
How Design Thinking Transformed Airbnb Into a Billion Dollar Business - ASquare
http://firstround.com/article/How-design-thinking-transformed-Airbnb-from-failing-startup-to-billion-dollar-business?utm_source=HackerNews&utm_medium=Anuj+Adhiya&utm_campaign=@anujadhiya
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Cookingboy
AirBnb is a billion dollar business now? I thought that usually refers to
revenue and not valuation, otherwise we'd call a bunch of startups without a
product "20 million dollar business".

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mikeyouse
In finance circles, when companies are referred to as "Million/Billion Dollar
Businesses" it's typically in terms of their market capitalization, which is
consistent with the OP's title.

Obviously we could quibble about the liquidity / depth of AirBnB's valuation,
but it's pretty safely into the billion+ market cap realm.

One example why it makes sense to use market cap. rather than revenue comes
from post-bankruptcy GM. When they re-IPOed in 2010, GM's market cap was
roughly $50B. However, in 2010, GM had $135B in revenue. Would anyone really
argue that GM is a "$130 Billion Business" when you could purchase the entire
firm for $50B?

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Cookingboy
Not always. When Wall Street say "iPhone is a x billion dollar business for
Apple" they refer to the revenue, not market share. When they say "SAAS is a X
billion dollar business" they mean revenue, not the combined market cap of all
SAAS companies.

But yes, I think it can be ambiguous.

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rmcfeeley
Would be more interested in "How Actively Breaking Existing Laws Transformed
Airbnb Into a 'Billion-Dollar' Business"

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EricDeb
When white-collar financial institutions break the law it's called the cost of
doing business. When hot startups break the law it's called disruption. When
poor, lower-class folks break the law it's called breaking the law.

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mrharrison
I like how their success story keeps changing. I think it was a TED interview
or something like that I heard a couple years ago of their success story.
Which was Paul Graham, convinced them to go meet their customers face to face
to learn their customers and form a personal relationship with them. Now it
seems to be bright pretty pictures.

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dang
This comment seems a little... prosecutorial.

Why should there be only one reason? It has been obvious for years that design
is a huge factor in Airbnb's success, and that it's a lot more than "bright
pretty pictures". That shit is hard and they nailed it. I'm sure they did some
other things too.

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dyeje
I feel like you're contradicting yourself here. Yes, there are probably more
than one reasons for their success. That is why focusing on one (design in
this case) is silly.

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mbesto
Slightly meta here - but I think everyone here (including myself) is just
being pedantic about the article. If you want to know what makes successful
businesses reading 1 or 2 articles about one on globally distributed
publications is _not_ going to give you the whole picture.

Founders at Work is a good example of painting a better picture ->
[http://www.amazon.com/Founders-Work-Stories-Startups-
Early/d...](http://www.amazon.com/Founders-Work-Stories-Startups-
Early/dp/1430210788)

~~~
simonebrunozzi
I love that book, and I fully agree with your comment.

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compare
Was really hard to figure out what in that article has anything to do with
"design". If anyone is as confused as I was, it seems that "design thinking"
is something totally different:

[http://en.wikipedia.org/wiki/Design_thinking](http://en.wikipedia.org/wiki/Design_thinking)

and I'm not too sure what that phrase really means either.

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pitchups
From the Wikipedia article:

 _" This approach differs from the scientific method, which begins with
thoroughly defining all the parameters of the problem in order to create a
solution. Design thinking starts without preconceived problem definitions and
solutions, in order to discover hidden parameters and alternate optimized
paths to the goal."_

Airbnb experimented with a different approach by going out and taking better
pictures themselves, rather than the using the preconceived notion that
startups should never do things that do not scale.

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idlewords
That doesn't sound like any scientific method I know.

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andyidsinga
was thinking the same thing ..how about a hypothesis and an experiment to test
it :)

it seems to me design and scientific method need not be separate at all... i
worked with some good designers at ziba on my last project and they were
effectively following a scientific method - hypothesis for design, rapid
implementation, then testing with users, observe and repeat. ( was fun too )

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etattva
They owe a lot of success to craigslist. They had been sending emails to users
who had been posting the rentals on craigslist. I had read this in some
initial success story.

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simantel
Not only did they poach users from Craigslist, but they also built a feature
that allowed you to crosspost your listing to Craigslist.

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GFischer
The thing is, building a marketplace (or a community) is very difficult
because you have to fill and balance both the supply and the demand sides.

That's why startups resorts to these kinds of "hacks" (whether it's
ethical/legal or not is another problem), it's akin to Reddit owners having
multiple accounts to give the impression of an active site.

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clairity
i like the underlying message (get out and try stuff, even if it doesn't
scale), but is the core example (increasing revenue & possibly saving the
company by iterating on the product) really a "design thinking" solution? it
seems that this kind of thinking should pervade the whole team at a startup,
not just be confined to the designers.

don't get me wrong, i love good design and have used google venture's design
sprint methodology ([http://www.gv.com/lib/the-product-design-sprint-a-five-
day-r...](http://www.gv.com/lib/the-product-design-sprint-a-five-day-recipe-
for-startups)) to great effect. but there's something about the term "design
thinking" that draws a line that doesn't seem to need to be there,
particularly in early-stage startups.

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tonylemesmer
Design thinking means that the non designer employees should think like
designers. Not that the designers should do everything. I don't necessarily
think this was a design thinking solution. It was simply a pragmatic business
necessity: do anything possible that improves the customer experience. Its
what the boss of the company should have been asking his employees to think
of.

Edit:spello

