Don’t Get Distracted by Success and Panic at Failure

Growing a new business — whether a start-up or a new endeavor at an established company – is a complete rush. But the drive to push forward can blind someone, even with an advanced business administration degree and experience.

Your organization can be at its most vulnerable just when success seems at hand. That’s what happened at short term rental broker, Airbnb. Business was growing for the site that helped match consumers who wanted to rent their homes for brief periods with travelers who needed a place to stay. It built to a million bookings within a couple of years — and then doubled that number in four more months. No wonder it received $112 million in series B venture funding in July 2011 for global expansion.

And then Airbnb ran into an overlooked brick wall. A customer complained that someone who rented her home had ransacked and vandalized it and had likely stolen her identity:

They smashed a hole through a locked closet door, and found the passport, cash, credit card and grandmother’s jewelry I had hidden inside. They took my camera, my iPod, an old laptop, and my external backup drive filled with photos, journals… my entire life. They found my birth certificate and social security card, which I believe they photocopied – using the printer/copier I kindly left out for my guests’ use. They rifled through all my drawers, wore my shoes and clothes, and left my clothing crumpled up in a pile of wet, mildewing towels on the closet floor. They found my coupons for Bed Bath & Beyond and used the discount, along with my Mastercard, to shop online.

It was terrible publicity on its own. But then the company made it even worse:

  • The victim alleged that Airbnb didn’t respond for 14 hours after she called them about the problem and that it wasn’t clear that the company would pay for the damage done.
  • She also blamed the company’s policy to block the access of each party in the transaction to the contact information of the other until after the deal is done, which prevents each from having the time for proper vetting.
  • To top it all, an Airbnb investor seemed to suggest that the victim was lying.

And then an alleged victim of a separate incident surfaced. Eventually Airbnb unveiled a new policy of paying for up to $50,000 in damages for such cases and announced the hiring of some people experienced in customer service. But, still, it was a disaster. The company had its eye on success and not failure. What could it have done differently?

  1. Do some deep risk analysis and see what simple actions, even if unlikely, could cause heavy damage.
  2. Formulate plans for such risks before they happen. Have a well-defined response.
  3. If things go wrong, take steps to cure the immediate problem and have everyone associated with the company, including investors, refrain from remarks. Let all communications come through official channels.

Most importantly, no matter how well things seem to go in the business, develop a keen sense of useful paranoia. Constantly ask yourself what you and the organization might have missed. You won’t avoid all problems, but you’ll minimize the risk of damage.

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