{audio:0:00:01} Sam, great to have you with us today. Can we start by diving into your core lessons from running the marketplace, at eBay?

{audio:0:00:12} Obviously, it was very early days, back in 1999, when eBay, in Australia, was the first international operation for eBay. eBay, even though it had already gone public, as a company at that time, a big part of setting up their first international office was really how you were able to build on the core marketplace tenets of supply and demand, in a new market, but plugging that, effectively, into a global marketplace. It was really building the marketplace from scratch. You really needed to start with the supply and I think that’s a key learning for marketplaces, in terms of, it is pure economics; it is supply and demand and what needs to come first. I think you need the supply for there to be a marketplace. Of course, the demand will drive where the marketplace goes, but you really need to have the supply, in the first instance. It was really about building supply.

{audio:0:01:18} Some of the other things we learned are, purely about the economics of supply and demand. It was also about the network effects that you’ve got, when you’ve got a two-sided marketplace and the benefits you get from both sides; both from the supply side and the demand side and where that can come from. Particularly on the demand side, it can come from various places that you may not have been looking for. Another key part was the role that merchandising plays. It really is, thinking about the shelves in a supermarket or even going a step further, on aisles in a supermarket and what is the supply that you put on the different shelves. Then how you arrange or rearrange the products on those supermarket shelves. It’s such a really important part of a marketplace. It’s interesting how those offline lessons can be applied to the online world. I know, in early days, wherever the eBay marketplace was, the global marketplace, the US, parts of Europe, or even in Australia, it was really important to look at the categories, which could be used as an analogy for aisles in a supermarket or even shelves, that where you might go from a one or two lane supermarket to an online marketplace that has more than 50,000 categories. So the merchandising that you do and the seasonality of that, you apply the same offline learnings that you would to the online business.

{audio:0:03:10} Just taking the first point you mentioned, about supply, what was the biggest challenge in recruiting new vendors and supply, to the marketplace?

{audio:0:03:28} Of course, in its early days, the heart of eBay was the collectables business. People and communities all around the world, were coming together to trade collectables. Much was made, originally, of Beanie Babies and whatnot. Collectors provided a ready-made source of supply, for the eBay community. I think it was in 2001 that eBay introduced fixed price. With fixed price, you provided the opportunity for professional businesses and retailers to really come onto the platform and sell in that format. In terms of managing supply, that provided the opportunity for eBay to, effectively, go out and find the type of supply it needed, as opposed to it being more organic and just organizing the shelf space.

{audio:0:04:40} It was a matter of identifying where there was excessive demand in the market, whether that was where you saw the conversion rates on products or the average sales price of products increasing, in particular categories. But then, that provided the opportunity to go and engage with either existing sellers or, potentially, new sellers, that you could bring onto the platform.

{audio:0:05:09} What sources of demand were you most surprised about?

{audio:0:05:16} From a demand side of things, the opportunity that you have with the marketplace is to tell the stories of the buyers and the sellers and how that connection was made, through a platform or a marketplace, such as eBay. One of the interesting things about eBay is when it became part of popular culture conversation. By sparking those instances and shining a light on interesting items that were maybe available on the marketplace and the transactions that were taking place and maybe even the personal connections, from someone around the world that was connecting with someone else, that was a really interesting way of driving demand. I think it would be fair to say that those stories are amongst the most interesting. What that does is then provide the opportunity for eBay, in this instance, to amplify those stories and tell those stories, in the media and that certainly benefited, significantly, from a demand point of view.

{audio:0:06:30} Just returning to the point you made on merchandising. Clearly, online marketplaces, 50,000 categories, unlimited shelf space. How did you transfer the learnings from offline, organizing aisles and shelves, to the online marketplace?

{audio:0:06:53} Certainly, eBay benefited from a significant amount of talent that came and was attracted to the business. We had a number of really great merchandisers, from their past lives, when they came to eBay. They did a really great job of instilling the discipline and how you use the data to help organize the marketplace. Whether that was Meg Whitman, from her merchandising experience, to folks like Jeff Jordan, who was leading the US business of eBay, at the time. Then onto other folks, like Michael Dearing, another good merchandiser who took their offline experience into some other online ventures and then to eBay and instilled the discipline that was required to grow a business. Then you would have other merchandisers and other people that ran categories. Folks like Dan Neary, from the collectable side of things, that knew what they were doing, or Geoff Iddison, from the Sotheby’s business, into eBay at the time. How did they run businesses?

