Airbnb: Scaling the Supply Side | In Practise

Airbnb: Scaling the Supply Side

Former Supply Side Manager, Australia, NZ, Pacific at Airbnb

Learning outcomes

  • How Airbnb built the host and guest community
  • Recruiting early consumer hosts and building trust with people sharing their homes
  • How to market and onboard hosts
  • Challenges for Airbnb recruiting professional properties versus OTAs
  • Airbnb take rate and pricing strategy versus Booking.com
  • Regulatory risks for Airbnb
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Executive Bio

Darren Vincent

Former Supply Side Manager, Australia, NZ, Pacific at Airbnb

Darren was one of the first employees to join Airbnb in the APAC region. He joined the company in 2012 when the company opened the first office where he was responsible for opening new destinations in Australia, New Zealand and South East Asia. Darren was then promoted to lead recruiting and onboarding hosts where he led the supply side to grow from 5,000 to 200,000 hosts. Read more

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Can you provide some context to your responsibility when joining Airbnb in 2012?

I joined Airbnb in the middle of 2012 as one of the first folks in APAC. I think we had about a dozen people across APAC at the time and about three of four employees in Australia. This was just before we actually launched the Australian/New Zealand.com/au versions of the website. In those days, it was very much everyone hands on deck, really trying to get Airbnb ready for launching that version of the site, which meant getting to know our customer base. Getting to know our community. Or getting to know both the early hosts, those that started back in 2010, with little support from Airbnb in the market there. Really building that brand up initially. Getting some early PR hits, some early traction with some of the leaders in the community, as well. Having that as a base for how we then grow the business forward from that.

Then that really led into focusing on very much the supply side of the marketplace being hosts and homes for Airbnb versus the demand side, which is guests. I’ll put experiences to the side, as well. Being the supply lead for Australia and New Zealand, really focuses on growing the supply, figuring out ways we can get the business moving and really latching onto the early adopters of Airbnb. Very much a lot of whom came out of Australia, being those travelers that are going to places like London, Barcelona, New York, San Francisco. Then as they started travelling and hosting in Australia, how we can leverage those guys and help grow the business.

You mentioned community in the first one or two sentences there. I think it’s a big word for Brian Chesky or for Airbnb. How would you define community?

Ultimately, community can mean many different things. I think they got to really focusing on multiple stakeholders in the business. When we talked about community, it was usually our host community because ultimately, they’re the ones providing the service for the product to the customer, which is the actual stay that you have in an Airbnb. In the early days it was focused on those folks.

Then Airbnb really started to think about how you grew the community or supported the community that existed around that. That’s both cities. It’s the cities that they operate in, or the communities that they operate in in terms of neighborhoods and so on. Also, a big thing about the guests’ community and the guests that are then staying in Airbnb and how you are working with them to ensure that, they’re having a great stay, but also they’re having ultimately a net benefit to the neighborhood or the place that they’re staying in. Whether that’s economic activity or social activity and so on, it’s really about nurturing those connections, as well. When Airbnb started thinking about the community, it was really about multiple stakeholders in the business.

What was unique about the approach to the host community in the early days?

It ultimately came down to how unique the product was in the offering. It’s an interesting one because the actual concept of Airbnb, if we just think about it as a concept of staying in someone’s house, it’s not a particularly new one. You had people that were doing home-stays. You had holiday homes across the world. Whether you go to a beach destination or something in the summer, often you might stay in a holiday house that pre-internet days, you would have booked it through the newspaper or just found something on Yellow Pages and called someone up and made a booking that way. That product wasn’t necessarily new, but I think the unique thing that Airbnb really had was how they enabled the technology that they have to help foster that at a global scale. How you connect a guest in Australia that’s travelling to Finland or someone in Russia that’s travelling to the USA? How do you ensure that that connection and that community is strong throughout all of them? I think there are a few things that Airbnb in the early days, it really helped to facilitate that.

One of the things that I think was really important was the payment platform they had. In the early days, it was like you had to phone someone up, you might have to give them a credit card over the phone or do it through your newspaper classifieds. It was usually disjointed in if you’re going on a three-week holiday and you’re staying at six different places for the holidays. You would often have to negotiate individually one-on-one with each person. Payments could all be in different ways. If you’re looking at international payments, sometimes there’s a banks’ transfer. That was always just a hassle. Or even in very early days of Airbnb, going back 2008, they even did cash transfers and so on, as well. There was always this awkward moment that you’re staying in someone’s house and you still haven’t paid and you’ve got to hand over the cash. Payment was a big one. Making that seamless and straightforward and easy was a big one.

