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Business Case, News

Airbnb Trips – The Next Move Towards Conquering the World

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“The stuff that matters in life is no longer stuff. It’s other people. It’s relationships. It’s experience.” – Brian Chesky, Co-Founder and CEO of Airbnb

What is your purpose of travel? Is it food? Is it fun? Is it meeting new, inspiring people? Is it getting to know new cultures? Travel is about meaningful moments, experiences you make that you will never forget. But how do you find those places for magical experiences? On TripAdvisor? Go to TripAdvisor and search for “Things to Do” in your home town: Hop-on-Hop-off buses, overpriced boat tours, Madame Tussaud’s… Have you as a local, ever done one of those activities? Most likely you will say: “That’s just something tourists do.”

To prevent travelers from stepping into tourist traps, Airbnb recently presented its’ new offering – the world of trips:

Airbnb knows what travelers want – the ultimate local experience. The previous, successful years resulted in a platform offering millions of homes around the entire world to tourists that no longer want to stay in anonymous hotels. But CEO Brian Chesky realized that homes are just one single part of a great journey. A great journey lets you immerse in and join the local community. With the new product Airbnb Trips, also experiences and places will all be available in the app. So, what are those new features?

  • Experiences: The offered activities are not just organized by city, but also by passion, for example Sports, Nature, Social Impact, or Food. The available experiences can take from a couple of hours up to multiple days. Every offered experience is presented in a short video. About half of the trips are offered at a price below $200 (Airbnb: Experiences, 2017).
  • Places: Within this function, local legends list their top things to do in an “insider guidebook”. Additionally, also audio walks and meet-ups are featured.

Business Model Evaluation

What is the value added for the three main parties involved in Airbnb’s business model?

Consumers (travelers) – For travelers, the extension of Airbnb’s offerings provides a great value added, because the platform becomes a One-Stop-Shop for your entire travel. This will reduce the time necessary to prepare trips and give you new local insights during your holidays. Of course, this comes at high costs: 55€ for a sunset bike ride in Tokyo or 98€ for a 3h-cocktail workshop in San Francisco can not be afforded by budget travelers.

Providers (guides) – From now on, you can also become a host for activities. When deciding to become a host, you have to apply and Airbnb checks the experience for certain quality standards. The best experiences offer guests access participation, and perspective (see Figure 1). Next to monetary profit, the benefits are also non-financial: get more exposure for what you love, promote your brand, and meet locals like you (Airbnb: Become A Host, 2017).

Bildschirmfoto 2017-03-07 um 11.46.39
Figure 1. Assessed Quality Standards for Experiences (Airbnb: Quality Standards for Experiences, 2017)

Platform (Airbnb) – With this business model extension, Airbnb wants to become the platform for your entire trip. By embedding new features like restaurant recommendations and an integrated reservation system, Airbnb seems to aim at replacing existing platforms like TripAdvisor and Yelp. Motivation of this move clearly is Airbnb’s transition from a website for booking accommodation to a full-service travel company, which comes along with increasing its user-base and revenue. For Experiences, Airbnb brokers the payment from the user to the guide and takes a commission, similar to how its home-booking service works. For Places, the company has some revenue-sharing deals in place, like a partnership with Resy to book restaurant reservations. Also, the market for travel activities is still underserved and promises large potential. So far, only small vendors like Klook, I Like Local, Peek and Viator offer a comparable service. However, their offerings are very “touristy” and generic. Additionally, Airbnb can leverage its popularity to quickly establish its offering.

Feasibility of Required Reallocations

Internal Arrangements – Airbnb Trips is more or less an extension from providing accommodation to additionally providing activities and tours. However, this requires further administrative effort, especially related to the quality standards assessment. This assessment is necessary to assure a local and personalized experience, so that Airbnb can clearly differentiate from competitors. Also, videos for every experience have to be created.

External Environment – Airbnb already radically disrupted the global hotel industry by applying the principle of the sharing economy (Zervas, Prosperito & Byers, 2014). With its business, the platform did not only antagonize hotels, but also governments that try to proceed against housing shortage (Jefferson-Jones, 2014; Lee, 2016), coming along with several law-suits in major cities like Berlin, New York and San Francisco. The extension of its offering will most certainly not reduce Airbnb’s number of critics. For example, the ‘ownership of an experience’ is very difficult to assess. Who should get the money, when a guide shows you around a market? Don’t the market traders also deserve a proportion for being essential for the experience? Next to legal conflicts, a discussion about the social impact can be initiated. The commercialization of local experiences may destroy the original selling point of unique, original travel impressions.

