Information Technology has in the last 30 years transformed the way we live and conduct our activities, both in good and bad ways. There have been great strides made in hardware and software, telecommunications, mobile technology, data structures, data analytics, network and wireless technology. Everyday we see how IT is disrupting businesses, careers, and social interactions. Many new business models and products have appeared, which challenge the old brick and mortar business models. Many IT business have become billion dollars companies. For example, Amazon, Facebook, Utube, WeChat, Alibaba, Google, Tencent, Explorer, AirBnB, Doordash, Paypal, Afterpay, Bitcoin and the list runs into thousands.

Presented below is the case history of AirBNB

Required

1. You are required to develop a business model using IT as the main backbone and create a startup business.

Your business model should indicate:

1. How will you use the IT technology to conduct the business-the business model
2. How will you make a profit?
3. Clearly define your product or services
4. Why is your product or service different from others in the market
5. Who will be your customers?
6. Why should they buy from your business?
7. What important technologies will you need to run your business?
8. What you think is the estimated costs of setting up your business?
9. What name will give the business?
10. What will be location?
11. What challenges you can envisage in starting your business?
12. What expertise you think will be needed and what options are there to acquire these expertise?

AirBNB Case History

How 3 guys turned renting air mattresses in their apartment into a $31 billion company, Airbnb

Rebecca Aydin

Updated

Sep 21, 2019, 2:27 AM

• Airbnb announced it plans to go public in 2020 on Thursday.
• Long before Airbnb persuaded strangers to sleep in one another's homes and became a $31 billion company, it was just an idea to make extra bucks and make rent.
• Find out how three guys turned renting an air mattress in their apartment into a multi-billion dollar company.

Airbnb announced it plans to go public in 2020 on Thursday.

Long before Airbnb persuaded strangers to sleep in one another's homes and became a $31 billion company, it was just an idea to earn a bit of extra money to make rent.

After their first guests, Airbnb's founders realized they were on to something bigger than a stopgap for rent. They faced rejection plenty of times and created their own version of Obama O's cereal but the three founders of Airbnb have built a big business in the past nine years.

Here's how they turned their idea to rent out an air mattress into a business that has the hotel industry running scared.

This post has been updated from an earlier version written by Biz Carson.

The year was 2007, and roommates Joe Gebbia and Brian Chesky couldn't afford their San Francisco rent.

The pair knew a big design conference was coming to San Francisco, and it was making hotels hard to come by.

And so it all started with an email: Gebbia wrote Chesky with an idea: What if they made turned their loft into a designer's bed and breakfast, complete with a sleeping mat and breakfast? It was a way to "make a few bucks." 12 years later, that idea is worth $31 billion.

The duo, who had met at college at the Rhode Island School of Design, thought acting as tour guides to designers would be a fun way to make money.

They created a simple site, airbedandbreakfast.com, bought three air mattresses, and arranged them in their loft.

Their first guests, two men and one woman, showed up. Each guest paid $80 to stay on the air mattress. One guest, Amol, was another designer who actually helped Joe and Brian on their presentations. "Being one of the first Airbnb guests feels like being on The Tonight Show, but I didn't know I was on The Tonight Show," Amol said in 2012.

Gebbia and Chesky soon realized how big their idea could be. They got together with their old roommate, Nathan Blecharczyk, to build it into a business.

They actually worked on a roommate-matching service for four months until they realized Roommates.com was already a thing. Then they went back to working on Air Bed and Breakfast.

The company launched a second time and no one noticed. The third time was at SXSW in 2008, but they only had two customers, and Chesky was one of them.

By summer 2008, the founders had finished a final version of Air Bed and Breakfast and went to meet investors. The whole experience had been redesigned around taking only three clicks to book a stay; otherwise it was too hard. Investors weren't convinced. Introductions to 15 angel investors left them with eight rejections, and seven people ignoring them entirely.

See the seven rejections here.

Broke and in debt, they decided to launch Air Bed & Breakfast (again) at the 2008 Democratic National Convention in Denver. As they had learned from their first time hosting, a hotel room shortage meant people would be looking for other options.

Since the site wasn't making money, the guys transformed cereal boxes into Obama O's and Cap'n McCains and sold them on the streets for $40 bucks a pop. Each one came with a limited-edition number and information about the company. Their bootstrapped marketing strategy netted them $30,000 to put toward the company.

