What is Airbnb?

Airbnb is an online marketplace connecting travelers with local hosts. On one side the

platform enables people to list their available space and earn extra income in the form of rent.

On the other, Airbnb enables travelers to book unique home stays from local hosts, saving

them money and giving them a chance to interact with locals. Catering to the on-demand

travel industry, Airbnb is present in over 190 countries across the world.

Founders, Funding received, Salient features & Facts:

Airbnb was founded on 1 August, 2008 and in a short span of time it grew as a technology

masterpiece. Having received a massive funding of $2.3 Billion from 31 different investors,

Airbnb is a part of the Billion dollar club. Here are few interesting facts about Airbnb.

Founders: Nathan Blecharczyk, Joe Gebbia and Brian Chesky.

Funding received: $2.3 Billion (Till June 2015)

Airbnb company valuation: $25.5 Billion (As of June 2015)

Airbnb is present in 34,000+ cities across 190+ countries.

Having 1.2 Million listings, the company has served over 35 Million guests.

Headquarters: San Francisco, California, USA.

140,000+ people stay at an Airbnb listed place everyday.

The massive funding received by Airbnb has made it enter the million dollar club. Airbnb’s

recent funding of $1.5 Billion in one go is one of the largest funding rounds ever conducted.

Can Airbnb generate such huge amounts of revenue? Well, maybe yes. Before moving on to

read about Airbnb’s customer segments, value propositions and understanding its business

model canvas, lets go through Airbnb Timeline.

The 5 step model about how Airbnb works:

1. Hosts list out their property details on Airbnb along with other factors like pricing,

amenities provided etc.

2. Airbnb sends a professional photographer (if available) to the property location in

order to take high quality photographs.

3. Travellers search for a property in the city where they wish to stay and browse

available options according to price, amenities etc.

4. Booking is made through Airbnb where traveller pays the amount mentioned by host

and some additional money as transaction charges.

5. Host approves the booking. Traveller stays there and finally Airbnb pays the amount

to the host after deducting their commission.

The host and the traveller can rate each other and can write reviews based on the experience.

AREA OF STUDY

Understanding Organizational Culture

Would you act the same way at a rock concert as you would while watching a symphony

orchestra perform? Although there are no written rules that dictate the acceptable way to act

at either type of performance, the concert audience will try to make it very clear to you if

your behavior does not conform to what they consider to be appropriate.

Would you dress the same way to attend a golf tournament as you would to attend a football

game? Although both are sporting events, there are a set of unwritten rules that dictate what

is considered to be the acceptable way to dress for each type of event, and the people in

attendance will send you signals as to whether or not they think you are dressed

appropriately.

At concerts, sporting events, and just about everywhere that people get together, group

members convey social expectations by how they dress and act. Newcomers to the group are

expected to learn what is acceptable to the group by observing the behavior and dress code of

the group members and adapting to the situation accordingly.

Defining Organizational Culture

Organizational culture works a lot like this. Every company has its own unique personality,

just like people do. The unique personality of an organization is referred to as its culture. In

groups of people who work together, organizational culture is an invisible but powerful force

that influences the behavior of the members of that group. So, how do we define

organizational culture?

Organizational culture is a system of shared assumptions, values, and beliefs, which governs

how people behave in organizations. These shared values have a strong influence on the

people in the organization and dictate how they dress, act, and perform their jobs. Every

organization develops and maintains a unique culture, which provides guidelines and

boundaries for the behavior of the members of the organization. Let's explore what elements

make up an organization's culture.

Organizational culture is composed of seven characteristics that range in priority from high to

low. Every organization has a distinct value for each of these characteristics, which, when

combined, defines the organization's unique culture. Members of organizations make

judgments on the value their organization places on these characteristics, and then adjust their

behavior to match this perceived set of values. Let's examine each of these seven

characteristics.

We chose Airbnb as our topic because it is a very interesting start-up story that took the hospitality sector with a blow. Just 7 years in the game and it stands as follows-

We feel that Airbnb is really just getting started and has so much more room to grow; it will

have a major impact on the hospitality industry. Warren Buffett, the not so tech billionaire,

recently told attendees looking for hotel rooms for the Berkshire Hathaway annual meeting to

not be discouraged by limited hotel rooms and to choose Airbnb. We think Airbnb is not

creating demand; they are simply shifting it to another form and driving the price down for

consumers and revenue for the industry--the same way Uber is for transportation.