All in all, Airbnb Trips moves the platform beyond its’ couch-surfing origins. The offering is clearly targeting the “emotionalization” of travel experiences, a next step in the service economy. This is a great possibility for travelers (who have the budget) to make unique memories. However, it comes at the cost of commercializing the local charm for the sake of profits. Airbnb should be careful and hold up high quality standards (e.g. small groups, special experiences) so that it does not destroy it’s newly designed value proposition.

References

Airbnb: Become A Host. Retrieved March 7, 2017 from https://www.airbnb.com/host/experiences?locale=en

Airbnb: Experiences. Retrieved March 7, 2017 from https://www.airbnb.de/experiences/

Airbnb: New. Retrieved March 7, 2017 from https://de.airbnb.com/new

Airbnb: Quality Standards for Experiences. Retrieved March 7, 2017 from https://www.airbnb.com/help/article/1451/what-are-the-quality-standards-for-experiences?locale=en

Jefferson-Jones, J. (2014). Airbnb and the housing segment of the modern sharing economy: Are short-term rental restrictions an unconstitutional taking. Hastings Const. LQ, 42, 557.

Lee, D. (2016). How Airbnb Short-Term Rentals Exacerbate Los Angeles’s Affordable Housing Crisis: Analysis and Policy Recommendations. Harv. L. & Pol’y Rev., 10, 229.

Zervas, G., Proserpio, D., & Byers, J. W. (2014). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research.

Business Case

QLIQZ – Human Web Against Data Giants

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Sick of giving away your data for free to data giants like Google, Facebook, and so on? You want to have control over your browser history, search terms, and advertisement when surfing the internet? You are annoyed by scrolling through a list of ads first when entering a term in Google Search? Then CLIQZ might be a very interesting alternative for you. 

CLIQZ combines search engine and browser. A quick search is performed directly in the browser, without having to go to another search engine. Search terms or names of a website are directly entered into the browser line. As done by other browsers, a selection of suggestions for websites appears, without you having to leave the current website.

The Human Web

Heart of the search engine is its algorithm, called Human Web, which ranks search results according to their relevancy, and not related to the content, structuring, and linking of websites as done under Search Engine Optimization. With the Human Web, CLIQZ makes use of the wisdom of the crowd – the community of users. The search algorithm of CLIQZ weighs data about people’s behavior on the web more than the technical analysis of websites. And the more data collected, the better is the search algorithm. But now you might think: “How is that different from Chrome or Firefox? They also collect my data.” In contrast to other search engines that build complete and detailed profiles on their users, CLIQZ only works with anonymous statistical data (CLIQZ Human Web, 2017).

Recent Development

CLIQZ recently hit the headlines with the acquisition of Ghostery, a browser plug-in and mobile app that enables its users to easily detect and control JavaScript “tags” and “trackers”, which allow the collection of the user’s browsing habits via cookies, as well as participating in more sophisticated forms of tracking such as canvas fingerprinting. By this acquisition, CLIQZ wants to increase its user base (AdAge, 2017).

Business Model Evaluation

Although the concept of CLIQZ  is widely described as very promising due to a global shift towards privacy awareness (EY Privacy Trends Report, 2016), this does not automatically lead to business success. Currently, CLIQZ  is a start-up backed by renown investors, namely Hubert Burda Media and Mozilla. As stated on their website, CLIQZ did not decide on how they will generate revenue (CLIQZ Support, 2017), but it should be compatible with the respect they have for our users’ privacy and with the core benefits of their product (direct, fast, clearly structured). Thus, making money like other conventional browsers (mainly through advertisements and search royalties) does not fit their strategy.

The single functions of CLIQZ and Ghostery are not new for consumers. If you do not want to be tracked, other options are already available on the market. Add-ons such as the Privacy Badger block scripts and cookies. The Tor browser offers even more anonymity. To avoid search engines such as Google, Startpage, for example, is also a privacy-friendly alternative.

However, CLIQZ provides a seamless integration of those single features into an encompassing solution. Next to this, the most useful differentiator of CLIQZ is its relevancy-based Quick Search. This combined functionality is currently the main reason for consumers to consider using CLIQZ as a default browser.