{audio:0:08:07} We launched eBay Sports, with Bob Hebbler. Folks that bought their offline merchandising and retailing experience, into eBay and that was a really important part and I think a really great way of getting things organized.

{audio:0:08:21} How were the categories organized, in the early days, as you did scale the marketplace?

{audio:0:08:28} At the outset, eBay was born in collectables, whether they be coins and stamps or comic books. Ultimately, it moved far more to practical things. Clothing, shoes and accessories was one of the first billion-dollar categories on eBay. The motors business was a business unto itself. It really just began to mirror the offline world. As those categories grew, you needed to create shelf space for them and then you needed to organize that shelf space. If there was a particular product or a category that was more popular than another one, then you elevated the merchandising of the category and the products within that. Sometimes, that would be seasonal. If you moved into the summer months, what are the goods that folks are requiring, in the summertime. eBay was a barometer for that.

{audio:0:09:36} When looking at organizing and showing certain categories at certain times, to different people, throughout the year? What was the biggest challenge in terms of organizing inventory or merchandising, on marketplaces?

{audio:0:10:01} Certainly, one of the challenges for eBay, is that the marketplace had become so big, that it became all things to all people. It got to a point that that size was, perhaps, its own worst enemy. As shopping experiences online continued to evolve, bidding or buying at fixed price, on eBay, may have been a sub-optimal shopping experience, compared to a category specific retailer, that may have entered the market. As an example, buying shoes, it was maybe a better shopping experience on Zappos, than it was on eBay. Or if you were buying a fashion item, it might have been better to buy on Nordstrom.com, than it was on eBay. Or when buying a computer, you may have had a better shopping experience elsewhere. So one of the challenges that eBay had, with its size, which was its greatest strength was starting to become its greatest weakness. It couldn’t recreate a marketplace specific to a category and it needed to break what was its greatest strength.

{audio:0:11:17} That’s what you see today where, arguably, eBay are getting picked off in certain verticals, for specific marketplaces or e-commerce offerings, to sell the category?

{audio:0:11:30} I think that what eBay had been able to achieve, through a long period of time, is that it became the destination for you to go online and purchase something. Of course, others have caught up now. We have seen the incredible growth that Amazon has had, in terms of how they’ve established their own marketplace and the things that they’ve done and was eBay able to do those sorts of things at the time? Perhaps it just wasn’t able to.

{audio:0:12:02} What metrics did you focus on at eBay, versus Airbnb, as a manager of a marketplace?

{audio:0:12:11} At eBay, one of the things we did was, we had access, very early on, to really great data sets and really good data scientists. They were certainly amongst the smartest people, within the organization. The metrics that really drove the eBay business, was gross merchandise value, which is the product of the number of listings times conversion rate times average sales price. Understanding the impact that each of those components had and the role they played, in driving growth and overall GMV of a category, was really important. That was really the focus.

{audio:0:12:59} On the demand side, having the number of users, very early on, was certainly a big part and how we were able to acquire new people and new demand, into the marketplace. Then it was, effectively, listings and different components of that and, also, how we monetized listings in different ways, became a significant part of the eBay business. But it was really listings, conversion rate and average sales price.

{audio:0:13:27} How would you compare it to Airbnb’s metrics?

{audio:0:13:32} In Airbnb, as a marketplace, you’re looking at the number of listings that you’ve got and where they are and what type of listing they are. Then on the demand side, you’ve got the guests. It really is, those two come together. It’s the nights booked. How many people are booking and how many nights are being booked and how many listings do they have available?

{audio:0:14:03} How would you compare eBay, versus Airbnb, as a marketplace?

