airbnb-organizational-structure

Airbnb Organizational Struture

Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

The five key features of Airbnb’s new organizational design

In April 2022, Brian Chesky, CEO of Airbnb just announced the new organizational design for Airbnb, as he pointed out the five key features:

  • 1. You can work from home or the office—whatever works best for you.
  • 2. You can move anywhere in the country, like from San Francisco to Nashville, and your compensation won’t change.
  • 3. You have the flexibility to live and work in 170 countries for up to 90 days a year in each location..
  • 4. We’ll meet up regularly for team gatherings. Most employees will connect in person every quarter for about a week at a time (some more frequently).
  • 5. To pull this off, we’ll operate off of a multi-year roadmap with two major product releases a year, which will keep us working in a highly coordinated way.
airbnb-organizaitional-design
airbnb-organizaitional-design
airbnb-organizaitional-design
airbnb-organizaitional-design

Brian Chesky highlighted:

Why did we come up with this design?

The world has become more flexible. Our business wouldn’t have recovered as quickly from the pandemic if it hadn’t been for millions of people working from Airbnbs.”

And he further highlighted:

We also had the most productive two-year period in our company’s history—all while working remotely.

But he also emphasized:

But there’s a tension.

The most meaningful connections happen in person. Zoom is great for maintaining relationships, but it’s not the best way to deepen them. And some creative work is best done in the same room.

And concluded:

The right solution should combine the efficiency of Zoom with the meaningful human connection that happens when people come together.

Our design attempts to combine the best of both worlds.

From open floors and on-site perks to flexibility and remote working

As Brian Chesky highlighted:

Two decades ago, Silicon Valley startups popularized open floor plans and on-site perks. Today’s startups have embraced flexibility and remote work. I think this will become the predominant way companies work 10 years from now

This is a critical point, as the trend to understand is exactly that. Today’s employees might value way more flexibility and remote working, rather than open floors, and on-site perks.

Read Next: Airbnb Business Model Analysis, Airbnb Unit Economics.

Related Visual Stories To Airbnb

Airbnb Business Model

airbnb-business-model
Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees. 

Airbnb Competitors

airbnb-competitors
The Airbnb story began in 2008 when two friends shared their accommodation with three travelers looking for a place to stay. Just over a decade later, it is estimated that the company now accounts for over 20% of the vacation rental industry. As a travel platform, Airbnb competes with other brands like Booking.com, VRBO, FlipKey, and given its massive amount of traffic from Google. Also, platforms like Google Travel can be considered potential competitors able to cannibalize part of Airbnb’s market.

Airbnb Business Model Economics

airbnb-unit-economics
As a peer-to-peer platform, once the transaction between host and guest goes through, Airbnb will collect a fee from both key players. For example, from a $100 booking per night set by the host, Airbnb might collect $3 as a hosting fee. While it might increase the price for the guest at $116 ($16 above the price set by the host) to collect its guest fees of $12 and taxes for the remaining amount. In 2022, Airbnb generated $63.2 billion in gross booking value on over 393.7 Million Nights and Experiences Booked, an average revenue per booking of $161, $8.4 in revenue, and an average service fee of 13.3%.

Airbnb Take Rates

airbnb-take-rate
Airbnb take rate is the percentage fee that the company gathers from hosts and guests on each booking that happens through the platform. The take rate for Airbnb fluctuated over the years, with a peak in 2020, at a 14.1% take rate and a 13.3% take rate in 2022.

Airbnb Value Per Booking

airbnb-value-per-booking
In 2022, Airbnb generated an average value per booking of $161 compared to $156 in 2021 and $124 in 2020.

Airbnb Financials

airbnb-financials
Airbnb makes money by collecting a take rate on each transaction on the platform. In 2022, Airbnb processed over $63 billion in gross booking value, which translated into $8.4 billion in revenue. Airbnb also generated $1.9 billion in profits, and $3.4 billion in free cash flow in 2022.

Who Owns Airbnb

who-owns-airbnb
Airbnb is primarily owned by its co-founders: Brian Chesky, with 76,407,686 Class B shares, which gives him 29.1% of ownership; Nathan Blecharczyk, with 232,306 Class A and 64,646,713 Class B, which give him 25.3%, and Joe Gebbia, which has 5,113,865 Class A and 58,023,452 Class B, which give him 22.9% ownership.

