9 -5 1 6 -0 9 4
REV: JANUARY 8, 2018
THALES S. TEIXEIRA
MORGAN BROWN
Airbnb, Etsy, Uber: Acquiring the First Thousand
Customers
By 2016, two-sided online platforms (or marketplaces) were pervasive among the fastest-growing
internet startups. These marketplaces sought to match suppliers of assets for rent, physical products,
or services with customers demanding them. Software such as mobile apps or desktop websites were
built to facilitate these transactions and provide the related services such as a matching algorithm, a
payment, and a delivery system. In general, these online marketplaces earned revenues by taking a cut
of the cost of services provided.
Among the most notable two-sided platforms in terms of their tremendous early growth were
Airbnb, Etsy, and Uber. They offered short-term property rentals, handcrafted goods, and car rides,
respectively. As two-sided markets grew to scale, network effects kicked in as more consumers bred
more suppliers and vice versa. But how did these platforms acquire their first customers when they
had so few providers? How did they go about acquiring their first thousand customers?
Airbnb
In 2007, designers Brian Chesky and Joe Gebbia could not afford the rent on their San Francisco
apartment. To make ends meet, they decided to turn their loft into a lodging space, but, as Gebbia
explained, “We didn’t want to post on Craigslist because we felt it was too impersonal. Our
entrepreneur instinct said ‘build your own site.’ So we did.” 1
A design conference was coming to town and hotel space was limited, 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
renters, each one paying $80; after that first weekend, they began receiving emails from people around
the world asking when the site would be available for destinations like Buenos Aires, London, and
Japan. Gebbia explained:
At that point we started to brainstorm what a larger, international version of the site
would be. That was basically our market research. People told us what they wanted, so
we set off to create it for them. Ultimately while solving our own problem, we were
HBS Professor Thales S. Teixeira and independent researcher Morgan Brown prepared this case with the assistance of Research Associate David
Lopez-Lengowski. This case was developed from published sources. Portions of this case are excerpted from Morgan Brown's case studies
published at growthhackers.com (www.growthhackers.com/growth-studies). Funding for the development of this case was provided by Harvard
Business School and not by the companies. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as
endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2016, 2018 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
solving someone else’s problem too. We were at a point professionally where we were
very ready to pursue our own idea. We were anxious though, like waiting in line for a
roller coaster. We didn’t know exactly what was ahead, but we knew we were in for a
ride. 2
The following spring, Chesky and Gebbia enlisted former roommate and engineer Nathan
Blecharczyk to help them get AirBed & Breakfast off the ground. They planned the launch around the
Democratic National Convention in order to capitalize on the resulting lack of hotel space.
Fast forward eight years to 2015, and AirBed & Breakfast, renamed Airbnb, was a household name.
As of fall 2015, the platform had annual revenue of approximately $900 million, extensive user growth,
and over 1.8 million properties listed worldwide (see Exhibit 1). With a $25.5 billion 3 valuation, Airbnb
was worth more than legacy players like Wyndham and Hyatt. 4 This tremendous growth helped the
company receive over $2.39 billion in eight rounds of funding from 32 investors, such as Y Combinator,
Sequoia Capital, Keith Rabois, Andreessen Horowitz, and TPG Growth (see Exhibit 2). 5
But how did a few air mattresses on the floor of a San Francisco loft become the most widely used
anecdote for successful two-sided marketplace growth hacking? a
Early Growth of Airbnb
“Pure Unadulterated Hustle” in the Face of Initial Resistance
In the summer of 2008, the founders needed a way to raise money. They bought a large amount of
cereal and designed special edition election-themed boxes, released that fall—Obama O’s and Cap’n
McCain’s, which were sold at convention parties for $40 a box (see Exhibit 3). They sold 500 boxes of
each cereal, helping them to raise around $30,000 for AirBed & Breakfast.
Despite raising some initial capital, the site did not gain much traction initially, and the founders
resorted to living off of leftover Cap’n McCain’s (the Obama O’s sold out)—a time they refer to as a
real “low point.” This low point did not last for long, however, as the following spring they had dinner
with Paul Graham, founder of startup incubator Y Combinator. Despite recognizing the startup’s
potential, Graham admitted to having some initial doubts, explaining, “I thought the idea was
crazy. . . . Are people really going to do this? I would never do this.” 6 Nevertheless, AirBed & Breakfast
joined Y Combinator’s 2009 winter class, receiving $20,000 in funding. It renamed the business Airbnb,
and received another $600,000 in a seed round from Sequoia Capital and Y Ventures. 7
Not everyone was as impressed with Airbnb’s business model, however, and the young startup
was also notoriously rejected by Fred Wilson of Union Square Ventures—a decision Wilson later
admitted was not a good one. Wilson claimed in 2011 that Union Square kept a box of Obama O’s in
their conference room to remind themselves not to make the same mistake again. The cereal also served
as an example of an early-stage startup doing everything necessary to get off the ground. As Wilson
explained: “Whenever someone tells me that they can’t figure out how to raise the first $25,000 they
need to get their company started I stand up, walk over to the cereal box, and tell this story. It is a story
of pure unadulterated hustle. And I love it.” 8
a Hacking is a term used in computer science to define clever and creative ways to use software to solve problems. Growth hacking
is an analogy applied to traditional marketing activities.
