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"No organization \u2014 other than perhaps the U.S. government \u2014 has been on more of an emotional rollercoaster this week than Airbnb.\nIt was just four days ago when the popular \"marketplace for spaces\" announced that it had raised $112 million in funding from Andreessen Horowitz, DST Global, General Catalyst and Amazon founder Jeff Bezos. The infusion of cash valued the once-struggling company at an impressive $1.3 billion.\nJust two days later however, Airbnb's world came crashing down. The gut-wrenching story of an Airbnb user whose place was robbed, ransacked and destroyed began making headlines, resulting in a surge of negative attention that questioned the company's viability as a business.\nThe user, a San Francisco resident known as \"EJ,\" wrote about the incident in late June. Here's an excerpt from her post:\n\"They smashed a hole through a locked closet door, and found the passport, cash, credit card and grandmother's jewelry I had hidden inside. They took my camera, my iPod, an old laptop, and my external backup drive filled with photos, journals... my entire life. They found my birth certificate and social security card, which I believe they photocopied - using the printer/copier I kindly left out for my guests\u2019 use. They rifled through all my drawers, wore my shoes and clothes, and left my clothing crumpled up in a pile of wet, mildewing towels on the closet floor. They found my coupons for Bed Bath &amp; Beyond and used the discount, along with my Mastercard, to shop online.  Despite the heat wave, they used my fireplace and multiple Duraflame logs to reduce mounds of stuff (my stuff??) to ash \u2013 including, I believe, the missing set of guest sheets I left carefully folded for their comfort. Yet they were stupid and careless enough to leave the flue closed; dirty gray ash now covered every surface inside.\"\nAirbnb Responds\nThat same night Airbnb responded, saying that it was in close contact with the host. In addition, Airbnb CEO Brian Cheskey outlined the steps his company has historically taken to protect the safety and security of its users, along with a series of changes it is implementing to improve safety. These changes include doubling the size of the company's customer support staff, offering new insurance options to hosts and creating a new Trust &amp; Safety Department. (Twitter has a T&amp;S Department, led by Del Harvey.)\nHere's what Chesky said on Wednesday:\n\"As soon as we learned what had taken place, 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. Because Airbnb facilitates the reservation details and payment information, we were in a unique position to assist with the investigation. While we are not at liberty to discuss the details during the investigation, we understand that with our help, a suspect is now in custody, and our information will now become important evidence.\"\n\"EJ\" Responds\nThis is when things took a turn for the worse for Airbnb. After the company's blog post, EJ responded, complaining that Airbnb had twisted the truth and was attempting to silence her story.\nHere are some of the most damning parts of her response:\n\"On June 29 I posted my story, and June 30 thus marks the last day I heard from the customer service team regarding my situation. In fact, my appointed 'liaison' from Airbnb stopped contacting me altogether just three days after I reported the crime, on June 25, for reasons that are unknown to me. I have heard nothing from her since.\"\n\"And since June 30? On this same day, I received a personal call from one of the co-founders of Airbnb. We had a lengthy conversation, in which he indicated having knowledge of the (previously mentioned) person who had been apprehended by the police, but that he could not discuss the details or these previous cases with me, as the investigation was ongoing. He then addressed his concerns about my blog post, and the potentially negative impact it could have on his company\u2019s growth and current round of funding. During this call and in messages thereafter, he requested that I shut down the blog altogether or limit its access, and a few weeks later, suggested that I update the blog with a 'twist' of good news so as to 'complete[s] the story.'\"\n\"I am not clear here if Chesky is trying to convey the message that Airbnb was involved in securing my safety, but the company was not. My safety was secured by my own efforts.\"\n\"The positive contribution mentioned in this statement might very well refer to the criminal investigation and communication with police; I can\u2019t know for sure. But the staff at Airbnb has not made a positive contribution to me personally or my situation in any way, particularly since June 30.