Chip Conley of Airbnb demonstrates how brands should dare to disrupt

SMG Insights | Apr 12, 2018 SMG Insights 04/12/18

One of the best parts about our annual SMG Forum is the opportunity to hear from some of the most innovative minds in the CX industry. This year, we had the honor of welcoming keynote speaker Chip Conley, former Airbnb Head of Global Hospitality & Strategy, who wowed our audience with his powerful insight on market disruption. On today’s blog, Chip takes the reins and expands on this hot topic.


Science fiction author William Gibson once wrote, “The future is here. It’s just not evenly distributed yet.” This observation accurately describes what I faced five years ago when the three Millennial Airbnb co-founders asked this aging Boomer boutique hotelier to join their small tech startup to help them evolve into a global hospitality brand.

I’d never heard of the “sharing economy,” I didn’t have an Uber app on my phone, and I thought the idea of people staying in each other’s homes rather than hotels sounded very strange. But five years later, Airbnb is now the largest hospitality brand in the world (based upon the number of rooms or homes offered). So what have I learned from this?

Often, it’s outsiders who disrupt + transform industries.

More than 31 years ago, I started my boutique hotel brand, Joie de Vivre, when I was a mere 26 years old—about the age of the co-founders of Airbnb when they started their company years later. I didn’t know what I didn’t know. And I was one of the pioneers of the U.S. boutique hotel industry just a few years after investment banker Bill Kimpton on the West Coast and Studio 54 owner Ian Schrager on the East Coast started their boutique hotel companies. If your innovation team or Board of Directors is full of industry insiders, make sure you find a few on the outside to help mix up the thinking.

You can disrupt yourself, but be prepared for conventional wisdom to push back.

Facebook founder Mark Zuckerberg said, “If we don’t create the thing that kills Facebook, someone else will.” About the same time, Facebook purchased upstarts Instagram and WhatsApp. And Reed Hastings, the innovative outsider founder at Netflix, upended the home movie rental industry. As a customer of Blockbuster, he felt ripped off that they were charging him late fees—double what it costs to actually buy the DVD.

Reed used the monthly subscription model of an athletic club to launch the DVD-by-mail business that was Netflix. But then, Netflix disrupted themselves by pursuing streaming services and original content. Just like Zuckerberg, they knew if they didn’t do it, someone else would. Wall Street beat up Netflix’s stock price when they were investing in this self-disruption, but Reed proved Wall Street wrong.

There’s a difference between innovation and disruption.

As a boutique hotelier, I was an early innovator, but it took two dozen years for us to create more than 50 hotels (all of them—back when I was founder/CEO before selling the company in 2010—in California). Because disruption is now tech-driven, it has the ability to scale globally very quickly, and it often opens up new markets tapping into new customer behavior.

Since disruption accelerates change, it’s no wonder if you’re feeling a bit more anxious these days. A new competitor can go from a small, new idea to market domination in just half a decade (look at Uber). Author Gary Hamel said, “The single biggest reason companies fail is that they overinvest in what is, as opposed to what might be.” Many entrepreneurs and leading companies think they’re disrupting, when they’re really just innovating on the margins.

The best disruptors combine high-tech and high-touch.

Part of the reason Airbnb is a successful disruptor is because, generally speaking, our guests are so happy. While not all Airbnb guests are thrilled with their experience, our guest satisfaction is substantially higher than the hotel industry because of the technology-enabled, peer-to-peer feedback loop we’ve created. It shows you can use high-tech (our online review system) to influence high-touch (how our hosts offer hospitality).

Is your brand at risk of disruption?

Since disruption is the order of the day, let’s look at how likely is it that you’ll be disrupted. Which industries and companies are most at risk? I believe it’s those that:

  • Have grown complacent by past successes and haven’t evolved their product offering
  • Have lost touch with their core customers’ evolving needs and have no way to track it
  • Didn’t imagine a whole new set of customers, with different needs, entering the market
  • Don’t take new competitors seriously, potentially because they feel competitively safe due to their historical regulatory environment
  • Have no clue what the true essence of their product offering is

Clayton Christensen, the author of The Innovator’s Dilemma, suggests that it isn’t bad management that can lead to being disrupted—often it’s good management. “They listened closely to their customers’ expectations. They carefully studied historical market trends. They ran focus groups. They allocated capital to the innovations that promised the largest short-term returns. And in the process, they missed disruptive innovations that opened up new customers and markets.”

The world is changing faster than ever before and technology is accelerating that change. Don’t believe that we’re just going through a momentary period in history. The future is made for those who are open to evolving, both themselves and their businesses.

Chip Conley | Strategic Advisor for Hospitality and Strategy, Airbnb

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