2
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
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But it was not just Airbnb’s business model that posed a concern. When Gebbia and Chesky—both
Rhode Island School of Design alums—were initially seeking funding for their startup, potential
investors didn’t know what to make of a company with two designers, despite the fact that
Blecharczyk, with a solid background in tech, had already signed on as an engineer. Chesky explained
that it was hard for many in Silicon Valley to see the company’s potential because “they thought we
just made things pretty.” 9
Yet it was most likely this design background that helped Airbnb find such innovative, unexpected
solutions—such as the limited-edition presidential cereal campaign—to the very real problems that all
early-stage startups faced. It was this ability to innovate that informed much of Airbnb’s growth
strategy when it came to acquiring its first thousand customers.
Craigslist Platform Integration
When exactly Airbnb implemented what has become its most famous growth hack is unclear, but
there was evidence of the Craigslist platform hack as early as 2010. 10 Though the startup worked hard
to distinguish itself from the more impersonal, scam-filled classified-style platform, Craigslist had one
thing that Airbnb did not—a massive user base.
Airbnb knew through both market research and its own experience that Craigslist was the place
where people who wanted something other than the standard hotel experience looked for listings—in
other words, Airbnb’s target market.
In order to tap into this market, Airbnb offered users who listed properties on Airbnb the
opportunity to post them to Craigslist as well, despite the fact that there was no sanctioned way on
Craigslist to do so. Though fairly straightforward in hindsight, the execution was not simple.
In essence, Craigslist saved listing information using a unique URL rather than a cookie. Because of
this, Airbnb was able to build a bot b to visit Craigslist, snag a unique URL, input the listing info, and
forward the URL to the user for publishing (see Exhibit 4).
Other aspects of the integration also proved to be challenging. The bot also had to fill out a handful
of forms, the simplest of which was the Craigslist category. The specific region proved a bit more of a
challenge since there were hundreds of different versions of Craigslist, some much more specific than
others—for example, six sub-regions within a region for the Bay Area, yet one Craigslist for the entire
state of Maine. This meant it was necessary to visit every Craigslist and scrape the names and codes
for every region.
Furthermore, there was the issue of the anonymous email assigned by Craigslist. This function had
to be turned off and replaced with a link to the Airbnb listing. And to ensure that the listing stood out
among the standard Craigslist fare, the platform’s limited HTML support had to be taken into
consideration as well. As writer and entrepreneur Andrew Chen explained:
This kind of integration is not trivial. . . . I wouldn’t be surprised if the initial
integration took some very smart people a lot of time to perfect. A traditional marketer
would not even be close to imagining the integration above—there’s too many technical
details needed for it to happen. As a result, it could only have come out of the mind of an
engineer tasked with the problem of acquiring more users from Craigslist. 11
b A (ro)bot is a software application that runs automated tasks or scripts over the internet performing tasks that are simple and
repetitive at a faster rate than would be possible for a human to accomplish.
3
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
The benefits of the Airbnb-Craigslist integration were numerous. Not only was it the sheer volume
of potential users accessible via Craigslist, but the fact that Airbnb listings were far superior to the other
properties available—more personal, with better descriptions and nicer photos—made them more
appealing to Craigslist users looking for vacation properties.
Once those Craigslist users made the switch, they were more likely to ignore Craigslist and book
through Airbnb in the future. In addition, those with properties listed on Airbnb ended up making
more money on their listings, which kept them using the service again and again. 12
Craigslist Poaching
While the first integration got much needed traffic to Airbnb listings, in Craigslist Airbnb saw
another opportunity for getting more users to list their properties on Airbnb in the first place. Dave
Gooden, who worked in Craiglist’s vacation rental sector, said that in late 2009, he began looking into
Airbnb’s mysterious growth. He explained:
When a competing company comes on my radar, I always do my due diligence. In my
Airbnb research, I didn’t find great SEO results or a gazillion followers on Twitter or any
massive advertising spends on Google or Facebook. I looked everywhere but I couldn’t
find any rational or traditional reasons for this type of growth. All of these Airbnb users
can’t be coming from tech blogs, can they? Word of mouth? I didn’t think so. After
thinking on it for a day or two, only one possible answer popped into my head: “These
guys are black hats!” c, 13
To test his theory, Gooden set up a “mouse trap” by posting a couple of rental properties to
Craigslist, both using Craigslist’s “anonymous” email option and clearly specifying that he did not
want to be contacted about other offers. Within a couple of hours, Gooden says he received an email
from a “young lady” who really liked his property and wanted him to check out Airbnb. He claimed
that this email alone was 99% of the evidence needed to support his Airbnb-Craigslist spam theory.
