6 ms·

How Design Thinking Transformed Airbnb Into a Billion Dollar Business

104 points by ASquare 12y ago

compare 12y ago
Was really hard to figure out what in that article has anything to do with "design". If anyone is as confused as I was, it seems that "design thinking" is something totally different: http://en.wikipedia.org/wiki/Design_thinking http://en.wikipedia.org/wiki/Design_thinking and I'm not too sure what that phrase really means either.
- pitchups 12y ago
  From the Wikipedia article: "This approach differs from the scientific method, which begins with thoroughly defining all the parameters of the problem in order to create a solution. Design thinking starts without preconceived problem definitions and solutions, in order to discover hidden parameters and alternate optimized paths to the goal." Airbnb experimented with a different approach by going out and taking better pictures themselves, rather than the using the preconceived notion that startups should never do things that do not scale.
  - idlewords 12y ago
    That doesn't sound like any scientific method I know.
    - andyidsinga 12y ago
      was thinking the same thing ..how about a hypothesis and an experiment to test it :) it seems to me design and scientific method need not be separate at all... i worked with some good designers at ziba on my last project and they were effectively following a scientific method - hypothesis for design, rapid implementation, then testing with users, observe and repeat. ( was fun too )
- GFischer 12y ago
  I attended a workshop on Design Thinking, the tl;dr version is here (a PDF which I recommend especially for startups): http://dschool.stanford.edu/wp-content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf http://dschool.stanford.edu/wp-content/uploads/2011/03/Bootc... even better, try to get into the Stanford course (they give open, 4-hour workshops, the last one was full) http://dschool.stanford.edu/ http://dschool.stanford.edu/ Edit: they also have a virtual "crash-course": http://dschool.stanford.edu/dgift/ http://dschool.stanford.edu/dgift/ I was shown some of the materials students made (in full Stanford courses, not in the 4-hour introductory workshop :) ), and they were amazing. I observed that one thing Americans have over students in my home country/culture is, they're way more likely to learn how to make awesome presentations :) .
- tensor 12y ago
  Design Thinking is the new MBA, but coming from a design background. I'm not that fond of it since I just call it "good business brainstorming" or "good problem solving."
beartime 12y ago
Their recent design should transform them into a million dollar business
pchristensen 12y ago
"How A Huge Market Opportunity Let Designers Create a Billion Dollar Business"
aaronchriscohen 12y ago
SUMMARY: "we were shocked, SHOCKED, to discover that an ad with a nice picture performs better than an ad with a bad picture."
- excellentpants 12y ago
  I laughed. However I think the article is trying to make the point that software engineering-types are sometimes prone to otherwise obvious oversights because they tend to think of solving all of their business problems with code.
rmcfeeley 12y ago
Would be more interested in "How Actively Breaking Existing Laws Transformed Airbnb Into a 'Billion-Dollar' Business"
- EricDeb 12y ago
  When white-collar financial institutions break the law it's called the cost of doing business. When hot startups break the law it's called disruption. When poor, lower-class folks break the law it's called breaking the law.
clairity 12y ago
i like the underlying message (get out and try stuff, even if it doesn't scale), but is the core example (increasing revenue & possibly saving the company by iterating on the product) really a "design thinking" solution? it seems that this kind of thinking should pervade the whole team at a startup, not just be confined to the designers. don't get me wrong, i love good design and have used google venture's design sprint methodology (http://www.gv.com/lib/the-product-design-sprint-a-five-day-recipe-for-startups http://www.gv.com/lib/the-product-design-sprint-a-five-day-r...) to great effect. but there's something about the term "design thinking" that draws a line that doesn't seem to need to be there, particularly in early-stage startups.
- tonylemesmer 12y ago
  Design thinking means that the non designer employees should think like designers. Not that the designers should do everything. I don't necessarily think this was a design thinking solution. It was simply a pragmatic business necessity: do anything possible that improves the customer experience. Its what the boss of the company should have been asking his employees to think of. Edit:spello
  - clairity 12y ago
    i think that's exactly what i was getting at: it should be something everyone on the team is doing. i doubt that this is the intent, but the term seems to be exclusive rather than inclusive. i'd be happy to be proven wrong though.
mrharrison 12y ago
I like how their success story keeps changing. I think it was a TED interview or something like that I heard a couple years ago of their success story. Which was Paul Graham, convinced them to go meet their customers face to face to learn their customers and form a personal relationship with them. Now it seems to be bright pretty pictures.
- 27182818284 12y ago
  The graph of the data with the high quality, bright photos showed a "WOW!"-like increase. I think they have a copy of the graph in Lean Analytics now. It is a dramatic change. Not like "Oh we saw an increase in traffic" but more like hockey-stick difference. I think everyone knows better pictures are better, but I don't think anyone realized how much of a large difference it could make--especially in their area. —Oh here is a copy I found real quick. As far as I know, they hired a few photographers, saw a statistical difference, and then decided to hire 20 http://i.imgur.com/VpYTF9L.png http://i.imgur.com/VpYTF9L.png