{audio:0:14:09} There are, certainly, some similarities and lots of differences. I think the community aspect of both organizations and both businesses, played a significant role in their success. I think, also, how the businesses were set up, to achieve either the mission of each of those, at different times. I think with the mission of Airbnb, we’re still very early days in that story. In 2014, Airbnb did a really good job of articulating what that was and that was the belief that, in Airbnb, the mission is a world where people can belong anywhere and how they were able to have that manifest itself.

{audio:0:14:59} In terms of the differences, in the marketplace, one key difference, particularly from an economic perspective is, at eBay, all of the fees were, effectively, charged to the seller. Whereas on Airbnb it’s, effectively, the guest that pays the fees. On Airbnb, it’s free to list, there are no service fees that are charged to the host. As Airbnb has continued to evolve, that’s been different, from the experiences side of things. As Airbnb has moved more into the traditional hospitality and hotel space, there have been pricing differences that have arisen, on that side of things. But a really big difference was that, on eBay, the seller paid all the fees and, obviously, they did pass those onto the buyer, in some ways. eBay really became beholden to the seller community, if they were trying to extract more revenue, through listing fees, success fees, as well as feature fees. Whereas on Airbnb, it’s the guest that’s making that choice to book that listing and incur the service fee and know what they are getting, as a result of that.

{audio:0:16:28} How does that change the way you manage the marketplace?

{audio:0:16:33} From an eBay perspective, you are always beholden to the sellers and the sellers, themselves, became a very powerful part of the eBay community. Of course, eBay activated their community, annually, through their eBay Live event. I’m not sure if it’s still going on. That was a significant event that the sellers were a big part of. Sellers on eBay were also able to, sometimes, become so successful on the eBay platform that they could then leave the eBay platform, because they had acquired their customers and they could continue to run their business successfully and, potentially, incur marketing costs that were less than their eBay seller fees. You would sometimes see that, particularly where you had a seller that may dominate a category or a product.

{audio:0:17:29} On the Airbnb side, in terms of how you’d manage the community, it’s about keeping it all very simple, a great user experience, from a guest point of view and also simple to be a host and to list a property. By not necessarily relying on the hosts, for the revenue, even though it’s their properties and their homes that they’re sharing, how Airbnb has been able to engage the host community and, effectively, bring more and more guests to their properties, I think, has really been their key thing that’s helped define Airbnb success today.

{audio:0:18:21} How do you think this could evolve, as we see more traditional properties be brought into the platform, with different pricing structures?

{audio:0:18:33} I think it certainly creates an opportunity for Airbnb. They’ve traditionally charged the guest a service fee and I think there are significant opportunities for Airbnb to monetize their business model and to evolve their business model, to elevate a host listing and provide an opportunity for the host to pay for that. Airbnb has recently introduced some other services. Plus is one of those, where there are certain criteria that the host meets, that means that the listing can be shown in an elevated way. Again, that’s an opportunity for Airbnb to monetize its platform, more significantly than it maybe has in the past. I think there will continue to be those opportunities, in the future.

{audio:0:19:34} What about setting the price. Clearly, it’s different in that on eBay, you are setting the take rate for the supply side and at Airbnb, it’s more setting the fee for the guest, but also now shifting towards a more traditional take rate for the supply. How did you think about setting the take rate, firstly at eBay and then this fee at Airbnb?

{audio:0:20:04} That’s a really interesting question and I think there have been others that have asked that, relative to different platforms. If you think about food delivery, particularly given our current situation, with Covid-19. Not addressing that specifically to the current circumstances but, I think that by giving the buyer the opportunity and setting prices for the buyer, it will ultimately be up to the buyer to determine whether or not they are willing to pay that price. I reflect, as a kid growing up, the local market gardener would drive a truck around the streets and ring a bell and my mum used to go out and pay for her fruit and vegetables, directly from the market gardener. There was a level of convenience that came with that. There was certainly no middle man in the process but you were willing to pay, perhaps a little more or pay a premium, for having the opportunity to buy direct and to buy it from your home.