However, he wanted to be sure the email wasn’t simply from an excited Airbnb user, so he decided to
dig a bit more.
Over the next weekend, Gooden built a site that used Craigslist email harvesting technology and
mass-mailing technology to target Craigslist users with vacation rentals. The result was over 1,000
vacation rental owners who signed up to list their properties on Gooden’s test site. He then re-listed
one of the properties on Craigslist, and within a day he received an email complimenting his property
and suggesting he list it on Airbnb (see Exhibit 5). The next week, he listed two more properties and
received two more emails. The week after that, he listed yet another property, and received two more
emails. As Gooden explained:
When you scale a black hat operation like this you could easily reach tens of thousands
of highly targeted people per day . . . and quickly gain 60,000 members on the supplyside, which again, is the hardest and most important part of growing a market place. I am
pretty sure that Airbnb isn’t the only company that has used this strategy or technique,
but I think they are the first to turn it into a one hundred million dollar investment at a
one billion dollar valuation. 14
c A black hat refers to a hacker who violates commonly established rules for personal gain.
4
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
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Though this hack was not as clever as the Craigslist platform integration discussed previously, it
helped Airbnb to grow its listings quickly and at almost no cost.
International Expansion: Restarting at Every Country
From the earliest days of AirBed & Breakfast when the founders received emails from people
around the world requesting the site’s expansion, international users played a significant role in
Airbnb’s growth. In May 2011, Gebbia told GigaOM’s Colleen Taylor:
This year is about international growth. I mean, some of our biggest cities are in Europe
and South America, and they are just starting to emerge. China and Asia are really
interesting to us. . . . It’s about localizing the site and making it really easy, bringing the
simplicity that we brought for people in the United States to these other countries. 15
In August 2014, Airbnb’s Rebecca Rosenfelt gave a talk entitled “Going for Global,” in which she
outlined some of the company’s international growth strategies. Rosenfelt began by pointing out that
though people in Silicon Valley think of Airbnb as a mature company, in other parts of the world, it
was still more of a “scrappy startup.” She explained, “We’ve had to crack growth over and over and
over again as we break into new regions.” 16
Part of the struggle, according to Rosenfelt, was that Airbnb was a two-sided marketplace, meaning
that in every new market it attempted to enter, it had to grow both the demand side (travelers) and the
supply side (hosts) from almost nothing. As it turned out, the supply side was much harder to grow,
as it was difficult to get people comfortable with the idea of opening their homes up to strangers.
One market in which Airbnb knew it needed to grow was France; although people were traveling
to typical tourist locations in France using Airbnb, not many people were using Airbnb to vacation
within France. The company decided to take two approaches to growing, setting up an A/B test in
which it chose several small vacation markets within France that it thought would be popular. It
randomly selected half of the locations to physically visit, and half to target using Facebook ads.
In the markets the company physically visited, teams of two to three people would talk to the few
users already in that market to get an idea of what was going on. They would also throw parties and
info sessions, set up booths around town, post flyers, and, as Rosenfelt said, “do whatever it takes.” 17
They also made sure to get contact info for everyone they talked to who showed interest in hosting,
and they followed up later with more information, an offer to create a listing for them to review, and
the like.
Airbnb kept meticulous track of what it cost to visit people (including the cost of throwing parties,
setting up booths, and other “on the ground” activities) and the listings that resulted, and compared
that to the Facebook ads and resulting listings in the markets it did not visit. It turned out that cost per
acquisition was five times better for actually sending people into markets.
After kick-starting these markets with a human presence, Airbnb kept growing two times faster by
itself. Based on Airbnb’s experience, Rosenfelt claimed that sometimes it was beneficial to do things
that did not scale, because a non-scalable tactic might be more scalable than initially thought, as was
the case with sending teams into new markets. At the very least, these initiatives resulted in valuable
feedback in terms of what was going on and informed other, more scalable opportunities for growth.
