Airbnb and copycat challenges | dstill.ai shared chat

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How did AirBnb deal with copycats?

AirBnb dealt with copycats through a combination of strategic decision-making, product innovation, and focused execution.

One way AirBnb dealt with copycats was by focusing on their unique value proposition and staying true to their original mission. They recognized the importance of building trust with users and designed features such as user profiles, secure payment systems (inspired by platforms like Facebook and PayPal), and review systems (inspired by Yelp) to foster trust among users .

Furthermore, AirBnb took a proactive approach to fight off copycats, conducting "an all-out war" against competitors who cloned their product. They launched in-person community meetups, built local operations teams, created playbooks for different regions, and engaged in aggressive acquisition and recruitment strategies .

In some cases, AirBnb also faced the option of acquiring the copycat companies, but ultimately chose not to pursue that route, as they believed it would compromise their culture and the original idea behind AirBnb .

Additionally, AirBnb's response to copycats was influenced by their focus on the long-term and making decisions that aligned with their mission and company values. They recognized that the best revenge against a clone was to let the clone run the company long-term, while staying true to their own vision .

Overall, AirBnb's successful response to copycats involved a combination of focusing on their unique value proposition, staying true to their original mission, implementing innovative features to build trust, engaging in aggressive competition strategies, and making long-term decisions that aligned with their company values .

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): And I ended up going on a hike in Bolinas, California in late 2019 with Joe and Nate, and I told them about this. And they said, what do you mean? I said, well, the company's successful, but it's not exactly the company I intended for us to build. And they said, what do you mean? I said, well, growth is slowing. Cost is rising. It's like super hard to get work done. There was a lot of bureaucracy. We were doing a billion dollars of marketing, like pretty soulless, like performance marketing. We were increasingly focusing more and more energy on like hotels and property managers and things that weren't central to the original idea of Airbnb.

Roelof Botha: With the company's massive growth, the team strayed from its focus on the original mission of building connection between guests and local hosts.

(someone): I knew some big changes needed to happen, but I didn't quite know how to change them because we were about to go public. And I'm like, oh my God, what do we do? So I come back New Year's Day, after New Year's 2020, and I meet with the executive team and I say, I know we're about to go public, but I think we need to make some changes, but I don't quite know how. And I know this seems like a really bad time. And we didn't quite know exactly what to do. And all of a sudden, the pandemic hits. And within eight weeks, we lose 80% of our business.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): You mean to say that strangers are going to stay with other strangers?

Roelof Botha: Remember, this was back in 2008, before Uber, DoorDash, Instacart, before the sharing economy was a mainstay of our lives. Today, we don't think twice about getting into an Uber. But back then, the idea of sharing a space with a stranger sounded kind of weird. Getting people to seriously consider Airbnb, to trust Brian and his co-founder's idea enough to use it, was the company's first crucible moment. The company's existence hinged on it. How do you unlock user trust?

(someone): I think we thought of it as a design problem. How do you design something for people to kind of virtually get to know people well enough to be able to trust each other, to give each other access? And I think we just, you know, we just looked at like a number of things that were converging. Facebook is rising at the time, social networking. That was an era where people had profiles. So it seemed kind of obvious that people on Airbnb should have profiles. PayPal was rising, and increasingly, people could pay each other online. And then Yelp was very popular, and people were used to rating things five-star. And they were also used to telling a story with a review. It wasn't just a five-star, but they would leave an actual review and write. And messaging platforms were becoming more robust.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): And so over the last couple of years, we've done our very best to grow into that valuation. And I think that hopefully the results now speak for itself.

(someone): When I think about the role of the pandemic crisis on Airbnb's business, we are a fundamentally different and better business today because of that crisis. And the lessons there were act quickly, be decisive, consider your stakeholders, and play the long game. You know, where we are today, we are leaner, we are more focused, and we haven't forgotten the pain that was the forcing function for all the changes that ultimately made us stronger.

(someone): Since we went public, we've made more than 340 upgrades and innovations to the product. It went from a breakeven business to generating. We're a unicorn by cashflow, three and a half times over. And I'm pretty proud of that. And we are just relentlessly obsessed with creating the most magical experiences, bringing people together. I think that People need travel in connection with other people more than ever before. Because the office is now Zoom, the mall is now Amazon, the theater is now Netflix. And I think travel is increasingly becoming the way that people see their friends. They reunite with others. They meet people. And that's what I want to do. I don't just want to be in the business of travel. I want to be in the business of getting back to that idea of Airbnb, that original idea.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): We'd create all the different guidelines for them. Then I'd go to the market. We'd do a big launch. We did a bunch of press interviews. We'd do a giant community meetup. We'd work with the team, get them all rallied and mobilized. And we'd go, and we'd never look back. And it was essentially an all-out war for a couple of years, probably. And predictably, they were able to stick with us for a little bit, but exactly what I thought was going to happen, happened.