{audio:0:21:28} I think, in the current day and age, there have been some challenges, over time, in different businesses, in terms of charging fees for products to be delivered. Giving the buyer the opportunity to choose, do they pick it up, do they have it delivered, do they have it delivered faster and providing those variable prices for that, I think is a really interesting new normal. If we reflect on that, from an Airbnb point of view, giving the visibility to the guest, in terms of how much they’re paying for a fee, they will be able to make those trade-offs, particularly in a world where comparisons are so readily available, provided those comparisons can be provided on an apples to apples basis. I think putting the power in the hands of the consumer or the guest, in Airbnb’s situation, is really interesting.

{audio:0:22:27} Then it’s finding that price. What are they willing to pay and how can that be toggled and understanding that behavior, so that businesses can find that point of optimal return?

{audio:0:22:41} How did you look at finding that optimal take rate?

{audio:0:22:48} At Airbnb, the take rate, as part of the service fee, wasn’t necessarily defined at a set rate. It was based on an algorithm, in terms of the price of the property. Normally, the higher the nightly price, the lower the take. The length of stay – the longer the stay, the lower the take. So that, effectively, moved. But one of the things – and I imagine Airbnb will continue to look at this – will be, is there more margin available to the business? Should there be less margin available to the business? Provided that they are transparent and the guest knows what they are paying when they see the service fee and the total price. Of course, there are guidelines and regulations around how prices and pricing should be surfaced to the consumer, globally. Maybe it’s different, country by country. But those things are very important.

{audio:0:24:01} I think it’s understanding what can provide the optimal return to the business, without the consumer feeling as if they are paying too much.

{audio:0:24:15} Where do you think is the greatest margin opportunity, for Airbnb, going forward, over the next five years?

{audio:0:24:23} I think there is an opportunity for Airbnb to really double down on its core business and remain true to the narrative that has stood it in such good stead. There’s been a lot of work done, recently, not just at Airbnb, and certainly not by accident, but around tech, globally, around what does a successful 21st century company look like? There are some pillars that various folks have looked at. Jonathan Mildenhall, former CEO at Airbnb and creative director at Coca-Cola, his company TwentyFirstCenturyBrand, has done some work around, what are the key pillars of a successful 21st century company. They include being purpose led, community driven, narrative based and tech enabled. I think it’s a mix of those things that we’ll continue to see companies define themselves by, in this new age.

{audio:0:25:41} Looking back then, what were the key differences, given the difference in the take rate between Airbnb charging mainly the guest and eBay charging the seller, what was the major difference in managing categories at eBay, versus hosts at Airbnb?

{audio:0:26:04} I think, maybe, to get to the differences, I might think about some of the similarities. Because they’re a marketplace, neither Airbnb nor eBay actually owned the goods that were being traded. Ultimately, I think that if there is something that Airbnb has set itself apart on, is really focusing on the mission and the human element of the marketplace. It’s those connections that hosts and guests establish, even if the host never meets the guest. The idea of staying in someone else’s home or the opportunity that a host can make a reservation at a local restaurant, for the guest. I think, genuinely, the human connection as virtual as that may be, that is something that Airbnb has really tapped into. They’ve been able to do it in an extremely authentic way and there are wonderful stories that have come out of the Airbnb community, about those personal interactions, even if they’ve only been in a virtual sense.

{audio:0:27:26} What about acquiring demand and the core differences in demand that you were finding or those sources of surprising demand that you found, both at eBay, versus Airbnb?

{audio:0:27:44} I think the increasing role that earned media plays in the development of a brand and the role of social, one misstep by a brand can spread like wildfire, right across the internet. The risks that can face a company by getting it wrong, are heightened and there is sensitivity to that. Airbnb has come along a little later, obviously, in time, than when eBay was started. The role that earned media plays in driving demand and becoming part of the popular culture conversation, is a key area that has really helped drive demand.

{audio:0:28:55} The network effects that come with that, again, in the two-sided marketplace, and people having great experiences and being willing to share them, is a significant part of it. Also, I talked before about those elements and pillars of a successful 21st century company and the authenticity of that story that’s told. When you refer to narrative based organization, what they do needs to stand behind what they say they are. An example of that, if we think about Airbnb and their mission and their vision of a world where people can belong anywhere. The story that they told, in one of their first global brand campaigns, was titled, Never a Stranger. It told the story of a 30-something professional female, travelling the world, staying in other people’s homes and, right out of the gate, it addressed the uncomfortable truth of staying in someone else’s home. By doing that and having an authentic story to tell, and telling that through your marketing, is certainly something that has set Airbnb apart.

