Source: https://arenavc.com/wp-content/uploads/2015/07/airbnb-original-deck-2008.pdf
Date: Fall 2008
Outcome: Entered Y Combinator. Raised seed from Sequoia. Is privately valued at $30 billion as of this writing.
One of my favorite pieces on design is 99% Invisible‘s explainer on “desire paths.” These paths illustrate that, regardless of how a space or product is designed to be used, people will depart from your design in favor of the path of least resistance. Or, in visual form:
In 2008, the hospitality industry thought it had a pretty good handle on how people made travel decisions. They thought they had a monopoly on trusted and safe brands and that to go downmarket meant dirty, scary motels or — shudder — hostels.
Airbnb saw a desire path.
Something interesting happens when you find a desire path: You expand the market. Even Uber didn’t think that far ahead. And notice how Airbnb actually revealed TWO desire paths: people who were looking to lend out their couches and spare bedrooms were listing them on Craigslist — a platform in no way designed to capture this sort of activity — while many more people were looking for “alternative” (inexpensive and/or personalized) hospitality. None of this activity was being properly captured, even on Couchsurfing.
The hotel industry was focused on serving high-margin business and comfortable recreational travelers. They believed in the value of their brands. Airbnb saw millions of people who were looking for trustworthy temporary housing but who were priced out of most brand-name lodging. And they came along when many people suddenly needed to cut their expenses and bring in more money on the side to afford mortgages they could no longer pay.
They paved that desire path just in time.
When you’re pitching a company with a clearly-delineated market, it’s not hard to model how big you can get. But how do you think about your financial future if the market is hidden or dark? You have to find that desire path — what people are doing when there’s no product doing it for them. There are typically two places to find these.
- Data. That’s what that slide above is: A desire path hiding in plain sight. The hard part is that these desire paths will typically emerge in unusual datasets. It’s hard to find a hospitality industry report in 2008 that was talking about Couchsurfing or Craigslist. Read and learn across disciplines.
- Customer validation. You have a theory that a valuable set of customers doesn’t show up in the data? Build an MVP and see what happens.
Pair those together and you have a compelling pitch.
Other notes:
- Most investors might say that, in a two-sided marketplace, you’re better off shoring up supply first before trying to scale up demand, but they secretly want you to bring both along at an efficient pace.
- The User Testimonials slide is great because the testimonials specifically address how Airbnb is competing on dimensions that the big hotels can’t match. Per the first bullet point, it’s also important that they included testimonials from both sides of the marketplace.
- I love perceptual maps on competition slides. They clearly illustrate a market’s softest spots.
- I also love a simple Product/Solution slide. Airbnb definitely qualifies.
- The Craigslist dual-posting feature is pretty rich considering some of Airbnb’s growth tactics.
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