Business Finance
MKT 410 The University of Tampa Airbnb Etsy and Uber Strategies Case Study

MKT 410

The University of Tampa


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The case analyses should be approached as though you are a global marketing manager assigned the task of assessing the situation and presenting three long-term strategies to resolve the concerns addresses in the case. I AM NOT LOOKING FOR A SUMMARY OF THE CASE.

Based on your understanding and external research on the current situation (see document attached), DESCRIBE AND DEFEND 3 strategies that would revitalize and/or improve their GLOBAL strategic objectives. Please do not limit yourself to the specifics of the case when formulating your strategies. Think ‘BIG PICTURE’ (ethical and cultural concerns, internal/external factors, complementary products/industries, sustainability issues, process improvements, etc.).

Your strategic recommendations should explain IN DETAIL the logic and process behind implementing such initiatives. Please do not provide vague recommendations. APA FORMAT; 6 FULL PAGES (AROUND 1,500 WORDS); DOUBLE SPACED.

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9 -5 1 9 -0 8 7 JUNE 5, 2019 THALES S. TEIXEIRA Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers By 2019, two-sided online platforms (or marketplaces) were among the highest-growing internet startups around. These marketplaces sought to match suppliers of assets for rent, physical products, or services with customers demanding them. Among the most notable two-sided platforms that quickly reached millions of customers were Airbnb, Etsy, and Uber. They offered short-term property rentals, handcrafted goods, and car rides, respectively. As two-sided markets grew past the 1 million customer mark, challenges of typical large businesses appeared. Among the challenges facing Airbnb, Etsy, and Uber were maintaining the fast pace of customer acquisition, reverting falling customer retention rates, and avoiding regulatory issues. How did these platforms balance their fast growth and massive size with so little time to adapt to ever mounting challenges? How did they adapt and change their customer acquisition tactics to grow from 1 million to many millions of customers? Airbnb Airbnb was a two-sided marketplace that matched people who owned real estate properties with people interested in renting short-term lodging. From mid-2011 to 2019, it grew from 1 million to over 150 million customers in 81,000 cities around the world, largely through international expansion and acquisitions. 1 This positioned the company to be ready for an IPO later in 2019, according to CEO Brian Chesky. International and Acquisitions Early on, Airbnb worked to establish its presence globally. In June 2011, Airbnb used capital from a recent round of fundraising, $100 million at a $1 billion valuation, to acquire German knockoff company Accoleo for an undisclosed amount. Soon after, Airbnb opened its first European office in Hamburg, Germany, which was headed by Accoleo founder Gunnar Froh. 2 The following spring, Airbnb acquired its largest UK-based competitor, Crashpadder, just in time for the 2012 Summer Olympics in London. That same year, Airbnb opened offices across Europe, in not only London but also Paris, Barcelona, and Milan. 3 The push for international growth proved effective for Airbnb, as the shifting demographics of the company user base indicated. In 2011, around 50% of Airbnb’s guests were from the United States, but Professor Thales S. Teixeira prepared this case. He would like to thank Morgan Brown and David Lopez-Lengowski for their valuable contributions. This case was developed from published sources. Funding for the development of this case was provided by Harvard Business School and not by the company. 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 © 2019 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to 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 Mahmoud Darrat ( Copying or posting is an infringement of copyright. Please contact or 800-988-0886 for additional copies. 519-087 Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers as of March 2014 that number had dropped to less than 30%, while more than 50% of its guests over the previous year were from Europe. Furthermore, the company projected the number of European guests to more than double by end of year. 4 In August 2014, Airbnb announced its acquisition, for an undisclosed sum, of the small, seedfunded startup Localmind, a platform that allowed people with questions about potential travel destinations to connect with locals who could answer those questions. Localmind leveraged Foursquare check-in history to help determine how qualified users were to answer questions about venues. Vivek Wagle, Head of Brand Strategy, explained on the Airbnb blog, “This was always meant to be. Localmind’s mission centers on using online technologies to connect people offline. At its core, that’s what Airbnb does.” 5 As part of the acquisition, Localmind’s founders began working on social initiatives as part of the Airbnb team. As Brian Chesky, co-founder and CEO of Airbnb, explained to VentureBeat, “The role of social in travel is more important than ever. We’ve seen connections shape the experience for our community, so we’re excited to have the Localmind team join us and lead this next wave of social products.” 6 An Entire Hospitality Brand Airbnb also focused on expanding to offer more than just lodging in cities around the world. As Chesky explained to Fast Company in early 2014, “Our business isn’t [renting] the house—our business is the entire trip.” 7 According to Fast Company’s Austin Carr, the concept of hospitality used to be considered “a relic of Old World grand hotels.” Yet it was this concept of hospitality that drove much of Airbnb’s growth initiatives. As Paul Graham, co-founder of Y Combinator, explained, “If you ask Brian now what drives Airbnb’s growth, it’s not that people want to get a cheaper space. Airbnb could’ve spread out horizontally into the sharing of power tools and cars and stuff like that. But Brian has decided the growth is in hospitality.” 8 It all started in the winter of 2012, when Chesky somehow stumbled upon a hospitality textbook from Cornell University’s hotel school. The 500-page book spoke to Chesky. As Carr explained, “Airbnb would no longer be about where you stay, but what you do—and whom you do it with— while you’re there.” 