~~~
clairity
i think that's exactly what i was getting at: it should be something everyone
on the team is doing.

i doubt that this is the intent, but the term seems to be exclusive rather
than inclusive. i'd be happy to be proven wrong though.

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pchristensen
"How A Huge Market Opportunity Let Designers Create a Billion Dollar Business"

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lifeisstillgood
I am feeling a tad jaundiced but can I give a reason for AirBnB's success as
well:

They found a way to allow people who do not own property nor have the rights
to rent out the property, to receive cash for renting out said property.

The recent BBC article estimated 40% of their bookings in this illegal / legal
grey area.

When you have the ability to give income off capital to those who don't own
capital it is an attractive deal - see stock shorting etc.

PS

I am (depressingly) expecting a fair number of downvotes, but I do hate to see
businesses which operate dubiously (albeit a mild version relatively speaking)
not being called out on it. At least YouTube got a roasting off the music and
movie lawyers.

And I would like to point to ethicalconsumer.org as a fairly eye watering list
of the ways in which "dubious" is ingrained in our society. We have a long way
to go.

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wdewind
> This was the turning point for the company. Gebbia shared that the team
> initially believed that everything they did had to be ‘scalable.’ It was
> only when they gave themselves permission to experiment with non-scalable
> changes to the business that they climbed out of what they called the
> ‘trough of sorrow.’

The place where everything changed is where the company literally started
disregarding the concept of design (not saying it's a bad strategy, but afaict
the entire point of design is to be forward thinking before you actually do
something). It seems, if anything, becoming _less_ designed saved them.

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general_failure
I must have read atleast 3 versions for the reason of airbnb's success.

As they say, history is written by the winners. Might as well write multiple
versions.

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abreckle
Great article. Joe really nails it. I wrote about an early experience with
them, and the resulting lessons learned from watching their evolution here
[https://medium.com/@adambreckler/its-like-craigslist-but-
bet...](https://medium.com/@adambreckler/its-like-craigslist-but-
better-76d6de78afa0)

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gmeluski
Having apartment hunted myself, I have the personal experience of noping right
out of any listing with no / bad photography. Categorizing this realization as
'design thinking' leans on hyperbole, and that ultimately has more to do with
editorial direction than AirBnB beating its own chest.

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collyw
I only found out about airbnb around a year ago. At the time the map was
ridiculously small. Is (was)that design focused?

(Actually design seems to be a particularly ambiguous words, that can mean
anything from translating engineering requirements to "looks pretty and is in
the current style")

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gizmodo59
A lengthy article in NY Times with the word 'billion' is all that required now
to increase the hype.

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gaius
Design thinking and a flexible approach to property law.

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aaronchriscohen
SUMMARY: "we were shocked, SHOCKED, to discover that an ad with a nice picture
performs better than an ad with a bad picture."

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excellentpants
I laughed.

However I think the article is trying to make the point that software
engineering-types are sometimes prone to otherwise obvious oversights because
they tend to think of solving all of their business problems with code.

