Strategy question
How would you improve the user activation rate of Airbnb? Feel free to assume What you consider to be activation.
- Airbnb
- Strategy
- Medium
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What this question tests
Tests product strategy for growth: defining a clear activation metric for a two-sided marketplace and proposing prioritized levers to move it.
How to approach it
- Define activation explicitly, since the question invites it: a guest completing their first booking within 30 days of signing up is a reasonable definition.
- Segment the funnel: signup, search, listing view, booking initiated, booking completed, and find where the biggest drop-off is.
- Hypothesize causes at the biggest drop point, such as trust concerns (no reviews yet), price sensitivity, or too few relevant listings in the user's area.
- Propose levers: a first-booking discount, better search relevance for new users, and trust signals like verified host badges shown earlier in the funnel.
- Prioritize by expected impact and effort, likely trust signals and search relevance first since they address root cause rather than just incentivizing with a discount.
- Define success: percentage of new signups completing a first booking within 30 days, with a target lift stated as an illustrative assumption.
What a strong answer includes
- Defines activation concretely as a first completed booking, not just a signup or search, since a search-only definition would overstate success.
- Grounds the fix in where the funnel actually breaks (for example trust or listing relevance) rather than defaulting straight to a discount.
- Distinguishes a short-term lever (discount) from a structural fix (trust signals, better matching), and explains why the structural fix compounds better.
- Sets a measurable target for the metric with a clearly labeled illustrative number.
Common mistakes
- Jumping straight to 'offer a discount' without diagnosing where users actually drop off.
- Leaving activation undefined and answering a vague version of the question.
Likely follow-up questions
- How would you know if the discount is buying one-time bookers rather than real activation?
- How would activation differ for a guest booking in a major city versus a rural area?
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More questions from Airbnb
Learn the skill behind it
Chapters of the AI PM course that teach what this question tests.
- Chapter 4: Discovery and strategy for AI products
- Chapter 9: Prove it paid off: outcomes, economics, and pricing
- Chapter 14: Get the job: the AI PM interview loop