  - thathonkey 12y ago
    The graph you linked shows them already on the uptick before going to do the photos but the article doesn't mention that.
- tolmark12 12y ago
  The title of the article is a bit grandiose; however I suspect their success is likely the net effect of many great small decisions like this.
  - mrbird 12y ago
    Probably "helped transform" would be better.
- dang 12y ago
  This comment seems a little... prosecutorial. Why should there be only one reason? It has been obvious for years that design is a huge factor in Airbnb's success, and that it's a lot more than "bright pretty pictures". That shit is hard and they nailed it. I'm sure they did some other things too.
etattva 12y ago
They owe a lot of success to craigslist. They had been sending emails to users who had been posting the rentals on craigslist. I had read this in some initial success story.
- simantel 12y ago
  Not only did they poach users from Craigslist, but they also built a feature that allowed you to crosspost your listing to Craigslist.
  - GFischer 12y ago
    The thing is, building a marketplace (or a community) is very difficult because you have to fill and balance both the supply and the demand sides. That's why startups resorts to these kinds of "hacks" (whether it's ethical/legal or not is another problem), it's akin to Reddit owners having multiple accounts to give the impression of an active site.
- martian 12y ago
  I thought the same thing, but some say otherwise: https://news.ycombinator.com/item?id=4497569 https://news.ycombinator.com/item?id=4497569
Cookingboy 12y ago
AirBnb is a billion dollar business now? I thought that usually refers to revenue and not valuation, otherwise we'd call a bunch of startups without a product "20 million dollar business".
- mikeyouse 12y ago
  In finance circles, when companies are referred to as "Million/Billion Dollar Businesses" it's typically in terms of their market capitalization, which is consistent with the OP's title. Obviously we could quibble about the liquidity / depth of AirBnB's valuation, but it's pretty safely into the billion+ market cap realm. One example why it makes sense to use market cap. rather than revenue comes from post-bankruptcy GM. When they re-IPOed in 2010, GM's market cap was roughly $50B. However, in 2010, GM had $135B in revenue. Would anyone really argue that GM is a "$130 Billion Business" when you could purchase the entire firm for $50B?
  - Cookingboy 12y ago
    Not always. When Wall Street say "iPhone is a x billion dollar business for Apple" they refer to the revenue, not market share. When they say "SAAS is a X billion dollar business" they mean revenue, not the combined market cap of all SAAS companies. But yes, I think it can be ambiguous.
gizmodo59 12y ago
A lengthy article in NY Times with the word 'billion' is all that required now to increase the hype.
wdewind 12y ago
> This was the turning point for the company. Gebbia shared that the team initially believed that everything they did had to be ‘scalable.’ It was only when they gave themselves permission to experiment with non-scalable changes to the business that they climbed out of what they called the ‘trough of sorrow.’ The place where everything changed is where the company literally started disregarding the concept of design (not saying it's a bad strategy, but afaict the entire point of design is to be forward thinking before you actually do something). It seems, if anything, becoming less designed saved them.
collyw 12y ago
I only found out about airbnb around a year ago. At the time the map was ridiculously small. Is (was)that design focused? (Actually design seems to be a particularly ambiguous words, that can mean anything from translating engineering requirements to "looks pretty and is in the current style")
gaius 12y ago
Design thinking and a flexible approach to property law.
abreckle 12y ago
Great article. Joe really nails it. I wrote about an early experience with them, and the resulting lessons learned from watching their evolution here https://medium.com/@adambreckler/its-like-craigslist-but-better-76d6de78afa0 https://medium.com/@adambreckler/its-like-craigslist-but-bet...
gmeluski 12y ago
Having apartment hunted myself, I have the personal experience of noping right out of any listing with no / bad photography. Categorizing this realization as 'design thinking' leans on hyperbole, and that ultimately has more to do with editorial direction than AirBnB beating its own chest.
general_failure 12y ago
I must have read atleast 3 versions for the reason of airbnb's success. As they say, history is written by the winners. Might as well write multiple versions.
lifeisstillgood 12y ago
I am feeling a tad jaundiced but can I give a reason for AirBnB's success as well: They found a way to allow people who do not own property nor have the rights to rent out the property, to receive cash for renting out said property. The recent BBC article estimated 40% of their bookings in this illegal / legal grey area. When you have the ability to give income off capital to those who don't own capital it is an attractive deal - see stock shorting etc. PS I am (depressingly) expecting a fair number of downvotes, but I do hate to see businesses which operate dubiously (albeit a mild version relatively speaking) not being called out on it. At least YouTube got a roasting off the music and movie lawyers. And I would like to point to ethicalconsumer.org as a fairly eye watering list of the ways in which "dubious" is ingrained in our society. We have a long way to go.

