This is a useful way to think about how markets/platforms evolve.
I have yet to use Airbnb. But it seems that the target customer has changed. I have been aware of them since they first showed up on Hacker News. They were pitched as renting an airbed where hotels are not a useful choice. That target customer is a demographic that I had aged out of before they started. If they were still marketing only to very young people willing to sleep on an airbed and not risk-averse to bedbugs, there would be a lot less disappointment. But of course the company wants to, as all do, grow to other customers and markets.
I wonder if the original investors always thought that they would try to compete with hotels for higher end customers as they do now.
What AirBnB missed was to include hotels in its listings, which would have allowed them to over a complete experience for travelers in general. booking.com started with hotels and included more AirBnB style listings.
Expanding into different niches like that is difficult. It's like Booking.com expanding into the camping market. They end up trying to shoehorn camping into the same database tables as hotel stays and it just becomes an abomination which misses many of the subtleties in the market.
Depends on the camp grounds. Those with specified and defined places it should be rather easy to do (Italy, Croatia, Germany are among those regions were you tend to have a lot those, France is a mixed bag and I haven't been to GB or Scandinavia recently). Those without defined places, that's gonna be difficult...
It changed when it turned into a big VC thing. All of the “Uber for X” models are fundamentally evil at scale. The founders vision is irrelevant to the investors need for return.
The business model is to grow until the market is saturated, and then become one of the 3-4 entities that dominate their niche. VRBO chalked out the “vacation home” scope, hotels do their thing, so AirBnb dabbles in everything, but owns the “shared” accommodation part of the market. While they advertise a treehouse in the rainforest or whatever, the socially problematic conversions of apartments to flop houses in locations without hotels ultimately drives the business.
Post-Google, I don't think there's any excuse for founders of marketplaces / platforms to ignore the ultimate metastasization of their business models.
If you are wildly successful (oh, to be so lucky), what will your company be forced to optimize?
Mid-years Amazon's radically generous customer service refunds and Etsy's seller revolt yanked their courses away from volume optimization for a few years... but it's their inevitable end state for boosting revenue. No public company can resist maximizing revenue by any means available, and especially when no other plausible alternatives are available.
So think really hard on how to set up a marketplace / platform with a business model that mixes in more user-aligned and sustainable goals? Looking at you, Apple...
This sounds like actually healthy productive places to exist and exchange might have to... exist outside of the realm of continuous growth by individuals motivated by ideology over profit.
The the need for cancer-like growth is really a driver of the worst behavior.
As a consumer of B2B services, I’m always amazed by the awful deals companies make to show revenue growth. One in particular a few years ago was particularly amazing. The sales dude was getting paid on revenue, and pushed through a deal that cost the company fortune. The entire sales chain of command retired and bought boats.
It started as being intended for VC, right? I remember YC being an investor and Paul Graham saying great things about the founders. Certainly they must have been counting on growth. Did they plan to just capture every airbed? Or to do to hotels what Uber did to taxis (both good and bad)?
All these (AirBNB, Uber, etc) e-companies do is take what's illegal, add "internet", and somehow is legal until the authorities can see through the shit-show.
Thank you for saying this. Sometimes I feel like I'm insane in that no one seems to acknowledge that many of these businesses are simply skirting real regulations because "internet" as you say so succinctly (e.g. PayPal skirting banking laws, Uber skirting Taxi laws, Amazon skirting tax laws etc.). Thankfully, it didn't/doesn't work in every country/case but it's apalling how often it did work.
btw. I'm all for interruption but please... it shouldn't be through these means (at least not on this scale).
Never forget "skirting consumer product safety regulations and trademark protections". Their entire retail business at this point is no more subject to regulation than buying "designer" handbags off some dude's street stand.
No, they hire the authorities, and the shit-show goes on forever. The gig is only up when they've passed their overvalued business on to late investors, who demand to be paid through strategic neglect of core functions, price rises to rational market values (or higher), and moonshot PR.
I am not asking about the founders. I agree we should be generous when considering their experience. I am asking about the investors. They put money in at some estimation of total addressable market.
These always remind me of the Stay Puft marshmallow man from Ghostbusters. Like the most innocuous thing ever becomes terrible at scale. Amazon, Uber, AirBnB, Facebook all seemed like reasonable to great ideas and were really neat at smaller scale. And once they grew they started wreaking havoc in new and unexpected ways.
It’s a good thought experiment for any startup - how could this cool thing that people like destroy the world if it became a paper clip maximizer?
Exactly, I was so optimistic that the only path was one of human enlightenment because of the internet's ability to scale up the distribution of information and allow groups to collaborate instantly.
> If they were still marketing only to very young people willing to sleep on an airbed and not risk-averse to bedbugs, there would be a lot less disappointment.
This would be fine if you were paying consummate prices. I’ve used AirBnB years back and for $20 a night you got about what you can expect.
What I don't get is ... where is the government in all this? As the article points out: the owners of the property clearly violate a lot of laws. So I hear violating the law gets you into "trouble with the law".
I once went to the German police over an illegal listing, after the owner got physical when I asked him to turn on the heat at night.
The police laughed at me and told me what I did wrong. Part of it was racism, but the other part of it was just laziness.
To actually get something to happen you have to send a letter to the general prosecutor, who then orders the police to investigate. This process takes months.
I have yet to use Airbnb. But it seems that the target customer has changed. I have been aware of them since they first showed up on Hacker News. They were pitched as renting an airbed where hotels are not a useful choice. That target customer is a demographic that I had aged out of before they started. If they were still marketing only to very young people willing to sleep on an airbed and not risk-averse to bedbugs, there would be a lot less disappointment. But of course the company wants to, as all do, grow to other customers and markets.
I wonder if the original investors always thought that they would try to compete with hotels for higher end customers as they do now.
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