On a pleasant day in the fall of September 2014, when the daytime temperature hovered in the 70s (°F), our Des Moines office phone rang, and Eric Papcun, who was our Chief Experience Officer, picked up the call. A familiar voice greeted him, and he was thrilled because it came from Airbnb, San Francisco headquarters.

The next day Eric and I got on a call with Alex Beauchamp, who was the Head of Global Content and Social Media for Airbnb. We have worked with Alex in her previous avatars. Alex shared a few business problems she wanted to solve, and we started solving Airbnb’s problems one by one, and our relationship with Airbnb blossomed.

The work we did for Airbnb is close to my heart, not just because they are one of the leading companies in the world but because they are one of the greatest innovators of this century.


How I became part of the sharing economy

In the early years (2002-2006) of Pepper Square, I always stayed with friends and family when I traveled across the US. One day, I came across a transformative site called CouchSurfing.com. Members all over the globe offered up their couches for free to cash-strapped travelers like me.

It was the original sharing economy, except there was a lot more sharing in Couchsurfing’s version than there was economy. And that was the problem.

Without a way to properly support itself, the application staggered under the burden of its popularity. It nearly went out of business because of technical glitches, and its community struggled to maintain its value with the flood of new users. Raising venture funding just exacerbated the problem, triggering power struggles between long-time volunteers and new leadership.


Couchsurfing learned the hard way that sharing doesn’t scale easily. Can an organization founded on cooperation sustain itself in a capitalist world?

The story of Airbnb

In 2008, Airbnb was born, and it became one of the most inspiring companies of the twenty-first century, valued at $35 billion in 2019. How did it become a leader, and what separates it from the rest?

One thing is for sure: they are stubborn and persistent as hell. Every business is presented with challenges, and how the business navigates those challenges defines its success. Airbnb has been consistent at innovating in the face of roadblocks.

Airbnb streamlined an outdated, inefficient industry and maximized the utilization of traditional homes across all user bases covering continents.

Airbnb never stops looking for the right people

In early 2014, Chip Conley, a true visionary in the hotel industry, was appointed Airbnb’s Head of Global Hospitality. This move itself shows how mature Chesky is in his hiring decisions. He can take advice from a more seasoned veteran found in Conley and is a force to be reckoned with because of it. Looking from the outside, “I didn’t see Conley joining Airbnb’s team as feasible, but Airbnb’s idea was too good to pass up, and Conley saw an opportunity to fill a void in the hotel industry” says Adam Smith, author of The Bravest You.

Airbnb is exceptionally focused on its core principles

Airbnb has made its mission known. Hospitality along with creating experiences is their focus. They have even limited their entire mission to one sheet of paper, so it is easier to understand, more comfortable to execute, and simpler to train people. They know that when people are able to comprehend fully what their core values are, they can produce better results in the process.

The key to financial success was in part due to Airbnb’s pioneering the sharing economy. It is supported by the great tech ideas suitable for collaborative consumption to hack the standard growth pattern.

Airbnb has also been reasonably efficient at digitizing trust. We all know that it is a continuous process.

They gained market dominance in the short-term rental and home-sharing markets because it is more efficient than anyone else. High ideals are also the reason for the growth.

The main thing that differs Airbnb from others is you may easily generate money from your extra space and ability to discover thousands of interesting places to stay around the world. It makes the world’s local area as travel-friendly by using your mobile app.

Digital innovation Airbnb

Airbnb did two things well to earn their success

Airbnb was created with a focus on being user-friendly, and it took advantage of the referral loop to generate customers. The service is incredibly easy to navigate, and more often than not, their users become advocates for Airbnb. Their referral loop, which encouraged users to recommend friends to use Airbnb as hosts or guests, was a simple yet highly effective way of building their customer base in a very natural way.

Building the supply side

Airbnb has invested good time and money into building its supply well, which is often neglected by a lot of companies in “On-Demand Economy.”

In a sprint to achieve the “Customer Acquisition” targets, companies are not building good technological infra on the supply side, but they are just working on creating the demand metrics to look good. And who can forget the “Growth Hack” used by Airbnb to build their supply side?

Airbnb is successful because they make money on other peoples’ properties and make other people work for them. The only thing Airbnb provides is the technical infrastructure to make transactions between people (the guest and the host) possible.

User Experience is the key

In 2020, customer experience will overtake price and product as the key differentiator. What Airbnb got right is the User Experience (in which 90% of companies fail), both on the guest and the host side. The game-changer is the simplicity of their web and mobile app, which sets the standard for future innovators.

“To unleash innovation and meaningful results, you need room to make bold decisions, test and learn from mistakes, and importantly have the support of your team.”

Invest in Digital Innovation – use the best practices in design and technology to make your business more transparent, flexible, and efficient.

Research credits: Gigaom, Quora, Medium

Are you looking for an experience-driven digital solution for your product or service?
Author Muki Regunathan
24 years of entrepreneurial experience with a focus on design and technology. Muki has Invested in 19 start-ups with three successful exits. Over the last 20 years, Muki has worked with 350+ leading companies maximize their outcome with Digital Innovation. Enterprises, emerging companies, and startups partner with Pepper Square to solve their business problems with all things digital.

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