Nest/Airbnb is a classic win-win

Nest and Airbnb recently announced a partnership by which Airbnb top rated hosts (superhosts) would get a 30% discount on the nest thermostat.

This is a spectacular win-win(-win) kind of deal where each participant in the Neet-Airbnb-Superhost triangle is getting something valuable without paying a heavy price. Let me explain:

Airbnb‘s investment is endorsing Nest and promoting its product to Airbnb’s clientele. Since Nest is a high-end brand and Airbnb doesn’t do such promotions often means they probably won’t alienate their superhosts. On the contrary, superhosts will take more pride in their special status which offers them exclusive discounts. And, by promoting Nest thermostats (considered more user friendly than the majority of competitors), Airbnb is guaranteeing a (literally) warmer experience to lodgers.

Superhosts have to actually buy the Nest thermostat, which is a non negligible cost even after discount. On the upside, they increase the perceived value of their property and increase the amount of satisfied customers, thus solidifying their continued superhost status with its various perks. Three could be other benefits such as energy conservation and easier remote assistance when using the Nest product.

Nest‘s price cut probably means they’re giving up most of their margin. High end smartphones hit a 50-60% profit margin. Nest probably has smaller scale, but I think in many other ways are comparable and I wouldn’t be surprised to find them at the lower end of that range.

Since Nest are only selling to a confined, small group (I’m guessing 10k-100k worldwide) I doubt this will dramatically affect the bottom line.

In return, Nest is strengthening its luxurious high end brand image. Superhosts are selected by customer reviews, meaning that anyone visiting a superhost is likely to have a terrific time. This experience will now tie in to seeing and using the Nest product. Those customers might have their first ever Nest experience in this setting, c reading a great first impression. They may but one for their own home or bee disappointed when they find inferior thermostats in future rentals, thus driving demand up organically.

I love these sort of clever combinations that add up to more of the sum of the parts. Of course, this deal was just announced and I may be totally delusional about how it plays out. If you have thoughts about this or similar examples, shmichael at gmail.