References

AdAge. Cliqz, a Mozilla-Backed Search Engine, Buys Privacy Extension Ghostery. Retrieved March 5, 2017 from http://adage.com/article/digital/cliqz-a-mozilla-backed-search-engine-buys-ghostery/307980/

CLIQZ. Human Web. Retrieved March 5, 2017 from https://cliqz.com/en/whycliqz/human-web

CLIQZ. Support. Retrieved March 5, 2017 from https://cliqz.com/en/support

EY Privacy Trends Report (2016). Can privacy really be protected anymore? Retrieved March 5, 2017 from http://www.ey.com/Publication/vwLUAssets/ey-can-privacy-really-be-protected-anymore/$FILE/ey-can-privacy-really-be-protected-anymore.pdf

Articles, Opinion

Mapping the Impact of Social Media for Innovation

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Facebook, YouTube, Instagram, Wikis, Twitter – Social media (SM) are everywhere. Those websites and applications allow the creation and exchange of user-generated content in a community setting (Kaplan & Haenlein, 2010). The users are not only private people, but also companies are exploring SM as a tool for commercial success. Next to outbound marketing, SM are also applied to enhance business interactions as part of the innovation and product development process (Kenly & Poston, 2011). However, so far new product development (NPD) through social media channels can only be observed anecdotally. Specialized consultancies also jump on the train and offer their services to get a piece of the pie (Accenture Interactive, 2017). But how nourishing is this pie?

The impact of SM on innovation performance was investigated in a study by Roberts, Piller and Lüttgens (2016). The analysis of 186 companies contributed to a better understanding of the dynamics between SM activities and NPD performance. The idea to use SM for innovation and NPD purposes is not novel. However, their study reveals some surprising results:

  • Gathering information from SM channels can lead to higher performance, but only when embedded in complementary, formalized processes. A defined structure and sequence for the flow of activities provides control, helps to reduce uncertainty and mitigates risk.
  • The relationship between SM usage and innovation performance is not entirely positive. An extremely broad application of SM results in a negative performance effect for all kind of innovation projects.
  • The relationship between seeking market-related and technology-related information in the open innovation context is complementary. Leveraging this dependency has a significant positive effect on NPD performance.
  • SM is better suited for gathering need information than for accessing solution information. Depending on the information needed, the explicit SM channels (forums, social networks, blogs, wikis etc.) differ.

These findings imply the positivity of SM for a firm’s innovation performance. But I personally doubt its large-scale effectiveness. After having screened the literature for mentioned best-practice examples, there are enormous differences between companies in how they leverage and exploit benefits of SM usage for innovative efforts. The involvement of customers into new product creations for consumer goods rather resembles the characteristics of a marketing or market research tools. Haribo asked its fan base to vote on new flavors for a special edition during the 2014 soccer world cup. Home-appliances manufacturer Liebherr invited its customers to participate in a fridge-design competition. In contrast to that, I found technology-oriented companies, like NASA, or IBM in collaboration with Topcoder, to give their followers far more influential power by posting demanding challenges. This is surprising, because the study stated SM to be more suitable for gathering needs than (technical) solutions. So, is there a difference between industries concerning the successful integration of SM in NPD? Are technology companies simply more knowledgeable in utilizing SM? Or are their users simply identifying more with the product and thus engaging in NPD processes? The multitude of questions call for a further investigation of the results in relation to different industries and specific firm capabilities in dealing with SM. Hence, up to now how nourishing and likely this cake for businesses and consultancies is, might still be questionable and has to be answered for individual initiatives specifically.

 

References

Accenture Interactive (2017). Social Media: Optimization to Harness Innovation. Retrieved February 15, 2017, from https://www.accenture.com/us-en/insight-social-media-optimization-harness-innovation-summary

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business horizons, 53(1), 59-68.

Kenly, A., & Poston, B. (2011). Social Media and Product Innovation: Early Adopters Reaping Benefits amidst Challenge and Uncertainty. In A Kalypso White Paper. Kalypso.

Roberts, D. L., Piller, F. T., & Lüttgens, D. (2016). Mapping the Impact of Social Media for Innovation: The Role of Social Media in Explaining Innovation Performance in the PDMA Comparative Performance Assessment Study. Journal of Product Innovation Management, 33(S1), 117-135.