The culture at Airbnb is taken very seriously. They are developing a culture of their own

through belonging. The first thing you need to know about Airbnb's approach to culture is it's

the vision of the founders - Brian Chesky (CEO), Joe Gebbia and Nathan Blecharczyk.

When you walk into the Airbnb

office in SOMA, San Francisco, you

could be entering a trendy inner-city

apartment building almost any place

in the world, which deliberately

aligns with the company's mission:

to create a world where you can

belong anywhere. Looking out

across the atrium-like foyer from

inside the HQ, you peer into a

kaleidoscope of colourful rooms

that have been painstakingly built to

resemble some of the more interesting Airbnb homes from around the world, including the

founder’s apartment where the company started, all marked proudly with a plaque telling the

story of the actual host and home

That is how you belong. You make a story and include as many people in it as you can. That

is how you win hearts, that is why Airbnb is so close to so many of us. The culture Airbnb

has managed to create is underpinned by not only its commitment to its mission and values,

but also to its unrelenting belief in honest, two-way communication. Studying organisational

culture through Airbnb is like setting a benchmark since the company has progressed ever

since in the game and most importantly been able to tap the most from its employee while

keeping them as happy. We shall find out how they do it in the coming chapters.

CHAPTER 3

How does an organisation begins and sustain its culture? There are mainly three forces that

play an important part in sustaining the culture:

• Selection practices

• Socialization methods- The socialization model

• Actions of top management

Let us look at it through our case study.

The Selection Process

Last year Airbnb received 180,000 CVs submitted for 900 positions.1 “We’re both lucky and

quite challenged,” Levy says. The company’s first preference for filling roles is to look

inside, and after that to look externally and start with internal recommendations. Every

candidate that makes it through to an interview goes through a set of interviews related to

their role , and in addition they have two additional interviews related to core values. These

are conducted by people selected by the founders, who are outside of the function for which

they are interviewing, and talk with the candidates about their experience, understanding and

mindset related to Airbnb.

The Socialization Model

Once somebody has made it through both sets of interviews and gets an offer, they go

through a week long check-in process that focuses on the Airbnb values, business strategies,

an introduction to each function, and ways of working. New team members usually go

through this process with others who have also been recently hired. "We create belonging by

enabling them to form a group that hopefully stays together as they progress here through

their careers,” Levy says. "We schedule different kinds of lunches and meetings to help

people to understand their colleagues they’re going to be working with. We ask all new hires

1 https://www.cultureamp.com/zine/001-how-airbnb-is-building-its-culture-through-belonging.html opened on 27th October 2015

to share a fun fact and why they came to work here, not just about their job, but who they are,

what they are into and how they ended up working at Airbnb.”

Actions of Top Management

The top management at Airbnb provides its employees with full freedom to deal with their

customers and aim to maintain a healthy workplace which is comfortable for everyone. Here

at Airbnb the workspaces are open and collaborative. Everything resides in a big hall. Rooms

with glass walls create a small feeling of separation. Every room represents a different city,

i.e. Amsterdam or Mexico City. The interiors are designed to look like actual apartments

offered on the Airbnb website. A giant staircase in the back of the hall is equipped with

cushions and serves as an informal meeting area for the staff or a more relaxing working

place. Additionally, the office includes a dark wooden bar, which looks like one of the

traditional Irish pubs and creates a casual, informal atmosphere. A modern kitchen holds

healthy food, drinks, and snacks, which are provided for the employees free of charge. Every

noon, a cook comes by the office and prepares a variety of fresh lunch dishes for the staff.2

So what is the culture at Airbnb like? If there is an unsatisfied customer complaining, the

employee is free to choose a way of compensation. A common practice at the office,

employee ordering a huge teddy bear and sending it to the customer with a card to apologize

for the negative experience he must have made. Also, people celebrate the others’ successes.

A small team started to applaud for someone and the whole staff joined the cheers. They

showed support and had fun. Moreover, employees have transparent access to all

information. This is only a logic consequence, since the more information people have, the

more autonomously they can work. However, this can be a bit overwhelming or sometimes

difficult. That is why helping others is also a priority. As the employees described it, no one

is ever too busy to help.

2 https://blog.nus.edu.sg/audreyc/2015/03/07/culture-vs-growth-airbnbs-secret/

How well has Airbnb covered the dimensions of culture? Let’s see how well the various

dimensions of culture are met at this start-up.

Openness, confrontation and trust: “Our rule of thumb is that nobody should hear about

anything externally, until we’ve told them internally,” Levy says. He also says that

“communication philosophy that we want to have an honest, open and two-way dialog

between everyone in the company."