9 Since then, Airbnb worked to suffuse hospitality throughout the entire user experience, even meeting with representatives from traditional hotel groups in early 2013. Yet, as Chesky explained, “[They didn’t] inspire us or fit with our culture. That’s what led us to Chip.” 10 Chesky was referring to Chip Conley, former CEO of Joie de Vivre Hospitality. In 1987, Conley was only 26 years old and fresh out of Stanford University’s business school when he, despite having no experience in the hotel industry, managed to raise $1 million to purchase and reinvent a ’50s-era motor lodge in San Francisco’s Tenderloin district. His model was popular with younger travelers seeking an alternative to the standard family- or business-oriented motels and hotels. The first renovation successful, Conley went on to do the same with over 50 more hotels in the Bay Area and beyond, becoming one of the originators of the boutique hotel concept and creating an entire brand of Joie de Vivre hotels. After holding the position of CEO for close to 24 years, Conley sold his stake in Joie de Vivre to Geolo Capital in 2010 and entered semiretirement. 11 In March 2013, having met with hotel representatives and realizing the traditional hotel approach was not what Airbnb was looking for, the company invited Conley to give “a fireside chat on hospitality and innovation.” Chesky said he remembered thinking, “Wow, there’s a lot of things he’s done that we should apply at Airbnb.” Chesky and Conley kept in touch, and in June Chesky offered Conley a job at Airbnb. Though Conley initially declined, Chesky did not give up, and over dinner one 2 This document is authorized for use only by Mahmoud Darrat ( Copying or posting is an infringement of copyright. Please contact or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers 519-087 night he convinced Conley to consult for 8 hours a week. By the end of the dinner, Chesky had talked him into agreeing to 15 hours. By 2016, Conley was Head of Global Hospitality at Airbnb and had become one of Chesky’s most trusted advisers. He explained, “Within a month, it was clear that nobody does anything part-time at Airbnb.” Conley’s first responsibility was to create a set of hospitality standards that made the guest experience more comfortable and reliable while preserving the unique and local flavor that each host contributed to the experience. 12 Mobile In response to the increasing consumer shift toward mobile—a shift that had been largely beneficial to the company—Airbnb optimized its mobile device service offerings for hosts and guests. Mike Curtis, Airbnb’s Head of Engineering, claimed in October 2013, “We’re really concentrating on mobile right now, building out our mobile team and building out our mobile product.” 13 For the first time, in July 2013, Airbnb allowed hosts to create listings and upload photos via mobile devices, even offering a how-to guide for first-time hosts. 14,15 By October, around 50% of hosts were using the mobile app, 16 and those hosts tended to respond to guests three times faster than those on desktop. This meant bookings could be completed as much as eight times faster via the Airbnb app. 17 As Chesky explained, “Can you imagine if every Uber driver had to go home first to check their laptop in order to find their next ride?” 18 To assist with those efforts, in October 2013, Airbnb brought on Scott Raymond, co-founder and Chief Technology Officer of Gowalla, one of the first location-based mobile apps that featured social travel guides. According to Raymond, “Gowalla’s mission was to get out and explore places in the world. That experience has been percolating in my mind for years.” 19 Gowalla was acquired by Facebook in late 2011, and Raymond worked for the company until leaving to join Airbnb’s mobile product team. A month later, in November 2013, Airbnb launched an all-new, “rebuilt from the inside out” mobile app for Android and iOS. The new app included several new features. These included Host Home, Hospitality Standards—as developed by Conley—and Host Groups. The new features were designed to simplify how hosts posted and managed listings. They also allowed better communication between host and guest and made it easier for hosts to track guests during their stay, all via mobile. The new app also included updated features for guests. “Larger, more dynamic images, easily navigable maps, and thoughtful animations” contributed to a more immersive design. A new Discover Feed featured Airbnb’s most unique and popular properties like lofts, treehouses, and castles, and allowed users to explore based on destination, theme, or trip type. The mobile booking process was also streamlined. 20 Word-of-Mouth In late 2013, Airbnb decided to relaunch its “underutilized and underperforming” 21 referral program. Because the majority of emails were actually read on mobile, the company decided to support sending and accepting mobile referrals—something very few apps did. Gustaf Alströmer, Growth Product Manager at Airbnb, described the referral system as something the company was not proud. To begin, Alströmer said his team looked at all the referral data they already had, to get an idea of how the product was doing and what was working, as well as to make forecasts as to what kind of growth might be possible from an improved referrals program. They also talked to companies with 3 This document is authorized for use only by Mahmoud Darrat ( Copying or posting is an infringement of copyright. Please contact or 800-988-0886 for additional copies. 519-087 Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers successful referral programs to get a better idea of industry standards and the potential for growth with a well-executed relaunch. 22 Airbnb’s referrals program relaunched in January 2014. The company measured invites sent via email, Twitter, Facebook, and direct link. From the beginning of the launch, the team A/B tested multiple variables to learn as much as possible. The Growth team wanted to ensure that invites felt like gifts, rather than promotions, and it turned out that invites with a photo of the sender helped to reinforce that feeling. Another A/B test involved the promotional emails sent by Airbnb to potential referrers. When testing self-interested versus altruistic language, they found that altruistic emails resulted in more invitations sent globally—which was also in keeping with the idea of Airbnb referrals as a gift. 23 Airbnb’s new referrals program had already resulted in hundreds of thousands of nights booked by referred users in 2014, 24 and overall referrals increased daily signups and bookings by 300%. 