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Some lessons we should learn from Airbnb.
TLDR: Lesson 1: It’s possible for you to make things better. Lesson 2: Solve your own tiny problem. Lesson 3: Validate quickly and double down when it works. Lesson 4: It’s easy to connect the dots ex-post-facto. Lesson 5: Finding product/market fit from day one is fiction.
We’ll cover lessons 2 and 3 today.
P.S. This is part of an in-depth 4 part essay series. Part 4 ships tomorrow at noon (+1 GMT).
When Brian moved to SF and decided to live with Joe to figure out what their billion-dollar startup was gonna be, he quickly learned that in order to make rent in SF, you have to sell a kidney. Probably both if you’re one of those fancy, pampered types that enjoys the finer things in life such as, you know, nutrition.
He didn’t have his part of the rent though ($1150).
But that weekend, there just so happened to be an international design conference at SXSW, and they noticed that all the hotels on the website were listed fully booked.
They figured: well, designers are gonna have to stay somewhere, we don’t have the money to make rent, so what if we made a makeshift Bed and Breakfast?
[Joe Gebbia showing the email he sent Brian that kicked off Airbnb, at his Ted Talk in 2016. ]
But Brian and Joe didn’t have any beds. However, Joe had some airbeds leftover from camping so they changed their idea to an Airbed and Breakfast (Airbnb).
They ended up hosting a 35yr old woman from Boston, a 45yr old father of 5 from Utah, and a 30yr old man from India. Oh… and they made rent.
If you just want to read about Airbnb, skip the following section and pick back up at: BUILD SOMETHING SMALL THAT YOU WANT AND THINK IS DOPE.
Notice that they weren’t trying to build a unicorn. They just needed to make rent and it seemed like a cool, fun thing to try.
This is a surprisingly common theme in startups. Travis made a similar remark about the origins of Uber:
Because literally every POS article on Business Insider type websites doesn’t have the accurate quote and more annoyingly can’t be bothered with a source either, here it is:
[Travis Kalanick at Startup School 2012 (2 years after founding Uber).]
Back when computers were expensive, Woz built his own because he wanted one for himself. That was the origin of Woz, Jobs, and for 12 days Wayne’s, Apple.
Notice the nice smooth ladder he’s talking about. You start small and incrementally work your way up. You don’t start with the vision of the trillion-dollar Apple we have today.
[Woz at the Haas School of Business]
[Woz on early Apple]
There’s this idea that in order to change the world you have to start with the vision to cure cancer or build a quantum computer or something.
I don’t really like that approach. Maaaybe it’s useful for a second-time founder but for a first-time founder, I think it’s way too overwhelming.
When you’re ambitions are so grandiose, it’ll scare you into inaction.
We know from BJ Fogg’s work (2009) on behavior science that if ability is low (something is extremely hard to do), then even with high levels of motivation, behavior won’t occur. And reminders (called prompts) will just make you frustrated.
But there’s another problem too. Namely, there are just so many examples of solutions to tiny irritations that escalate into big companies.
There are a few reasons for that but one of them is that it brings clarity, simplicity, and focus. My favorite example of this is The Point vs. Groupon. [4]
So be open to solving small problems in your life. Yesterday I saw Mikael Cho, founder of Unsplash, talk about this on Twitter. It’s a good reminder that small stuff really can become big.
[Cho's tweet. My $0.02.]
And if after that you’re still inspired to tackle the hard and obvious problems, you’ll be in a much more favorable position. [5]
They went from idea to execution fast. There was no complex infrastructure. No complicated back-end designed to handle the influx of millions of people. No, it was all very ghetto. We need to pay the rent, so can we get 3 people to pay us $80 to stay with us and sleep on our Airbeds during the conference?
Most of the time when founders do that stuff, it’s just another way to hide.
One of the best models we have today is the Kagan Validation Model: Get 3 paying customers in 48 hours without spending any money. (Sumo Group founder and early Facebook/Mint employee Noah Kagan.)
Sure, that might eliminate ideas that would’ve worked had you spend more resources (false negatives). But it also prevents you from spending months or even years on ideas that are never gonna work (false positives).
Since the latter is a far more common problem, it’s more important to prevent that from happening.
By making the system overly sensitive, you’ll prevent wasting resources on ideas that’ll never work and the stuff that does make it through your filter is much more likely to succeed.