{audio:0:30:32} How did you find the differences in driving organic traffic and this community at eBay, versus Airbnb, given that there is such strict focus on the vendors at eBay, as they’re paying the fees, versus more the guest focus at Airbnb, arguably?

{audio:0:31:18} It comes back down to telling the stories of hosts and guests, in an authentic way that also becomes part of the popular culture conversation. One of the things and one of the ways that Airbnb has done, to achieve that, would be that they’ve developed, within the business franchises, what helps personify what staying on Airbnb is like. For example, they have the Night At franchise, so you could stay at the Louvre. Not everyone is going to have the opportunity to go and stay at the Louvre, but that is an analogy that, if you can stay in the Louvre, you could just about stay anywhere else, on Airbnb. You could stay in a department store, overnight. What kid hasn’t dreamt of spending the night in a department store and having a chance to run wild. Or stay in a significant sporting field or be part of an experience that you wouldn’t otherwise have the chance to participate in. If you could do that, imagine what else you could do.

{audio:0:32:58} Clearly, we’ve seen Airbnb onboard more traditional properties, to the marketplace which has somewhat shifted the pricing structure from strictly a guest paying a service fee, to also the host paying either a fixed fee or a host and guest fee. What is your view on how Airbnb can really compete with traditional OTAs, in that traditional property game?

{audio:0:33:47} Where it remains authentic to Airbnb’s mission, of a world where people can belong anywhere, that could mean they belong in a hotel, it could mean a serviced apartment and it could mean all of these things. Predominantly, it means staying in someone else’s home. I think where Airbnb will compete against the traditional OTAs is, Airbnb is more than just transaction based. I recall conversations I’ve had with GMs of five-star hotels that maybe have listed on the Airbnb platform. You talked to them about what’s different and they say that Airbnb helps them remember what hospitality is actually all about. It means that they come out from behind the desk, they potentially greet the guest, in a way that’s different from coming up and checking in, in the traditional way, or sitting down at a desk, in some of the more upmarket resorts. Maybe they actually show them to the room, because it may have been outside their traditional booking system. They show them the room, they show them the minibar and, when they check out, they return the room key or the room card in a different way from, maybe, that business of traditional hospitality has evolved into.

{audio:0:35:39} I think that that’s a way that Airbnb would continue to be able to differentiate itself from those traditional OTAs, in as much as, it’s not just a transaction that has taken place. There’s something more to it. There’s the human element, even though that human element can be virtual.

{audio:0:36:07} Do you think, in the long run, whether that’s five, seven, 10 years’ time, the supply side is, effectively, completely commoditized across all of the OTAs, including Airbnb? You’d see that, arguably, Airbnb would have probably more individual homes, versus the Bookings or the Expedias, but also Airbnb could onboard the independent hotels and the hotels that are on the OTAs and Expedia? Do you see that the supply side is going to be completely commoditized, in the long run? If so, what do you see the effects of that being?

{audio:0:36:52} One of the things that guests are coming to Airbnb for is the genuine, authentic travel experience, when they go to a place. I’m not sure I can imagine a time where everything is as commoditized. One of the risks that the OTAs have that Airbnb has, and one of the things that I hear from hoteliers, is they don’t like the OTAs. They feel as if they are competing with them, for their own inventory. You see hotels and hotel chains and groups offering benefits if you book direct, specifically with the hotel, as opposed to going through a third-party OTA. They don’t want to be beholden to a third-party OTA, to compete with their own inventory. As information on the internet becomes, again, more freely available and transparent, how people find places to stay could be different.

{audio:0:38:25} In the future, we’ll see far more of people going directly to properties, as opposed to through a third-party OTA. How that might represent a risk to Airbnb is, I think, is along the lines of individual hosts may have their own website. They might be a home or an apartment that’s booked out 90% of the time. Many of those people might want to come back again and again and again. Those hosts have the opportunity to market directly to their guests, again and again. I don’t believe that’s an issue, so far, for Airbnb, because they do more than enough to get guests to come back to the Airbnb platform. It’s so simple, they value the reviews and their standing on Airbnb. There is the right kind of insurance that’s built in, on Airbnb. They can trust where they’re staying. There’s a lot of reasons why people will continue to come back to Airbnb in the numbers, if not more so, than they have so far.

