Airbed and Breakfast (428 words): The Startup Story of AirbnbBrian and Joe were flat mates in downtown San Francisco. In mid-2007, IDSA conference crowded downtown, filled all hotel rooms, and drove up accommodation prices. Brain and Joe thought to let people stay with them. In 30 minutes, they made a blog prototype advertising air mattress and breakfast for cash. To their surprise, people showed up! They told guests about their favourite hole-in-the-wall places. AirbedAndBreakfast was born.AirbedAndBreakfast was the first online marketplace allowing event attendees book rooms with locals, instead of hotels. The website facilitated transactions between people with extra space (hosts) and people who need short-term stays during an event but on a tight budget (guests). It charged a commission from the hosts and a service fee from the guests, that was $39 per reservation on average. So far, they invested $35,000 to start. The cost to cover web hosting and storage by Amazon was $5,000 paid annually. The cost per reservation was $9, covering credit card processing fees to PayPal.Three industries account for 80% of all accommodations. The bed-and-breakfast industry ($2 billion in the U.S.) included homestays offering overnight accommodation and breakfast with an "at home" atmosphere. The vacation rental industry ($18 billion in the U.S.)with major players like HomeAway and VRBOoffered more comfort but still a good deal. The hotel industry ($180 billion in the U.S.) was half occupied by major chains, such as Marriott and Hilton. Assume no overlap. The U.S. market accounts for 40% of global market. Worldwide, 20% of all accommodations was event-based, 60% of were by budget-conscious travellers, and 50% were booked online.Brain and Joe lined up three more events to test the market. They launched during 2008 SXSW festival. They had only 5 successful reservations. They relaunched at the 2008 democratic national convention. This time, they got 50 reservations. During the January 2009 presidential inauguration , they had 145 reservations. The numbers were not great; after all, there were 2 billion trips made worldwide each year! Making matters worse, events at this scale were few and far between, and website traffic the week after each event dropped to near zero.Also, the ratio of reservation-to-listing was lower in New York City than in San Francisco. They hypothesized that either the website visitors were browsing but not booking or the homes listed were poor quality. To find out, they left San Francisco for New York City to interview as many hosts as possible. They found that it was the pictures! Listings posted professional photos were booked 3 times more frequent than those posted cell-phone cam photos

Also, the ratio of reservation-to-listing was lower in New York City than in San Francisco. They hypothesized that either the website visitors were browsing but not booking or the homes listed were poor quality. To find out, they left San Francisco fo. New York City to interview as many hosts as possible. They found that it was the pictures! Listings posted professional photos were booked 3 times more frequent than those posted cell-phone cam photos. Question 1 (4 points) (a) Describe AirbedAndBreakfast's share of market (SOM). Apply case facts and course materials to receive full credit. (b) Estimate AirbedAndBreakfast's current SOM worldwide in dollar amount. Apply case facts. Considering it was a new entrant facing fierce competition, use 1% as the portion. Write out logic and equations to receive full credit