Like other marketplaces, including transport companies, such as Uber and Lime, Airbnb balances a variety of elements, designs, and marketing strategies to build its complex market. Lenny Rachitsky, Airbnb’s former product manager with a focus on growth, has explored the strategies that built the business, writing on venture capitalist Andrew Chen’s blog.
A founder of Localmind, a platform for asking questions about specific locations, Rachitsky sold his company to Airbnb in 2012. The three-person firm then joined the larger company’s product team. “Deciding to open your home to strangers is a complex decision”, Rachitsky writes. “Over the course of the seven years that I spent at Airbnb, my work centered around helping people all over the world make this decision.”
Though his account is very detailed, it describes how product and communications strategy came together. At the core is the host value proposition, the part of the site that tells visitors why they ought to become hosts, and remains fundamental throughout the company’s lifecycle. There are several important lessons here. From a conversion point of view, showing visitors estimated earnings was “an order of magnitude more effective than any other value prop. Any time we hid or obscured it, growth dipped.” Similar campaigns have worked for Uber and rival ride-hailing service Lyft.
The best marketplaces wear their promises on their sleeves, adapting and iterating them as they learn more and more about their users. At the early stages, meanwhile, whether you actually deliver on the promise will impact a marketplace’s crucial word-of-mouth growth.
Early stages in a B2C space are crucial. Rachitsky notes the effectiveness of hand-holding early members to make them feel they are part of the business. It’s especially useful if there is high potential lifetime value – those phone calls and visits are very much worth it. However, the guide hints at some of the rule-bending behaviours for which startups have become notorious. For instance, “be creative in how you figure out contact information,” he writes.
Like many people from the startup world, Rachitsky is cautious about expensive brand advertising, though he recognises its value. “Don’t expect to ever be able to measure the impact”, he adds. “Because you won’t.” Costs are large and the impact on supply growth relatively small, but it is a chance to do something “unique and noteworthy.”
Other, more general strategies hold lessons for any companies looking to build experiences. In some instances, this means making the platform useful to supply-side users even when there wasn’t much demand. EventBrite, the ticket-booking platform, lets users create free web pages for their events. Restaurant reservation service, OpenTable sold restaurants table and CRM management products for a low monthly fee without requiring diners on the buyer side.
As Andrew Chen has written elsewhere, supply is king. In an essay on his site, the Andreessen Horowitz partner notes that maintaining supply is the crucial challenge to marketplace businesses, and why most Uber for X businesses struggled through a very short life.
Chen argues that these companies “failed to become a thing because they sought to emulate ridesharing when they should have just approached their particular market from first principles". Founders have to think about the supply-side worker – can they do it full time, will they come back and drive/rent out their place again. It’s in this area of communications and user insight that these companies live or die.
Sourced from Andrew Chen, TechCrunch