5
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Etsy
As Etsy founder Rob Kalin explained in 2008 on the company’s blog:
In early April of 2005, I sat in an orange chair facing an open window. It was nighttime
and the lights were off. I was back in Brooklyn after a brief residence in Paris, and I was
about to sketch the initial ideas that would become Etsy. Working with three friends—
Chris, Haim and Jared—Etsy went from these ideas to a site live on the Web in about two
months. 18
Indeed, Etsy was founded in Brooklyn in June 2005 by Rob Kalin, Chris Maguire, Jared Tarbell, and
Haim Schoppik. Twenty-five-year-old Kalin, who had attended five different colleges before earning
his bachelor’s degree in the classics and eventually shifting his focus to woodworking, needed a
marketplace for the wood-encased computers he was building. At the time, that marketplace did not
exist, so they built it. 19
At least that was one version of the story. David Lifson, who ran Etsy’s product management team
in 2008, explained it a little differently, writing on Quora that Etsy’s original founders started out doing
“simple freelance website building” after college. One project they worked on was a community forum
for crafters. After building the new forum, they began reading through what users were actually
saying, and the overwhelming consensus was “I wish there was a place I could sell my crafts! Ebay
sucks—it’s hard to use, doesn’t care about us, and charges high fees.” 20 So, Lifson said, “The founders
saw an opportunity, built Etsy, and announced it to the community. Instantly, thousands and
thousands of sellers registered for the site and started selling. They also told their friends at even larger
crafting community forums about Etsy, which brought even more sellers.” 21
As with the precise details surrounding the company’s origin, there had been much speculation
about the meaning of the name “Etsy.” Yet until 2010, the company declined to share where Etsy came
from. That January, Kalin explained to Reader’s Digest: “I wanted a nonsense word because I wanted to
build the brand from scratch. I was watching Fellini’s 8½ and writing down what I was hearing. In
Italian, you say ‘etsi’ [‘eh, si’] a lot. It means ‘oh, yes.’ And in Latin, it means ‘and if.’” 22
By January 2008, Etsy had 50 employees, and 650,000 users—120,000 of whom were sellers—in 127
different countries. 23 In 2010, just five years after launch, Etsy’s community had grown to 5 million
members, and the company was valued at around $100 million. 24 That same year, Etsy saw revenues
of just over $300 million. 25 As of December 31, 2014, the Etsy community had grown to 54 million
members, of whom 1.4 million were active sellers and 20 million were active buyers. By 2015, the
company earned $2.39 billion in sales, amounting to almost $200 million in revenue. 26 (See Exhibit 6.)
Then, in April 2015, 10 years after Etsy’s initial founding, the company successfully completed its IPO,
raising more than $287 million and resulting in a valuation of more than $3.5 billion. 27 Some setbacks
after April 2015, though, were responsible for a steep decline in its stock price. As of April 2016, Etsy’s
market value was less than $1 billion. 28
So how did Etsy go from an idea to a $2 billion publicly traded company while growing to 54 million
users in just 10 years?
Early Growth of Etsy
Although two months sounded like a quick launch, Kalin explained in 2010 that the launch “actually
wasn’t going quite fast enough,” so Maguire and Schoppik “ended up basically moving into my
apartment and we spent a solid six weeks working on it day and night.” 29 In addition to getting the
6
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
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site up and running, Etsy faced a challenge unique to two-sided marketplaces: finding the first sellers
and buyers.
Etsy Brand and Community Hacker Danielle Maveal explained on Quora that, in the early days,
Etsy “did something that works and is often overlooked. We got off the internet.” 30 To begin, Etsy was
founded in Brooklyn, which Quora user Jennifer Johnson described as “a design mecca” with “great
artisan flea markets.” 31 Though the fledgling company did not have to look far to find high-quality
sellers, Maveal said that Etsy had a team attending art and craft shows across the U.S. and Canada
almost every weekend.
The team would single out influential “artists, crafters and vintage collectors,” 32 all of whom
represented potential Etsy sellers, and bought them lunch or gave them “craft show kits” and
promotional materials. As Maveal asserted, “[W]e knew if they set up shop on Etsy, and were
successful, others would follow.” 33 Grace Dobush was one such artist. She explained:
Etsy debuted at just the right time: Indie craft shows had started popping up around
the U.S. in the early 2000s, but running your own online store was a complicated task.
(My “store” at the time encouraged buyers to mail me money orders.) Most of the people
who joined Etsy in those first few years were like me—independent crafters who were
already at least somewhat established IRL d—and the quality of the goods on the site was
generally high. 34
Not only did these influential artisans have established, substantial followings, but, as Lifson and
Dobush explained, many of them had had little to no e-commerce presence before Etsy and were thus
highly motivated to send buyers to the site. 35,36 In two-sided marketplaces, it was always a challenge
to find both sellers and buyers, especially in the early days, but by courting established artisans, Etsy
found its supply-side solution.
