Great post, thank you Yvonne. Regarding your point on Airbnb branching out into the business segment, I found an article in which the Hilton executive team ecently rstated that Airbnb cannot replicate what incumbent hotel chains offer business travelers (http://skift.com/2015/10/28/extended-stay-america-sees-a-potential-partner-not-a-threat-from-airbnb/).
Airbnb doesn’t provide several of the main conveniences that formal hotels do for the business customer (and the secretaries who often make the bookings on their behalf):
(1) predictable room availability – listings come and go, and since home owners/suppliers often only have limited space, Airbnb is a less reliable source of accommodation
(2) capacity for larger teams – I’ve had experience travelling with management in the past, where Airbnb was considered but subsequently dropped as a result of our inability to find listings with sufficient space to house the entire team in one location
(3) loyalty rewards and discounts – Airbnb doesn’t have partnerships with companies that make it a consistent and obvious choice for business travelers, and doesn’t offer cost savings
Based on the above, do you believe Airbnb is making the right choice to go into a space where it has a relative comparative disadvantage? Also, seeing that spare occupancy is a problem for many hotels, particularly in periods between major conferences, what are your thoughts on Airbnb partnering with hotels to give additional visibility/advertising?
Thank you Tom – My comment builds off Tom Dunn’s post above regarding the risk of expanding operational capacity in response to a surge in demand that may or may not be sustainable. Certainly with clothing, it’s difficult to predict when companies rise into and fall out of favor. Sales for North Face, Patagonia, and as we now see on campus with Canada Goose, are all driven by popular “hype” that could recede as quickly as it developed as new competitors enter the fray and market saturation and brand “fatigue” kicks in (I for one have already dropped the idea of buying a Canada Goose parka after seeing it too frequently around HBS).
In my view, LL Bean should preserve “stockouts” as a differentiator and marketing tool, which means its investment in increased capacity is a poor strategic decision. Similar to ramen restaurants that reject reservations or space expansions in favor of utilizing long lines to build perceived exclusivity, LL Bean should keep supply below demand to maintain its brand “hype” as long as possible, while also reducing capital and labor costs and the odds of future capacity glut.
Thank you for this introduction to Soylent – I’ve heard of it on multiple occasions but had no knowledge of its distribution or marketing strategy. From the founder’s criticism of the traditional food system, my understanding is that Soylent aims to be a comprehensive meal replacement product, in the sense that its ultimate goal is for consumers to forgo non-Soylent food entirely. The fact that Soylent raised another round of funding at the start of the year to research ways to cut down its already very modest price tag (http://techcrunch.com/2015/01/14/soylent-20m/) also indicates to me that the company is looking to scale up (lowering margins without increasing scale seems like poor business planning).
My concern with this is that while Soylent’s limited product offering and avoidance of paid marketing and physical store distribution are perfectly aligned with its functional and emotional emphasis on simplicity, they may be problematic if Soylent hopes to achieve broader reach. Users such as the one who commented “I have not set foot in a grocery store in years” seem more like extreme than regular customers, it’s difficult for me to imagine Soylent can substitute all or even most meals for a mainstream demographic without either diversifying its product line or relying on more aggressive distribution.
Would be interested in your thoughts on whether you think it’s necessary for the company to move in this direction going forward, or if not, what alternative approach you think it should take.