Recently, there was a terrific New York Times op-ed article by Thomas Friedman about the rise of Airbnb and why it has been so effective in catching the cultural zeitgeist.
One of the things Friedman brings up is that Airbnb’s real innovation isn’t in online rentals, but in creating trust between people. This is true, however Friedman misses two significant points: the disposition towards trusting “experts” is a hallmark of Gen Yers (aka Millennials), and the Airbnb business model identified value where it was previously not seen.
Let me start with the second point. Airbnb is incredibly valuable because it effectively “hacks” the traditional rental mindset. Historically, the rental format has been, “I rent my apartment and I may sublet the whole apartment when I need to.” What Airbnb does is make people aware that their rental space is more modular than they thought. Basically, they have a business opportunity sitting right in front of them, in the form of their couch, their spare bedroom, etc. Previously, people were sitting on an asset (space that can be rented!) and Airbnb helped them become not only aware of that latent asset, but also assist them in renting it on a marketplace. So there are three things at play here: Airbnb made people aware of something that they didn’t think of before, sold people on a new type of business model, AND it provided them the tools to make that business model happen. Absolutely brilliant.
However there’s also a significant “Part Two” to this story that has to do with the main users of Airbnb: Gen Y. In Kelton’s 2012 “Talking to Strangers” Survey (released by Bazaarvoice in partnership with The Center for Generational Kinetics), we found that Millennials have a strong trust towards experts. “When looking for opinions about products to buy, Millennials are more than three times as likely than Boomers (22% vs. 7%) to turn to social channels. They’re on the hunt for feedback from experts and people with common interests – not just personal connections.”
What Airbnb does is it capitalizes on the trust that Millennials have towards experts – in this case, the countless people who review their experience staying at someone’s house/couch/guest room – and translates that into trust in the Airbnb marketplace. What Friedman misses is that each reviewer, acting as their own expert, is already viewed as a trusted source by Gen Y. What Airbnb did is it further compounded this fact by the sheer volume of experts, which made it the “go-to” site for this type of service.
As Millennials increase their spending power and influence in our economy, businesses and brands need to make sure they address the unique behaviors and needs of this generation.