The secret to Airbnb's continued growth and success is down to more than perseverance. Airbnb's growth strategy stands out from the crowd, here's why.

1. 1/14
April 9, 2021
Airbnb’s Growth Strategy: How to Make $3.4B in ARR &
IPO During A Pandemic
process.st/airbnbs-growth-strategy
Molly Stovold
April 9, 2021
I’m writing a post about Airbnb, from an Airbnb.
Ironic yes, but not unlikely.
In 2019, Airbnb hosted 272 million bookings globally. And, in 2020, despite a global
pandemic restricting travel, Airbnb suffered relatively minimal losses of only 22%.
2020 was also the year Airbnb decided to go IPO, despite the global pandemic, a significant
drop in revenue, and global travel restrictions.
How did they manage it? A growth strategy like no other, that’s how.

2. 2/14
This Process Street blog post takes a deep dive into Airbnb’s growth strategy, how they got
where they are today, and where they could be going. To skip to a specific section of the post
click the appropriate link below:
Let’s start with where it all began, with 3 air beds.‫ی‬
The history of Airbnb: From Obama O’s to turning over $3.4B in
revenue

3. 3/14

4. 4/14
In 2007, at the beginning of the financial crisis, Airbnb started as a simple solution to a
pressing problem; co-founders Joe Gebbia and Brian Chesky couldn’t afford rent, so they
opened up their San Francisco apartment for guests to stay in. They soon realized they may
be onto something bigger than just a way to avoid eviction. So, along with their old
roommate, Nathan Blecharczyk, the trio started to build their idea into a hosting business.
That was 13 years ago.
Airbnb has evolved substantially since then, though it has not been a straightforward path to
success. They launched and relaunched a number of times (six to be exact). They found
themselves up to their ears in debt, rejected by multiple investors, and were close to flatlining
on more than one occasion.
The Airbnb story is one of perseverance and steadfastness. Opportunities and ideas were
found and grasped through innovation to drive massive growth. One of the wackier ideas
being their “Obama O’s” and “Cap’n Mcain’s” cereal.
The Obama O’s & Cap’n Mccain’s Story
To summarize the video. Obama O’s cereal sold out in record time, making the founders
around $30,000. Substantially more than they had ever made renting airbeds.
(Cap’n McCains didn’t sell out.)
Post Obama O’s
Perhaps the founders’ design background played a role in finding such innovative ideas, or
perhaps it was just sheer luck. Either way, their ability to adapt, adjust, and persevere
eventually began to work in their favor. By 2019, Joe, Brian, and Nathan had turned a once
floundering idea into a global business that operates in more than 34,000 cities in 91
countries. And, in December of 2020, they decided to go IPO, despite the global pandemic, a
22% drop in revenue, and global travel restrictions.
Typically startups prefer to go public during a phase of sustained economic growth and
overall stability to have the advantage of confidence within the market. Choosing to go IPO
during economic recessions, or in the midst of chaos: like World War II, natural disasters
(think: Australia bushfires of 2019), or during a… pandemic isn’t just abnormal, it’s unheard
of.
Airbnb’s decision to go public was radical.
Astonishingly, Airbnb’s radical move worked in their favor. Airbnb shares were originally
valued at $68. This doubled overnight to $146 and the current value per share (at the time of
writing) is $209. Sure, they experienced some fluctuations, but let’s not dwell on that.

5. 5/14
Today, Airbnb is more than air beds and breakfasts, Airbnb is used by millions of hosts and
guests globally not just for accommodation, but also for experiences. The following section
will take a closer look at Airbnb’s product and service offerings.
Airbnb’s growth startegy: Product breakdown
I’ve chosen to keep this section brief, as it’d take a whole post to fully cover the ins and out of
Airbnb’s product. For a full low-down check out Pooja Srinivasan’s post: The Tech Stack
Behind Airbnb
In essence, Airbnb operates an online marketplace for lodging, primarily homestays for
vacation rentals, and tourism activities, aptly named: Airbnb Experiences. Unlike the average
home, Airbnb does not own any of the properties listed on its app or website. Instead, it
profits by receiving a commission for every booking made via its platform.
What makes Airbnb
Airbnb is acloud-based application, which allows it to quickly scale and handle heavy
workloads. This is what the nifty app relies upon:
1. Programming languages: Ruby and Javascript.
2. Framework: Ruby on Rails. The RoR framework is well known for its awesome
capabilities that speed up development and, as a result, reduce costs and TTM (time to
market).
3. JavaScript framework: React. A JavaScript UI library, React, is a flexible and
efficient solution for building sleek user interfaces.
4. Web server: Nginx. A powerful HTTP and proxy server that speeds up content
delivery, while ensuring Airbnb is secure and scalable.
5. Key-value storage: Redis. Redis provides a scalable cache infrastructure and a
key/value database.
6. Cloud storage: Amazon S3, EBS. To store user data including user pictures, Airbnb
uses Amazon services.
7. Cloud hosting: Amazon EC2. An efficient tool for distributing incoming traffic. It
ensures that Airbnb’s system doesn’t go down during sudden traffic spikes or
unexpected traffic fluctuations.
8. Cloud database: Amazon RDS. Airbnb keeps its data in Amazon’s cloud relational
database.
9. Big data tools: Presto, Druid, Airpal. Airbnb has a ton of user data and therefore rely
on various instruments to store, process, analyze, and manage that data.
Airbnb Plus