In 2010, Steven Carpenter at TechCrunch pointed to Etsy’s ability to attract sellers of handmade
items in his “TC Teardown” of the company, noting that while Etsy’s 6.7 million products looked
insignificant in comparison to eBay’s 117 million total listings, “Etsy’s 6.7 million products are more
than double eBay’s 3.2 million listings for similar handmade goods.” 37 Carpenter went on to assert:
In a little over four years, Etsy has firmly established itself as the place to buy and sell
items such as art, glass, jewelry, and art supplies, among others [see Exhibit 7]. This
suggests further that eBay continues to be vulnerable across other categories where:
(1) community is a core part of the selling-buying experience; and (2) the company has
been unable to attract higher-end sellers. 38
In contrast to eBay, building a community and attracting high-quality sellers was something Etsy
accomplished early on, which led to what is perhaps the most significant factor in Etsy’s early growth.
(See Exhibit 8.) Well-respected independent crafters brought onboard their most loyal customers. This
generated a second wave of other independent crafters joining, and similarly bringing along, more
casual customers with them. With that, the flywheel of seller-buyer-seller sign-ups started to spin.
d IRL is short for “in real life.”
7
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Uber
“In the beginning, it was a lifestyle company. You push a button and a black car comes up. Who’s
the baller? It was a baller move to get a black car to arrive in 8 minutes,” explained Uber Cofounder
and CEO Travis Kalanick. 39
As of December 2015, what began in 2009 as a luxury car service in San Francisco was valued at $62
billion 40 and operated in more than 400 cities worldwide. 41 In that same month, Uber closed a $2.1
billion round of funding, led by Tiger Global Management and T. Rowe Price. At the time, Uber’s
revenue was up 300% year over year for the previous two years. 42 At Disrupt NY 2013, Bill Gurley of
Benchmark—investor for both eBay and Uber—claimed, “Uber is growing faster than eBay did. . . . [It]
is probably the fastest growing company that we’ve ever had.” 43 (See Exhibit 9.)
The Need for Uber
Previously, hailing a cab could be quite difficult. The cab riders either stood outside—wind, rain,
sleet, snow, or shine—waving their hands in the air until they could hail a cab, or riders called a taxi
dispatch, if the number was available, and had to wait 20 minutes until a car arrived. Once the rider
arrived at their destination, they fumbled to count out the right amount of cash plus a tip, then
negotiated with the driver who never had the right change, or who “forgot” to start the meter, or whose
credit card machine was broken. All told, very few people viewed finding and using a taxi service as
something enjoyable; it was simply something that they dealt with due to the lack of an alternative.
Uber completely changed the way riders acquired private transportation in several key ways. First,
the Uber smartphone app was integrated with Google maps so the user could see how far away the
nearest cars were, set a meeting point on the screen, and hail a car to meet the user there. Users could
even see their driver’s information, including ratings, as they watched the car approach.
Uber drivers called or sent a text to confirm that they were on the way, giving users peace of mind
that their order was received. Once the car arrived, usually within a few minutes, the driver greeted
the rider by name and the rider hopped in. Initially, the cars were black cars and SUVs. Uber X, a lowercost version of the service, was introduced a year later and was made up of a fleet of well-maintained
sedans (see Exhibit 10).
Once riders arrived at their destination, the app charged the riders’ credit card, and they were free
to go on about their day. There was no need to deal with cash, change, tips, or receipts. 44 Uber removed
the friction from the typical taxi cab transaction and made it a predictable process.
Bill Gurley (partner at Benchmark, an early investor in Uber), saw Uber’s key to growth as a simple
one: Uber offered a great product. He explained: “The product is so good, there is no one spending
hundreds of thousands of dollars on marketing.” 45 While this was certainly the case, it was not the only
factor driving growth at Uber. In fact, from the beginning of Uber, there were several early tipping
points.
Early Growth of Uber
Although the company was founded in 2009, Uber did not officially launch until June 2010. In
January 2011, just six months later, it had had between 3,000 and 6,000 users and had already done
between 10,000 and 20,000 rides. 46 So what got the company there?
8
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
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Solving Problems for Riders
First and foremost, as Gurley pointed out, Uber provided a solution to a real problem that affected
millions of people. Among the many problems Uber was tackling were poor cab infrastructure in some
cities, poor service and fulfillment including dirty cabs, a poor customer experience, late cars, drivers
who were unwilling to accept credit cards, and more.
Uber set out to reimagine the entire experience and make it seamless and enjoyable across the board.
It did not fix one aspect of the system—e.g., mobile payments for the existing taxi infrastructure—it
tackled the whole end-to-end experience, from mobile hailing, seamless payments, and better cars to
no tips and driver ratings. By avoiding the trap of smaller thinking, it was able to create an experience
that redefined what it meant to use a car service, sparking an avalanche of word of mouth and press
coverage.
