was.
This is not to say that Airbnb fails in all of it’s promises, but I wonder whether a company like Airbnb, whose very business model is a commercialization of shared space, can ever succeed in creating a more empathetic ‘open-world-space’.
Struggles/ Disruptions
Throughout this success story are thousands of stories of struggle and frustration. I am talking about the neighbourhoods, communities, and cities that Airbnb has influenced.
While Airbnb has made travel more accessible, it has also contributed to rising rent and evictions. Communities must contend with the “hotelization” and gentrification of their neighbourhoods as Airbnbers move in and leave little space for anyone else. This affects some of the most vulnerable neighbourhoods which struggle for representation and resources. The company often pretends that everybody benefits from their platform. However, people who can’t find housing, live in cramped conditions, don’t own their flats, or can’t rent them, are not simply excluded from the benefits of Airbnb, but are often harmed.
Accountability and Bias
Another unexpected outcome of Airbnb’s massive growth is a sense of unaccountability when it comes to user experience. In a recent medium post, Jackson Cunningham explains how he was banned from Airbnb without explanation. Airbnb holds the right to make hard and cold decisions about who uses the platform and who doesn’t, and can enforce these decisions at any time. There is no appeal process, and you are blocked from communicating with the company, so even if there was a mistake, you’re out of luck.
This power can be used well. For example, if a host denies accommodation due to race, or if a guest ruins an apartment. However, in the case of Cunningham the reasons were much more obscure and possibly incorrect. When an instance like this occurs, it forces us to wonder how large corporations can be held accountable for their decisions, especially when they dominate an industry.
Looking forward, we might ask how Airbnb is responding to criticism? How much do they care about their external influence on communities, cities, or even individuals? How much do they feel the need to explain their actions to the outside world?
Airbnb has implemented policies to address user concerns, such as comprehensive insurance policies to cover hosts in case of damage, and practices which attempt to reduce racial bias. In some cities they have begun to pay hotel tax, and have also shared portions of their data with local governments. This data allows officials to understand and react appropriately to Airbnb’s influence in the community. However, the now massive tech company could be doing a lot more, for example they have been rather vague about how their policies will actually succeed at reducing racial bias, and though they claim to be working in concord with local governments, they continue to enable gentrification.
Another Option: Fairbnb
A recent startup called Fairbnb has decided to tackle some of the issues that Airbnb creates. Their mission is to create a platform that serves a similar purpose as Airbnb, while investing profits back into the community. The company would be cooperatively owned by the users, allow members to vote on how the profits are used.
Fairbnb highlights a new trend of ethical “knock-offs” of commercial services. When we take couchsurfing as a starting point, and Fairbnb as an endpoint, we can see an interesting evolution from a social exchange, through to a market exchange, and finally ending up at something which takes a little bit of both. It’s unlikely that Fairbnb will be seriously competitive with Airbnb any time soon, due to its comparative lack of funding, however, it highlights the possibility for a market based product whose core vision is embedded in social responsibility.
Digital dynamics
In my first series of articles I explored the theoretical framework of potential for the digital age, and attempted to map where we are coming from and where we could go. In the 2nd part I explored the digital dynamics that have emerged both in the individual as well as in cultures and companies through the implementation of digital technologies. I talked about 9 technological drivers adapted and supplemented from Kevin Kelly’s book The Inevitable (2016) which help us understand this new cultural era:
- Decentralization
- Sharing
- Continuous becoming
- Flowing
- Assessing/ Open
- Tracking
- Remixing
- Cognification/ AI
- Global Awareness
The list above shows the 9 digital dynamics. You can find a further description of them in part 2. However, at the moment I will focus on the 4 emboldened dynamics which are identified as being particularly relevant for Airbnb, though the company does partake in all of the dynamics to some extent.
Airbnb has decentralized the hotel industry and put much of the profit of accommodation into the hands of regular people. According to Business Insider, the home-sharing platform — which has offerings in 191 countries — outstrips Marriott International, Hilton Worldwide, Intercontinental Hotel Group, Wyndham Worldwide and Accor Hotel Group, which have 3.9 m listings between them.
This vast decentralization has played a major role in the development of the ‘sharing economy’, along with companies like Uber and Lyft. This kind of sharing is not necessarily new. Previously, services like Couchsurfing, (a platform that started already in 2004, and offers similar accommodation options but free of charge) could quench a similar need, but the defining difference is the exchange of money. This move from a social to a market exchange might suggest that real ‘sharing’ is not happening because it is not freely given.
Whatever way you look at it, the sharing economy has accomplished a much larger user base than platforms like couchsurfing ever has. Perhaps the exchange of money guarantees better quality, or increases our ability to trust a stranger. Either way, people are much more willing to trust a stranger with Airbnb than with couchsurfing — and the only real difference is money.
The last trend I want to speak about is Global Awareness and Openness. As individual homes open all over the world to travelers, a less curated and potentially more authentic experience of a place becomes possible. Connections are made between host and guest which feel less professional.
This openness and accessibility leads not only to a greater amount of options, but a different mindset in the traveler. There is a feeling of trust established through the rating and review system, which enables people to take a risk which they most likely would not do without such a platform. This digital tool creates a space in which global movement and participation feels like a very real and present possibility.
Thoughts and Questions for the Future:
If Airbnb wants to move into the future with a sustainable and holistic model, what are some of the questions or concerns that they need to address?
- Racial bias on platform
- How will they work with cities and communities to ensure that they are not hogging desperately needed housing for short term use?
- Could they learn from Fairbnb and invest large amounts of their profit into community programs/ initiatives? What sort of pressure would be needed in order to make this happen?
- What is the potential for Airbnb to aid in humanitarian crisis and mass migration? Is this a responsibility or an opportunity? Airbnb has already taken some steps to do this by providing free accommodation to aid workers, why not to refugees? What kind of risks do they anticipate with offering housing to refugees and/or immigrants?
- Can sharing really occur on the market or is it only real sharing when it exists on a social economy rather than market exchange?
- What does inner work look like for Airbnb? Is attention to inner life reflected in their branding — their image of belonging etc. Or is this branding superficial?
