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This is NOT a simple summary. It is an executive summary based on an article which I attached to this request. I also included all the elements which should be followed while working on this task. It is not a very long one as in total it has to be 3 pages, but it is important to include everything the professor stated.


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Request

Please write a 3 pages executive summary on Airbnb, Etsy, Uber: Acquiring the First Thousand Customers. I have attached the file below. Papers are to be typed, double-spaced, have a cover sheet which includes Title. You must segregate your material and use headers that tells the reader what he/she is about to read. I have attached the case file below.

Please follow this points:

* The above is the coversheet and doesn’t count as “number of pages.” Let’s see what you can do and keep the report focused – think business writing – to-the-point. Think 3 pages, not including the cover sheet. Also, Do Not state what someone else must do – YOU are the decision-maker – make the decisions! Also, you must defend your decision, e.g., hire X or market Y – ok, how? Where is the money coming from? I’ll repeat this point below.

Next, the analysis needs to address the following topics: NOTE: You MUST put headers at the beginning of each section – you are telling the reader what you are about to discuss. “Executive Summary,” etc., are the headers to be used. Further, it must be in this order and no section is combined with another, Segregate your work.
 

Executive Summary – a summary of your work and conclusions.

This is the first thing an executive reads but it is written last. It is not a summary of the case; it is a summary of Your work. It introduces the topic, states a key issue(s) and the proposed recommendation. It is worth of repeating - Do not summarize the case! Also, leave out phrases like –“…this case evaluates…,” “…the following essay…,” “…this essay concludes…” and similar.

Problem Statement – what problem(s) did you see, pick the key issue(s) – only state the problem(s) you will address. Pick a key problem(s) that you wish to address – there are always issues to address. Do Not explain, analyze or give a recommendation, just state the problem(s) nothing else. Short and to-the-point.

To repeat - there are always issues in the case, pick and state the problem(s) as you see them. These are the problems you will address – stay on track! State the problem(s). These are not questions, they are statements! Do not present a problem in the form of a question! Do not list facts and/or solutions or recommendations here. Make sure that you are stating a problem. Be careful not to state a solution as a problem. For example: “The problem with NYC traffic is that there are not enough parking spaces.” The “traffic problem” may have nothing to do with parking but “parking spaces” is given as a solution effectively closing off other ideas as to what the “problem” actually is.

This is the most “abused” section – many of us cannot state a problem. We most often state results and/or solutions and/or desired outcomes in the form of a problem – both are wrong. For example, someone will write as a problem “…the company’s stock dropped in value.” Sounds right, but it isn’t - it is a result of a problem. Why did the stock price drop? What did the company do (or not do) to cause it? State the cause – you now have a problem to address. Look for a “weakness” in the firm or something that they are not doing or doing poorly.

This is the Points you need to write on:

1. Summary of Facts – Summary only! – and only as they apply to the stated problem(s) being addressed.

State the facts as they apply to the problems you are addressing; do not include superfluous issues. A common failing here is noting a diatribe of facts from the case that have nothing to do with the problem stated – don’t do it. Focus your work. DO NOT analyze anything here, that is the next section – these are the FACTS upon which you are building your case.

2. Analysis of Facts – How the facts influenced the decisions.

Analyze the facts as they apply to the issues you are addressing. Surprisingly, many will write a short paragraph somehow believing that the “analysis” was really addressed under facts, that the issue is obvious, or that there was nothing left to say. These are errors. The analysis is where you demonstrate comprehension of the issues…and I don’t read minds.

3. Recommendations – As Manager/Executive/Consultant - What would YOU do, WHY, and critically HOW you will achieve it. You need to do so objectively and therefore no personalization.

This is the most important item; assuming that you were able to state a problem. First, if you do not make recommendations, the report is not accepted, or the grade will be lowered significantly. Next, do not state that the company should keep doing what is doing. Nor should you state such mundane items like “The Company should do market research to see what the market is like….” Do not simply rehash the material – your thinking and problem solving abilities are most important. Also, leave out phrases akin to “As a consultant…manager… I recommend….” Further, you must state HOW you plan to achieve the results, this almost always means a quantitative analysis. So, if you say, hire X people, advertise more, etc., you need to show How you plan to pay for this and the anticipated results, i.e., what benefit will the company garner.