Word of Mouth from Satisfied Customers
Much of Uber’s success could be attributed to the fact that it made the whole experience easier and
more pleasant. Max Crowley of Uber Chicago explained: “We’ve found that our growth is driven
substantially by word of mouth. When someone sees the ease of use, the fact that they press a button
on their phone and in less than five minutes a car appears, they inevitably become a brand advocate.” 47
According to Kalanick, for its early growth Uber relied almost exclusively on word of mouth, and
spent very little on marketing. He explained, “I’m talking old school word of mouth, you know at the
water cooler in the office, at a restaurant when you’re paying the bill, at a party with friends—‘Who’s
Ubering home?’ 95% of all our riders have heard about Uber from other Uber riders.” In late 2011, word
of mouth generated a new Uber user for every seven Uber rides. 48
Uber even got attention from the likes of comedian Dave Chappelle, actor Edward Norton, venture
capitalist Marc Andreessen—who called it a “killer experience”—and Airbnb CEO Brian Chesky—who
claimed that “Uber makes it very easy to not own a car.” 49
Benefits for Uber Drivers
Not only did Uber transform the experience for riders, but it was also good for drivers. Discussing
Uber’s expansion to Washington, DC, Kalanick explained: “There are a lot of drivers in this city who
are out of work. Because of that, there are a lot of drivers and limo companies that are coming to us to
basically help their drivers make a living.” 50
Uber did not employ drivers. Instead, the service acted as a liaison between people who needed
rides to drivers who were in the area. This arrangement could bring in more than $500 a day, which
amounted to a week of work for some cab drivers. 51 Like any good service, it was a win-win for all
parties involved, and this was certainly another factor contributing to Uber’s growth. Later in Uber’s
existence, the decision to not employ drivers but, at the same time, define precisely what they could
and could not do, would end up getting the company into legal trouble.
9
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Conclusion
Airbnb, Etsy, and Uber were clear outliers among online two-sided platforms in terms of their
extraordinary early-growth rates. Being in very different industries, each startup had a distinct set of
effective approaches to acquire their first thousand customers on the supply and demand side. Yet,
were there any commonalities across their approaches? Could any of the approaches used by these
three companies early on in their life cycle work for other two-sided platforms, networks, or markets
in very different industries?
10
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Exhibit 1
Source:
Airbnb Users (left) and Properties (right) Growth up to 2015
Adapted from http://www.inc.com/sonya-chudgar/airbnb-annual-report-skirts-legal-issues.html, accessed
March 22, 2016.
Exhibit 2
Source:
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Airbnb Venture Funding Rounds
Adapted from Gregory Ferenstein, “Uber and Airbnb’s incredible growth in 4 charts,” Venturebeat, June 19, 2014,
http://venturebeat.com/2014/06/19/uber-and-airbnbs-incredible-growth-in-4-charts/, accessed March 22, 2016.
11
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516-094
Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Exhibit 3
Source:
Jordan Crook and Anna Escher, “A Brief History of Airbnb,” TechCrunch, June 28, 2015,
http://techcrunch.com/gallery/a-brief-history-of-airbnb/slide/9/, accessed March 21, 2016.
Exhibit 4
Source:
Obama O’s and Cap’n McCain’s
Example of Airbnb’s Craigslist Integration Email
Rishi Shah, “Airbnb Leverages Craigslist in a Really Cool Way,” Getting More Awesome: Web Marketing by Rishi Shah
(blog), November 24, 2010, http://www.gettingmoreawesome.com/2010/11/24/airbnb-leverages-craigslist-in-areally-cool-way/, accessed March 21, 2016.
12
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customerservice@harvardbusiness.org or 800-988-0886 for additional copies.
Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Exhibit 5
Source:
Example of Airbnb’s Craigslist Hack Email
Dave Gooden, “How Airbnb Became a Billion Dollar Company,” Dave Gooden (blog), May 31, 2011,
http://davegooden.com/2011/05/how-airbnb-became-a-billion-dollar-company/, accessed March 21, 2016.
Exhibit 6
Source:
516-094
Etsy’s Sales Volume (in US$ millions)
Etsy and Statista, http://www.statista.com/graphic/1/219412/etsys-total-merchandise-sales-per-year.jpg, accessed
March 22, 2016.
13
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516-094
Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Exhibit 7
Source:
http://techcrunch.com/2010/09/11/tc-teardown-etsy/, accessed March 22, 2016.
Exhibit 8
Source:
Numer of Items for Sale on eBay and Etsy
Etsy’s Growth of Buyers (top line) and Sellers (bottom line)
Steven A. Carpenter, http://techcrunch.com/2010/09/11/tc-teardown-etsy/, accessed March 22, 2016.
