US-based accommodation site Airbnb will offer a $50,000 insurance guarantee to its users after its poor handling of a trashed home, providing a valuable lesson for start-ups on effective PR.
Based in San Francisco, Airbnb works as a travel network by pairing travelers with locals willing to rent out their homes for a fee. Founded in 2008, it has already raised more than $100 million.
Last month, the home of a San Francisco host – known as EJ – was robbed and vandalised by a guest.
“They smashed a hole through a locked closet door and found [my] passport, cash, credit card and [my] grandmother’s jewellery I had hidden inside,” EJ wrote in a blog post.
“They took my camera, my iPod, an old laptop, and my external back-up drive filled with photos, journals… They found my birth certificate and social security card.”
“They used my fireplace and multiple Duraflame logs to reduce mounds of stuff to ash… The kitchen counters, wood furniture, my bed frame, my desk, my printer… all were doused in powdered bleach.”
Airbnb chief executive Brian Chesky discussed the incident in a guest article on TechCrunch, in which he said the company was “devastated” to receive the news.
“Our first concern was to make sure our host was safe. We have been in close contact with her ever since and have worked with the authorities to help find a resolution,” Chesky wrote.
“Because Airbnb facilitates the reservation details and payment information, we were in a unique position to assist with the investigation… We understand that with our help, a suspect is now in custody.”
“Once our host’s safety was secured, our attention moved to further strengthening our system.”
However, the company has since rethought its formal response to the incident, issuing an unconditional apology to the victim. It also announced its plan to offer users a $50,000 guarantee against damages to hosts.
Chesky told TechCrunch that over the last four weeks, the company has “really screwed things up”, admitting it could have handled the situation a lot better.
“I hope this can be a valuable lesson to other businesses about what not to do in a time of crisis,” he said.
“With regards to EJ, we let her down and for that we are very sorry. We should have responded faster, communicated more sensitively, and taken more decisive action.”
“We weren’t prepared for the crisis and we dropped the ball. Now we’re dealing with the consequences.”
Brian Walker, managing director of The Retail Doctor, says the incident should serve as a warning to start-ups about putting in place an effective PR strategy from the outset.
If the incident is common knowledge and could impact consumers’ perceptions of your brand, Walker says you have no choice but to publicly acknowledge it and act accordingly.
“The challenge is not to overstate it, but it definitely needs to be on the agenda. You would typically engage a good public relations company to help you with this,” he told StartupSmart.
“You go through a period of acknowledgment of the issue, some degree of damage control, a rectification strategy, a measurement of the effectiveness of that strategy and communication as to the resolution, and then you move on.”