Roelof Botha: WMDU hung on for seven years, but in the fall of 2018, they finally capitulated. As Brian predicted, the missionaries prevailed.

(someone): They never had an intention, in hindsight, to build a long-term company. They built this company to sell it. It ultimately became a marathon and they didn't want to keep racing.

(someone): One sign of success to me from Airbnb through this crucible moment with Windu is, in some sense, this was known to be the harder path. And in retrospect, they made it look easy. I don't think it was actually easy at any given point in time when they were going through the motions of trying to sign up as many listings as possible in Europe. But slowly but surely, a company that was based in San Francisco, most of its business in the United States, ended up in a situation where the majority of the business was actually coming from Europe and bookings in Europe.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): All of a sudden I felt like we had a gun to our head. And this company overnight raises a parent of supposedly a hundred million dollars. And they hire like 400 people in 30 days. They set up all these international offices and they said, we're going to be the international Airbnb. We're going to be the Airbnb of Europe. And this was a huge problem for us. If you're Airbnb and you're not in Europe and you're a travel company, but you can't travel to Europe, that's like not a very interesting product. Airbnb not being international is like your phone, not having email. It's just not useful. And then sure enough, I get an overture from the Samber brothers to meet. Oliver Samber inviting me and my co-founders and a partner from Sequoia to Berlin.

(someone): By the way, this was Greg McAdoo, a former Sequoia partner who initially sourced Airbnb. And he traveled to Berlin with Brian, Joe and Nate to meet Wim Do in 2011.

(someone): And so we fly to Berlin and the office is in like a former factory. The factory is converted to a tech office, but honestly, it still looked like a factory. It was literally like an assembly line, maybe a sweatshop. When I say sweatshop, like people were literally sweating in there, like there was no air conditioning. There's hundreds of people sitting elbow to elbow, and many of the people have two monitors up.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): Overnight, they went from zero to a billion dollars in revenue. They were the hottest company in tech. And then this company called CityDeal cloned them and created a European version of them. And Groupon ended up having to buy that company. And Citi Deals was created by these brothers called the Samware Brothers. I remember I was meeting these investors and they basically told me, the major thing you need to worry about is if these brothers discover you, because they can rebuild your business overnight. And so I thought, oh my God, as long as these two brothers don't clone us, we're probably fine. One day we like noticed that we're getting all this scraping data and like a lot of weird messages are being sent to our host to list on this site called Wimdu. And we're like, what's Wimdu? And we learned that Wimdu is a clone of Airbnb based in Europe, out of Berlin. And it's created by the Samwer brothers.

(someone): Every time we change a pixel or change anything on our website, Window would change theirs to basically mirror our website. They would be contacting our host, placing bookings on Airbnb just to go there and recruit the host to list on Window. It's quite a fascinating situation on a copycat competitor that was trying to beat Airbnb, but doing it in ways that were very competitive on day one.

(someone): All of a sudden I felt like we had a gun to our head. And this company overnight raises a parent of supposedly a hundred million dollars.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): Or do we compete with them and conduct a ground war?

(someone): I thought, there's no way we buy them and we win. Because even if we do win, it's never going to be Airbnb again. It's going to be a different culture. It's not going to have the same spirit. And we're going to bring in a mercenary mentality to an otherwise mission-oriented company where people suddenly, it'd just be a culture clash and it's not going to go well. And I just didn't think they really cared at all about the experience. They didn't care about design. They didn't care about connection, all the things that we talk about. And I said, well, that is not a culture fit. And if one of my goal was to flip the company, then this probably would have made sense. But I'm 41 now. And at the time I thought I'd be still doing this in my forties. And I said, I need to make really, really long-term decisions. And I thought the best revenge against a clone isn't to beat them. It's just to make them run the company long-term. You had the baby. You raised the baby. I'm not adopting your baby. You raised the baby. And I thought there's no way they're going to raise this baby for 18 years.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): It was literally like we're on a mission and we weren't going to lose.

(someone): The efforts we made were fast and furious. And Ryan was very, very focused on how do we sign up a lot of supply? How do we get hosts to become productive as quickly as possible? How do we make products and services to get them to be great hosts? There was a lot of meetups. He was traveling a lot. He was going all over Europe to host many of the meetups. He also had to talk to a variety of government officials because some various government officials thought that Airbnb was a crazy idea. But that wasn't new to him. People thought Airbnb was a crazy idea from the beginning.