Second, in terms of their review system, that goes back to building up the community, as well. The concept of having a two-way review system was quite unique at the time. I think that helped to facilitate a lot of trust in the platform that was built. Trust is something that comes up a lot, especially if you hear multiple people talk about Airbnb, those early days was really about building trust in the platform and building trust in the concept. Whilst again, many people had probably done it in the past or stayed in different places, it was like them doing it over the internet and doing it across many different countries. Just that concept of potentially putting your own house up on Airbnb rather than a holiday home. A holiday home is often a secondary home. You might not have as strong a connection to your second house versus your primary residence.

It’s a very high intent activity that we’re asking people to do. A lot of people would say there is high risk versus reward to that. I think it’s really about building trust in the platform. Keeping it community focused, as well, so ensuring that both guests and hosts, even just the little things in terms of building profiles and building connections. Encouraging people to say, hey, what are you doing in terms of travelling? This isn’t a hotel. You’re staying in someone’s home. Give some information. Tell us what you’re travelling for. Allowing hosts to have control over some of that, as well, I think was very important in building trust in those early days.

What was the biggest challenge in building that trust in the early days?

In terms of building trust, ultimately, it was about overcoming the concerns that many people had which were often driven by what they might have read in the newspaper or what they would have seen in the news. It’s those horror stories and things going wrong. It was really about overcoming some of those obstacles. Both from a, hey, what if something goes wrong? Everyone was thinking of the worst-case scenario. Certainly, there’s been some cases in the news and many people have read about when things do go wrong. It was really about overcoming that. The best way we actually found to overcome that was actually to bring in hosts in the community that were already doing it. It was certainly a platform that’s had a huge attraction in terms of its word-of-mouth and people talking about it. When travelers were using it, they were saying, “This is a great experience. I found an awesome place in a part of a city that potentially I couldn’t have stayed in”, because there are plenty of places where there are Airbnbs and there just isn’t any hotel supply there.

The hotel supply is usually in the downtown or CBD area of a city. Many of the Airbnbs would be scattered across a city in different areas. They’re seeing obviously it was a great benefit from them. Then just being able to hear from the hosts and saying, “I’ve had 100 guests stay. All of them have been amazing. All of them have brought something unique or something different. I’ve managed making friends, meeting new people.” Actually bringing those people in both in terms of what it means from a marketing perspective, from a PR perspective, but also just in terms of educational content and different things that they did in the early days was really about letting those folks tell the stories for them and helping them saying, here someone that’s doing it. They’ve been doing it for a year, they’ve been doing it for two years. They have the same concerns and fears that you had at the beginning. What are the things they did to overcome them and potentially, how can they help answer some of those questions?

Can we move on now to discuss specifically the hosts. Scaling the supply side. Firstly, how would you split the market in the different types of hosts?

In terms of the segments?

How do you look at segmenting the supply side of Airbnb?

Airbnb certainly grew as a consumer hosting platform. I differentiate that then to a professional hosting platform. Again, there were some platforms out there. Things like HomeAway, VRBO or Stays in Australia is a good example. Each country might have their own little one. Again, most of those were probably focused on the vacation rental market or holiday rental market, which was often professionally managed. Might not have always been, but it was always secondary or professionally managed home. Therefore, the tools and systems and things that it did very much catered to a professional market.

Airbnb really started by focusing on how you actually overcome some of those challenges for a consumer side. As I said, payment was a big one. A professional is probably going to have their own payment system, POS system, that they can actually process credit cards and do other things. An individual just looking to rent out a room on Airbnb is not going to have that. Airbnb really focused on that. From the first few years of Airbnb being established, it was really predominantly focused on that side of the market. Professional certainly existed on Airbnb, in vacation rental, you had property managers and different things that did exist. They didn’t really start to facilitate those guys to grow on Airbnb until around a few years ago, around 2015/2016 was when they started looking at it.

From then, there was a big split between what you might call a consumer, which is just individuals and professionals. Then under professionals, you have two main sides of things, one of which is called traditional hospitality, which is really about things like hotels and apartments hostels. Your normal things that have been around for decades that you can book that are very much traditional accommodation option. Then second to that is your property managers, really. People that might be managing anywhere from ten to ten thousand property. There are some really large enterprise sized property managers and so on that exist out there.

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Airbnb: Scaling the Supply Side

May 7, 2020

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