• Three Minutes

Crazy idea or Crazy profits

Updated: Jun 18, 2020

Today we’ll talk about an off-track and seemingly crazy idea that defied the rules of the start-up book.

It is the story of Airbnb and the wild idea that they had.

Before we jump into the story, we must understand two things – Scalability and Central and Peripheral routes to persuasion.

One of the first golden rules for a tech start-up is to ensure scalability. Scalability refers to any system’s ability to adapt and cater to a sudden increase in workload or market demand. This basically means that if your website is getting famous, please ensure that is optimized and doesn’t crash.

Next, is the idea of central and peripheral routes of persuasion. Central route refers to information and facts that attract you towards a product. Xiaomi phones sell simply because of their huge feature range at a small price. Aka value for money.

But on the other hand, iPhones sell due to their look, the premium feel and the status symbols attached to it. This is the peripheral route of persuasion, where brands get you to pay more by attaching intangible characteristics to the product.

You can simply compare the advertisements of these two brands to further understand this difference.

Now that we have this in mind, back to Airbnb

Airbnb is one of the fastest-growing tech companies but its beginnings were pretty rudimentary. The idea for Airbnb came while renting out of 3 air mattresses in co-founders Brian and Joe's apartment. They made $80 per guest and thought that this was a really cool idea so they made a website and started promotions.

Things were not going well. There were listings; there was traffic but revenue was just $200 a week, split between three people living in San Francisco.

Frustrated, they embarked on a crazy plan. The co-founders took their cameras and went to the doors of each of their NYC listings, clicking better apartment pictures. Within a month of starting this strategy - sales doubled. Then tripled. Then....well, the rest is history.

This model wasn’t scalable, it was a totally crazy idea. The idea of founders clicking pictures with maxed out credit cards, spending their last dollar (that they made selling cereal, not kidding) isn’t a feasible plan. If this had failed AirBnB wouldn’t mean anything to us. But they had struck the right chord and had put their everything into it, even if it didn’t make strategic sense, because this was their last straw.

Later they did work on scalability but for the initial period, this was their game. And they succeeded. Because this was the little push that their business needed to getting rolling again.

Now to the second part of our analysis, why did it succeed?

Airbnb had the central routes of persuasion in hand. Cheap rooms in good localities, what more do you want?

But they failed in the peripheral part. The room pictures uploaded by the owners were blurry, often in bad lighting and quality. These pictures just didn’t seem “appealing” enough to the customer. So even though they had the traffic, people just browsed and left.

Thus posting professionally clicked pictures, in good angles put a positive image and a good feeling in the customer’s mind. That is the reason why, within weeks, Airbnb soared. The idea seems so rudimentary that we may think how could they miss this? But these small things are the ultimate game-changers.

So the next time you have an idea, don’t put it aside simply because it isn’t in sync with the start-up rulebook. Because the best part of being a start-up is that there are no rules!

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