6. 6/14
Airbnb Plus is an invite-only program that recognizes top hosts and places to stay on Airbnb.
Many Superhosts are in the Airbnb Plus program and Plus hosts are expected to maintain
Superhost-level standards of hospitality.
For those unfamiliar with the app, Superhosts are experienced hosts who provide an example
to other hosts, and extraordinary experiences for their guests. Once a host reaches Superhost
status, a badge will automatically appear on their listing and profile to help them be
identified.
Airbnb.org
Airbnb.org is a new non-profit that connects people to places to stay in times of crisis. It
provides emergency response to help provide shelter and homes to evacuees, relief workers,
refugees, asylum seekers, and more recently, frontline workers fighting the spread of COVID-
19.
Across the globe, more than 100,000 hosts have offered to open up their homes and have
provided accommodation to over 75,000 people in need. This is a great example of Airbnb
taking a strong social responsibility stance.
Airbnb Experiences
There are online and offline Airbnb experiences. The online experiences can be hosted from
anywhere through video, whereas in-person experiences are hosted in a specific location. The
experiences range from those relating to culture, art, music, nature, dining, and exploration
activities. Airbnb experiences, much like Airbnb stays, are hosted by people who have
something they wish to share; but, rather than sharing their home, they share an experience.
The Airbnb we all know
Hosts can use the site to rent out extra space in their house or apartment to travelers. Guests
can use Airbnb to find a place to stay, and/or experience something unique and special.
Airbnb claims to be:
“A trusted community marketplace for people to list, discover and book unique
accommodations around the world.” – Anne Sraders, How Does Airbnb Work for Hosts and
Travelers?
Disclaimer: For any of you reading this and thinking: “what about the downside of these
short-term rentals, such as the gentrification of local neighborhoods, etc.?” – I’ll cover that
later in the post.
Airbnb’s growth strategy: Overcoming “stranger equals danger”

7. 7/14
The idea of staying in a stranger’s home may have blown your mind a few years ago, but
today it’s not only a standard practice, it’s actually the preferred accommodation for tens of
millions of travelers across the world. And there’s one company to thank for that: Airbnb.
The question is, how did they manage it?
How did they convince both hosts to open up their homes to complete strangers, and also
persuade guests to stay with complete strangers? Especially given the current crisis of trust
we’re experiencing. Thanks to the prevalence of fake news, a general lack of faith in the
system, fear of globalization, and the consistent erosion of social values we’re more unlikely
to trust now than ever before.
In order to overcome this “crisis of trust” Airbnb has designed a whole system that
encourages its users to trust in the, and their product. This system is called the “hierarchy of
needs”:
Airbnb’s hierarchy of needs

8. 8/14
(Source)
In order for both hosts and guests to trust in Airbnb, they believe they must accomplish three
things: Safety, connection, and support. Let’s take a closer look at each of these.
Safety ‫ط‬
They use technology and machine learning to assess the risk of each and every
reservation before anything is confirmed. Globally, they conduct watchlist checks, and
in the US they run background checks on every host and guest. They also lead home
safety workshops, give out free smoke and carbon monoxide detectors, and provide
online safety cards with important emergency information. In terms of data protection,
they safeguard all accounts using multi-factor authentication, requiring additional
verification whenever a user logs in from a new device. Plus, they don’t release payment
to a host until the guest is checked in safely.

