Airbnb is a trusted community marketplace that connects people to unique travel experiences. Founded in August 2008 and based in San Francisco, California, Airbnb enables people to list, discover, and book travel experiences around the world from an apartment overnight to a castle for a week. It is available in 192 countries and over 26,000 cities.
Airbnb’s first Head of International, Martin Reiter, talks about globalising market entry at speed, fighting off clones and intense, international hiring.
Mckinsey – Groupon – Airbnb
Martin Reiter actually intended to be a philosopher before his entrepreneurial streak led him down a different path. After his Masters in economics, law and philosophy, his travels through Nepal eventually ended up with him joining McKinsey & Co.
He was then approached by Oliver Samwer, founder of Rocket Internet and acting COO of Groupon. Samwer originally needed someone to build out the Central and Eastern Europe region for the business.
Shortly after starting, Samwer needed help integrating two large scale acquisitions, one in Japan, one in Russia, leading Reiter to spend time in both Tokyo and Moscow. Whilst that enabled him to learn a lot about global business traits and scaling at speed, he also realised cultural differences between him and Samwer. “I didn’t feel that building a sustainable company was a priority for Oliver at that time”.
Just as Reiter was becoming increasingly disillusioned, Brian Chesky, co-founder and CEO of Airbnb, reached out to Reiter. He had a challenge, which Reiter recalls as “Rocket’s Wimdu (an Airbnb competitor funded by Samwer’s Rocket Internet) has cloned our site and was trying to poach our hosts. I have a vision to allow people to share, and build trust around that, bringing good to the world. They are eroding that. ” Impressed by Chesky’s visionary approach, Reiter took on the challenge and joined just after Airbnb had raised around $120m. “They needed someone to put a good chunk of this to good use – mostly around winning globally,” he quips.
Moving at speed
It all moved fairly quickly: “I might have been the fastest senior hire they made. They were really conscious about time to market – being recognised as the first mover was critical.
Reiter’s role was to lead the global expansion; to make Airbnb number one in all major markets. Initial discussions began with two fundamental questions: why do you want to go international and why now – “given that you bet your company to a large extent on that decision, it’s essential to be 100% aligned with the board and the founders”, Reiter explained.
As a marketplace with global network effects, it was a clear “winner takes it all” situation. Urgency was driven by many competitors evolving, one being Oliver Samwer’s WIMDU having raised $70m”.
Together with the board, Airbnb designed a rough playbook, hiring plan, country prioritisation and financial plan. Competitive risk was a major factor, highlighted by Airbnb’s decision to launch in the highly competitive Russian market before they set up in Australia, which was a potentially lucrative market itself.
“We knew in Russia with their clone industry they would have competitors up and running almost every week so we said we would rather go to Russia and discourage potential investors by planting a flag there than going straight for more overtly obvious financial opportunities,” said Reiter.
Within four months of the market entry plan being signed off, Reiter had launched eight offices; the MD in each region was operational, the team was hired, the office lease was signed and the first people were working there. After six months, 12 offices had been launched. As he describes it, it was “internationalisation at an industrial scale.”
“We just created a plan that allowed us to parallelise a lot. I had the opportunity to hire very strong people. These two things allowed us to out execute others in terms of speed,” said Reiter.
During those four months, Reiter was spending 80 per cent of his time hiring. “We hired 250 people internationally. Airbnb were about 40 people when I joined.”
“We needed to find a solution to move very fast without compromising on quality and culture.” In the end all 250 people that were hired went through eight interviews each, requiring pretty strong logistics to make this all happen.
In Reiter’s experience, there are four main factors you need to consider when thinking through internationalisation; why, when and where, what do you need to adjust in terms of product offering and business model, and what steps need to be taken to achieve global scale. The most important in his opinion is why you should go international.
You need to raise money to scale globally and if your investors don’t agree on your justification for reasons for growing internationally, it won’t happen,” he explained. Europe alone can be a big pull. “As a US business, you have to remember that when considered as a whole, Europe is still the largest consumer market,” he says.
According to Reiter, the reasons for attempting to achieve global scale can be broken down into three broad categories. For some business models, particularly market places, international growth is more of a requirement than an option. It provides the opportunity to raise supply and demand to a far greater scale. Airbnb falls into this category. For others it is often more of an opportunity than a requirement – an opportunity to sustain top line growth and to take control of a market and fending off competition early on.
“For Airbnb if we didn’t try and scale internationally it could have been pretty dangerous as people travel everywhere and we had to match that demand.”
Taking a break
After “years of mayhem,” Reiter has taken a break and has now become a prolific host on Airbnb, with four listings in Vienna. If he were to do it all over again, the one thing Reiter would change is to make sure that discussions up front included product and engineering resources in a more definitive way as “it’s not a problem you can easily solve down the road”.
“If I would do it again I would invest more tech resources on operations, social and internationalisation of the product up front,” he explained.