(someone): You know, I think we did a really good job localizing Airbnb. That was really critical. It's probably the biggest ROI thing we ever did. And then we created a playbook, a country by country playbook. And I think we did it actually before Uber and others. And then we became like the model that other companies then built off of, but. We'd get a country manager. I would interview the manager. I would then go to the team. We'd create a whole Airbnb inbox kit. They would build out a local operation. We'd create all the different guidelines for them. Then I'd go to the market.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): Next, I basically started immediately cutting costs. We reduced the pay of all the executives. We punted a lot of key projects. I studied Apple when Steve came back to Apple. He reduced the product line. He went back to a functional organization. That's what we did. Reduced the product line. We went back to a functional organization. We had to do a layoff. We were one of the first big layoffs in Silicon Valley. We cut 25% employees. It was the hardest thing I ever did. We had over a billion dollars worth of reservation requests that came in for guests that wanted to cancel their trips, but they couldn't get a refund because of their cancellation policy. And the hosts were really hoping to get paid.

Roelof Botha: In a two-sided marketplace with guests on one side and hosts on the other, Airbnb faced existential financial risk.

(someone): The hosts are thinking, I'm not going to get any more revenue for a period of time because all of travel is shut down. And the guest is like, well, I don't know what's going to happen. Maybe I'm going to lose my job because of the pandemic and I have to take care of family members. I need that money back. There's about three or $4 billion of customer deposits where both sides are claiming that they were owed that money.

(someone): And so a real tension of who do you favor, guest versus host?

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): When I say sweatshop, like people were literally sweating in there, like there was no air conditioning. There's hundreds of people sitting elbow to elbow, and many of the people have two monitors up. On the left monitor is Airbnb's website and the right monitor is Wimdo. And literally there are designers and engineers cloning the site, like an assembly line cloning the product in front of us. And all of our family was like, you are the Americans, you are the innovators, but we are the executors. And he said, we are going to copy you. We're going to clone you. We're going to out execute you. He was very straightforward. He's like, this is exactly what we're doing.

Roelof Botha: The Samweb brothers effectively gave Airbnb an ultimatum. Buy us or else. It was a crucible moment where Brian and his team had to decide. In the face of a company shamelessly cloning your product, do you buy them or do you fight back?

(someone): It was a struggle to sort of think about this company that is trying to copy Airbnb in a different region of the world. Should we just buy them because they have traction in another geography and maybe we should allow them to continue to grow there and make them part of Airbnb? Or do we compete with them and conduct a ground war?

(someone): I thought, there's no way we buy them and we win.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): And it's very easy to look at Airbnb and the analogy would be an online travel booking site, an OTA. And then you should just accept whatever inventory that can make you money.

(someone): I think there was a temptation to say, well, the natural instinct is to expand hotels. But I think that we had a really good insight early on to focus on a differentiated product to really hone in on a niche category. But beyond our business rationale, like, listen, I'm in my twenties and I'm like, I'm not dedicating the rest of my life to building a hotel booking site. Like there's something magical about people staying with each other and that's, we want to focus on and we don't want to divert our focus. I like to ask entrepreneurs, like, why do you deserve to exist? And the best generic answer I've ever heard is because if I don't do it, no one else will. And if your answer to the question is if I don't do it, someone else will, then that's a less compelling answer. And so I felt like if we don't do this concept, no one else will. And for a while, that was true. And then one day, someone else copied us. Here's how it happened. I want to take you back to 2011. The fastest growing company ever up to that point, supposedly was a company called Groupon. Overnight, they went from zero to a billion dollars in revenue. They were the hottest company in tech.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): And we had an idea. We said, well, what if we just turned our house into a bed and breakfast for the conference? We can meet some cool designers, get paid. They can have a local guide to the city. But there's a problem. And the problem is, like, we didn't really have beds. We just moved there, and Joe had a bed. I was literally sleeping on a foam mattress. And Joe said, well, no worries. I have a bunch of airbeds in my closet. So we pulled the airbeds out of the closet. We inflated them. We said, this is not a bed and breakfast. This is an airbed and breakfast. It's going to be cheaper than a bed and breakfast. And we built the website in like three days. It was just Joe and I, basic HTML, and we launched it. And I didn't know what kind of people would stay with us, but three people ended up booking with us and something really cool happened. we made enough money to pay our rent. Something even better than that happened, though, is three people lived with us for a week. And here's the thing, when three strangers come and they stay with you for a week, it's like you take a multi-year relationship and you compress it to a matter of a few days, right? You get to know somebody when they live with you and you spend all day with them.

Airbnb ft. Brian Chesky - Battling a copycat clone and rebuilding user trust to revolutionize travel

Crucible Moments

(someone): All of a sudden I felt like we had a gun to our head. And this company overnight raises a parent of supposedly a hundred million dollars.