The one VC who did take notice was Paul Graham. Graham invited the guys to join Y Combinator, a prestigious startup accelerator that doles out cash and training in exchange for a small slice of the company. The company spent the first three months of 2009 at the accelerator, working on perfecting their product.

Even during Y Combinator, they still got rejected famously by investors. Fred Wilson of Union Square Ventures admitted in 2011 that he had failed to look past the Air Bed and Breakfast name and see the business.

"We couldn't wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal. Others saw the amazing team that we saw, funded them, and the rest is history," Wilson wrote.

The company continued its scrappy business-building techniques. Channeling their design backgrounds, the founders launched an ambitious project to get its hosts to love the company. They visited all of their hosts in New York to personally stay with them, write reviews, and professionally photograph their places.

In March 2009, the company finally scrapped the Air Bed & Breakfast name and simplified it to "Airbnb." No more confusing associations with air mattresses.

A month later in April 2009, Airbnb finally picked up a $600,000 seed investment from Sequoia Capital. Chesky describes it as going from only eating leftover cereal to "ramen-profitable."

That's when the company hit the accelerator on growth and learned a bunch about their business. Chesky famously lived exclusively in Airbnbs for a few months in 2010 when their employees crowded out the bedroom space left in their apartment.

By 2011, four years after the first air mattress guests, Airbnb was already in 89 countries and had hit 1 million nights booked on the platform. It also finally won the break-out mobile app award at SXSW a definitive success after its lukewarm launch at the festival in 2008.

That same year, some of the valley's biggest VCs put $112 million into the startup, valuing it at over $1 billion. That makes Airbnb a "unicorn" in Silicon Valley.

Soon after, the fast-growing startup hit a snag. One host had their place completely trashed. Other hosts started complaining about guests throwing ragers or leaving their place in disgusting shape the following morning. The company started implementing a coverage policy, upping it to a $1 million "Host Guarantee" by summer 2012.

The company also had a growing problem of people getting fined or evicted from renting their place out on Airbnb. Cities soon had a growing problem with Airbnb rentals, and the company's regulation headaches began.

With legal battles (and unruly guests) plaguing the home-sharing platform, Airbnb decided to do a redesign in 2014. The new logo, called the Blo, was immediately criticized for looking more like genitalia than a symbol of belonging.

Despite its focus on belonging, cities started to reject Airbnb rentals. New York threatened to ban Airbnb and short-term rentals in 2014 and fine every host. Many city laws made it illegal to rent out your unit without being present for less than 30 days.

Even Airbnb's hometown in San Francisco wasn't happy. The company spent more than $8 million in the fall of 2015 to combat a citizen-led ballot initiative meant to limit the Airbnb rentals.

In spite of the regulatory headaches, the company tried to act on its "belong anywhere" promise. It started collecting hotel taxes and remitting them to some cities. It's also pledged to give cities some of its data as part of a "community compact."

In July 2016, Sen. Elizabeth Warren urged the Federal Trade Commission to look into how websites for short-term rentals, like Airbnb, were exacerbating housing shortages.

The letter was also signed by Sen. Dianne Feinstein and Sen. Brian Schatz.

Since 2016, Airbnb has been expanding its services through a series of high-end launches and acquisitions adjacent to its main service.

Here's the running list of Airbnb's strategic launches and acquisitions since 2016:

• (2016) Airbnb Experiences, launch: "one-of-a-kind activities hosted by locals."
• (2017) Luxury Retreats, acquisition: a global "luxury vacation rental company."
• (2017) Niido, launch: "home sharing in new apartment buildings that will be optimized for home sharing and flexible living."
• (2018) Airbnb Plus, launch: a "tier of homes on Airbnb that have been personally verified for quality and comfort."
• (2019) HotelTonight, acquisition: An app and website that helps people book last minute hotel reservations.

In September 2019, Airbnb announced its plan to go public in 2020.

Airbnb on Thursday announced it plans to go public in 2020. The startup did not specify a timeline beyond "during 2020." Airbnb has not clarified whether it has confidentially filed its S-1 IPO paperwork, which would include basic financial information for potential investors to consider. An Airbnb spokesperson declined to comment when asked whether the paperwork has been filed.

Steven Tweedie and Aaron Holmes contributed to this report.

Axel Springer, Insider Inc.'s parent company, is an investor in Airbnb.