Lessons from the rise of Airbnb applied at Boston Consulting Group Digital Ventures.

1. Created by Josh Schachter, Product Lead, BCG Digital Ventures
Incubating for Success
21 NOV 2016
Lessons from the rise of Airbnb applied at BCG
Digital Ventures

2. Created by Josh Schachter, Product Lead, BCG Digital Ventures
The Airbnb story…
2
Airbnb boasts millions of listings in 10's of thousands of cities across nearly 200
countries. But the world's largest "hotel" wasn't always the darling of Silicon
Valley. Founded under the framework of design thinking by Joe Gebbia & Brian
Chesky, young graduates of The Rhode Island School of Design (RISD), Airbnb
trod its way through multiple failed launches and rounds of product iteration
before becoming a commercial success.
Airbnb did not spawn out of DV. But its story and
the lessons that follow reflect the operating
principles, lean methodologies, and MVP
mindset under which we incubate digital
businesses on behalf of our corporate partners.
…applied to BCG Digital Ventures

3. Created by Josh Schachter, Product Lead, BCG Digital Ventures
1. Solve a problem for a niche audience
2. Great ideas spark a strong reaction
3. Persevere through the Trough of Sorrow
4. Get close to your customers…and do
things that don't scale
4 Lessons from Joe Gebbia's interview on How I Built
This
3
In October, 2016, AirBnB
co-founder Joe Gebbia
sat down with NPR's
How I Built This.

4. Created by Josh Schachter, Product Lead, BCG Digital Ventures
• In 2007, Joe Gebbia and Brian Chesky
observed sold-out accommodations for
the Industrial Design Conference in San
Francisco, CA.
• Launched airbedandbreakfast.com as a
quick proof-of-concept to offer local
housing to trade show visitors  validated
by 3 designer guests.
• Received inquiries from past guests for non-
conference usage, and expanded site to
general travel.
1. Solve a problem for a niche audience
4
AirBnB homepage in March, 2008

5. Created by Josh Schachter, Product Lead, BCG Digital Ventures
2. Great ideas spark a strong reaction
5
Joe Gebbia on initial
reactions to great ideas
Joe Gebbia on initial investor
reactions to Airbnb
Paul Graham's initial reaction to Airbnb
"Great ideas start out as polarizing. They either
really tug on somebody's emotions or a latent
desire they have that's never been answered
before, or they perturb them in some way."
"We've all been taught that strangers equal
danger…No one in their right mind would invest in
this service."
"You mean people actually use
this?!...Well that's weird."

6. Created by Josh Schachter, Product Lead, BCG Digital Ventures
• First real launch was at SxSW (unveiled to
merely 6 listings and 1 booking).
• 2nd launch at 2008 DNC in Denver,
Colorado. Grew from 0-800 homes in 4
weeks; but usage flat lined after
convention.
• Trough of sorrow is the time between
product and market fit. When most quit.
• Airbnb collects $200/wk in fees during this
time.
• Bootstrapped by selling collectible cereal.
3. Persevere through the Trough of Sorrow
6
Product
Market

7. Created by Josh Schachter, Product Lead, BCG Digital Ventures
3. Persevere through the Trough of Sorrow
7

8. Created by Josh Schachter, Product Lead, BCG Digital Ventures
• Y-combinator's first mandate to Airbnb 
go to your customers in NY.
• Learned that listings needed better photos
• Rented a camera; went door-to-door to all
30 hosts to take photos
• Hosts revealed inefficiencies of existing user
interface; friction in finding listings.
4. Get close to your customers…and do things that
don't scale
8
Enlightened Empathy is
"seeing the world so
closely in the shoes of
the person that you're
creating for, that you
can see the world how
they see it. You bring
those insights and
combine them with your
own design point-of-
view to build something
so much more [special]."
Joe Gebbia, founder of Airbnb