Is Airbnb Committing Suicide By Becoming Mainstream?
Is reimagining a brand’s purpose too much of a risk? Will Airbnb end up being the example of what not to do?
In terms of Silicon Valley success stories, there are a few company names that now serve as shorthand for global success. That is defined both in terms of brand recognition and revenue and is the kind of success every visionary startup founder vies for. One of those companies that have hit the jackpot is undoubtedly Airbnb, the vacation rental company founded in 2008 that reportedly completed $900 million in revenue during 2015.
Scaling To The Top
Part of the reason for Airbnb’s unparalleled success has been the fact that its business model is inherently scalable. The assets and resources to keep the service growing already exist. The proof of that is in the numbers. According to a report published by investment firm Cowen and Company, “in 2013, Airbnb hosts managed to lodge nine million guests. That number could soar to nearly half a billion in 2025.”
While the company has certainly hit a number of regulatory hurdles in cities across the world over all, they’ve managed to keep expanding at pace and in line with user demand. But Airbnb’s founder, Brian Chesky, appears not to be satisfied by that tremendous success. He’s expanding the platform to include something more.
More Than Just Accommodations
Earlier in November, at the company’s “Airbnb Open” conference, Chesky announced the launch of Airbnb Trips, which currently offer 500 curated experiences with local hosts in 12 cities. These currently include Los Angeles, San Francisco, Miami, Detroit, Havana, London, Paris, Florence, Nairobi, Cape Town, Tokyo and Seoul.
This may seem like a logical extension of Airbnb’s “belong anywhere” ethos and it obviously still fits into the umbrella of internet-enabled tourism for a millennial usership. However, the decision by Chesky to go this route has some serious implications for Airbnb’s future. As Vanity Fair notes, “If the service takes off, it could be what transforms Airbnb from a one-trick Web site into a platform (in Silicon Valley parlance) that eventually will allow individuals to sell all sorts of services, such as guided tours, musical outings, even car rides, which could put Airbnb in competition with Uber.”
Slice Of The Pie
Unlike many other tech companies, Airbnb doesn’t have a revenue problem. It’s cut of each host’s fee for renting out their home or apartment amasses equates to a large amount of revenue for the company. In other words, it’s not just a popular company in terms of eyeballs, it’s a profitable one too. The question is, then, why the company has felt the need to expand its offerings further. Is this just a vanity move that might indicate a troubling form of mission creep? Or will it further revolutionize the travel industry more than Airbnb has already done.
Taking The Risk
As Mashable wrote about the announcement, “This is also a radical change for the company. This way it opens up a new opportunity for people who don’t host guests in their homes to participate and make money off the platform…For now, experience is still somewhat of a gamble: it won’t be profitable for Airbnb or its hosts unless many people participate in the excursions. Still, Airbnb is banking it will pay off as the company looks to become more of a one-stop travel shop.”
Only time will tell if Airbnb is able to scale this service offering in the same way it managed to scale its rather more straightforward room rental service. After all, vetting an “experience” requires a little more work than simply making sure a listing offers the concrete things it says it does: a bed, wifi, sheets etc. While the new offering is surely innovative, it may not have the same properties in terms of scalability that we’ve seen from Airbnb in the past.