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Airbnb: The Ups and Downs of Stakeholder Engagement

| Thursday August 4th, 2011 | 2 Comments

Airbnb is a popular web based service that lets people rent out their spare rooms or even entire homes when they’re not around. I happen to be a big fan and have used them dozens of times to rent out my own place as well as to stay in other cities. I was therefore pretty shocked, along with many others, to read the news last week about the meticulous ransacking of a woman’s apartment by an Airbnb renter.

The ransacking was so bizarre, over the top, and downright evil, it actually spawned conspiracy theories that the whole thing was a set up – perhaps done by hotel industry goons to give Airbnb a bad name. That theory will likely dissolve in light of some recent arrests.

Nonetheless, a few mis-steps in handling the situation landed Airbnb on the front page of innumerable mainstream media leading many to question the safety of the service – a PR disaster of epic magnitude. For many, this was the first time they’d heard of the company – the worst possible first impression.

So what went wrong, and how did Airbnb set it right?

According to “EJ” (the woman who’s apartment was sacked), and reported on her own blog, Airbnb mounted an initially swift investigation, offering support and promising to go above and beyond any legal obligations to make sure EJ had a habitable place to live.  Then, according to EJ, the line went dead. Airbnb not only left her hanging for close to a month, but went on the defensive.  They backtracked on precisely what their legal obligations were, suggested they would not cover any damages, and (allegedly) suggested that EJ edit or remove her blog postings for fear of mounting negative PR.  Big mistake.  A mushroom cloud of bad press ensued and Airbnb entered its first round of what can optimistically be called “growing pains.”

Those of us familiar with young, inexperienced organizations can probably understand how easy it must have been to panic, try to make things better, then second guess oneself when the gravity of a situation dawns, and the business impact of the initial solution is unclear and risky.

Since then (reported widely), the leadership of Airbnb seems to have had some time to get their senses together.  They’ve realized their initial gut response was the right one regardless of exactly what their legal obligations were (technically, they had none).  They realized that in over-thinking it after the fact, they lost touch with their moral obligations.  The fact is, they were under a moral obligation to address the needs of EJ to the best of their ability – especially since the entire tenet of their organization, and indeed the very basis of the sharing economy on which they are based – depends on trust.  In a case as extreme as EJs, a little extra effort on Airbnb’s part would have likely prevented the maelstrom of negativity they’ve been enduring.

So, yesterday, Airbnb founder Brian Chesky penned a letter to all Airbnb customers politely taking responsibility for a poorly executed response to the EJ incident.  He also pledged to institute a series of additional security measures and most significantly, a $50,000 guarantee against any vandalism or theft coming from an Airbnb rental.  One assumes EJ will get some of that $50,000.

Will it make everything better?  EJ isn’t quite ready to let it go, but it’s a very reassuring gesture to many customers and has earned a new wave of positive and genuine buzz for the company.  It will also likely be costly for Airbnb while they hire new people, figure out how to handle the insurance, and protect against fraud should someone try to hijack the system.  Perhaps such costs could have been prevented by a more measured and consistent response.

The optimist in me is not about to dismiss Airbnb, regardless of how they handled a highly unusual situation.  After all, no matter how secure the system is, you’re always taking a risk when you let someone stay in your home – a little common sense will protect against all but the rarest infractions.

All signs point to Airbnb continuing their incredible rise towards revolutionizing travel and in time, this story will indeed be assigned the moniker of a mere growing pain.


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Categorized: Managing Business|

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  • http://www.mcoconnor.com MC

    I also dig the Air BnB concept but can’t say I was all that surprised the ransacking happened. Seemed only a matter of time. The next big issue, I think, will be the questions around the legality of renters posting and renting out their places using AIr BnB or similar services (there are many emerging).
    Renters should check their leases to see if sublets are illegal. ANd while it wants to stays hands-off, seems like Air BnB might need to get involved in this aspect of the transaction, too, through some financial backing/insurance. I’d imagine that the percentage of rented (rather than owned) apartments, especially in cities, is pretty high.

    • Nick Aster

      Yeah, exactly. City governments are already trying to meddle with the model (in NYC especially). I think it’s a pity – why mess with people’s ability to raise a few extra bucks when the place isn’t in use? It’s really a win-win-win business situation.

      Of course, with rent control in place you’ve got an invitation for abuse … though I see that as another reason to reform rent control! :-)

      I think the best situation would be for Airbnb to remain as hands off as possible and make it really clear to people that at the end of the day, if you’ve got serious valuables strewn about the house, the program may not be for you. It’s a common sense thing. When I rent my place I perform at least enough of a check on people to know they exist and that I could get in touch with them if anything went wrong. It’s not that hard to do.