Airbnb and the Sharing Economy: A Study of Entrepreneurial Success under Brian Chesky

Airbnb and the Sharing Economy: A Study of Entrepreneurial Success under Brian Chesky

Brian Chesky, co-founder and CEO of Airbnb, has revolutionized the hospitality industry with his innovative home-sharing platform. This case study explores the journey of Chesky and Airbnb from its inception to becoming a leading player in the sharing economy.

Foundation and Early Challenges

Airbnb’s conception occurred in 2008 when co-founders Brian Chesky, Joe Gebbia, and Nathan Blecharczyk decided to address the problem of scarce and expensive hotel accommodations. By renting out air mattresses in their San Francisco loft during a design conference when hotels were fully booked, they inadvertently laid the foundation for what would become Airbnb. The platform was originally named “Air Bed and Breakfast,” reflecting its modest beginnings and the founders’ intent to offer overnight stays with breakfast.

Initial Struggles

From these humble origins, Airbnb faced a multitude of early challenges. Gaining initial traction proved difficult; the concept of renting out personal living spaces to strangers was foreign and sparked trust and safety concerns among potential users. To overcome skepticism, the co-founders realized the necessity of a reliable system for profiles, reviews, and secure payments to foster trust within their community.

Regulatory Hurdles

Another significant obstacle for Airbnb was the regulatory landscape. The traditional hospitality industry had long been governed by strict regulations related to zoning, safety, taxation, and occupancy that did not contemplate the sharing economy model. Airbnb found itself at odds with these existing laws, leading to legal contention in various markets. Even as they sought investors, they encountered skepticism; one investor famously walked out on Brian Chesky mid-pitch.

In many cities, short-term rentals were not allowed or required special licensing. Airbnb accommodations were often deemed illegal because they contravened local short-term rental laws, as detailed in an examination of Airbnb’s early legal issues. The company aggressively engaged in lobbying efforts and public campaigns to persuade lawmakers and the public of the benefits of its platform. They advocated for new regulations that would permit their business model while addressing the concerns of municipalities.

Cultural Resistance

Additionally, there was cultural resistance to the idea of home-sharing. Traditional hospitality businesses, particularly hotels, viewed Airbnb as a threat to their livelihood and lobbied against it. Community groups expressed concerns about the impact on housing availability and neighborhood dynamics. Airbnb had to work diligently to demonstrate how their platform could positively contribute to communities by providing homeowners with an additional income source and by promoting tourism in less-traveled areas.

Innovation and Business Model

Airbnb’s innovative approach fundamentally disrupted the traditional lodging industry by not only presenting unique, affordable accommodations to travelers but also by establishing an entirely new paradigm for how people experience travel. The vision of co-founder and CEO Brian Chesky was instrumental in this shift—his goal was not simply to offer an online marketplace for room rentals, but to reimagine the very concept of belonging in a global travel context.

Creating Belonging Across Borders

Chesky envisioned a world where travelers could feel at home anywhere, where they could connect with local cultures and communities in a more authentic way than traditional hotels might allow. Airbnb created a platform that didn’t just disrupt the hotel industry—it changed the relationship between space, comfort, and travel.

Trust Through Technology

A critical element of Airbnb’s model is its digital network, which fosters trust between hosts and guests who have never met. By implementing a robust system of profiles, verified IDs, and a two-way review system following each stay, Airbnb cultivated a community of users who could rely on transparent feedback and secure transactions. This trust factor is a cornerstone of the sharing economy and contributed greatly to Airbnb’s success.

Revolutionizing Revenue

The commission-based revenue model adopted by Airbnb aligns directly with user engagement: the more successful bookings are made, the more Airbnb earns. Therefore, it’s in the company’s best interest to provide an exceptional experience for both hosts and guests. This has led to an incentive structure that continually drives the platform to innovate and improve, fostering growth and retention within its user base.

Diversifying Accommodations

As a disruptive innovator, Airbnb expanded the range of options available to travelers, far beyond what was traditionally offered by hotels and bed-and-breakfasts. From city apartments to beachfront villas, treehouses to castles, the array of properties listed on Airbnb provides travelers with unparalleled choice.

