My recent AirBNB experience was illustrative of the fact that even the so-called Unicorn Startup is not immune to any of the long list of things that can make customers crazy. I hardly know where to start. Here is a recap of the story, and some further lessons on customer expectations and the AirBNB business model.

The Story

I, a 50-hotel a year business traveler, decided to throw AirBNB a bone just for something different by staying in one. There are a few good reasons for doing this, not the least of which is trying to wean away from the chain hotels, which are getting a little rough.

I had a trip to Tucson, I needed a place to hole up for the night, so I decided on this place:

Nice spot, AirBNB superhost.

I got all the way through the booking process, including clicking the button that says “pay”, and the app froze for a few seconds, and then gave me a screen that said “The property you have chosen is not available, please book another”.

I drove to the airport, settled in at the gate, and booked another:

Another nice spot. Problem: By the time I got off the plane, welcome emails from both places showed up in my account.

So what had clearly happened was that due to app unresponsiveness, I had a double reservation. I ended up discovering this at about midnight (thanks to Delta delaying my flight for 4 hours because whoever schedules the pilots did not properly do their job). I picked the closest place and waited until the following day to sort it all out.

Lesson 1: Find out what the customers want and try to give it to them.

What I wanted was just to send them an email, tell them what happened, and for them to make it all go away. What actually happened was that they told me it wasn’t their problem and I should have to vent some more energy tracking down my money when I could be having Miller Time.

I even offered to accept a coupon for a future stay, which should have made them delighted, but they resisted that suggestion.

What they didn’t know about me is that my time is valuable and part of their service to me is to have me spend as little of it as possible chasing their mistakes

Lesson 2: If someone tells you that you have a problem you should believe them

In this case, there was an obvious screwup. The customer (me) attributed it to the app .

The Customer Service department “checked with the back end people” and claimed it was clean on their end.

We all know better than that. I am reasonably confident that AirBNB has a very sophisticated IT operation and they know exactly how often double bookings occur, and also the number of times that error message flashes, expecially at about 4 pm when the servers are nice and busy. I will wager a night’s stay in a BNB that this this happens a thousand times a day.

So, their alarm systems for this type of screwup are ineffective. There is a video for that:

Alarm Systems are INeffective

Lesson 3: Align your Organization

This is yet another one of these situations where the corporate office needs to do one thing (build market share) and the customer service system is doing another thing (ticking off target customers).

We see situations like this all the time, where there is lack of alignment in all parts of the organization for the openly stated corporate strategy. There is a video about this too:

Lesson 4: Know the Business Model

Is AirBNB a hotel company? No, AirBNB is a communications company. They do the job of connecting people with unused assets (an empty room) and a need (weary travelers like me that need to hole up for the night). They are exactly in the same business as Uber and Lyft, and have some of the same limitations. They have limited control over their process inputs (potential slum properties and felon owners) and customers (guests from hell throwing beer bottles through the drywall). They have adjusted to some of this by having rating systems for both properties and customers (leaving them open to some discrimination issues).

Side Issue: They have one advantage over Uber and Lyft in that the underlying asset, real estate, is non-depreciating. The value of the room does not decrease with each use.

Now, AirBNB is seen as a threat to the traditional hotel business and is targeting business travelers. This means that the same communication methods and service issues that were OK for renting your air mattress to someone to sleep on your floor is not going to work.

We have also had this conversation:

Lesson 5: Beware the Call Center

The call center’s job is to answer calls (or respond to emails and texts) and not to solve problems. I believe this idea has been explored in detail extensively enough so that I do not need to further this rant.

That being the case, is it any wonder that the problem that could have been solved with one “yes” response got turned into “no” plus at least 6 emails, and aggravated both the means of production and the customer?

The Bottom Line

I guess all in all, I eventually got my $99 back, and nothing really terrible happened, except misdirected emotional energy. Is misdirected emotional energy important? I believe so.

AirBNB does perform one other job, which is “branding”. By operating as a central function, doing promotional activity such as coupons, and highlighting AirBNB as a “brand” they do provide a service to their customers and operators in that they position themselves in the marketplace as an interesting lodging alternative to a hotel. The risk of this, of course, is that if they don’t screen their operators and also customers a little bit, the brand name will eventually become tainted, as it has in the case of Uber. Uber drivers have been accused of rapes, kidnappings, and other antisocial behavior.

https://www.14news.com/2019/07/01/evansville-uber-driver-facing-rape-charge/

So, should I book another AirBNB? My sense of adventure says one thing, and as we all know there is no assurance that Hilton will not cause me problems as well.

The AirBNB IPO is imminent. According to this source, the current estimated market capitalization of AirBNB is as much as $38B, and unlike Uber is cash-flow positive. The current market captialization of Hilton Corp is $28B despite being in business for 100 years, and whose business is to have massive capital investment to buy real estate and have all those employees.

Make what you will of any of this. All I am saying is that AirBNB, the so-called ‘unicorn” is vulnerable to the same types of business screwups that we see in all businesses, from Hilton down to the mom-and-pop startups. System issues, lack of alignment with customer service, and entrenched mediocrity are contagious. Even unicorns can catch them.