How Airbnb's Founder Conquered The "Trough Of Sorrow" With Enlightened Empathy

When they couldn't seem to get their idea off the ground, Airbnb's founders got close with their customers—really close.

In the early days of a new company there are problems. It's inevitable. Maybe there are no customers, you realize everything you thought they knew is completely wrong, or, everyone thinks your idea is crazy.

"What they call this in the lifecycle of an idea is the trough of sorrow," says Joe Gebbia, cofounder of Airbnb. "It's a very bleak, dark time where you're just trying to kinda figure out how to get your idea off the ground."

Joe Gebbia

Of course, Gebbia and Airbnb made it out of the inevitable trough of sorrow, but it's something that tests the resolve—and legitimacy—of any new enterprise. How, exactly did they persevere? Gebbia and his crew got close with their customers—really close.

"We used to travel and actually stay with our customers," says Gebbia. "It was the ultimate enlightened empathy—you were so close to the people you were designing for that it informed you in a way that, you know, an online survey never would."

"So by being so close to our customers we were able to listen to their needs and then design a product that they loved."

Video produced by Knack Factory for The Feast.

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  • Steven Unger

    airbnb presents itself as a leader of the "sharing economy". But consider that the renting guest pays airbnb at the time the reservation is made, but airbnb pays the host when the guest arrives. No one seems to notice that a big chunk of airbnb's profits must come from the interest they earn on the guest's money that they hold for days, weeks or months. Earning interest on the other people’s money?
    Sounds pretty corporate to me. (Perhaps airbnb should support the sharing
    economy be donating the accrued interest to charity or using it to support

    Be that as it may, I do believe that a homeowner in a residential zone should be able to rent 1 or 2 bedrooms to guests for less than 30 days at a time. To do so the homeowner should pay a modest annual license fee (say $100 per room) and collect local lodging tax, and be required to be living in the property during the guests stay to supervise the property and the guests. For travelers, such airbnb listings typically have nightly rates below those of decent local hotels. However, in terms of economic self-interest, these hosts may have decided that having short-term renters is more profitable or desirable then offering their rooms to long-term roommates – thus depleting the stock of lower cost roommate rentals in the local housing market.

    The bigger problems with airbnb rentals come when the host or homeowner does not live in the property and is therefore not able to supervise the property or the guests. Some of these are properties where the airbnb host normally resides but is temporarily renting out the property while they travel. Others, however, are apartments, condos and whole houses where the host, owner or a manager simply does not reside. When a short-term rental is unsupervised, is there an emergency plan in case of a fire? Do the neighbors have a phone number to call if the unsupervised guests get out of hand? Do apartment neighbors or the condo association even know that keys and access codes are being given out to short-term renters? And many of these unsupervised rentals have high rates of $200 to $800 per night (similar to expensive hotels). These hosts and property owners have decided that renting for short-term stays is more profitable than month-to-month rentals or sublets. However, an ongoing short-term apartment, condo or “whole house” rental depletes the local rental market. When a residential property goes "commercial" in this way there must be more demanding requirements for licensing.

    I live in a Portland, Oregon with a population of 800,000. There are over 1,000 airbnb type listings and a large number are not owner occupied and rent for $150 to $800 per night. Most of these do not collect local lodging tax. Altogether Portland is
    losing over $1,000,000 a year in badly needed revenue. This is because airbnb
    pays lip service to helping municipalities enforce local codes and collect
    lodging tax. Also, in Portland, enforcement of the existing Bed & Breakfast
    Ordinance is currently "complaint driven". So some unlicensed airbnb
    hosts get shut down while others do not.

    To be of assistance airbnb should provide sufficient information to the municipality so that city officials can identify and contact those who list properties to inform them of licensing and tax requirements. (This could be limited to the name, address,
    phone and e-mail associated with each listing.) Currently it is impossible to
    do get the identifying information from the airbnb website necessary to contact
    the host or file a complaint except to pretend to be a potential guest.

  • Ned_Ed_Ted

    Steve, bank interest rates are so low now (such as 0,1% for demand deposits) so I sincerely doubt that "a big chunk of airbnb's profits," come from interest on retained deposits.

    You have a point about city lodging taxes, and I understand that airbnb is trying to work with some cities on collecting that. The problem is that cities often have an entire ecosystem of laws that effectively prevent anyone from legally sharing a spare room. Think of zoning laws, business licensing laws, lodging taxes, and sometimes, rent control laws. These laws were designed with big hotel chains in mind, not individuals with a spare room to rent. Cities that wish to embrace the benefits of the sharing economy will need to take note and revise their legal code so that an individual homeowner can realistically comply with the law without hiring a legal team.

  • Jeanine Banks

    Hats off to Airbnb for applying design thinking and Lean principles to delight customers.