Reference no: EM133237835

Airbnb Succeeds with Global Vision but Local Touch

Brian Chesky, Joe Gebbia, and Nathan Blecharczyk knew they were on to something with the idea of playing matchmaker between people with extra rooms or vacant homes to rent and travelers looking for cheaper or more interesting alternatives to hotels. However, in those early days they might not have realized they were setting a course to disrupt the global travel industry and become a major force in what is now known as the sharing economy.

Among other things, Airbnb's growth is a story of dogged persistence. Despite multiple rejections from investors and several failed attempts at launching the company, the trio kept at it. They learned, adapted, and in the parlance of entrepreneurship, pivoted multiple times in search of the right product-market fit.

Many companies view international expansion as an opportunity to grow. Airbnb saw it as a necessity. The network effectis crucial to its success; that is, the larger the network of hosts and guests, the more valuable the system is to everyone. Potential hosts will be more inclined to join the community if they believe there will be enough business to make it worthwhile, and travelers will be more inclined to search for accommodation on Airbnb if they believe they will find lodgings that suit their needs. As the company's vice president in charge of product development, Joe Zadeh, puts it, "for Airbnb to work we have to be everywhere."

Of course, there are many different ways to operate internationally, and these decisions can make or break a company's expansion plans. Airbnb's choices were defined on one side by its reliance on technology and strong company values and on the other by the extremely diverse range of local market dynamics around the world. To make sure it maximizes the return on its investment in web and mobile technologies and upholds those core values while responding to local conditions, the company uses the transnational strategy described here. In other words, it is a model of thinking globally while acting locally.

The company's values and operating standards include a strong sense of community for hosts and guests, high standards of cleanliness and safety, and respect for government authority. Regardless of where they are in the world, hosts and guests alike are expected to treat each other and surrounding neighborhoods with respect. The company offers extensive guidance to hosts, for instance, to make sure guests have a safe and enjoyable experience and that property owners stay in compliance with real estate laws, tax regulations, and other expectations. To make sure these global values are implemented appropriately on a local level, Airbnb gives hosts specific city-by-city advice on how to follow regulations.

The willingness to work with government regulators is crucial to the company's success, now and in the future. (In this regard, Airbnb's approach from the beginning was starkly different from that of Uber, another major player in the sharing economy, which under its original leadership earned a reputation for crossing ethical and legal barriers.) Property sharing is a more pervasively disruptive enterprise than ride sharing, so this cooperative approach might be viewed as enlightened self-interest. Many cities around the world suffer from a housing shortage, with rents so high in desirable central locations that even people with midrange incomes can't afford to live there. When property owners choose to rent their spaces to short-term visitors, they keep these accommodations out of the general housing supply and thereby make choices even more limited for people who want to live in those areas. With its global mandate to respond to local authorities individually, rather than trying to impose its business model on the world, Airbnb is better positioned to succeed in the face of occasional opposition.

Promotion and communication are other key ways that Airbnb implements the global-local model. All aspects of branding and communication strategy are defined at a high level but adapted to local conditions country by country. In Airbnb's role as an intermediary, it has double the marketing challenges of a typical company: It needs to attract hosts willing to share their properties with complete strangers and travelers willing to forgo the predictability of hotels for the unique experience of staying in someone else's home. Connecting with people on a local, individual basis is therefore crucial.

With a presence in nearly 200 countries, content translation is a huge and never-ending task for Airbnb as new listings are continuously added to the site. Airbnb uses a semi-automated approach to translating the website into more than two dozen languages, including a custom translation tool that detects when new phrases are added to listings and sends them to the company's translators, who can then fine-tune the wording.

Airbnb also adapts its account management and payment systems to accommodate local needs. For example, customers in many countries can sign up using a Facebook or Google account. However, in China and other parts of Asia, the mobile messaging services Weibo and WeChat are much more popular, so Airbnb lets people sign up using their accounts on those systems. Payment options are also highly localized, such as a method for getting around the lack of credit cards in Cuba.

The business has grown unimaginably since those early air-mattress days, and the company's smart approach to international operations deserves much of the credit. As Airbnb confronts new challenges from competitors and local market conditions, Chesky, Gebbia, and Blecharczyk are sure to keep thinking globally and acting locally with continued success.

Critical Thinking Questions

Question 1. Would licensing the Airbnb business system to other companies have been a better way to establish the brand in various countries? Why or why not?

Question 2. Should Airbnb consider changing its name to something more locally meaningful in each country? Why or why not?

Question 3. Why does the sense of community as a strategic theme work better for Airbnb than it would for a ride-sharing company such as Uber or Lyft?