1 Sticking to the 35-word limit suggested by Collis and Rukstad in Section 1.2.3, what strategy statement would you propose for Airbnb?
2 Carry out a ‘three-horizons’ analysis (Section 1.2.1) of Airbnb, in terms of both existing activities and possible future ones. How might this analysis affect its future strategic direction?
3 Using the headings of environments, strategic capability, strategic purpose and culture seen in Section 1.3.1, identify key positioning issues for Airbnb and consider their relative importance.

4 Following on from the previous questions and making use of Section 1.3.2, what alternative strategies do you see for Airbnb?
5 Converting good strategic thinking into action can be a challenge: examine how Airbnb has achieved this by considering the elements seen in Section 1.3.3?

A unicorn is a mythical animal that has been described since antiquity as a horse with a large pointed spiral horn. Legend has it unicorns are very rare and difficult to tame. It is a name that has been adopted by the US venture capital industry to denote a start-up company whose valuation exceeds $1bn (£0.6bn, €0.75bn). Airbnb, founded in 2007, was one of these rare and valuable unicorns, already valued at $25bn in 2015. How could this start-up become so successful, so fast?

Origins

The original founders of Airbnb, Joe Gebbia and Brian Chesky, first met at Rhode Island School of Design. Five years later, both aged 27, they were struggling to pay their rent when a design conference came to San Francisco. All the hotels were fully booked, so they set up a simple website with pictures of their loft-turned-lodging space – complete with three air mattresses on the floor and the promise of a home-cooked breakfast in the morning. This site got them their first three paying guests at $80 each. It dawned on them this could be the start of something big. They both wanted to be entrepreneurs and Brian already had some experience having designed a cushion for back sufferers and built a website. 1 Next day they created a website, www. airbedandbreakfast.com .

They decided to target conferences and festivals across America, getting local people to list their rooms on a website created by former flatmate and computer programmer, Nathan Blecharczyk. In the summer of 2008, Barack Obama was due to speak in Denver at the Democratic Party National Convention. Eighty thousand people were expected to attend and Joe and Brian thought there would be a shortage of hotel rooms. They rushed to complete their website in time and recorded 800 listings in one week. However, it did not make any money. To survive they had to make use of their entrepreneurial skills, buying cereal in bulk and designing packaging such as ‘Obama’s O’s’ and ‘Cap’n McCain’ cereal; jokey references to the two Presidential candidates of

the year. How ver, they soon added a payment facility to their website allowing them to charge up to 15 per cent of the booking (the host pays 3 per cent and the traveler between 6 and 12 per cent). By April 2009, they were breaking even.

Growth

Attracting funding for their start-up was not easy. Investors saw Gebbia and Cesky purely as designers, which did not fit the traditional start-up profile. Funders thought there would not be much demand for listings that mostly advertised sleeping on airbeds. Nonetheless, in 2009 Airbnb received its first funding of $20,000 from angel investor, Paul Graham, co-founder of Y Combinator (a start-up mentoring programme), who was impressed with their inventiveness and tenacity. The company was renamed Airbnb and it provided an app and website that connects people seeking lodging with renters who have listed their personal houses, apartments, guest rooms on either platform. Further funding followed: in November 2010 Airbnb raised an additional $7.2m. This allowed the company to expand to 8000 cities worldwide, to increase the number of employees to 500 and to move out of the founders’ flat – where staff had been making sales calls from the bathroom and holding conferences in the kitchen – to offices in the design district of San Francisco. The early history of Airbnb is illustrated in Figure 1……..