Airbnb and the Sharing Economy: A Study of Entrepreneurial Success under Brian Chesky

Impact on Urban Spaces

The introduction of Airbnb into urban spaces has had a profound and multi-faceted impact on the way cities develop, function, and cater to both residents and visitors. This impact is a blend of economic, social, and cultural effects that have reshaped urban landscapes around the world.

Tourism-Led Gentrification

One of the most significant impacts of Airbnb has been tourism-led gentrification, particularly in historic districts such as Palma’s old quarter in Mallorca. The influx of travelers seeking local experiences can inflate property values and rents, potentially pricing out long-term residents and altering the neighborhood’s character. Small businesses may be pushed out or replaced by those catering to tourists, which can lead to a homogenization of unique urban areas.

Economic Revitalization

On the flip side, the presence of Airbnb can serve as an economic catalyst for neighborhoods. By bringing in tourists who utilize local services and shops, it can breathe new life into areas that may have previously been overlooked or economically stagnant. Hosts earning additional income through the platform can reinvest in their properties and communities, leading to gradual urban renewal.

Addressing Community Concerns

Brian Chesky has publicly recognized the platform’s role in these urban dynamics and has taken steps to mitigate negative consequences. The company has started to collaborate with city officials to create regulations that aim to preserve the integrity of neighborhoods while still allowing residents to benefit from the sharing economy. This includes implementing caps on the number of days a property can be rented out and ensuring Airbnb rentals adhere to local housing laws.

The challenge lies in achieving a balance where Airbnb supports local economies without contributing to adverse effects like displacement or loss of cultural identity. It’s a complex issue that cities and Airbnb continue to navigate together, often resulting in tailored solutions that reflect the unique needs of each urban area.

Pandemic and Adaptation

The onset of the COVID-19 pandemic brought about abrupt and profound changes across various sectors, and the hospitality industry, including companies like Airbnb, was among the hardest hit. The global travel restrictions and safety concerns led to a sudden and drastic reduction in tourism and, by extension, the usage of Airbnb’s services.

Adapting Business Model

Faced with this new reality, Chesky had to pivot the company’s strategy to align with the changing landscape. Recognizing that long-term stays were becoming more prevalent as people sought safe havens or remote work solutions, Airbnb adapted its offerings to cater to this market. This shift involved not only highlighting properties suitable for longer stays but also ensuring that these listings met enhanced cleanliness protocols to reassure guests during the pandemic.

Enhancing Guest Experiences

Beyond logistical adaptations, Airbnb also focused on enhancing guest experiences within the confines of pandemic restrictions. Virtual experiences, such as online cooking classes or cultural tours, were introduced to keep guests engaged and offer them meaningful experiences despite travel limitations. These initiatives allowed Airbnb to maintain a connection with its customer base and even expand its reach.

Navigating Through Leadership Challenges

The tough decisions made by Chesky during this period included layoffs and scaling back operations, which, while difficult, were necessary for the survival of the company. In a letter to employees in May 2020, Chesky elaborated on the need for a more focused approach to navigate through the crisis. He emphasized the company’s resilience and the importance of maintaining the core vision of Airbnb while making strategic cuts and adjustments.

Long-term Repercussions and Learnings

As the pandemic persisted, it became increasingly clear that the world would have to adapt to a ‘new normal’. For Airbnb, this meant permanently integrating the lessons learned during the crisis into their business model. Adaptation is key to overcoming pandemics, and Airbnb’s ability to adjust to these unprecedented circumstances highlighted the importance of flexibility and innovation in times of crisis.


Brian Chesky’s journey with Airbnb is a testament to the transformative power of innovative thinking and adaptive leadership. From humble beginnings to a global phenomenon, Chesky steered Airbnb through regulatory challenges, urban impact debates, and a global crisis. The story of Airbnb under Chesky’s leadership serves as a blueprint for startups aiming to disrupt established industries and become a part of the global economic fabric.



SAGE Journals

SAGE Journals





Leave a Reply

Your email address will not be published. Required fields are marked *