Airbnb set new records when it floated on Wall Street with a valuation of more than $100bn, making it the biggest company to double its value on the first day of trading.

One can only imagine the thoughts of the 15 A-list investors who passed up the opportunity to buy a stake in the fledgling company when Joe Gebbia and Brian Chesky pitched to them in 2008.

Some commentators worry about an overheating market and that Airbnb’s flotation is further evidence that tech valuations are simply too high. After all, Airbnb has never made a profit on an annual basis and it owns no properties.

But, as an entrepreneur, I can only applaud the vision, persistence and ingenuity of its co-founders, who piled up $20,000 in credit card debt when they started out because they could not find angel investors. They believed in their busines model even when they were only making a couple of hundred dollars a week and they have been vindicated.

And as an investor in hotels and hospitality, I admire their achievement in re-fashioning the industry, successfully competing with traditional behemoths and forcing them to question the way they operate. The Harvard Business School has a case study on Marriott, which in 2017 had more than one million rooms and 7% of worldwide room supply; its leadership team realized that they needed to respond to Airbnb’s ‘live like a local’ approach, which has proved popular with younger travellers. Courtyard by Marriott, a chain of modestly priced hotels, was one example of its response to the competition.

Like all start-ups which have successfully forged a position in a crowded market, Airbnb operated under the radar initially. It did not seem to be a threat to its competition because hoteliers did not realize they were competing in the same market for the same customers.

But just because Airbnb started life as a budget solution for travellers, and a way for property owners to make a bit of money on the side, it did not mean that it would retain a low-cost, high-volume model for ever.

It succeeded because rather than assuming it knew what its customers wanted – which hotels are sometimes guilty of – it took the trouble to ask them. It then adjusted its model accordingly.

The sharing economy is commonplace these days, but Airbnb were the pioneers. They created a new type of consumer behaviour, persuading travellers it was safe to stay in strangers’ apartments and encouraging home owners to open their doors to people they had never met. By doing this, they created an inexhaustible supply of properties, becoming the first global property sharing app.

At the heart of the sharing economy is trust, whether it is sharing a car, a parking space, a yacht or a home. Airbnb’s founders were designers and their eye for design is obvious in the way the platform is curated; it is a simpler user experience than rival platform Vibro, for example. Simplicity and transparency ae crucial to build trust in the host/renter relationship.

In the third quarter of 2020, Airbnb made $219 million, and although it was badly hit by the Covid pandemic and laid off one quarter of staff, it fared better than most in the hospitality and tourism industries. It acted decisively to retain the confidence of its users, refunding travellers for cancelled holidays, even if it meant penalising hosts. Their rationale was that, with a strong customer base, hosts will remain invested in the platform; without one, they will begin to question its usefulness.

Airbnb is expected to make about $4.2 billion sales in 2021, a far cry from the days when its founders were so desperate for cash that they invented two branded breakfast cereals, Obama O’s and Cap’n McCain’s, to sell online during the 2008 US election. The gimmick caught the eye of broadcasters, making them $30,000 and keeping the company afloat.

Like all the best entrepreneurs, Gebbia and Chesky have proved agile, inventive and adaptable. They may once have been shunned by investors, but now they can justly claim to have changed the face of the travel industry.

2019 has been a turbulent year for the global economy with the headwinds of Brexit, the fall-out from the US-China trade war and continuing tensions in the Middle East creating uncertainty in boardrooms. We live in an inter-connected world and it is hard for any business to ignore the impact of these momentous events.

So, the theme of the C & C Alpha Group’s 2019 annual conference, Business Sustainability, Emerging Risk Analysis and Growth in a Changing Climate, could not have been better chosen. Led by Professor William Kerr and Professor Juan Alcacer, from Harvard Business School, it addressed these issues head-on. Every challenge brings opportunities and the best business leaders don’t shirk from their responsibilities or find excuses for failure – they seize those opportunities.

Harvard Business School’s classic definition of entrepreneurism is: “The relentless pursuit of opportunity without regard to resources currently controlled”. However, that is not an invitation to be reckless. Risk should always be managed. As an investor, I am always looking for new ventures that excite me, but, for every two or three opportunities we invest in, we will probably turn down 100. We minimize risk by going in small and increasing our investment incrementally. Once your base is sound, the time is right to take higher investment risks.

Many business leaders struggle with the dilemma of managing their company’s growth trajectory. One way of looking at this by asking: Have I earned the right to grow? Professor Kerr suggested a helpful four-question framework, which can be summarized as:

• Is my business ready?
• Do we have the resources we need?
• Have the leadership team bought into the vision?
• What is the cost of standing still?

