“If you launch and no one notices, you can keep launching. We kept launching, and people kept writing about it. We thought we’d just keep launching until we got customers.” – Chesky
Two lessons Airbnb founders learned from Paul Graham early on:
It’s better to have 100 users who love you than 1 million users who just like you.
Go to your customers
Chesky and Gebbia went door to door in NYC to meet with customers. They collected feedback, understood the customer’s pain points, organized meetups. They helped customers take pictures of their home to post on Airbnb….
Blecharczyk stayed back in SF to code the website.
Y Combinator invested 20% in Airbnb for 5% stake. Y Combinator provided coaching, mentoring, opportunities to meet future VCs.
Sequoia invested $585,000 and Youniversity invested $30,000 for 25% stake, which valued the company at $2.4 million. 3 founders then paid themselves a salary of $60,000 per year.
Chesky: the biggest enemy of startup is your own confidence and your own resolve.
Product/market fit = make something that people want
3 founders visited Zappos and other companies that wanted to emulate. They found out that they must have a set of values to guide the organization and a strong mission.
They composed their core values before hiring a first employee.
Interview process was intense. The 3rd engineer had to do 2 phone screens, in-person interviews with engineers #1 and #2 before meeting with Blecharczyk. After that, he met with Chesky and Gebbia. Before a decision was made, he had to come back twice to do a series of one-on-one with every person in the office.
The total of interview time was 15 hours. Then, he was given a timed three-hour take-home coding challenge.
The company grew to 25 people in summer of 2010 working in the 3-bedroom apartment.
Airbnb would hold the fee for 24 hours after the guest stay before releasing it to the host in order to ensure that everything is as expected by the guest.
Airbnb was emphatic about certain things from the start: users are never more than 3 clicks away from a booking, user experience is frictionless and easy.
Chesky and Gebbia focused on the look, simplicity, and overall experience of the website.
Issues that Airbnb solved:
Payment system to enable seamless experience of paying for rooms and releasing payment to hosts.
24/7 customer support
Search: matching the guest and the host so that both the guest and the host would not just like but like so much that both would use the platform again and would tell their friends.
Airbnb faced customer complaints about guests damaging the host’s belongings. The founders were advised to be careful in responding. They kept quiet and let the complaints surface. Finally, Chesky decided that he must stop managing the outcome and manage the situation in accordance with the company’s values.
Airbnb issued an insurance policy for the host of $1 million.
Airbnb also uses the classic marketing technique: giving hosts different statuses as rewards for their good behaviors.
Review system: users can only review after they pay. Host and user won’t see each other’s review for 24 hours.
Hosts and users can’t see phone number and address until a host accepted the request and reservation has been booked.
Don’t wait for a problem. If you want to work with a city, you should get to know a city. If you go there first and you come with the best of intentions, you could end up with a partnership. If a city comes to you, you could have many many years of potential conflicts.
If people like what you build, everything is a solvable problem with the application of smart people, time, and money. What you can’t solve for is if you built something nobody wants.
There are always good mentors at anytime. When Chesky was unemployed, he was just as shameless.
Chesky is a learning machine with extreme level of curiosity. Chesky constantly takes notes.
Chesky writes down what he learned during the week and sends an email to his staff to share. It becomes his management tool.
How to get your staff to play at the next level: you can’t really ask them to work harder when they are already tired but you can ask them to massively up-level their thinking.
Chesky is driven by a calling rather than fame or money. Buffett: Chesky would be doing what he’s doing if he didn’t get paid a dime for it.
Reference: The Airbnb Story: How Three Ordinary Guys Disrupted an Industry, Made Billions . . . and Created Plenty of Controversy by Leigh Gallagher