The Power of Small Changes: From Bankruptcy to $10 Billion

For a startup, a small change could potentially lead to gigantic results.

 

There’s a well-known but often untold story about Airbnb, the worldwide platform for renting lodges and residential space. In 2009, Airbnb had been operating for about a year, and was facing doom and failure straight in the face. The Silicon Valley startup had flat-lined at revenue of $200 a month for a long period of time, and was starting to run out of cash very quickly (most of the cash they had was in the form of credit card/ personal debt).

At that point, the Airbnb founders joined Y Combinator and were advised to forget scalability and focus on customer satisfaction. With that advice, the team reassessed their website and embraced customer mentality to understand why users were coming to the website but not making bookings. The answer stared them in the face: the pictures of lodges and apartments posted by hosts were terrible. Really terrible. It was no surprise none of the customers were booking; the low quality pictures made most lodges look shady, at best.

Over the course of the next weekend, all but one member of the Airbnb team went to New York City to photograph the existing listings with professional cameras and equipment. The following Monday, all those photos were posted, and everyone at Airbnb monitored the results with little expectation that it would create any significant ruffle.

To their (happy) surprise, revenue in the week of that same Monday doubled to $400. In hindsight, that seems insignificant, but at that time, it was huge. It was movement.

It also put Airbnb on the right track towards growth. The result gave them a clear sense of guidance, and a better understanding of their customer base. It was a small change, but one that fundamentally altered how the startup approached problems. No longer did they adhere to the Silicon Valley mentality of “solving everything with lines of code” from behind a computer. Rather, they sought a new approach of “leaving the building” in order to go find and talk to their (potential) customers.

Today, Airbnb continue to embrace the “small, seemingly insignificant” changes because they have experienced firsthand the exponential power a minor alteration entails. In fact, their CPO, Joe Gebbia, believes that if it weren’t for that one change back in 2009, Airbnb would have fizzled out into the graveyard of forgotten startups. He also credits the “photography” solution as the feature that propelled them towards the $10 billion valuation they have recently achieved.

 

 

Slice of Advice:

Take solace in the Airbnb story if you are facing doom and gloom, and remember that when you think your product is dead, a minor alteration driven by a true understanding of your customers can revitalize everything. Dissect your product, and experiment with small changes to your design, code, or software until you find that “ruffle”.

 

Video: Airbnb Co-founder discusses the embrace of the “small change”

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1 Comment

  1. bandar

     /  June 4, 2014

    Great story has him. Many lessons learned.

    I salut you for that!

    Reply

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