Hey people! Welcome back to Forests Over Trees, your weekly tech strategy newsletter. It’s time to zoom-out, connect dots, and (try to) predict the future.
A Facelift for Airbnb
Airbnb wants a re-brand.
They want to reach customers they haven’t been able to reach before. They want to be young and cool and fast-growing (again)!
Instead of me trying to tell you about their recent facelift, take a look at this screenshot from their website. Anything stick out to you?
“Experiences”, “Online Experiences” , and "Icons” … I’m sorry what?!
So I got curious and dug into it. Here’s what I found.
First impressions
1/ Experiences make sense
Clicking on this tab, you see what you might expect: things to do in cities you visit. There are sailing trips in Lisbon, a Greek food tour in Athens, and a Traditional Flamenco show in a cave in Spain. I have a weird fear of caves, but otherwise this is cool! All of the experiences are hosted by individuals with ratings (4.9 for the caves… not bad).
2/ Icons are chaotic
This option is inside of “Stays”, and it’s interesting to look at but hard to understand. You can stay in Prince’s Purple Rain house, in Shrek’s Swamp, or “Join a living room session with Doja Cat”. What? It’s not totally clicking. I think these are designed to be exclusive/unique events, but they’re not categorized as experiences. And they’re not rated or hosted by “real” individuals. Case in point, this one for fans of The Incredibles (Edna Mode is amazing, but not real):
3/ Online Experiences seem brilliant
There are cooking classes, meditations, and even live (online) music. It’s like an entire marketplace (think Upwork, Fiverr), with online offerings from real people. No travel required. Here are my actual notes from earlier this week: “Wow. This is crazy.”
Making sense of the new look
In November 2023, the last time I wrote about Airbnb, we were already seeing signs that they needed to push into new territory to find bigger growth…
I even titled the post “Airbnb needs to go bigger than travel”, for Pete’s sake!
But I didn’t think they would go this big, this soon.
So I went to listen to their last earnings call, hoping for some nuggets of wisdom from CEO Brian Chesky about what he’s thinking.
Here are a few incredible quotes (source).
On Icons (Doja Cat’s living room)
“[They] mark an important next step in helping people understand that Airbnb offers more than just travel accommodations.”
“[With Icons] spanning various geographies, demographics, and fan bases, we'll be able to reach key segments in a more targeted way.”
This helps… sort of.
It’s definitely a shock to the system, telling people they are more than just a travel company. And I take his point that they can do narrower targeting this way. But I’m not 100% convinced. More on that later.
On being a noun and a verb
“Airbnb is a noun and a verb. It's synonymous with a category, kind of like Kleenex or Xerox. People say, "I'm going to get an Airbnb. I'm going to Airbnb my place." Literally, the name Airbnb has the name B&B in it. So, one of the challenges is that people open our app to expect to see stays. And so, what we want to do, in addition to bringing back experiences… is we wanted to expand Airbnb's brand positioning to include more than just a place to stay.”
This helps… a lot.
It explains why he thinks he needs the shock factor of Shrek’s Swamp. Your reputation and your brand sticks with you (for better and for worse).
Also, maybe I’m reading way too much into this, but is he hinting that they might need a name change!? Sorry, I’ll calm down.
So… will it work?
The Good
Extending the travel brand – I love the travel-related experiences, because I think they’re the perfect extension of the brand. It’s natural to think of planning travel activities while you book lodging. Hosts’ binders with recommendations and food menus are a great start, but getting folks who are particularly knowledgeable or passionate about the local area (or who own the family restaurant and will bring you behind the scenes) is even better.
Embracing reputation – Airbnb has one of the few review systems I trust (and one of the few I regularly contribute to). And they do a great job of “badging” hosts to tell you who the best ones are. If they can extend that same level of quality and trust to their other experiences, I think they’ll have a huge advantage over other review/booking sites (cough, Trip Advisor). Over time, they’ll be able to leverage that trust to sell larger, more expensive experiences.
Untethering from real estate – The cliché insight about Airbnb is that they innovated by using individually owned assets, rather than locking themselves into commercial leases the way hotels do. Well… experiences (especially the online-only ones) are the next evolution in that same line of thinking. With experiences, you don’t need a house to be a host on Airbnb, you can lead tours instead. Or, you skip all that and just help other people plan their trip online! Removing constraints (like property ownership) for hosts should lead to a ton more activity on Airbnb.
The Bad
Icons – This is just one person’s opinion (with very limited data compared to the folks inside Airbnb), but I’m not sold on this part of the plan. Instead of pouring marketing dollars into building a replica of Shrek’s Swamp and giving a tiny sample of people the exclusive experience of staying there… why not build tools that make it easier to host experiences? Or give traditional hosts easy ways to collaborate and revenue-share with experiences hosts in their area? Plus, while I pointed out the beauty of untethering from real estate above, this is almost the opposite. They’re basically building/leasing amusement parks for single day experiences.
The Unknown
Non-travel, online experiences – In my mind, this is the biggest bet they are making, where they’re hoping to get lucky. The risk is that customers won’t intuitively think of Airbnb beyond travel. Or that growth in this segment won’t contribute to the flywheel of growth in their other segments (good travel experiences lead to more travel, which means more stays and experiences booked…). But the upside is that if they can convince users (and hosts), the sky is the limit. They won’t be limited by home ownership, or travel trends, or anything else. And they’ll be tapping into the rising tide of gig-work globally. I made the analogy to Fiverr and Upwork earlier… if I was one of those companies, I would be terrified.
Wrapping up
It's been really fun to watch Airbnb navigate this hard, important inflection point. We’ll have to check on them again in another few months to see how things progress (and whether ‘Icons’ survive the summer)!
Bonus Bullets
Quote of the Week
Nothing extraordinary is achieved through ordinary means.
— Scott Belsky, CPO at Adobe
Quick News Reactions
More
CowbellAI Partnerships! — This week, The Atlantic and Vox Media announced deals with OpenAI. We’ve talked before about the the chaotic, constant re-shuffling of partnerships in the space… But I’m beginning to think the news companies (who rely on protecting their content) have a lot more to lose than the social media companies (who rely on user engagement). Just because Reddit did it doesn’t mean you should do it.Ticketmaster hacked — It’s crazy to see this news break right after the announcement that the DOJ is suing them. Apparently the hackers have data for 500M+ customers and are trying to sell it for a mere $500K… Just like with the FTX hack right as they were crumbling, it seems like attackers who are already in systems decide to exit and extract value before it’s too late.
Smart lil watch — Google is launching a connected Fitbit smart watch for kids 7+. It comes out in August and will cost $230 plus a monthly subscription. I’m not sure kids need more devices, and I’m also not sure Google is good at personal hardware, but it does sound cool. They’ll have fitness-based games, location tracking for parents, etc.