Storyboarding

storyboarding-business
A storyboard is a linear sequence of illustrations used in animation to develop a broader story. A storyboard process is now used also in business to understand and map customers’ experience and enable the growth of the company using that process.

Airbnb Arbitrage

airbnb-arbitrage
Airbnb arbitrage is a business model where the renter of a house or apartment sub-lets the property to Airbnb users. This is a model where the Airbnb arbitrageur can transform a long-term rental, with the main property owner, into a short-term rental, with higher rates and margins.

ADU Market

adu-market
An accessory dwelling unit (ADU) is a term used to describe a secondary house or apartment located on the same plot of land as a larger, primary place of residence. This has become an industry for its own sake, with the potential to become the next trillion-dollar industry.

Samara Business Model

samara
Samara is a manufacturer of prefab accessory dwelling units (ADUs) that can be installed and operational in a matter of hours. It started as an R&D unit of Airbnb in 2016. And it eventually was spun off and run by Airbnb co-founder Joe Gebbia, who now runs it full-time.

Types of Organizational Structures

organizational-structure-types
Organizational Structures

Siloed Organizational Structures

Functional

functional-organizational-structure
In a functional organizational structure, groups and teams are organized based on function. Therefore, this organization follows a top-down structure, where most decision flows from top management to bottom. Thus, the bottom of the organization mostly follows the strategy detailed by the top of the organization.

Divisional

divisional-organizational-structure

Open Organizational Structures

Matrix

matrix-organizational-structure

Flat

flat-organizational-structure
In a flat organizational structure, there is little to no middle management between employees and executives. Therefore it reduces the space between employees and executives to enable an effective communication flow within the organization, thus being faster and leaner.

Connected Business Frameworks

Portfolio Management

project-portfolio-matrix
Project portfolio management (PPM) is a systematic approach to selecting and managing a collection of projects aligned with organizational objectives. That is a business process of managing multiple projects which can be identified, prioritized, and managed within the organization. PPM helps organizations optimize their investments by allocating resources efficiently across all initiatives.

Kotter’s 8-Step Change Model

kotters-8-step-change-model
Harvard Business School professor Dr. John Kotter has been a thought-leader on organizational change, and he developed Kotter’s 8-step change model, which helps business managers deal with organizational change. Kotter created the 8-step model to drive organizational transformation.

Nadler-Tushman Congruence Model

nadler-tushman-congruence-model
The Nadler-Tushman Congruence Model was created by David Nadler and Michael Tushman at Columbia University. The Nadler-Tushman Congruence Model is a diagnostic tool that identifies problem areas within a company. In the context of business, congruence occurs when the goals of different people or interest groups coincide.

McKinsey’s Seven Degrees of Freedom

mckinseys-seven-degrees
McKinsey’s Seven Degrees of Freedom for Growth is a strategy tool. Developed by partners at McKinsey and Company, the tool helps businesses understand which opportunities will contribute to expansion, and therefore it helps to prioritize those initiatives.

Mintzberg’s 5Ps

5ps-of-strategy
Mintzberg’s 5Ps of Strategy is a strategy development model that examines five different perspectives (plan, ploy, pattern, position, perspective) to develop a successful business strategy. A sixth perspective has been developed over the years, called Practice, which was created to help businesses execute their strategies.

COSO Framework

coso-framework
The COSO framework is a means of designing, implementing, and evaluating control within an organization. The COSO framework’s five components are control environment, risk assessment, control activities, information and communication, and monitoring activities. As a fraud risk management tool, businesses can design, implement, and evaluate internal control procedures.

TOWS Matrix

tows-matrix
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

Lewin’s Change Management

lewins-change-management-model
Lewin’s change management model helps businesses manage the uncertainty and resistance associated with change. Kurt Lewin, one of the first academics to focus his research on group dynamics, developed a three-stage model. He proposed that the behavior of individuals happened as a function of group behavior.

Organizational Structure Case Studies

Airbnb Organizational Structure

airbnb-organizational-structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

ibm-organizational-structure
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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