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Airbnb Vs. Samwer Brothers - Long-term Wins

So we got to the point where we started getting successful only to have all these people basically copy us. One day, it was early 2011, so about two years in from 2009 of it working. So 2009, 2010, it kinda was working. 2011, so we had two year kinda honeymoon. I don’t know if you wanna call it honeymoon, and then suddenly, by the way, in 2010 somebody, this guy Howard Hartenbaum, he’s an investor at August Capital. He told me, he says, “Whatever you do, you gotta make sure is these two brothers don’t copy your website.”

And I said, “What two brothers?” And he goes, “They’re called the Samwer brothers and they’re notorious and usually when they copy your website, they scale it and they kill you.”

And he’s like, but he’s like, “Don’t worry though, ‘cause you’re fine.’ Cause they haven’t copied your website and if they haven’t by now, they won’t.”

I’m like, “Thank God, we’re free.” All of a sudden, we notice people, we noticed a lot off suspicious activity and people spamming our users and we’re like, “Something’s up.”

We didn’t know what was up. Turns out, we find out the Samwer Brothers have their eye on Airbnb.

Now, I’ll tell you how scary this was. In 2011, the hottest start up in the world was Groupon. They went from zero dollars to, I think, a billion dollars in revenue in like a year, or two. At the time, that was completely unheard of. Actually, it’s still kind of unheard of. And Groupon grew that fast, not because of US business, but because the European business, which was called CityDeal. That was actually the Oliver Samwer clone that Groupon had to buy.

So basically, these two brothers, not only, I was told, would kill anyone that they cloned, they’re like the attack of the clones, but they also had built what was, at least being positioned at the time, the fastest growing, most successful start up of all time. That was how Groupon was positioned. That was not somebody that we were interested in fighting, right.

Suddenly this giant dragon appears and you’re like this is not possible to beat him. And now at this point, we had raised 7 million dollars, in fact, from you [Reid Hoffman].

(laughter) - [Hoffman] Yep.

- Yeah, so, Reed had given us 7 million dollars and then suddenly, in 2010 I think, in April 2010. By January or February or March, some point 2011, they [Samwer bros] raised 90 million dollars. And we had 40 employees, and it took us two and a half years to find these 40 people.

And in 30 days, they hired 400 people. And they opened 20 offices and I had no idea how you even opened a second office. We have one office, how do I get a second office? Do I fly there? Do I get an apartment?

And they had 90 million dollars and I was like this is horrible. And they basically said, “We’re gonna do in Europe what you did in the United States.” Now the problem with that is, most companies, if they lose Europe, they’re just a smaller company. In Airbnb, if you lose Europe, there is no Airbnb. A travel website where you can’t travel to Europe is like a phone without email or a phone without signal. There’s no reason for it to exist.

So this became a bet-the-company fight. And we didn’t know what to do. We had a proposition to buy the company. It would have been very expensive, but more importantly, it would have been a huge cost, culturally. And I didn’t know what to do.

I remember, I called up Mark Zuckerberg because they cloned FaceBook, this (speaking French) So I called up Andrew Mason. Andrew Mason told me, “Yeah, they’re probably gonna kill you.” He had told me a story that Oliver Samwer was so good at copying companies that it was too easy for him. He needed to turn it into a challenge. So he decided to hire developers from North Korea.

Just 'cause, I don’t know, and Andrew described it as, 'cause he just wanted to make it more challenging, the copy companies, 'cause it was too easy.

I don’t really believe that story, but… And there was this whole mythology. Mark Zuckerberg told me, “Don’t let them sell, whoever has the best product wins.”

And he ended up being right. Paul Graham gave me even better advice though.

He said, “You’re missionaries, they’re mercenaries and often times, missionaries often win.” So he said, “You should basically just pretend like they had this baby, but they don’t wanna raise the baby.”

And so I thought, well we’re founders. We wanna grow this company. So I’m like a parent and I want this child to grow into this wonderful company. And so I said… Well, I didn’t say this to Oliver Samwer, but my view was, my biggest punishment, my biggest revenge on you is, I’m gonna make you run this company long term. So you had the baby, now you gotta raise the child. And you’re stuck with it for 18 years. 'Cause I knew he wanted to sell the company, I’m like, “No, no. You’re running this company.” And I knew he maybe could move faster than me for a year, but he wasn’t gonna keep doing it. And so that was our strategy. And we built company long term. And the ultimate way we won is, we had a better community. He couldn’t understand community. And I think we had a better product. And it was a do-or-die time. And we ended up flying to Europe, we hired bunch of country managers, we flew them all to San Francisco and we basically trained them for a month or two.

We said now go to your countries, hire your team, here’s how you open a market, here’s how you open cities and we opened, I think like eight or 10 offices in like three months. It was actually totally insane. We hired hundreds of people and the whole speed of the company picked up at that point.

And a couple years later, obviously, it was game over.

Samwer, I mean the gift he gave us was a scale fast. And he, he took a company that was kind of successful and he kind of compressed our time to becoming an international network effect within a year.

Credits to:
https://community.intelligentfanatics.com/t/airbnb-vs-samwer-brothers-long-term-wins/248