25 Not only that, but Airbnb found that referred users tended to be better than the average user—in other words, they were not merely in it for a free night. Referred users tended to remain engaged with Airbnb and book future trips, and they were much more likely to send referrals themselves than were nonreferred users. Rebranding On July 16, 2014, Airbnb officially relaunched its website and mobile apps with a new look and feel. This rebranding was the result of a year of brand study, for which the company collected user research, interviewed guests and hosts in more than a dozen countries, and brought in London-based DesignStudio for additional assistance. Airbnb’s research also delved into competing brands, and, according to DesignStudio’s Paul Stafford, the company found that too many tech companies relied on a “cold, corporate blue color.” 26 Up until July 2014, Airbnb was one such company. Both the original logo for AirBed and Breakfast and the Airbnb logo that replaced it were executed quickly out of necessity. Joe Gebbia, co-founder and Chief Product Officer explained, “Those brand identities were created in a matter of hours, for a short deadline, and only for temporary use.” Chesky echoed that sentiment: “We were growing so fast, it became one of those things where you say you’ll figure it out later, but then you never end up doing it because you’re too busy.” 27 But with the company’s new focus on international expansion and becoming a more inclusive hospitality brand, it seemed like the appropriate time to tackle the branding issue. After conducting extensive research into Airbnb’s own brand as well as that of other companies, Chesky claimed he was able to distill it all into a single concept—belonging. He explained, “Airbnb is about belonging anywhere. The brand shouldn’t say we’re about community, or our international [reach], or renting homes—it’s about belonging.” 28 The company’s new logo, the Bélo, embodied this and more, combining visual elements of a person, a location pin, a heart, and the A in Airbnb. Chesky hoped that the logo would grow to become a “universal symbol of sharing.” Controversies As the company expanded and refined its business model, it grew from a friendlier, personal alternative to Craigslist into a friendlier, personal alternative to hotels. After all, based on the number 4 This document is authorized for use only by Mahmoud Darrat ( Copying or posting is an infringement of copyright. Please contact or 800-988-0886 for additional copies. Airbnb, Etsy, Uber: Expanding from One to Many Millions of Customers 519-087 of beds offered, Airbnb was the fifth-largest hotelier in the world, with prices at least one-sixth cheaper than traditional competitors and a presence in almost every country worldwide. 29 This explained why the company’s biggest concern for 2014 and beyond was dealing with blowback from the disrupted hotel industry—along with city and state officials, none of whom were sure what to do when it came to taxing and regulating Airbnb transactions. On the one hand, there were people such as Richard Solomons, CEO of InterContinental Hotels Group, who argued, “If they’re selling themselves as this big brand that’s going to be bigger than Hilton and InterContinental Hotels, they ought to be thinking about regulation and leveling the playing field.” 30 The hotel industry in New York City was particularly outspoken about its disdain and concern over Airbnb. In August 2013, Vijay Dandapani, CEO of Apple Core Hotels, complained, “These people [who rent out their apartments] don’t pay taxes. . . . The web sites may tell them they need to pay all taxes, but they don’t require it.” 31 In February 2014, Lisa Linden, a representative of the Hotel Association of New York City, complained, “Residents who use Airbnb and similar sites to rent rooms to incoming travelers degrade the quality of life for neighboring residents, take revenue from local municipalities and jobs from local employers, and could deter travelers from returning.” 32 In March 2014, Linden claimed, “These illegal facilities are impinging on available housing stock, lost revenues for the city, and potential job losses for NYC’s tourism industry.” 33 Then in April 2014, Lodging magazine reported, “Many hotel owners have been up in arms because Airbnb hosts are not subject to traditional hospitality based regulations or requirements, such as paying lodging taxes.” 34 Chesky, however, who met with hotel industry executives in Davos, Switzerland, in early 2014, asserted, “We are not seeking to go to war. I left those meetings imagining that I will be able to have a cordial relationship with some of the leaders of those companies.” 35 Yet the company faced some unlikely resistance. Despite previous concern over the fact that Airbnb was not paying hotel taxes, the Hotel Association of New York City claimed that if there was a proposal to allow Airbnb to contribute $21 million to New York in hotel taxes it would “oppose it, entirely.” As Airbnb acknowledged in a press release on the subject, the hotel industry’s shifting rhetoric was “just one piece of a larger issue, which is that any new legislation holding Airbnb accountable for taxes would also legitimize the Airbnb business. And that’s something the hotel lobby doesn’t want.” 36 Airbnb also felt resistance from outside the hotel industry, as several cities worked to regulate the short-term rental market. In April 2015, Quebec announced that it was evaluating ways to crack down on rentals through housing brokers in Montreal, one of Airbnb’s most popular travel destinations. The considered regulations would subject Airbnb to the same regulations as hotels, which included a 3% tax to guests on the price of the room per night, and a $250 annual fee to the hosts for the right to rent a room for fewer than 31 days at a time. 37 San Francisco was another city of controversy, where, until February 2015, Airbnb had refused to pay a 14% hotel tax. However, when faced with mounting citywide pressure, Airbnb finally agreed to pay a back-tax bill of tens of millions of dollars. Yet despite Airbnb’s agreement to pay the city tax, a ballot measure, known as Proposition F, was proposed later that year that would put severe limits and restrictions on people hosting through Airbnb. As part of a PR campaign to both bolster goodwill and advertise its paid tax dollars before the Proposition F voting, Airbnb released several paid ads around San Francisco, suggesting ways those tax dollars could be spent on public works around the city. The ads backfired, however, and instead came across as “passive aggressive.” 38 Despite the negative PR 5 This document is authorized for use only by Mahmoud Darrat ( Copying or posting is an infringement of copyright. Please contact or 800-988-0886 for additional copies. 519-087 Airbnb, Etsy, Uber: Expanding from One to Man ...
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Running head: CASE STUDY

