How Airbnb work

Airbnb is an online marketplace connecting travelers with local hosts (people who list their available space and earn extra income). It caught on quickly, as it provides travelers with a cheaper alternative to traditional accommodations eg. hotels, and it offers the unique proposition of a unique local experience.

Initially supply-constrained (it was hard to convince people to open up their homes to strangers), Airbnb’s founders went door to door with a camera to convince hosts to list their properties.

Their revenue streams are as follows:

• 6–12% commission fee from guests
• 3% transaction fee from hosts

You’re probably also wondering about the trust and safety systems in place. Here’s Airbnb’s verification process:

1. Take a photo or upload an image of your government-issued ID, such as your driver's license or passport
2. Connect another online profile to your Airbnb account, such as a Facebook, Google, or LinkedIn account
3. Upload an Airbnb profile photo and provide a phone number and email address

Another trust and safety feature would be their review system. However, a few people have pointed out dissatisfaction along these lines: “Then, I understood one reason for all of the positive reviews: each reviewer’s name, their photo, and a link to their profile accompanies their review. Of course users would want to seem friendly and agreeable to the Airbnb community. Their ability to be approved by future hosts depended on it.” — taken from Business Insider.

There are a great deal of things we can learn from Airbnb, though. It’s not easy to run a marketplace, and it’s a different set of challenges when the marketplace has achieved scale.

If you’re interested in the latest news and updates on the sharing economy, head on over to Arcadier Learn. Other than interviews with prominent leaders around online marketplaces, it also provides step-by-step guides to help any marketplace operator set up and built their own marketplaces.