The Airbnb Success Story

Thursday, March 28, 2019

Do you know how Airbnb started and what is the Airbnb success story? 

Let me take you on a journey about the necessity of innovation.

Before becoming one of the most successful services for accommodation rentals, Airbnb was a pet project of two young guys. Two graduates of a design college were trying to establish themselves in San Francisco. And in that endeavor, they started renting their room. The Airbnb success story has just begun.

Those who don’t know, Airbnb acts as a middleman for those who want to rent their home and those in search of cheap accommodation. And they charge a fee for it. That’s what the Airbnb business model is. Leigh Gallagher explored the Airbnb business and its success story and then wrote it down in her book – The Airbnb Story.

Leigh is the assistant managing editor at Fortune, and she also appears on many business programs on the TV. Her book tells the story behind a group of three people and how their small venture became one of the most used vacation rental apps. And it all happened within a decade!

Listen to the summary at Blinkist or listen to the book at Audible.

AirBed, cereal and the mentor

These two cereal boxes were the reason that Airbnb caught the attention of Y Combinator and became one of the success stories.
These two cereal boxes were the reason that Airbnb caught the attention of Y Combinator and became one of the success stories.

Two designer graduates – Brian Chesky and Joe Gebbia – were trying to get some job in San Francisco. And that was around October 2007. They didn’t even have enough for their house rent, and then, the conference of Industrial Designers Society of America happened.

The duo brainstormed ideas to monetize the shortage of hotel rooms during the event. So, they decided to rent out their apartment space at $80 per night. They had three air mattresses to start with, and the AirBed and Breakfast kicked off. Also, they put ads on various design blogs and got their three customers in the next few days.

Next, they tried to get a few house owners to rent their space for two upcoming events. And they hired an engineer, Nathan Blecharczyk to design the booking interface. This little initiative did get some press attention.

They were getting good traffic and decided to cash in the opportunity by offering collector edition cereal boxes. Obama O's and Cap’n McCain were now, the cereals provided at breakfast, and it caught the attention of Paul Graham. Paul is the founder of Y Combinator, a launch pad for startups and he gave this team a three-month of mentoring. The Airbnb success story wouldn't be the same if they haven't attracted his attention with this venture.

They came to New York City, spruced up the photographs and changed their venture’s name to Airbnb. Airbnb started growing after an investment of $585,000 from Sequoia. Greg McAdoo put his faith in their idea. The Airbnb success story was taking shape.

How Airbnb payment works?

Airbnb has a smart pricing model that offers insurance to both the guest and the host.
Airbnb has a smart pricing model that offers insurance to both the guest and the host.

People were flocking in to use this offbeat and adventurous accommodation alternative. And it was Airbnb’s mission to keep the human touch in their work. One of the Airbnb host obligations is to give their apartment a personal touch.

The first hired engineer came in 2009 and Chesky spent about six months to find that guy who supported the mission of Airbnb. By 2017, however, Airbnb employs around 2,500 people. It is present in 191 countries and has 3 million active offers. These numbers further elaborate on the Airbnb success story.

Airbnb has already experienced 140 million check-ins, and new users keep joining. And the Airbnb payment system has a role too in this success story.

There is no split payment option, and the customer pays the booking amount upfront for the number of nights. However, the money doesn’t go to the hosts right away. It’s on hold until the guests spend 24 hours at the property. It’s done so that if someone asks for a refund, Airbnb can oblige.

Read more: Find Cheap Accommodation Anywhere!

Also, Airbnb offers insurance to hosts, and the hosts can claim security deposits against damages. After an incident with a San Francisco host in June 2011, they introduced the user review system.

Along with that, came:

  • the 24-hour customer service hotline
  • user verification 
  • background checks

Racial and legal issues

Airbnb had some racial and legal problems due to the user experience of racial discrimination in some cases.
Airbnb had some racial and legal problems due to the user experience of racial discrimination in some cases.

But even then, the Airbnb success story didn’t run smooth. An assistant professor of business administration, Michael Luca, started a study on shared market platforms like Airbnb, Amazon, and eBay. And the study suggested that hosts weren’t charging as per the Airbnb pricing strategy.

The non-black hosts were charging about 12% more than the usual rates. Airbnb dismissed the results, but then Michael’s team brought another report suggesting discrimination based on people’s profiles.

An African-American businesswoman, Quirtina Crittenden, was rejected by the hosts multiple times. So, she changed her name to Tina and also, the profile photo, and hosts accepted her booking. This incident happened in around 2016. And many more started sharing their experience with racial discrimination.

So, Chesky made a public apology, and Airbnb brought user reviews in the spotlight instead of the profile photo. But that wasn’t the end of problems for Airbnb. It faced many legal issues regarding rental laws and regulations and also opposition from some residents.

Read more: How One of the Most Successful Companies Works?

With strangers in the neighborhood, residents were concerned about peace and safety. Moreover, some hosts even started using their vacant place as hotels. But, with time Airbnb sorted out everything and now is one of the biggest players in the hospitality industry. The user base is growing, and many are looking forward to using the services of Airbnb sometime soon.

The Airbnb success story shows that:

  • You can create a successful venture with a little creativity and innovation.
  • You don’t need a lot of money to start a business.
  • Making customers feel that you care is very important.

So, when are you coming up with something with that little idea wandering in your brain? 

Start early and work on it!

Abhijeet Kumar a freelance content writer for
We travel not to escape life, but for life not to escape us.