9. 9/14
Connection ĝ
Each and every person on Airbnb has a detailed profile page with helpful information
about themselves and their home. Hosts can also require that guests provide a
government ID, such as a passport or driver’s license, before booking their listing, and
then the host, in turn, must do so as well. Airbnb’s secure messaging tool allows hosts
and guests to get to know one another before requesting or approving a reservation.
Also, guests and hosts can publicly review each other after each stay, so future hosts
and guests can see those reviews and take them into consideration before making any
decisions.
Support Ӟ
Airbnb’s customer service, trust, and safety teams are on call 24/7 and are available in
11 different languages. Plus they offer rebooking assistance, refunds, reimbursements, a
Million Dollar Host Guarantee, and insurance programs, all to help make things right.
Although Airbnb can’t eliminate all risks for both hosts and guests, they clearly strive to
ensure that every host and guest have the best, and safest experience possible. But, needless
to say, sometimes things do go wrong. I wrote about some of the hurdles experienced by
Airbnb in this post: The Minimum Virtuous Product: Is the Move Fast & Break Things Era
Behind Us?
In terms of a percentage, the amount of stays that go bad is very few:
“Of our more than 30 million stays in 2016, significant property damage (claims reimbursed
under our Host Guarantee program for over $1,000) was reported in only 0.009% of stays. At
that rate, you could host a new reservation every single day for over 27 years without expecting
to file a significant property damage claim under our Host Guarantee.” – Nick Shapiro, Global
Head of Trust & Risk Management at Airbnb
Airbnb’s growth strategy: The sharing economy
Co-founder of Airbnb Joe Gebbia defines the sharing economy as “commerce with the
promise of human connection”.
The sharing economy disrupts old notions concerning consumption and ownership. You
don’t have to go to work to earn a living, and your “home” can become a source of income. As
can your car, your professional equipment … your pet.
In 2013, when Airbnb was scaling rapidly and very much in vogue, Forbes wrote an article
featuring Frederic Larson, a famous 63-year-old photographer. At the time, Larson had two
kids in college and was looking to fill the family’s piggy bank by any means possible. For
twelve days a month, he’d rent out his Marin County home on Airbnb for $100 a night, of
which he’d get $97. He also turned his Prius into a part-time taxi via the ride-sharing service
Lyft, and pocketed another $100 a night in the process.

10. 10/14
Larson leveraged his assets, took advantage of the sharing economy, and generated an
average of $3000 a month in revenue.
Airbnb is often described as the best-known example of the sharing economy, which to
expand on Joe Gebbia’s definition, consists of: Asset owners who use digital means (such as
Airbnb) to capitalize on the material assets they already own. While the consumers rent from
their peers rather than making a purchase themselves, in the case of Airbnb the “purchase”
would be a home.
What’s interesting here, however, is not that Airbnb found a way to provide people like
Larson with an income through the sharing economy. But, rather that they created an
entirely new market.
Airbnb created a whole new class of supply that had never before been experienced by guests
and hosts but also hadn’t been experienced by the market. This meant that Airbnb could
make the rules as they went along, with little to no regulator involvement, particularly in the
early years.
“Airbnb was able to enact much more platform-favorable payment terms versus the hotel
industry. Unlike Booking.com and the OTAs, guests pay Airbnb at the time of booking, and
Airbnb keeps that cash (including fees) until after check-in — which could occur weeks or even
months later.” – Acquired, The Complete History and Strategy of Airbnb
The creation of this new market created an immensely beneficial cash-flow dynamic for
Airbnb that allowed them to grow while using much less cash than would otherwise have
been required. The company created a unique experience, not just for the guests and hosts,
but also for the travel industry as a whole. In this sense, Airbnb can be seen as Disruptive
technology that shook up the travel and tourism industry.
Airbnb’s growth strategy: Promise & deliver on value for everyone
Airbnb relies on user-generated listings, content from its hosts, and most importantly, upon
reviews from both guests and hosts in order to build trust. User engagement is at the root of
Airbnb’s success and that is why they do what they can to keep their users happy. How do
they do that? They deliver on what they promise.
Let’s take a closer look at how Airbnb strives to deliver on value for both hosts and guests.
Hosts
Income generation: Hosts keep 97% of the income generated with each booking.
Convenient transactions: Payment collection, verification, and delivery.

11. 11/14
Insurance: Airbnb offers solutions and promises to mitigate and issues that may
arise, such as damage to a host’s property. This includes insurance with the protection
of up to $1,000,000 USD; the ability to set house rules that guests need to confirm
adherence to prior to booking (e.g. no parties, no smoking, pets, etc), and various other
measures.
Risk minimization: Verified ID forces members to link a Facebook/Google+ account
to their Airbnb profile and add personal information.
Reviews: Online reviews and ratings help hosts judge the reliability of their
counterparts.
Ease of joining the platform: Detailed guidance through the process, resources,
case studies, clarity around hosting requirements as well as support (live chat, email,
phone).
Management tools for hosts: Basically a mini reservation management system with
various features, such as: listing details, price settings, availability calendar, and more.
Controlled messaging: Communication between the host and the guest is tightly
moderated (no contact information exchange), and reporting features.
Guests
Large amount of choice & variety: Airbnb has everything from treehouses to
castles, and from hammocks to beachside penthouses. There are options on Airbnb that
you are unlikely to find elsewhere.
Often cheaper: You often get more for your money with Airbnb, even with the added
6 to 12% reservation fee. Airbnb stays often tend to be cheaper or provide more value
through their included amenities (e.g. kitchen, coffee machine, washing machine, etc).
Authentic stays & experiences: One of the earliest and still present propositions is
to experience the location more authentically.
Controlled messaging: Communication between the host and the guest is tightly
moderated (no contact information exchange), and reporting features.
Reviews: Online reviews and ratings help hosts judge the reliability of their
counterparts.
The future of Airbnb