104 points by ASquare 12y ago

Was really hard to figure out what in that article has anything to do with "design". If anyone is as confused as I was, it seems that "design thinking" is something totally different: http://en.wikipedia.org/wiki/Design_thinking http://en.wikipedia.org/wiki/Design_thinking and I'm not too sure what that phrase really means either.

pitchups 12y ago
From the Wikipedia article: "This approach differs from the scientific method, which begins with thoroughly defining all the parameters of the problem in order to create a solution. Design thinking starts without preconceived problem definitions and solutions, in order to discover hidden parameters and alternate optimized paths to the goal." Airbnb experimented with a different approach by going out and taking better pictures themselves, rather than the using the preconceived notion that startups should never do things that do not scale.
- idlewords 12y ago
  That doesn't sound like any scientific method I know.
  - andyidsinga 12y ago
    was thinking the same thing ..how about a hypothesis and an experiment to test it :) it seems to me design and scientific method need not be separate at all... i worked with some good designers at ziba on my last project and they were effectively following a scientific method - hypothesis for design, rapid implementation, then testing with users, observe and repeat. ( was fun too )
GFischer 12y ago
I attended a workshop on Design Thinking, the tl;dr version is here (a PDF which I recommend especially for startups): http://dschool.stanford.edu/wp-content/uploads/2011/03/BootcampBootleg2010v2SLIM.pdf http://dschool.stanford.edu/wp-content/uploads/2011/03/Bootc... even better, try to get into the Stanford course (they give open, 4-hour workshops, the last one was full) http://dschool.stanford.edu/ http://dschool.stanford.edu/ Edit: they also have a virtual "crash-course": http://dschool.stanford.edu/dgift/ http://dschool.stanford.edu/dgift/ I was shown some of the materials students made (in full Stanford courses, not in the 4-hour introductory workshop :) ), and they were amazing. I observed that one thing Americans have over students in my home country/culture is, they're way more likely to learn how to make awesome presentations :) .
tensor 12y ago
Design Thinking is the new MBA, but coming from a design background. I'm not that fond of it since I just call it "good business brainstorming" or "good problem solving."

