Need an old Boeing 727 for an overnight stay in Costa Rica, or maybe just a parking space in France? Who ya gonna call? How about a global rental community. Learn how three San Francisco entrepreneurs went from renting out their apartment to renting out castles, Igloos and Boeing 727s.
They bought some air mattresses and offered them up as overnight accommodations with breakfast for $80 a night. They called it Airbed and Breakfast! Airbnb for short.
Cheap accommodations are hard to find in a place like San Francisco, and the experiment went well. They were quickly inspired to expand their online rental offerings, and brought in a third partner — Nathan Blecharczyk.
The three amigos attracted investors. And with a cool, well-designed website, they sought to become a trusted community marketplace for people to list and book unique accommodations from around the world. They made money right from the start. Low commissions, distinctive rentals, and offerings at every price point drove their success. People quickly discovered you could rent everything from tree houses to medieval castles!
Within 3 years they had reported revenues of $500 million.
Like a lot of companies, they learned from their mistakes. After some controversy surrounding an Airbnb user who had her apartment ransacked by a renter in 2011, Airbnb went to great lengths to make it right, and to protect its users from similar calamities in the future. The biggest step they took was guaranteeing every person renting out their home a $50,000 insurance policy against vandalism and theft.
For most users, that bit of added protection seemed to do the trick. Today, Airbnb is on the web in 11 languages, does 75% of its business outside the U.S. and has 5 million nights booked.
But as Airbnb gets more and more successful, its more traditional competitors are taking note. As part of the recent “sharing economy” boom– a $26 billion dollar movement that has been pitting amateurs and non-specialists against major corporations who have traditionally dominated their industries– Airbnb is causing quite a stir. Regulators all over are feeling pressure from the hospitality industry to put a stop to Airbnb. Just as ride-sharing companies like Uber and Lyft have been accused of running unregulated taxi services, Airbnb and its users have been facing legal scrutiny. One East Village resident was recently found guilty of “effectively running an illegal hotel” by a New York judge.
The truth is that Airbnb, and other companies like it, are currently operating in a legal gray area. This is the first time in history that the technology has been advanced, connected, and ubiquitous enough to make such services possible. As such, there aren’t necessarily laws in place to regulate this new mini-economy. Airbnb co-founder Joe Gebbia is quick to point out that this isn’t the first time a disruptive product has been met with dramatic reactions: “When the car was introduced in 1908, cities tried to outlaw cars. Remember that? Trying to make cars illegal,and forcing people to go back to horse and buggy, that seems so laughable, doesn’t it?”
All in all, Gebbia is optimistic about the regulators and politicians who may hold the future of his company in their hands. “When policy makers start to really grasp the potential of the sharing economy in their city, they are intrigued to learn more about how it can help them.” Gebbia continues, “We can talk about the social benefits all day, policy makers love to hear that, but they also want to know ‘what’s the bottom line here?’ When they start to realise the economic impact that guests bring to their neighbourhood, they want to figure out how to make it work.”
Brian Chesky, Joe Gebbia and Nathan Blecharczyk exemplify an axiom featured on our website: Think unique – Intentionally go against the grain.
Airbnb. Unique online rentals. Now Why Didn’t I Think of That?