14
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Exhibit 9
Source:
Uber’s Revenues (in US$ billions)
Reuters, http://www.trbimg.com/img-55d7b4d0/turbine/la-fi-g-uber-revenue-20150821/650/650x366, accessed
March 22, 2016.
Exhibit 10
Source:
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Uber’s Active Drivers in the U.S.
Forbes, http://blogs-images.forbes.com/briansolomon/files/2015/05/uber-stats-4.png, accessed March 22, 2016.
15
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516-094
Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
Endnotes
1 “Travel Like a Human With Joe Gebbia, Co-founder of Airbnb!” Allentrepreneur (blog). August 26, 2009,
https://allentrepreneur.wordpress.com/2009/08/26/travel-like-a-human-with-joe-gebbia-co-founder-of-airbnb/, accessed
March 21, 2016.
2 “Travel Like a Human With Joe Gebbia, Co-founder of Airbnb!” Allentrepreneur (blog).
3 Brown, Morgan. “The Making of Airbnb.” Boston Hospitality Review, January 8, 2016,
http://www.bu.edu/bhr/2016/01/08/the-making-of-airbnb/, accessed April 4, 2016.
4 Crook, Jordan, and Anna Escher. “A Brief History of Airbnb.” TechCrunch, June 28, 2015, http://techcrunch.com/gallery/a-
brief-history-of-airbnb/, accessed March 21, 2016.
5 “Airbnb.” Crunchbase. https://www.crunchbase.com/organization/airbnb#/entity, accessed March 21, 2016.
6 Carr, Austin. “19_Airbnb: For Turning Spare Rooms into The World’s Hottest Hotel Chain.” Fast Company, February 7, 2012,
http://www.fastcompany.com/3017358/most-innovative-companies-2012/19airbnb, accessed March 21, 2016.
7 Crook and Escher, “A Brief History of Airbnb.”
8 “Airbnb.” AVC (blog). March 2011, http://avc.com/2011/03/airbnb/, accessed March 21, 2016.
9 Carr. “19_Airbnb: For Turning Spare Rooms into The World’s Hottest Hotel Chain.”
10 Shah, Rishi. “Airbnb Leverages Craigslist in a Really Cool Way.” Getting More Awesome: Web Marketing by Rishi Shah (blog),
November 24, 2010, http://www.gettingmoreawesome.com/2010/11/24/airbnb-leverages-craigslist-in-a-really-cool-way/,
accessed March 21, 2016.
11 Chen, Andrew. “Growth Hacker is the new VP Marketing.” @andrewchen (blog), http://andrewchen.co/how-to-be-agrowth-hacker-an-airbnbcraigslist-case-study/, accessed March 21, 2016.
12 Chen, “Growth Hacker is the new VP Marketing.”
13 Gooden, Dave. “How Airbnb Became a Billion Dollar Company.” Dave Gooden (blog), May 31, 2011,
http://davegooden.com/2011/05/how-airbnb-became-a-billion-dollar-company/, accessed March 21, 2016.
14 Gooden, “How Airbnb Became a Billion Dollar Company.”
15 Taylor, Colleen. “How Big Is Airbnb, Really?” GIGAOM, May 31, 2011, https://gigaom.com/2011/05/31/airbnb-revenuefunding/, accessed March 21, 2016.
16 Rosenfelt, Rebecca. “[500DISTRO] Going for Global: 5 Guerrilla Tactics When the Slick Stuff Fails.” Slideshare, August 6,
2014, http://www.slideshare.net/500startups/05-rebecca-rosenfelt-airbnb-draft-1, accessed March 21, 2016.
17 Rosenfelt, “[500DISTRO] Going for Global: 5 Guerrilla Tactics When the Slick Stuff Fails.”
18 Kalin, Rob. “Etsy’s First Five Years.” The Etsy Blog (blog), January 30, 2008, https://blog.etsy.com/en/etsys-first-five-years/,
accessed March 21, 2016.
19 Evans, Teri. “Creating Etsy’s Handmade Marketplace.” Wall Street Journal, March 30, 2010,
http://www.wsj.com/articles/SB10001424052702304370304575152133860888958, accessed March 21, 2016.
20 Lifson, David. “How did Etsy Overcome the chicken and the egg problem in its early days?” Quora, comment on user posed
question, September, 17, 2010, https://www.quora.com/How-did-Etsy-overcome-the-chicken-and-the-egg-problem-in-itsearly-days, accessed March 21, 2016.
21 Lifson, “How did Etsy Overcome the chicken and the egg problem in its early days?”
22 Lammle, Rob. “How Etsy, eBay, Reddit got their names.” CNN, April 22, 2011,
http://www.cnn.com/2011/LIVING/04/22/website.name.origins.mf/index.html?hpt=C2, accessed March 21, 2016.