Specific Rules

NEVER note: “could have;” “should have;” or “would have” as any part of your work. Why? – It’s too late! You need to address what needs to be done to save and/or improve the company.

Other points of note:

  • 1)Leave out personal pronouns      (I, me, my…) – they only weaken your writing.
  • 2)Do not personalize the work –      stay objective
  • 3)NO questions, most especially      rhetorical ones, as they don’t answer anything, rely on the reader to      interpret the writer’s work, tend to mislead and cause confusion.
  • 4)Use Active Voice in your      writing – passive voice weakens your writing and makes the points raised      less clear. See the other file on “passive voice” writing.
  • 5)Reminder - Use a cover sheet      (see above)
  • 6)The text is to be 12 point,      Times Roman is nice, and leave about 1.25” on the sides and 1 inch margins      on the top/bottom; double-space lines. I don’t use a ruler, these are      guidelines. Excessive white space is not well-received.
  • 7)Please put page numbers on      the pages (cover sheet is an exception).
  • 8)Do not put a header on one      page and have the text start on the following page – keep the header with      the 

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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. This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Acquiring the First Thousand Customers 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Acquiring the First Thousand Customers 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Acquiring the First Thousand Customers 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Acquiring the First Thousand Customers 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 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: 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 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: 516-094 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Acquiring the First Thousand Customers 516-094 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 question, January 5, 2012, https://www.quora.com/How-did-Benchmark-Capital-justify-a-49M-valuation-for-Uber, accessed 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 This document is authorized for use only by Saad Ahmed (saad_ahmed71@yahoo.com). Copying or posting is an infringement of copyright. Please contact customerservice@harvardbusiness.org or 800-988-0886 for additional copies.
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Running head: AIRBNB, ETSY, AND UBER

Airbnb, Etsy, and Uber: Acquiring the First Thousand Customers
Name of Student
Institution Affiliation

1

AIRBNB, ETSY, AND UBER

2
Executive Summary

Startup industries usually compete against each other to increase their customers'
base. Ideally, the issue here is significantly more technical or complicated with new
businesses sharing a market that has been launched as a platform to provide independent
services to customers. Airbnb, Etsy, and Uber have acquired thousands of customers in a
short period by embracing the two-sided online platforms that were determined by the
developing web. This commercial centre intended to match the demands and suppliers of
assets for physical products, rent, or online services. The platforms of the three companies
offered temporary property rentals, auto rides, and assembled merchandise, respectively. The
expansion was a significant impact on the systems of the companies because it attracted more
customers, thus, increasing supply to meet customers' demands.
Problems
I.
II.

Uber lacked enough customers
Airbnb lacked an extensive catalogue of potential places to establish

III.

Lack of drivers

IV.

Airbnb lacked a massive user base.
Summary of the Facts
Airbnb needed to seek for individuals eager to list their homes before searching for

people to stay on those houses. “If you don’t have a supply of apartments and houses, people
will not come,” remarked Teixeira. The founders, Joe Gebbia and Brian Chesky thought like
customers by figuring out where their customers will purchase if Airbnb does not exist.
Fortunately, they had an answer within a short time, and it was Craigslist. They predicted that
they were able to do a better job of making apartments attractive compared to the online
classified websites through siphoning their customers first (Teixeira & Brown, 2016). This
strategy succeeded in that property owners gathered their chances of searching a potential

AIRBNB, ETSY, AND UBER

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renter with nothing to lose. On another note, the founders of Airbnb comprehended that the
possibility of a problem was likely once they have apartment owners on the hook. Checsky
and Gebbi hired experienced and professional photographers to go to property owners’ homes
to take marketing pictures.
The underlying pr...


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