12. 12/14
(Source)
“People will want options that are closer to home, safer, and more affordable. But people will
also yearn for something that feels like it’s been taken away from them — human connection.
When we started Airbnb, it was about belonging and connection. This crisis has sharpened our
focus to get back to our roots, back to the basics, back to what is truly special about Airbnb —
everyday people who host their homes and offer experiences.” – Brian Chesky, A Message from
Co-Founder and CEO Brian Chesky
Remember the definition given by Joe Gebbia of the sharing economy? “Commerce with the
promise of human connection”. As an outcome to the pandemic, the idea of human
connection has been turned upside down. What was once considered a positive, unifying, and
fundamental part of being human has now been reduced to face-masks and social distancing.
The latter of which does not bode well for Airbnb who relies entirely upon human
connection, be it through the sharing of one’s own space, or the sharing of an experience.
Specifically, Airbnb’s desire to go back to basics means they intend to return to focus on what
they did when they first started in 2007: Provide a platform where everyday people can earn
an income through hosting guests in their homes, or by hosting experiences.
This also seems troublesome to me for one key reason: More often than not, it is not
everyday people renting out their homes on Airbnb; but rather commercial Airbnb
operators, professionals such as brokers, real estate agencies, and multiple advertisers
renting multiple apartments.

13. 13/14
A 2019 research paper reveals that the more professional an Airbnb listing is, the higher
average monthly revenue it stands to make. By professional I’m referring to attributes that
reflect the host’s savvy when it comes to selling short-term rentals. Professional hosts ensure
they get “Superhost” status, enable instant booking, know the value of professional
photographs of their “homes”, and average a higher number of reviews per listing. All of
which result in increased monthly revenue.
Other players that do well from Airbnb are those who rent out entire homes. As you’d expect,
renting an entire home is more revenue than renting a Granny annex in your backyard. But,
where is the human connection in renting an entire home?
So, in summary, I see two key issues with Airbnb’s future plans:
How can they “go back to basics” when both the sharing economy and the travel
industry have completely changed over the last 13 years?
Basic no longer exists, and, at the moment, nor does travel.
It is becoming increasingly clear that sometimes it is actually the “everyday
people” who are suffering at the hands of the platform.
Professional hosts who treat their listings as de facto hotels rather than opportunities for
part-time ‘home sharing’ along with those that can afford to rent out their entire homes are
considerably more successful in the Airbnb marketplace. These practices cause long-term
rentals to be removed from the housing market and also drive up housing prices within
popular neighborhoods. Resulting in gentrification, and erosion of socio-cultural norms.
As such, when looking towards the future of Airbnb, if returning back to basics is the plan,
the basic arena would benefit from regulations. Policymakers and Airbnb itself should be
concerned about the comparable success of professional hosts, especially as the platform
tries to position itself as helping “everyday people”.
Conclusion
From Obama O’s to unicorn status, Airbnb’s road to success had been nothing short of
unique every step of the way.
Born out of the 2008 financial crisis, they fundamentally changed the nature of the travel
market and provide guests with more quality for less money. The platform has also facilitated
and assisted hosts to earn a substantial income.
That being said, the coronavirus outbreak will undoubtedly create a new world for the travel
industry and Airbnb will need to evolve to accommodate this. In their evolution, proper
consideration of the social ramifications of their product should be prioritized to mitigate
further gentrification and income inequality at the hands of the platform.

14. 14/14
I’ll sign off with a quote from co-founder Joe Gebbia:
“We didn’t invent anything new. Hospitality has been around forever. There’s been many other
websites like ours. So, why did ours eventually take off? Luck and timing aside, I’ve learned
that you can take the components of trust, and you can design for that. Design can overcome
our most deeply rooted stranger-danger bias. And that’s amazing to me. It blows my mind. I
think about this every time I see a red Miata go by.” – Co-founder Joe Gebbia, How Airbnb
Design For Trust
Further resources on growth
If you found this content interesting check out this post of hypergrowth featuring Airbnb and
Uber:
Hyper Growth: The Strategies You Need to Reach Unicorn Status
Or, for a look at how the likes of Slack, and Hubspot approach growth, have a read of this:
Build a Product That Sells Itself With Product-Led Growth