Airbnb: Reinventing hospitality with network effects
In 2008 Airbnb’s founders were having difficulty raising funds for their new idea and were turned down by many Silicon Valley investors when trying to raise a mere $150,000. No doubt part of investor skepticism revolved around the difficulty inherent in two-sided marketplaces and businesses that rely on indirect network effects for success. So what is the value of Airbnb’s indirect network effects and how did they scale the business? And now that Airbnb has reached a large scale, how has the traditional hotel industry responded?