## Airbnb Product Interview: Free Experiences or Tours?
This blog post guides FAANG interviewees through a product interview scenario for Airbnb. The challenge is to debate whether Airbnb should offer free experiences or tours, a strategic question that tests a candidate’s product sense and business acumen.
Detailed Guide on Framework Application
a. Choosing the Right Framework:
The Profitability Framework is ideal for analyzing new feature proposals in terms of potential revenue and costs.
b. Applying the Profitability Framework:
1. Profitability Analysis:
Begin by estimating the potential increase in customer satisfaction and retention versus the costs associated with offering free experiences.
2. Market Analysis:
Consider the competitive landscape and whether such an offering could differentiate Airbnb in the market.
3. Customer Willingness to Pay:
Explore if guests would be willing to pay for future experiences after receiving a complimentary tour, thereby boosting long-term revenues.
4. Cost Structure:
Analyze the expenses related to launching and maintaining the free tours, such as guide fees, insurance, and administrative costs.
5. Scalability:
Evaluate if the concept can be scaled globally or if it’s better suited for certain markets or property types.
c. Hypothetical Example:
Imagine that data shows a 10% increase in repeat bookings for hosts offering free local tours. The cost of providing these tours could potentially be offset by the future bookings and possibly higher average nightly rates due to improved user experience.
d. Facts Check:
Utilize available information like average cost of tours in various cities and guest retention rates to support your analysis.
e. Effective Communication Tips:
Be concise and explain how complimentary tours could lead to direct and indirect profitability increases. Back up your position with data and clear, structured logic.
Conclusion
Making strategic recommendations for Airbnb involves analyzing how new features can drive profitability while enhancing user experience. Practice with the Profitability Framework will help you as a PM candidate to not only structure your responses but also showcase your business insight in high-stakes interviews.