Think about it. If you can presell something based on a phone call then that leaves all the tools in your toolbox available to grow it. Whereas if you launch with the perfect product and marketing after years of refining it behind closed doors, then where exactly are you gonna take it from there? What’s left to optimize?
This does beg the question: ‘‘Why make the system overly sensitive in the first place? Why not adjust it so it’s perfect?’’ Because that’s not possible. There’s no way to create a system that will sort good ideas from bad ideas perfectly. So you’ll always have to be biased toward identifying good ideas and throwing away good ones that seemed bad (false negative) or identifying bad ideas and continuing to work on bad ideas that seem good (false positives).
This essay Paradigm Shift: Drastically Increase The Odds of Success goes into depth on how to think about false positives and negatives.
[4] From The Right Way To Start A Startup:
[5] Elon Musk is a role model for many founders nowadays but what he’s doing now is much less accessible than what Jack Dorsey, Drew Houston, or Mark Zuckerberg have done. In fact, it was so inaccessible that he couldn’t raise enough from investors. Which is why half a billion dollars in loans from the government was required. As for the hundreds of millions to kickstart Tesla and SpaceX? His own money. Which he made from… yup… internet startups. His first project was a small video game called Blastar. After that, he created Zip2 (Internet version of the yellow pages telephone directory with maps included.), then PayPal.
Also, SpaceX grew in ambition. Originally the idea was just to use 100 of the 180 million dollar payout of the PayPal acquisition to eBay, to get people excited about space again. He wanted to land a miniature experimental greenhouse containing seeds with dehydrated gel on Mars to grow plants on Martian soil, “so this would be the furthest that life’s ever traveled” in an attempt to regain public interest in space exploration and increase the budget of NASA.
As for Tesla, that wasn’t even founded by Elon. Which most founders know but gen. pop. or the up and coming founder might not. The original idea came from AC Propulsion where Tom Gage and Alan Cocconi had built the t zero.
[ https://youtu.be/gb9E222QsM0 ]
--------------------------------------------------------------------------------------------------------------
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TLDR: Lesson 1: It’s possible for you to make things better. Lesson 2: Solve your own tiny problem. Lesson 3: Validate quickly and double down when it works. Lesson 4: It’s easy to connect the dots ex-post-facto. Lesson 5: Finding product/market fit from day one is fiction.
We’ll cover lessons 2 and 3 today.
P.S. This is part of an in-depth 4 part essay series. Part 4 ships tomorrow at noon (+1 GMT).
LESSON 2: SOLVE YOUR OWN TINY PROBLEM
When Brian moved to SF and decided to live with Joe to figure out what their billion-dollar startup was gonna be, he quickly learned that in order to make rent in SF, you have to sell a kidney. Probably both if you’re one of those fancy, pampered types that enjoys the finer things in life such as, you know, nutrition.
He didn’t have his part of the rent though ($1150).
But that weekend, there just so happened to be an international design conference at SXSW, and they noticed that all the hotels on the website were listed fully booked.
They figured: well, designers are gonna have to stay somewhere, we don’t have the money to make rent, so what if we made a makeshift Bed and Breakfast?
[Joe Gebbia showing the email he sent Brian that kicked off Airbnb, at his Ted Talk in 2016. ]
But Brian and Joe didn’t have any beds. However, Joe had some airbeds leftover from camping so they changed their idea to an Airbed and Breakfast (Airbnb).
They ended up hosting a 35yr old woman from Boston, a 45yr old father of 5 from Utah, and a 30yr old man from India. Oh… and they made rent.
If you just want to read about Airbnb, skip the following section and pick back up at: BUILD SOMETHING SMALL THAT YOU WANT AND THINK IS DOPE.
DON’T BUILD A UNICORN, SOLVE A TINY ANNOYANCE YOU HAVE
Notice that they weren’t trying to build a unicorn. They just needed to make rent and it seemed like a cool, fun thing to try.
UBER
This is a surprisingly common theme in startups. Travis made a similar remark about the origins of Uber:
Because literally every POS article on Business Insider type websites doesn’t have the accurate quote and more annoyingly can’t be bothered with a source either, here it is:
[Travis Kalanick at Startup School 2012 (2 years after founding Uber).]
APPLE
Back when computers were expensive, Woz built his own because he wanted one for himself. That was the origin of Woz, Jobs, and for 12 days Wayne’s, Apple.
Notice the nice smooth ladder he’s talking about. You start small and incrementally work your way up. You don’t start with the vision of the trillion-dollar Apple we have today.