beartime 12y ago

Their recent design should transform them into a million dollar business

pchristensen 12y ago

"How A Huge Market Opportunity Let Designers Create a Billion Dollar Business"

aaronchriscohen 12y ago

SUMMARY: "we were shocked, SHOCKED, to discover that an ad with a nice picture performs better than an ad with a bad picture."

excellentpants 12y ago
I laughed. However I think the article is trying to make the point that software engineering-types are sometimes prone to otherwise obvious oversights because they tend to think of solving all of their business problems with code.

rmcfeeley 12y ago

Would be more interested in "How Actively Breaking Existing Laws Transformed Airbnb Into a 'Billion-Dollar' Business"

EricDeb 12y ago
When white-collar financial institutions break the law it's called the cost of doing business. When hot startups break the law it's called disruption. When poor, lower-class folks break the law it's called breaking the law.

clairity 12y ago

i like the underlying message (get out and try stuff, even if it doesn't scale), but is the core example (increasing revenue & possibly saving the company by iterating on the product) really a "design thinking" solution? it seems that this kind of thinking should pervade the whole team at a startup, not just be confined to the designers. don't get me wrong, i love good design and have used google venture's design sprint methodology (http://www.gv.com/lib/the-product-design-sprint-a-five-day-recipe-for-startups http://www.gv.com/lib/the-product-design-sprint-a-five-day-r...) to great effect. but there's something about the term "design thinking" that draws a line that doesn't seem to need to be there, particularly in early-stage startups.

tonylemesmer 12y ago
Design thinking means that the non designer employees should think like designers. Not that the designers should do everything. I don't necessarily think this was a design thinking solution. It was simply a pragmatic business necessity: do anything possible that improves the customer experience. Its what the boss of the company should have been asking his employees to think of. Edit:spello
- clairity 12y ago
  i think that's exactly what i was getting at: it should be something everyone on the team is doing. i doubt that this is the intent, but the term seems to be exclusive rather than inclusive. i'd be happy to be proven wrong though.

mrharrison 12y ago

I like how their success story keeps changing. I think it was a TED interview or something like that I heard a couple years ago of their success story. Which was Paul Graham, convinced them to go meet their customers face to face to learn their customers and form a personal relationship with them. Now it seems to be bright pretty pictures.

27182818284 12y ago
The graph of the data with the high quality, bright photos showed a "WOW!"-like increase. I think they have a copy of the graph in Lean Analytics now. It is a dramatic change. Not like "Oh we saw an increase in traffic" but more like hockey-stick difference. I think everyone knows better pictures are better, but I don't think anyone realized how much of a large difference it could make--especially in their area. —Oh here is a copy I found real quick. As far as I know, they hired a few photographers, saw a statistical difference, and then decided to hire 20 http://i.imgur.com/VpYTF9L.png http://i.imgur.com/VpYTF9L.png
- thathonkey 12y ago
  The graph you linked shows them already on the uptick before going to do the photos but the article doesn't mention that.
tolmark12 12y ago
The title of the article is a bit grandiose; however I suspect their success is likely the net effect of many great small decisions like this.
- mrbird 12y ago
  Probably "helped transform" would be better.
dang 12y ago
This comment seems a little... prosecutorial. Why should there be only one reason? It has been obvious for years that design is a huge factor in Airbnb's success, and that it's a lot more than "bright pretty pictures". That shit is hard and they nailed it. I'm sure they did some other things too.

etattva 12y ago

They owe a lot of success to craigslist. They had been sending emails to users who had been posting the rentals on craigslist. I had read this in some initial success story.

