The Story of Hilton
The new Marketing Manager was very nervous and anxious. It was a cold fall of 2007 and it was the first meeting of shareholders in which he had been invited to speak to give a presentation. It was very ambitious of him that he had not wanted to tell anyone as all the big bankers who financed the company, top executives and major shareholders were present.
First, the CEO spoke which was then passed onto the Chairman. Finally, they gave the floor to the Manager. His knees began to tremble but with a firm voice, he began his speech: “We are Hilton, the second-largest hotel network in the world. We have 610,000 beds, 3,800 hotels, we operate in 88 countries and have 93 years of trajectory. My proposal is that in the next 20 years, we double our capacity by adding 600,000 beds, with an investment of 40 billion dollars.”
The participants looked at each other in amazement, not knowing what to say. How was such a figure to be financed? By how many years were the profits of the company going to be mortgaged? How would the stock market react? In an industry as mature as the hotel industry, would there be market demand for 600,000 more beds?
AND thus in a heated debate, the questions followed one after another and in the end, the expected happened. I know it resolved that such a project would not even be voted on. The manager returned home dejected and depressed. The next day he quit his job as he was convinced that Hilton had come to his growth ceiling and there was no place there for people like him.
The Story of Airbnb
The previous episode never really happened, instead, it happened in San Francisco.
Joe and Brian could not pay the rent of their apartment so they came up with a plan. In order to pay their rent, they decided to publish on a very simple site that they were renting 3 inflatable beds (airbed) on the floor of the living room of his apartment and that they would serve breakfast to those who rented. A short while late, two men and a woman answered the call and paid $80 each to book and stay the night.
Long story short, that was the beginning of Airbnb (Airbed and Breakfast) that most must of us know of. For those who do not know, I tell you that it is a site that connects friendly smart owners of rental properties (which can range from just a shared room or a treehouse, even the most sophisticated of mansions) with tenants looking for a place to your vacations or to stay on business trips or to live a long time.
Today, they already operate in 192 countries, they manage 650,000 beds and it took them just 4-5 years to reach that level, becoming the largest “hotel” network in the world. And without having invested a single dollar in bricks!!
What was the “magic” of Airbnb? Using the “excess capacity” or the “sharing economy” or the “collaborative consumption ”or any of the other expressions that are so fashionable. That is the 650,000 beds that Airbnb makes available today already existed. They just found a clever way to put them on the market.
Airbnb will go public very soon and its listing is expected far exceeds the current market value of the Hilton chain and the same is being done by Uber and Getaround formally known as drivy and Buzzcar as with private cars, and mecanse.com with clothes that others are not wearing.
Another example would be the use of electric drills.
Some of us have bought an electric drill and the average use in its entire useful life could be just 12 minutes. If that’s the case, what about the millions of electric drills left unused in the homes of millions of people? Rather than having it lying down collecting dust, you can rent it out for people to use it for a low cost and having its use rather than it sitting there and the person not being able to use an electric drill. It’s a win-win for everyone.
When I was discussing this theory with my children, one of them told me: “then what do we do with the dining table chairs that are used on average less than an hour per day? ” and I replied:
“If you find an efficient way that those chairs can be made available at noon in a restaurant, in the afternoon in an office and at night come home, then not only would you have a good business in hand, but perhaps it was no longer necessary to manufacture more chairs in the world. With those that already exist are enough and more than enough.”
Start Reusing and getting rid of the concept of “Excess Capacity”
“Excess capacity” is a concept that is revolutionizing the world. Opportunities are ahead everywhere from this revolution. So the questions you would be asking then:
What is “excess capacity” in your business and where can it be found?
The answer to that is to take advantage of facilities (schools, clubs, etc.) available to us. Generally, facilities have an “excess capacity ”of hours available at night and many times during the day too. Growing parking problems cannot be solved with the number of garages that are private. Instead, they can be solved by increasing the availability of the garage.
And the idle hours that retirees and students have could not be taken advantage of? It will be that for each demand situation there is no possibility of taking advantage of overcapacity of something that already exists?
Let’s think smart, it doesn’t have to be work hard. Many good new businesses can emerge to be profitable for everyone and anyone.