News of HomeAway’s trademark-infringement lawsuit against AirBnB has left many customers of both companies wondering what to think about the whole thing.
“Good Artists Borrow, Great Artists Steal.” This famous saying, most often attributed to Pablo Picasso, pretty much summarizes how the creative process works in any media. And Silicon Valley is no different.
If you’re good enough at making high-quality copies, people will admire you for your skillset. You will earn some respect and even a decent amount of money. Still in all, it doesn’t matter how good the replica is. It will be overshadowed by the original creation.
A creative genius, Picasso was never interested in copying things. His creative process began with ideas from others, which once absorbed, took on a new life in his own image, and on a different scale.
Oftentimes, these ideas came to him via the great masters, and sometimes from his fellow artists. Throughout his career, he mastered his “art of stealing” like no one else.
While a teenager, Picasso became fascinated by the work of Jean-Auguste-Dominique Ingres. This resulted in a series of works that made the originals look pretty outdated. One of Picasso’s greatest contributions to the art world, Cubism, was also influenced by Ingres.
Turkish Bath by Ingres (1862) – left and by Pablo Picasso (1907) – right
This is how things get done in the realm of genius. Ideas inspire great artists to create a new art form that didn’t exist before, and is often regarded as revolutionary.
Whether you borrow or steal in the world of business, the consequences are vastly different.
On December 16, 2013, AirBnB launched a new advertisement campaign, “Home to You.” The Home to You ad campaign centers around a video showing artisans recreating 50 Airbnb vacation rental listings in the form of miniature birdhouses.
Yes, birdhouses. This is what all the fuss is about.
Here’s how AirBnB describes the idea behind the movie on their YouTube channel:
No creatures on earth travel quite like birds do. They soar the skies, then land in new places. They see the world from a different perspective, one to which all real travelers aspire. This film is a celebration of our passion for travel and the kind of hospitality that makes people feel at home anywhere.
How could a story like that not touch the soul of an aspiring traveler?
But, apparently, it can also touch a copyrighted image: the “Birdhouse Mark” which happened to be a protected trademark of AirBnB’s biggest competitor, HomeAway, Inc. HomeAway’s logo prominently features a birdhouse, and the company uses birdhouses as its sort of “mascot.”
According to HomeAway’s argument, Brian Chesky, CEO and co-founder of AirBnB, paid multiple visits to HomeAway’s headquarters in Austin, Texas. This said, it’s probably safe to assume that the giant birdhouse replica in the middle of their headquarters didn’t pass unnoticed.
We will leave it up to history to determine whether AirBnB’s national campaign is a complete steal or just borrowing. It certainly visualizes an especially poetic perspective on travel.
One thing, though, is crystal clear to Brian Sharples, CEO and Chairman of HomeAway.
“We do believe it is a fairly deliberate attempt to confuse the marketplace,” Sharples has said. Chesky “has been to our downtown offices several times. He has stepped into our giant birdhouse. I don’t think that anyone could argue that this was a mistake on their part.”
So, what now?
Should we consider it as a formal announcement of the war between two competitors? Was HomeAway fed up with AirBnB breaking more and more into the market for traditional vacation rental homes?
Although they are clashing over the same market niche, HomeAway and AirBnB are very different animals when it come to their respective cultures, founders, and backers, and the demographics of their hosts, guests, founders, and even haters.
It’s even safe to say that AirBnB and HomeAway are completely opposites any way you look at them. This is what makes this clash so fascinating.
Let’s look back at the history of two companies and try to understand what may arise from this.
HomeAway, Inc, nowadays a publicly traded company under the AWAY ticker, was founded in 2005 by Brian Sharples and Carl Shepherd. Within six years, they managed to bring the company to its IPO, generating a sixfold return on investment (based on the post-IPO figures).
Their runaway success was mainly attributable to a clever way of cherrypicking and acquiring market leaders in the vacation rental industry around the globe, and monetizing their existing customer bases.
Some of HomeAway’s most notable acquisitions included VRBO.com and VacationRentals in the US, Arbitel.fr in France, and about twenty additional websites in different time zones, languages and hemispheres, the most recent being the Australia-based Stayz, for $198M. HomeAway often called themselves a startup, but it’s pretty unusual for a startup to begin operations with $49M on hand, with another $500M deposited by VCs within the first couple of years of operation.
AirBnB was founded in 2008, by two designers,Brian Chesky and Joe Gebbia, and an engineer, Nathan Blecharczyk. For a few months they tested out the idea of renting an airbed in their San Francisco loft to conferencegoers. Packaged with a small meal, the accommodation was dubbed Airbed and Breakfast (later shortened to AirBnB). They made a few attempts to replicate this model in other cities, but that didn’t help with their flat revenue graph.
Forced to think outside of the box as their fledgling company struggled to become profitable, the founders began to offset their losses by selling repackaged cereal as “Obama O’s” and “Captain McCain’s.” The cereal story, a hit during the 2008 election, later became a trigger point for Paul Graham to take these guys seriously. In the winter 2009, the founders were invited to participate in YCombinator, one of Silicon Valley’s first and most respected startup accelerators. From this very moment, AirBnB’s growth was phenomenal. The amount of funding they attracted over the course of couple of years reflects their rapid market expansion. Starting from the $20K coming from the YCombinator fund, they quickly accumulated $326M in funding from their first tier investors and celebrities. Being pioneers of the shared economy, they inspired a lot of controversy, viral press, and tidal waves of support from all around the globe. It’s fair to mention that over time the website became for some a reliable source of income—and for others, some sort of a travel religion. People started referring to AirBnB’s brand as a foundation of a new phenomena: the shared economy. Inspired by their success, dozens of other startups adopted their business model to different markets: AirBnB for Cars, AirBnB for Dogs, you name it! Finally, the AirBnB founders came up with their own new version of AirBNB … for birds.
BirdBnB.com became their first national ad campaign calling for bird houses. Notably, the campaign cost AirBnB no less than $2M.
“We promise you’ll never look at birdhouses the same way — and if you stay in one of these remarkable homes around the world, you may never look at travel the same way again too,” the website states. (At the time of this article, BirdBnB.com is redirecting to the main website AirBnB.com)
This is where their march has been stalled by a lawsuit from HomeAway.
“Defendant and HomeAway target and provide services to an overlapping class of Travelers for their respective services, through overlapping channels of trade,” the HomeAway suit states. “On information and belief, Defendant, has long targeted the tenants in landlord owned apartments in major cities (such as New York, Paris, San Francisco, Berlin, etc.) as its major supplier of listings.”
“However, Defendant [Airbnb] has recently increased its efforts to attract business in traditional vacation rental markets (such as the Gulf Coast, Rocky Mountains, Provence and Tuscany), in which HomeAway has long been well-established.”
Embedded in the culture of HomeAway, Sharples said, is the birdhouse logo, designed by downtown Austin advertising firm McGarrah Jessee and chosen “because it symbolizes what we do.”
AirBnB’s creative genius has served them pretty well on many occasions. It will be interesting to see how things will unfold this time.
Shall we expect an open-field battle between competitors, a massive settlement or M&A talk?
What are your thoughts on this?