Case Study
Student’s Name
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Case Study

Due to the increased digitalization and adoption of new technologies, two-sided online
platforms remain some of the fast-growing internet startups globally. The two-sided platforms
were developed to find better and more efficient ways of satisfying the demand of their
customers. Some of the most successful two-sided platforms that managed to build their brand,
expand their operations internationally, attract millions of customers, and compete favorably
with other market players include Airbnb, Etsy, and Uber. Airbnb offered short term property
rentals to customers who were interested in renting and short-term lodging. Etsy was a two-sided
platform that specialized handmade items and supply of art materials, photography, food, toys,
jewelry, and clothing. Uber, on the other hand, is a two-sided online multinational platform that
provides customers with transport services where car rides are ordered online, and a designated
driver is sent to offer transport services (Teixeira, 2019). The two-sided online platforms
businesses faced a wide range of challenges that negatively impacted their success. Therefore,
this paper describes and defends strategies that would revitalize the global strategic objectives of
the two-sided online platforms, Airbnb, Etsy, and Uber.
Airbnb's failure to comply with the tax policies negatively impacted its global strategic
objectives. According to the case study, Airbnb faced resistance in various places because they
were viewed as tax defaulters who does not want to support the economy (Teixeira, 2019). As
such, other countries had decided to develop policies that limited the activities of Airbnb in such
countries. The best strategy to help Airbnb improve its global strategic objectives is to improve
its compliance with all the legal requirements of the countries and cities where they expand their
operations. According to Slemrod et al. (2017), it is vital for international companies planning to
comply with the tax legislation to keep close tabs on the constant changes in tax legislation to



ensure that they are always on the right side of the law to avoid conflicts. Therefore, Airbnb
should regularly monitor tax...

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University of Virginia

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