Airbnb: how doing something that does not scale doubled weekly revenue
The idea
In October 2007, Brian Chesky and Joe Gebbia had a simple idea. During a design conference in San Francisco, hotels were hard to find, so they offered an air mattress in their living room to visitors. Nathan Blecharczyk joined as the third co-founder in 2008, and the website launched in August of that year.
Staying alive
Money was tight. In 2008 the founders raised about $30,000 by selling cereal named after the two presidential candidates, mostly at the Democratic National Convention. In January 2009 they joined Y Combinator, which gave them $20,000 in exchange for 6% of the company.
The stuck point
Weekly revenue was flat at about $200, split between three founders who had maxed out their credit cards. Joe Gebbia has said the growth curve looked like a flat line, not a hockey stick.
The experiment
While at Y Combinator, the team looked at the New York listings with Paul Graham to understand why the business was not growing. Gebbia noticed that many photos were poor, often taken with camera phones. Graham suggested a fix that does not scale: fly to New York, rent a camera and photograph the listings themselves. The founders did exactly that. They also stayed with users to understand their problems. Graham's advice was to go meet your people.
The result
According to Gebbia, weekly revenue doubled from $200 to $400, the first improvement in more than eight months. He has said the team had believed every solution had to be scalable, and this was the turning point.
What came after
By March 2009 the site reported 10,000 users and 2,500 listings. In April 2009 Airbnb raised a $600,000 seed round that included Sequoia Capital, and in November 2010 it raised a $7.2 million Series A from Greylock Partners and Sequoia Capital. The sources do not say that the photo experiment caused any investment. The order of events is clear, but many factors contributed to the company's success.
Read it through the Vane evidence ladder
- Compliment
- Casual interest
- Time commitment
- Reputation commitment
- Money commitment
The new revenue came from real guests paying real money for bookings, which is the strongest kind of evidence in the ladder. The numbers were small, so this shows that something worked, not that a large market exists. The next step is to repeat the result with more customers and more cities.
Why it worked, and how it connects to Vane
They looked at what customers actually saw.
Reviewing real listings with an advisor showed a specific problem: poor photos.
In Vane: Stage 2, Talk to customers and look at how they behave today
They went to where the customers were.
They flew to New York and stayed with users instead of guessing from a distance.
In Vane: Stage 2, interviews and patterns
They ran a small, cheap test.
Renting a camera and photographing listings by hand cost little and could be done fast.
In Vane: Stage 3, Test your offer
They measured with money.
Weekly revenue went from $200 to $400. Paid bookings are stronger evidence than opinions.
In Vane: Stage 3 and Stage 7, record the commitment and the revenue
They did the manual work before building systems.
They did not wait for a scalable solution. They learned first, then built.
In Vane: Stage 4, First version and first users
What to try in Vane
- Find one specific thing your customers struggle with by looking at what they actually do, not only what they say.
- Test a small fix by hand before you build anything, and write down the number you expect first.
- Record any paid result in Stage 3 as a Money commitment, then plan how to repeat it.
Sources
Evidence levels and the connections to Vane are our reading of this public story and do not reflect the company's own views. This company did not use Vane. Early validation was one of many factors in its success.