Design

How Design Thinking Transformed

Airbnb from a Failing Startup to a
Billion Dollar Business
Airbnb Co-founder Joe Gebbia talks about the true meaning of being scrappy
and being willing to do things that don't scale.

In 2009, Airbnb was close to going bust. Like so many startups, they had
launched but barely anyone noticed. The company’s revenue was flatlined at
$200 per week. Split between three young founders living in San Francisco,
this meant near indefinite losses on zero growth. As everyone knows, venture
investors look for companies that show hockey stick graphs, and according
to co-founder Joe Gebbia, his company had a horizontal drumstick graph.
The team was forced to max out their credit cards.

It's Okay to Do Things That Don’t Scale

At the time, Airbnb was part of Y Combinator. One afternoon, the team was
poring over their search results for New York City listings with Paul Graham,
trying to figure out what wasn’t working, why they weren’t growing. After
spending time on the site using the product, Gebbia had a realization. “We
noticed a pattern. There's some similarity between all these 40 listings. The
similarity is that the photos sucked. The photos were not great photos. People
were using their camera phones or using their images from classified sites.
It actually wasn't a surprise that people weren't booking rooms because you
couldn't even really see what it is that you were paying for.”

Graham tossed out a completely non-scalable and non-technical solution to

the problem: travel to New York, rent a camera, spend some time with
customers listing properties, and replace the amateur photography with
beautiful high-resolution pictures. The three-man team grabbed the next flight
to New York and upgraded all the amateur photos to beautiful images. There
wasn’t any data to back this decision originally. They just went and did it. A
week later, the results were in: improving the pictures doubled the weekly
revenue to $400 per week. This was the first financial improvement that the
company had seen in over eight months. They knew they were onto
something.

This was the turning point for the company. Gebbia shared that the team
initially believed that everything they did had to be ‘scalable.’ It was only when
they gave themselves permission to experiment with non-scalable changes
to the business that they climbed out of what they called the ‘trough of
sorrow.’

“We had this Silicon Valley mentality that you had to solve problems in a
scalable way because that's the beauty of code. Right? You can write one
line of code that can solve a problem for one customer, 10,000 or 10 million.
For the first year of the business, we sat behind our computer screens trying
to code our way through problems. We believed this was the dogma of how
you're supposed to solve problems in Silicon Valley. It wasn't until our first
session with Paul Graham at Y Combinator where we basically… the first
time someone gave us permission to do things that don't scale, and it was in
that moment, and I'll never forget it because it changed the trajectory of the
business”

Why Designers Need to ‘Become the Patient’ to

Build Better Products
Gebbia’s experience with upgrading photographs proved that code alone
can’t solve every problem that customers have. While computers are
powerful, there’s only so much that software alone can achieve. Silicon Valley
entrepreneurs tend to become comfortable in their roles as keyboard jockeys.
However, going out to meet customers in the real world is almost always the
best way to wrangle their problems and come up with clever solutions.

Gebbia went on to share how an early design school experience also shaped
his thinking about customer development, “If we were working on a medical
device, we would go out into the world. We would go talk with all of the
stakeholders, all of the users of that product, doctors, nurses, patients and
then we would have that epiphany moment where we would lay down in the
bed in the hospital. We'd have the device applied to us, and we would sit
there and feel exactly what it felt like to be the patient, and it was in that
moment where you start to go aha, that's really uncomfortable. There's
probably a better way to do this.” This experience pushed Gebbia to make
‘being a patient’ a core value of their design team.

The desire to always be the patient is immediately felt by all new team
members. “Everybody takes a trip in their first or second week in the company
and then they document it. We have some structured questions that they
answer and then they actually share back to the entire company. It's
incredibly important that everyone in the company knows that we believe in
this so much, we're going to pay for you to go take a trip on your first week.”
Let People Be Pirates
While Airbnb is data driven, they don’t let data push them around. Instead of
developing reactively to metrics, the team often starts with a creative
hypothesis, implements a change, reviews how it impacts the business and
then repeats that process.

Gebbia shares, "I'm not sure how useful data is if you don't have meaningful
scale to test it against. It may be misleading. The way that we do things is
that if we have an idea for something, we now kind of build it into the culture
of this idea that it is okay to do something that doesn't scale. You go be a
pirate, venture into the world and get a little test nugget, and come back and
tell us the story that you found."

Individual team members at Airbnb make small bets on new features, and
then measure if there’s a meaningful return on the bet. If there’s a payoff,
they send more pirates in that direction. This structure encourages
employees to take measured, productive risks on behalf of the company that
can lead to the development of major new features. It allows Airbnb to move
quickly and continually find new opportunities.

We’re trying to create an environment where people can see a glimmer of

something and basically throw dynamite on it and blow it up to become
something bigger than anyone could have ever imagined.

Everyone Learns to Ship On Day One

As part of the onboarding process at Airbnb, the company encourages new
employees to ship new features on their first day at the company. It earns
them their sea legs and shows that great ideas can come from anywhere.
This approach yields results in unexpected ways. For example, one Airbnb
designer was assigned what seemed like the small task of reevaluating the
“star” function. In the original Airbnb product, users could ‘star’ properties to
add them to a wish list — a basic feature. Gebbia recounts the story:

“Our new designer comes back and says I have it. I go what do you mean
you have it? You only spent the day on it. He goes, well, I think the stars are
the kinds of things you see in utility-driven experiences. He explained our
service is so aspirational. Why don't we tap into that? He goes I'm going to
change that to a heart. I go, wow, okay. It's interesting, and we can ship it so
we did. When we ship it, we put code in it so we can track it and see how
behavior changed.”

Sure enough, the simple change from a star to a heart increased engagement
by over 30%. In short, let people be pirates, ship stuff and try new things.
Parting Words
When you’re building product at a startup you’re always moving a million
miles an hour. It’s tough. You need to ship. Gebbia tries to balance this reality
with the need to think in new ways by constantly pushing his team to think
bigger. He notes, “Anytime somebody comes to me with something, my first
instinct when I look at it is to think bigger. That's my instinctual piece of
advice. Think bigger. Whatever it is, blow it out of proportion and see where
that takes you. Come back to me when you've thought about that times 100.
Show me what that looks like."