{audio:0:39:51} Do you think Airbnb entering the traditional hotel space, versus OTAs, will drive the take rate down lower than the 14% it roughly is?

{audio:0:40:08} Whether it drives it down or whether it goes up, I think could be quite different. For the property owners on the traditional hospitality side, are they driven by price or occupancy? What are they willing to give up? The thing that Airbnb brings is so much organic traffic, of people coming to Airbnb that that could, effectively, be a far more cost-effective driver of demand than paying an OTA a significant take rate than what they are currently doing. I think that there will be a balance, as well. I don’t think it’s a matter of picking winners or losers, at this stage. There is a lot of runway in this space but, at the same time, things can be turned on their head, pretty quickly.

{audio:0:41:21} Do you think that, because Airbnb drives a high proportion of organic traffic, they could, effectively, charge the hotels less than the OTAs, who have to pay Google for traffic?

{audio:0:41:38} Yes; I think that could be an outcome. It’s hard to say, from the outside, sitting here today, how Airbnb is, necessarily, thinking about that, given their recent position that they’ve taken, in terms of focusing more on their core business.

{audio:0:42:01} What do you think is the biggest challenge Airbnb will face, as the business scales?

{audio:0:42:10} I think Airbnb will remain relevant. I think they’re going to be more popular than ever, in the next 12, 18, 24 months. I think they need to continue to focus on the customer, keep it simple, continue to attract great properties and continue to tell the story of their hosts and guests and remain relevant, as consumers change and travel. We know that the expectations, whether it be from millennials, Gen Y, Gen Z, how that’s all continuing to evolve, I think Airbnb is especially well-positioned to take advantage of that.

{audio:0:43:13} One of the things that Brian Chesky has talked about it, and he talked about when Airbnb launched their experiences, in November 2016, is that the stuff that matters in life, is no longer stuff. It’s the opportunity to share experiences, whether that’s somewhere that you’ve stayed or something that you’ve done and I think that that’s going to be increasingly the case.

{audio:0:43:44} What do you think is the largest question to answer or address, regarding the regulatory risk for Airbnb, over the next five to 10 years?

{audio:0:43:56} Regulation is certainly something that is an interesting question and, I’m not sure, has completely been answered, as markets and cities, around the world, behave very differently and respond differently, in terms of the role that Airbnb plays, in particular markets. The important thing for that is – and again, not speaking from an Airbnb perspective – the thing I do know, and this comes back to some of the pillars we’ve talked about, in terms of being purpose led, part of being purpose led, is ensuring that you are bringing all stakeholders along, whether they be hosts, guests, the broader community at large, shareholders, governments. The thing that Airbnb has demonstrated is its willingness to participate and contribute, at all levels and to be conciliatory when it can, but also to stand up for its hosts or guests, if they are being negatively impacted.

{audio:0:45:32} There are so many twists and turns in the road, relative to regulation. It’s certainly been a significant challenge for Airbnb to deal with and, I think, will continue to be so.

{audio:0:45:44} What do you think would be the biggest regulatory risk for the business, going forward?

{audio:0:45:54} I would probably answer that more so, in that so far, I think Airbnb has done a really good job of addressing those issues, headlong. It’s choosing to fight or choosing to find middle ground, with regulators, wherever it can. They will continue to look at each situation, on its merit – each city, each state – and do the very best job they can, of navigating those really tricky waters.

{audio:0:46:33} Moving on to look at building communities and I think this links into this purpose led, narrative based theme that we’ve discussed. What does a community mean to you?

{audio:0:46:51} A community, to me, means a group of people that can gather around a common cause or mission or activity and feel like they belong. To me, at its simplest, it’s that sense of sharing something in common.
{audio:0:47:29} What do you think attracted so many people to the Airbnb narrative, of belonging?

