How A Startup Grows Up: Lessons From Airbnb's OpenAir Summit

From conception to full-fledged company, startups can learn a lot from the leaders at a recent San Francisco summit on the sharing economy.

On Thursday, April 24, Airbnb hosted the OpenAir summit: A gathering of the most influential players in the sharing economy, including Uber, Homejoy, and Y Combinator.

Read the full coverage from Fast Company's Alice Truong here, and check out these highlights on growing a startup.

How are startups born?

Y Combinator cofounder Paul Graham says the best startups “just build stuff.”

"If you think about it, a surprising number of the most successful startups were not even supposed to be businesses in the beginning. They were just projects," he said.

Airbnb began when the founders rented their air matresses out to visitors in San Francisco. Today, 11 million guests stay in Airbnb hosted properties.

The takeway: Think too hard about starting a startup, and you’re already straying from the scrappy entreprenuerial spirit that makes them succeed.

How can a startup grow up?

When should scaling growth be on the table?

It’s about standards, said Annie Chang, head of product at Homejoy, a homecleaning marketplace. When the core offering—the root of your business—looks like a plant trying to grow in a too-small pot, it’s time to scale up.

But if what you’re doing isn’t working yet, scaling won’t help, says Box's senior vice president of engineering Sam Schillace. "There's no point in doing it if they're not sticking."

Ben Horowitz, general partner at venture capital firm Andreessen Horowitz, compared startups to babies that become angsty teenagers as they grow (Truong mentioned Facebook, Airbnb, and Github as examples of companies that suffered growing pains). "Everybody loves a baby,” said Horowitz of shiny new startups. “You never run into someone who goes, 'I fucking hate babies.'"

The takeaway: Scale only when you’re ready to remove the training wheels. Until then, savor the wide-eyed developmental stages of your company.

Where should scaling focus?

Think on both sides of the share. Airbnb guests spend, on average, three days considering 20 listings before they book a room. Considering the time and effort guests are investing in their choice—even after choosing to go with Airbnb over a hotel—puts the pressure of a perfect experience on the company.

But that doesn’t mean ignoring the hosts’ experience, says Airbnb software engineer Surabhi Gupta: "It's important to recognize with a two-sided marketplace we have to look at the entire ecosystem." Their hosts are scrutinized by reply rate, response time, acceptance rates, and other factors that bring everyone involved a positive experience.

The takeaway: Don’t neglect makers for the sake of buyers, and vice versa. In a sharing ecosystem, the two are codependent—and their combined satisfaction is what makes your business go ‘round.

What if growth fails?

Graham, at the outset of Airbnb, gave a valuable pieces of advice: "It's okay to do things that don't scale."

Airbnb CTO and cofounder Nathan Blecharczyk credits those words to the company’s success—traveling to New York to meet their hosts and guests in person, and touring properties. "We built evangelists out of them. This is the beginning of how Airbnb grew," said Blecharczyk.

When scaling starts to falter, it’s tempting to cling to the sinking mast of old strategies. "When growth plateaus, you pretty much have to start from scratch,” says Graham. “You need to treat your situation as if you need to come up with a new startup idea."

The takeaway: When a startup starts to stumble, tear it down: Incorporate some of the old, if you must, but start new.

[Image: Flickr user ariel jatib]

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