\"\n\"And for those who have so generously suggested a donation fund be set up to help me recover, I thank you from the bottom of my heart, and suggest that instead, you keep the money and use it to book yourself into a nice, safe hotel room the next time you travel. You\u2019ll be glad you did.\"\nOuch.\nPaul Graham Chimes In\nThe story doesn't end there, though. One of Airbnb's earliest investors, Y Combinator partner Paul Graham, has chimed in, claiming that Airbnb has indeed offered to compensate her for damages, despite previous reports:\n\n\"I've just learned more about this situation, and it turns out Airbnb has been offering to fix it, from the very beginning. From the beginning they offered to pay to get her a new place and new stuff, and do whatever else she wanted.\nThe story [TechCrunch founder Mike] Arrington wrote yesterday about Airbnb not offering to help was bullshit. He asked a company spokesman what Airbnb was doing to help her. The spokesman, who'd been told by their lawyers that he couldn't go into detail about that because of the precedent said 'I can't comment on that.' So Arrington, in typical Arrington fashion said, 'Well, unless you tell me I'm going to write that you're not willing to do anything for her.' And he did. Really not cool.\nI've talked to the Airbnb guys and they are already doing everything they could be doing to help this woman.\nEven if you don't believe they are nice guys (which they are, among the nicest of all the people we've funded), do you really think they are so dumb that they don't realize it's not worth the bad PR to save money and effort in this situation?\" he wrote.\n\nHere's the big question: If Airbnb is doing everything in its power to help the victim of this incident, why is she still complaining? We don't know the answer. There are still a lot of unanswered questions that are making this situation murkier.\nStartup Damage Control: 5 Painful Lessons\n\n\nWhile we believe this incident will continue to play out over the next week (or longer), there are several lessons all entrepreneurs should learn from Airbnb's mistakes. This is not just a painful learning moment for Airbnb, but for all entrepreneurs that will experience a crisis of this magnitude at some point in their startup careers.\n\n1) Don't let the past come to haunt you. The incident happened at the end of June. Had Airbnb gone public with the incident and used it as an opportunity to teach its users better ways to keep themselves safe, the company wouldn't be in the position it is in today.\n2) Don't make claims you can't back up with certainty. CEO Brian Chesky said Airbnb \"has been in close contact\" with EJ since the incident, but according to EJ, he's simply not telling the truth. If it's true that Airbnb cut off contact after she put up her blog post, it's a damning portrait of Airbnb's values. Chesky should never have talked about the incident without verifying every detail of Airbnb's interaction with the victim. Better yet, the company should have talked with the victim before issuing a statement that utterly backfired.\n3) Treat the customer as sacred, even when you're angry with the customer. Cutting off contact was clearly the wrong move (if true). While we don't know what kind of overtures Airbnb made to the victim, it seems clear it needed to do more to appease her. A blog post where EJ wrote about meeting with the Airbnb team and getting financial and moral support from them would have changed everything.\n4) Serve the customer, not your own interests. The greatest mistake Airbnb made in this incident was reportedly asking EJ to change her blog post or take it down. That approach is certain to backfire, as it did with Airbnb. Focus entirely on the customer's concerns during a crisis and disregard self-interest. The first thing on Airbnb's mind should have been helping the customer, not containing the potential damage. If you go above and beyond the call of duty, the customer will reward you. If you don't, the customer will punish you 10 times harder.\n5) Be in constant communication with the customer. EJ emphasized how \"wonderful\" the customer service team was to her in her original blog post. In her second post, she accused the company of delivering a veiled threat to her. You can't predict how customers will react at any stage of a crisis, so have a plan for multiple contingencies and stay in constant communication with affected customers so they aren't surprised by any public statements you make.\n6) Set the record straight. Customers lie. Companies lie. Victims lie. Reporters lie. There are so many conflicting points of view in a crisis that the truth can be hard to discern. Provide every detail you can to your customers, and come clean about all of your mistakes (an FAQ is a great format). Nothing short of this will clear the air.\n\nImage courtesy of Flickr, phatcontroller"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2011/07/29/airbnb-pr-crisis/>