NB: This is a guest article by Drew Meyers of OhHeyWorld.
Airbnb is the darling poster child of the entire startup world right now. The company raised $200 million in its latest round, at a valuation of $2.5 billion.
Over the course of the last few months in San Francisco, Seattle, Boston, New York, and Washington DC, I’d venture a guess that Airbnb was mentioned in 95% of conversations I had related to tech startups.
In San Francisco, TaskRabbit is a close second — coming up in roughly 65% of conversations related to startups in the Bay Area (though I rarely heard their name on the East Coast).
Having booked with AirbnbÂ while I was in Barcelona this summer, and for a New York stay a few weeks ago, I absolutely love the service, and don’t plan on going back to hotel life any time soon.
For me, what I’m purchasing is not so much the room as it is the local experience and local expertise. Particularly when I’m abroad, I don’t want to even spend five minutes on the internet trying to find the nearest grocery market.
I’d rather get the answer from someone that lives there, in 20 seconds.
As with any successful web startup, there is a huge list of competitors that seems to grow by the month, all across the globe. Sites such as Wimdu, Roomorama, 9Flats, and Tripping. Plus the dozens of smaller regional players. (Quora thread about competitors here).
Airbnb is, by all accounts, killing it — booking roughly 200,000 rooms per month. That said, like any company, they do have weaknesses competitors can exploit.
Here is the strategic approach I’d take if I was one of their competitors and really wanted to take on AirbnbÂ (I am not and I do not):
- Focus on one specific country.
- Research the legalities of that country. There are a few cities where it’s illegal to rent your apartment short term (like NYC andÂ San Francisco). If it’s illegal in your proposed country or city, pick a new one and try again.
- Build a great product, suitable to that specific country (and language). Make sure there are some real values behind your company — it has to be more than “a copycat of Airbnb for country X”.
- Make sure the human component is highlighted prominently. Remember, the actual host is a huge part of the value for many people (at least those that book shared rooms).
- Book a 2-night stay with every single host on AirbnbÂ (in your country) — and tell them about how your service is better (hint: there better be a differentiator). Ask what you can do to make their experience better.
- Focus hard on driving awareness among travelers going to that region. Find them on Twitter, Facebook, Google or wherever else they may be lurking online.
- Do whatever it takes to ensure that inventory stays at least 20% than demand in your country of choice. If needed, pay a small bonus to get properties listed. You absolutely do not want to ever run into a scenario where someone searches on your site and can’t find any properties to rent.
- Do whatever it takes to get 100% of inventory (or as close as possible) in your country.
- Repeat steps 1-8 for between three and five additional countries.
- Build software tools for your hosts (and particularly the ones managing multiple units) to manage their entire business — accounting, inventory management, email marketing to touch past guests regularly, revenue reporting and predictions, and online presence (some super hosts have websites).
- Inventory management software needs to work with all booking sites, not just your own. Individuals are placing their rooms on multiple sites in an effort to remain fully booked — but they of course don’t want to update availability in multiple systems every time someone books.
Though I do not think AirbnbÂ has public API’s to hook to, I’m sure building the software from standard AirbnbÂ system emails wouldn’t be too hard for someone good at parsing emails.
A fair amount of work, yes, but not crazy complicated
Or, indeed, an independent software company should build a tool that manages inventory across all booking sites. Perhaps that company already exists and I just don’t know about it?
If so, I’m willing to bet a lot of money that Airbnb, or one of their competitors is going to come calling soon.
NB:Â This is a guest article by Drew Meyers ofÂ OhHeyWorld.