{audio:0:47:38} At their core, I think everyone wants to feel as if they belong. I caught a small section of Michelle Obama’s documentary, Belonging, recently and it was interesting to juxtapose some of the things we heard her saying, relative to much of what the founders talked about, in terms of how Airbnb was established. It’s interesting that when the first three guests stayed with Brian and Joe, in their apartment in San Francisco, over 10 years ago, the thing that comes out of that, even though there were air mattresses, on a floor, in an apartment, and they were thousands of miles away from where they lived or where they were from, they had made a human connection and they felt as if they belonged. I think that’s a really key part of it.

{audio:0:49:16} You often hear people say, managing the community. Obviously, community is a very fluffy and broad, subjective and intangible word. What did you focus on, within the community?

{audio:0:49:38} Reflecting on some of the communities that I’ve been a part of, from a genuine community perspective, as opposed to a business or marketplace point of view, I think it generally is, what is that common thread that people can attach themselves to? Different things will have different meaning to different people. If there’s that one common thread that they can attach themselves to – and at Airbnb, that’s belonging – I think that what makes people belong, will be different to different people. The diversity that you have, in the Airbnb community, is one of those things that will continue to help Airbnb stand in really good stead, relative to the experiences that people have had when they’ve been living like a local. I think they will continue to look for that.

{audio:0:51:00} How would you compare the community of eBay, in the early days, as compared to Airbnb today?

{audio:0:51:09} At eBay, the community was more product based. What was the transaction that took place, that brought people together? In that instance, it was a product and it was a common interest in collecting something, maybe just buying something, using a particular kind of make-up or whatever it was. At Airbnb, it’s about the experiences; it’s about that humankind piece that is a little bit different. It’s about what they were able to achieve. What was transformational about the travel experience that they had? I think that’s the difference.

{audio:0:52:07} At Airbnb, when you say community, do you focus more on the host, do you focus more on the guest or is it a mixture of both?

{audio:0:52:18} It’s generally a mixture of both. However, my observation would probably be, it’s more host based. The same could be said about eBay. When the eBay community would get together, sure, I might have purchases something that meant that I told stories about what I was able to find on eBay, but when the community would gather, it would predominantly be sellers. Similarly, I would say, from an Airbnb point of view, it’s predominantly the hosts. Quite often you see, hosts will organize themselves in cities, all around the world, and conduct events for themselves, where they will share ideas and share experiences. Similarly, when Airbnb has hosted events, globally, whether it be the Airbnb Open in Paris, in 2015, in LA the following year, in 2016, or smaller events that have taken place, all around the world, the focus is generally on hosting.

{audio:0:53:45} How do you see that evolving, given that Airbnb charge the guests more than the hosts. Whereas, eBay, they were, effectively, the customer?

{audio:0:53:55} Whilst I think it could evolve, it’s been interesting and it creates an opportunity for Airbnb, economically, because they haven’t yet charged the hosts or only do so from an experiences perspective and as they’ve evolved more into the traditional hospitality lines of the business. When the hosts turn up, they’re turning up because (a) it’s part of their livelihood and (b) they love to be a host and share their homes and do those sort of things and (c) for many, it’s a commercial enterprise and they might think differently about it. But in many instances, the hosts, they come together to share how being a host on Airbnb has positively impacted their lives and they want to come together and share that, as well as learn from others.

{audio:0:55:01} How do you kick start a community?

{audio:0:55:07} In the early days of a community, there needs to be something that they gravitate towards. So understanding what they stand for and what are the values that either a company or a community holds dear to them and what they can grasp hold of. Then, it’s somewhat tactical and it’s not how every community builds, but it’s, how do you give them a place to come? Online community boards, the opportunity to interact with each other, it has its pros and cons and you need to moderate those community boards and the things that are going on and being said. But then it’s really, how do you mobilize those communities, in different ways? That could be appointing local ambassadors, on a city or region basis, not in any employee-like capacity, but to give them the opportunity, if they are passionate about the community that they are involved in, to give them the tools to tell those stories and bring folks along.

{audio:0:56:34} If I look at the Airbnb side of things, I think that’s been important for helping to establish good regulations around the world, in different communities and cities, to tell the story, in terms of what good Airbnb hosts, as a community, have been able to achieve, together.

