The Airbnb Ecosystem, Lessons In Platform and Ecosystem Strategy

Airbnb, even with its ecosystem, has quite a traditional business model. Markets have been around for millennia and the idea of bringing different parties to a venue to trade is older then money.

What makes Airbnb so successful, though, really defies the logic of mainstream commentary around platform strategy. Airbnb is a success despite breaking the most obvious “rules” of platform strategy.

Some writers play up the idea that platforms as markets are novel but I think it is overdone. There are other analysts who talk about platforms as if they were just operational systems with an open API (Airbnb does not have one!).

We therefore need to look at what, in practice, Airbnb has done to secure and elevate itself, ignoring the voices that say an open API is essential.

To do that, I did a little research on the Airbnb ecosystem. Platforms have pioneered work practices that Fin Goulding and I have called FLOW and we’ve summarised how FLOW functions as a kind of anti-planning system in our book FLOW.

So what does Airbnb teach us about the modern economy?

The Airbnb Ecosystem

As you can see from the diagram above, the Airbnb ecosystem is not especially complex but it shows the characteristics we are beginning to expect of ecosystems that are also markets. These include integration – integrating a variety of services, including finance; integrating many types of services to keep barriers to entry low.

The Airbnb Ecosystem
Here is a summary of the categories:

  1. Guests (of course): This is a highly diverse group (bottom right in the image above). I have only summarised a few of the main groups in the purple bubble: they are people who are on weekend breaks, people going away for longer, business traveler and experience seekers.
  2. The property ecosystem: The orange bubble top left, shows a number of property-related interests in the ecosystem. There are people who rent out rooms or apartments or houses with varying degrees of flexibility. There are superhosts and there are friends of hosts who can do the meet-and-greet on behalf of hosts.
    In recent times Airbnb has been working with construction/property developers to develop assets that will allow it to compete with resorts or properties with high end community facilities like swimming pools. In addition Airbnb has also begun exploring how to offer home improvement loans, taking it into the area of financial services.
  3. Business development: There is then a group of activities on the left that are all about biz dev.
    Companies have sprung up to create conferences around the Airbnb community, to teach people how to optimise Airbnb businesses. There are rental management systems that link host accounts with other gig economy activities. And there are expense reporting apps that make it easier to account of expenditure around a property and rental. There are also Airbnb specific SEO services and the Airbnb community hosted by the company.
  4. Services: There is a group of service providers: Companies that provide cheap cleaning services (in some cases in partnership with Airbnb), remote property access services; laundry pick up; photographic services to improve property appearances on the Airbnb site and so on
  5. Political ecosystem: Botton centre you can see NGOs and civic councils. Airbnb is using its data and convening power to help settle refugees.
  6. Experiences: Airbnb has fortuitously alighted on the idea of experiences. Example: If you are a marathon runner you can now book a week with a pro-athlete in Nairobi and experience professional running training. Experiences constitute a powerful and diverse ecosystem of people providing experiences in al areas – cooking, zen, yoga, sport, arts and so on.

I am sure this list is not exhaustive but it is a start in understanding how a platform really works in practice. Many third parties, many third party assets and matching of needs through innovations in the ecosystem!

Airbnb has chosen a careful path through the hypery of APIs to cautiously position itself in ways that make it better than its competitors.

Platforms essentially need low barriers of entry to the ecosystem and clear economic opportunity. And to date that’s what Airbnb participants have had. This is now changing and Airbnb is helping where necessary by moving into loans.

Airbnb provides better life experiences for paying customers (transferring something of a Disney effect to everyday life), better business building opportunities for partners, and, now that there is likely to be a higher barrier (improving quality of properties), is looking for ways to help ecosystem members over it. Simple, careful, considered.