23 Kalin, “Etsy’s First Five Years.”
24 Evans, “Creating Etsy’s Handmade Marketplace.”
25 Lammle, “How Etsy, eBay, Reddit got their names.”
16
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Airbnb, Etsy, Uber: Acquiring the First Thousand Customers
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26 Etsy, Inc., March 4, 2015 Form S-1 (filed March 4, 2015), via sec.gov,
http://www.sec.gov/Archives/edgar/data/1370637/000119312515077045/d806992ds1.htm, accessed March 22, 2016.
27 Popper, Ben. “Etsy completes its IPO, valuing the craft marketplace at over $3.5 billion: A sensible public offering to match
that warm sweater.” The Verge, April 16, 2015, http://www.theverge.com/2015/4/16/8428627/etsy-ipo-goes-public, accessed
March 21, 2016.
28 http://finance.yahoo.com/q?s=ETSY.
29 Evans, “Creating Etsy’s Handmade Marketplace.”
30 Maveal, Danielle. “How did Etsy get its first batch of independent sellers when it started?” Quora, comment on user posed
question, August 21, 2014, https://www.quora.com/How-did-Etsy-get-its-first-batch-of-independent-sellers-when-it-started,
accessed March 21, 2016.
31 Lifson, “How did Etsy Overcome the chicken and the egg problem in its early days?”
32 Lifson, “How did Etsy Overcome the chicken and the egg problem in its early days?”
33 Maveal, “How did Etsy get its first batch of independent sellers when it started?”
34 Dobush, Grace. “How Etsy Alienated Its Crafters and Lost Its Soul.” Wired, February 19, 2015,
http://www.wired.com/2015/02/etsy-not-good-for-crafters/, accessed March 21, 2016.
35 Dobush, “How Etsy Alienated Its Crafters and Lost Its Soul.”
36 Lifson, “How did Etsy Overcome the chicken and the egg problem in its early days?”
37 Carpenter, Steven. “TC Teardown: Etsy, It’s Crafty.” TechCrunch, September, 11, 2010,
http://techcrunch.com/2010/09/11/tc-teardown-etsy/, accessed March 21, 2016.
38 Carpenter, “TC Teardown: Etsy, It’s Crafty.”
39 Mangalindan, JP. “The Trials of Uber.” Fortune, February 2, 2012, http://fortune.com/2012/02/02/the-trials-of-uber/,
accessed March 21, 2016.
40 Whitehouse, Kaja, and Marco della Cava. “Uber now valued at $62B after new $2B raise.” USA Today, Dec. 3, 2015, http://
www.usatoday.com/story/tech/2015/12/03/uber-now-valued-62b-after-new-2b-raise/76733924/, accessed April 4, 2016.
41 Uber. “Work that moves you: Don’t just find your place—create it.” https://www.uber.com/careers/, accessed April 4,
2016.
42 Blodget, Henry. “Now I know Why Investors Are Going Hog Wild About Uber . . .” Business Insider, November 13, 2014,
http://www.businessinsider.com/ubers-revenue-2014-11, accessed April 4, 2016.
43 Dillet, Romain. “Benchmark’s Bill Gurley: ‘Uber Is Growing Faster Than eBay Did.’” TechCrunch, April 29, 2013,
http://techcrunch.com/2013/04/29/benchmarks-bill-gurley-uber-is-growing-faster-than-ebay-did/, March 22, 2016.
44 Mangalindan, “The Trials of Uber.”
45 Dillet, “Benchmark’s Bill Gurley: ‘Uber Is Growing Faster Than eBay Did.’”
46 Abraham, Nikhil. “How did Benchmark Capital justify a $49M valuation for Uber?” Quora, comment on user posed
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March 22, 2016.
47 Crowley, Max J. “How did Uber capture local markets? How did they gain and maintain traction once there?” Quora,
comment on user posed question, January 15, 2013, https://www.quora.com/How-did-Uber-capture-local-markets-How-didthey-gain-and-maintain-traction-once-there, accessed March 22, 2016.
48 Travis, “Chicago—Uber’s biggest Launch to date?” Uber Newsroom, September 22, 2011, https://newsroom.uber.com/us-
illinois/chicago-ubers-biggest-launch-to-date/
49 Mangalindan, “The Trials of Uber.”
50 DeBonis, Mike. “Uber CEO Travis Kalanick.” Washington Post, July 27, 2012,
https://www.washingtonpost.com/blogs/mike-debonis/post/uber-ceo-travis-kalanick-talks-big-growth-and-regulatoryroadblocks-in-dc/2012/07/27/gJQAAmS4DX_blog.html, accessed March 22, 2016.
51 Mangalindan, “The Trials of Uber.”
17
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