In 2013, the co-founder and CEO Brian Chesky sent a letter to the whole team at Airbnb. He

published it under the name “Don’t fuck up the culture”. It is about the advice an investor

once gave to the three founders. Despite the investor’s cynical view that it was practically

inevitable to ruin the culture once a company grows, the culture was exactly the reason why

he invested in Airbnb. Organizational culture is described as the shared way of doing

something with passion. It is the foundation of every company and it should stay with it even

after the founders are gone. To drive future innovations, the company has to build the culture

by upholding its core values in everything they do. This includes hiring, working, as well as

informal chatting. Why is that so important? As Chesky puts it: “The stronger the culture, the

less corporate process a company needs”. Meaning that, with a strong corporate culture, you

can give your employees more autonomy, you can trust them to do the right thing and be

entrepreneurial. Ultimately, that is how innovative ideas emerge.

The letter (attached in the appendix) shows how well the company has stood stood its ground

on autonomy, freedom, and asking the employees to collaborate. To build on what Chesky

emphasized in his letter, we noticed that employees are indeed working very independently.

For instance, if there is an unsatisfied customer complaining, the employee is free to choose a

way of compensation. Also, people celebrate the others’ successes. If a small team starts to

applaud for someone and the whole staff would join the cheers. They show support and have

fun. Moreover, employees have transparent access to all information. This is only a logic

consequence, since the more information people have, the more autonomously they can work.

However, this can be a bit overwhelming or sometimes difficult. That is why helping others

is also a priority. As the employees described it, no one is ever too busy to help.

What type of an organisational culture does Airbnb sport?

After going through their website and online facts about how well the start-up has managed

to create an outstanding culture we derived at a conclusion that Airbnb is nothing short of

having an Entrepreneurial Culture.

So what is Entrepreneurial Culture? As we put it, in an entrepreneurial culture, work is

more than a job, it's a lifestyle. Employees work like a team than in most companies, and in

some cases, we're even like a family. As have already discussed the company takes very good

care of its employees and gives them the freedom to work as they like. They communication

in the workspace comes easy and birthdays, anniversaries and small joys and clelbrated

together. This not only gives the employees a purpose of work and sense of belonging, it also

extracts the most out of them through making work look easy.

That is how the founders of Airbnb have managed to build this sort of culture, by actually

indulging in things. All the founders once in very while go out to their unexplored or also

famous destinations and stay with their host. This helps Airbnb build brand trust and loyalty.

Treating employees with respect helps enable them to do their jobs to the best of their

abilities. If you challenge people to raise their bars, provide fun activities, keep people

informed and humanize your management, you get culture. From these basics, you will grow

in your petri dish a strong, healthy culture that will allow you, your company and your

employees to flourish.3 Hasn’t the CEO of Airbnb nailed it?

How has Airbnb developed a Customer Responsive Culture?

At Airbnb the priority is to deliver full customer satisfaction. As they say- Customer

Experience is an insanely creative, highly trained team of global specialists responsible for

escalated customer cases that begin online, but exist in the offline world. These include

monetary and personality disputes, last minute cancellations, VIP rebooking, and “outside the

box” mediation for violations in Airbnb Terms of Use. We seek those who are passionate

3 http://entrepreneurship.org/resource-center/creating-an-entrepreneurial-culture.aspx opened on 29th october 2015

about human relationships and behavioral psychology, who thrive on finding creative

solutions to complicated situations, and treat every upset user as an opportunity to create a

loyal promoter.4

They have people working for them from across the globe who come together in a cultural

confluence and add to the service provided to their huge customer base. The plan is simple to

empower both employees as well as the customer through brining in change in organizational

structure to give employees more control and also to empower employees to make decision

about their jobs.

How has Airbnb developed workplace spirituality?

To begin with Workplace Spirituality is the recognition that people have an inner life that

nourishes and is nourished by meaningful work that takes place in the context of the

community. Airbnb recently developed and launched an intranet to update everyone on

employee birthdays and anniversaries. It also hosts a page for each employee and office so

people can get to know each other and build their internal networks. Levy says its other

"secret sauce" is a group called “ground control” that is a part of the employee experience

team with the aim of bringing the culture to life. This team is tasked with looking after the

workplace environment, internal communications, employee recognition, celebration and

events. The team is made up of over 10 people in San Francisco, and the role exists in just

about every one of the Airbnb offices around the world.

4 https://www.airbnb.com/careers/departments/customer-experience