{audio:0:57:04} If you were to mention two or three core factors that drive a community and, also, how these communities typically fail or break up, what would you say?

{audio:0:57:22} Perhaps, the most significant aspect of community, is actually having a shared goal, value, belief that people can gravitate and attach themselves to. Then how does that manifest itself, back into the community and grow? There’s one community growing, a phrase called the Snowflake Model, that refers to how communities can grow by just planning an ambassador, in a particular location, that helps grow out a business.

{audio:0:58:06} I think, when communities fail, it’s when they don’t have that shared vision, in what they actually stand for and, importantly, the ability to articulate it. It’s all very well and good to be passionate about something, but if you don’t have the ability to easily talk about and don’t have the tools to help grow that community, that becomes a real challenge.

{audio:0:58:37} What are some common reasons why communities typically break down or fail, even after somewhat growing and evolving?

{audio:0:58:52} If there isn’t that mission, that true north, that a community can attach itself to, that would be a reason that they might fail. We see, particularly in the tech space, growth in businesses that evolve quickly and then disappear, as quickly as they came along. Sometimes that might be the result of not being able to understand what a business or a community actually stands for and that’s really important.

{audio:0:59:35} What do you think are the most important factors to consider, when running a marketplace?

{audio:0:59:45} A couple of factors that are really important in running a marketplace include, getting the balance right; the supply and demand. Not having one side that has far more weight to it or becomes lopsided. It’s all very well and good to have all the supply, but if you’re not driving the demand to that supply, the providers of that supply, in the marketplace, aren’t going to be successful. They’re not going to feel good about it and they’ll be looking for alternatives. It’s about matching supply and demand, as best you are able, right from the very start.

{audio:1:00:29} What would you tell a 27-year-old, 28-year-old Sam, today, moving into that online marketplace world?

{audio:1:00:40} I would say, hang on for the ride; it can be pretty hectic. I would generally say, embrace the pure economics of a marketplace and the opportunity that can come with that, particularly in terms of rounding out certain skillsets from the supply and the sales side of things, to then more of the marketing and communication and merchandising side, on the demand.
{audio:1:01:18} Generally, focus on, how do you generate earned media, relative to a marketplace? With that, you then get the network effects. The importance of giving people stories to tell, is a very key part and if I was to give myself that same advice, it would be, go after what you’re passionate about sooner, not later. Don’t underestimate the impact that earned media can have, on building a marketplace.

{audio:1:02:02} An aced brand will be able to unify all of its stakeholders, with just that one story which is about, how do you bring everyone together, and it’s got to be authentic. The tech piece is, data, it’s scale but, also, how do you take the technology and have it connect emotionally, with the community? Then the community piece, itself, means that you’re aligning. Community can be your biggest strength; it can also be your biggest weakness. I think it almost became one of the biggest weaknesses, at eBay, where the seller community, they would rally against eBay, around fees and other things along those lines. Again, to be community driven, are those incentives aligned around customers, investors and employees alike?

{audio:1:03:09} The purpose piece is more around, where is the purpose aligned? These four things have sort of come out of eBay and there have been times when Airbnb hasn’t done these things well but, for the most part, they have. By doing that, they’ve created the most valuable accommodation business in the world. There are other examples, like from a purpose led point of view, I think Unilever, if you’re not doing good for the world and you’re a brand at Unilever, Unilever is divesting them. Patagonia have said that they won’t make fleece for tech companies now, unless you’re a B Corp. There are a variety of things you see, where businesses are actually standing behind what they say they are, from that purpose led point of view.

From eBay to Airbnb: Marketplace Lessons

eBay's approach to building supply and merchandising versus Airbnb's host community

From eBay to Airbnb: Marketplace Lessons

Former Country Manager at Airbnb and Director at eBay, APAC

inpractise.com/articles/ebay-airbnb-marketplace-lessons

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Executive Bio

Sam McDonagh

Former Country Manager at Airbnb and Director at eBay, APAC

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From eBay to Airbnb: Marketplace Lessons(May 11, 2020)

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