Another useful way to approach the question is to ask: What was the first thing that worked for my business? Every business has core competencies, but what is your distinctive competency – what do you do better than your rivals? Make growth decisions based on your distinctive competency, not on your core competencies.

Another important consideration is that cashflow is usually the biggest challenge to growth. Sometimes it is better to be less profitable if it allows you to keep hold of capital because raising capital yourself can cost you more than the profit you have sacrificed.

Adel Al Ali, chief executive of Air Arabia, who founded the Middle East’s first low-cost carrier in 2003 and has presided over its growth into a 50-strong fleet flying to 170 destinations, gave a fascinating insight into his strategy. He looks at profit, not growth or market share, arguing that if you are weak it is easier for competitors to damage you. Airlines typically have a three/five-year strategy, but invariably the plan changes every year, such is the speed of change in the industry.

His philosophy is not to worry too much about corporate secrecy or competitors trying to steal your business; he argues a good business should have the self-confidence to let the competition chase you, rather than chasing them. That approach has certainly worked for Air Arabia; whilst 17 airlines have closed globally during the last 12 months, Air Arabia is ordering 120 new aircraft and extending into new markets.

However, not every business leader can afford to be so sanguine. Profit draws a crowd; Netflix and Ben and Jerry are good examples of pioneers in their fields whose business models have been imitated and have had to innovate constantly to stay ahead of the competition. And competition is not always direct; arguably, the biggest challenge to camera manufacturers has been the advent of the smartphone.

As a business leader you need to be alive to risks posed not only by competitors in your own space, but by rapid technological change, which could make your own business model obsolete. The rise of Airbnb has changed the face of the travel industry and it is instructive to consider how Marriott International, which most people think of as an upmarket hotel operator, has responded to the challenge, rather than ignoring it.

The first Marriott hotel was opened in 1957; today, more than 1 million hotel rooms in 110 countries operate under the Marriott International banner, but within its collection there is a huge range of properties, from flagship luxury hotels to midscale brands, offering options to travelers on a budget. Bill Marriott Snr, who started the company in 1927 from a single root beer stand, had a motto: “Success is never final” and Marriott’s hotel innovation incubator has introduced the concept of apartment living and ‘local experiences’ to some of its hotels in response to the ‘live like a local’ phenomenon pioneered so successfully by Airbnb.

If you are running a successful business, it is tempting to think you don’t need to change anything about your business model. But in today’s fast-moving world, if you wait until you need to change it you will already be too late. The best CEOs anticipate disruption even before it has happened and are not afraid to change their business to adapt to it, however, counter-intuitive that might seem.

There is a well-known saying in the business world: ‘Don’t let a good crisis go to waste’. Rather than fearing radical changes in their market, or macro-economic factors buffeting their business, a good CEO embraces a crisis, seeing it as an opportunity for re-invention.   And if there isn’t a crisis, one can always be created!

The idea of the unicorn was coined in a TechCrunch article in 2013; it referred to tech startups valued at more than $1bn and they numbered around 40 at the time. Their number grew into the hundreds, but then the herd thinned out and people started to ask if it was all a bubble.

I have always thought that a billion dollar valuation is not the most important way of looking at a company. Sure, it’s a huge number and who wouldn’t want to join the Unicorn Club? But valuation isn’t the goal, it’s just a reflection of success. I prefer to look at long-term potential – to guarantee long-term growth, a tech start-up has to define and dominate a product category, not just for a year or two, but for a decade.

To be successful, any business has to ask itself three questions: Do you have a unique selling proposition? Would you leave a hole in the market if you weren’t there? Are you committed to continuous improvement?

The challenge for any Unicorn is that it can be a stock market darling one year, but old news the next. Tech is going beyond data and getting back into the physical world – 3D printers, for example – with new levels of individual creativity, empowerment and innovation. But picking winners and losers is difficult. I am excited by the potential of driverless cars, but no one can guarantee which companies will ultimately dominate this sector.

The capital gap for start-ups remains a challenge; the Silicon Valley culture leads the way, and the UK venture capital and private equity market remains strong, but I am most excited by the growth in Indian venture funding. The potential there is almost limitless.

However, wherever in the world you are starting a business one thing is the same the world over – creating something new does not necessarily happen according to the needs of a five-year fixed investment fund so you need to find backers prepared to think imaginatively and who are in it for the long term.

And, for venture capitalists, one thing is also the same the world over: great people make great businesses. Find great people, support them and empower them and you could find one day the unicorn is no mythical creature; you’ve helped create its modern-day equivalent.