simantel 12y ago
Not only did they poach users from Craigslist, but they also built a feature that allowed you to crosspost your listing to Craigslist.
- GFischer 12y ago
  The thing is, building a marketplace (or a community) is very difficult because you have to fill and balance both the supply and the demand sides. That's why startups resorts to these kinds of "hacks" (whether it's ethical/legal or not is another problem), it's akin to Reddit owners having multiple accounts to give the impression of an active site.
martian 12y ago
I thought the same thing, but some say otherwise: https://news.ycombinator.com/item?id=4497569 https://news.ycombinator.com/item?id=4497569

Cookingboy 12y ago

AirBnb is a billion dollar business now? I thought that usually refers to revenue and not valuation, otherwise we'd call a bunch of startups without a product "20 million dollar business".

mikeyouse 12y ago
In finance circles, when companies are referred to as "Million/Billion Dollar Businesses" it's typically in terms of their market capitalization, which is consistent with the OP's title. Obviously we could quibble about the liquidity / depth of AirBnB's valuation, but it's pretty safely into the billion+ market cap realm. One example why it makes sense to use market cap. rather than revenue comes from post-bankruptcy GM. When they re-IPOed in 2010, GM's market cap was roughly $50B. However, in 2010, GM had $135B in revenue. Would anyone really argue that GM is a "$130 Billion Business" when you could purchase the entire firm for $50B?
- Cookingboy 12y ago
  Not always. When Wall Street say "iPhone is a x billion dollar business for Apple" they refer to the revenue, not market share. When they say "SAAS is a X billion dollar business" they mean revenue, not the combined market cap of all SAAS companies. But yes, I think it can be ambiguous.

gizmodo59 12y ago

A lengthy article in NY Times with the word 'billion' is all that required now to increase the hype.

wdewind 12y ago

> This was the turning point for the company. Gebbia shared that the team initially believed that everything they did had to be ‘scalable.’ It was only when they gave themselves permission to experiment with non-scalable changes to the business that they climbed out of what they called the ‘trough of sorrow.’ The place where everything changed is where the company literally started disregarding the concept of design (not saying it's a bad strategy, but afaict the entire point of design is to be forward thinking before you actually do something). It seems, if anything, becoming less designed saved them.

collyw 12y ago

I only found out about airbnb around a year ago. At the time the map was ridiculously small. Is (was)that design focused? (Actually design seems to be a particularly ambiguous words, that can mean anything from translating engineering requirements to "looks pretty and is in the current style")

gaius 12y ago

Design thinking and a flexible approach to property law.

abreckle 12y ago

Great article. Joe really nails it. I wrote about an early experience with them, and the resulting lessons learned from watching their evolution here https://medium.com/@adambreckler/its-like-craigslist-but-better-76d6de78afa0 https://medium.com/@adambreckler/its-like-craigslist-but-bet...

gmeluski 12y ago

Having apartment hunted myself, I have the personal experience of noping right out of any listing with no / bad photography. Categorizing this realization as 'design thinking' leans on hyperbole, and that ultimately has more to do with editorial direction than AirBnB beating its own chest.

general_failure 12y ago

I must have read atleast 3 versions for the reason of airbnb's success. As they say, history is written by the winners. Might as well write multiple versions.

lifeisstillgood 12y ago

I am feeling a tad jaundiced but can I give a reason for AirBnB's success as well: They found a way to allow people who do not own property nor have the rights to rent out the property, to receive cash for renting out said property. The recent BBC article estimated 40% of their bookings in this illegal / legal grey area. When you have the ability to give income off capital to those who don't own capital it is an attractive deal - see stock shorting etc. PS I am (depressingly) expecting a fair number of downvotes, but I do hate to see businesses which operate dubiously (albeit a mild version relatively speaking) not being called out on it. At least YouTube got a roasting off the music and movie lawyers. And I would like to point to ethicalconsumer.org as a fairly eye watering list of the ways in which "dubious" is ingrained in our society. We have a long way to go.