AirBnB: Business Model Development and Future Challenges

CRITICAL CASE ANALYSIS

AirBnB started out in 2008 by Brain Chesky and Joe Gebbia in San Francisco, California. As
they were unable to pay the rent so they came up with the idea of renting air mattress to make
money. AirBnB is basically community based two sided online platform.

First AirBnB modeled itself as a listing site by creating a website where others could also rent
their unutilized rooms or mattresses. At the start AirBnB focused on event based listings but after
customer feedback they allowed general listings as well. They used Craigslist to attract potential
customers (i-e Piggyback strategy). AirBnB also used the Producer Evangelism Strategy by
developing a website they have attracted the hosts who bring customers to the platform as well.
Also, AirBnB used The Big-Bang Adoption Strategy for the marketing of platform to increase
number of producers and users on its platform by establishing online public relations campaign
and get the coverage from blogs. Through its peer-to-peer marketing strategy it gained the trust
of the users. AirBnB also created a buzz through mass media outlets by delivering them the
promotional cereal boxes and they got the attention of Y-combinator for investment.

AirBnB constantly looked for customer convenience and worked for building host and renter
good relations. As explained by Chesky he himself reached out to the customers to know their
concerns and finds the ways to solve them. Also, they have taken some excellent steps towards
the marketing of the platform which gained them early investors. Social Media has also helped
the company in establishing social networking and trust. Also, AirBnB fostered the engagement
with stakeholders in order to provide better and more services to the customers. As they got
partnered with a startup called Vayable which offered travel guide services to the renters as well,
added a new segment of travelers into its existing customer base. AirBnB is very responsive
towards renters and hosts feedback and constantly upgraded their website with changes and
features to satisfy the needs of customers.

For two sided business model. The company has to create value for both producers and
customers. It is very important to build the trust on both sides. As AirBnB did by getting detailed
information about host and renters. As their business grew they constantly upgraded their
website to get the feedback and also they have offered instant-booking feature for trusted renters.
It is important look for the frequency of participation from the customer sides and also the
number of bookings done by particular host. Also, the two sided business model can be analyzed
by looking at the positive network effect in which both the host and renter are satisfied and had a
good interaction. Make your users and producers continuously participate on your platform by
giving them discounts to the renters and bonus points to the host who achieve a fare level of
visitors in particular time.