[Woz at the Haas School of Business]
[Woz on early Apple]
BUILD SOMETHING SMALL THAT YOU WANT AND THINK IS DOPE
There’s this idea that in order to change the world you have to start with the vision to cure cancer or build a quantum computer or something.
I don’t really like that approach. Maaaybe it’s useful for a second-time founder but for a first-time founder, I think it’s way too overwhelming.
When you’re ambitions are so grandiose, it’ll scare you into inaction.
We know from BJ Fogg’s work (2009) on behavior science that if ability is low (something is extremely hard to do), then even with high levels of motivation, behavior won’t occur. And reminders (called prompts) will just make you frustrated.
But there’s another problem too. Namely, there are just so many examples of solutions to tiny irritations that escalate into big companies.
There are a few reasons for that but one of them is that it brings clarity, simplicity, and focus. My favorite example of this is The Point vs. Groupon. [4]
So be open to solving small problems in your life. Yesterday I saw Mikael Cho, founder of Unsplash, talk about this on Twitter. It’s a good reminder that small stuff really can become big.
[Cho's tweet. My $0.02.]
And if after that you’re still inspired to tackle the hard and obvious problems, you’ll be in a much more favorable position. [5]
LESSON 3: VALIDATE QUICKLY AND DOUBLE DOWN WHEN IT WORKS
They went from idea to execution fast. There was no complex infrastructure. No complicated back-end designed to handle the influx of millions of people. No, it was all very ghetto. We need to pay the rent, so can we get 3 people to pay us $80 to stay with us and sleep on our Airbeds during the conference?
Most of the time when founders do that stuff, it’s just another way to hide.
One of the best models we have today is the Kagan Validation Model: Get 3 paying customers in 48 hours without spending any money. (Sumo Group founder and early Facebook/Mint employee Noah Kagan.)
Sure, that might eliminate ideas that would’ve worked had you spend more resources (false negatives). But it also prevents you from spending months or even years on ideas that are never gonna work (false positives).
Since the latter is a far more common problem, it’s more important to prevent that from happening.
By making the system overly sensitive, you’ll prevent wasting resources on ideas that’ll never work and the stuff that does make it through your filter is much more likely to succeed.
Think about it. If you can presell something based on a phone call then that leaves all the tools in your toolbox available to grow it. Whereas if you launch with the perfect product and marketing after years of refining it behind closed doors, then where exactly are you gonna take it from there? What’s left to optimize?
This does beg the question: ‘‘Why make the system overly sensitive in the first place? Why not adjust it so it’s perfect?’’ Because that’s not possible. There’s no way to create a system that will sort good ideas from bad ideas perfectly. So you’ll always have to be biased toward identifying good ideas and throwing away good ones that seemed bad (false negative) or identifying bad ideas and continuing to work on bad ideas that seem good (false positives).
This essay Paradigm Shift: Drastically Increase The Odds of Success goes into depth on how to think about false positives and negatives.
NOTES
[4] From The Right Way To Start A Startup:
[5] Elon Musk is a role model for many founders nowadays but what he’s doing now is much less accessible than what Jack Dorsey, Drew Houston, or Mark Zuckerberg have done. In fact, it was so inaccessible that he couldn’t raise enough from investors. Which is why half a billion dollars in loans from the government was required. As for the hundreds of millions to kickstart Tesla and SpaceX? His own money. Which he made from… yup… internet startups. His first project was a small video game called Blastar. After that, he created Zip2 (Internet version of the yellow pages telephone directory with maps included.), then PayPal.
Also, SpaceX grew in ambition. Originally the idea was just to use 100 of the 180 million dollar payout of the PayPal acquisition to eBay, to get people excited about space again. He wanted to land a miniature experimental greenhouse containing seeds with dehydrated gel on Mars to grow plants on Martian soil, “so this would be the furthest that life’s ever traveled” in an attempt to regain public interest in space exploration and increase the budget of NASA.
As for Tesla, that wasn’t even founded by Elon. Which most founders know but gen. pop. or the up and coming founder might not. The original idea came from AC Propulsion where Tom Gage and Alan Cocconi had built the t zero.
[ https://youtu.be/gb9E222QsM0 ]
--------------------------------------------------------------------------------------------------------------
Loved this essay? I ship daily essays that make entrepreneurial science digestible for founders and help you blow up your revenue delivered straight to your inbox or WhatsApp.
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