The story of Airbnb is packed with key lessons on building a successful startup. Let’s dive into the pivotal moments and turning points that transformed this seemingly impossible dream into a billion-dollar company.
The idea for Airbnb started in 2007. Co-founders Brian Chesky and Joe Gebbia were roommates, and they couldn’t afford to pay their rent in San Francisco. So, they had the idea of making money by renting out an air mattress in their apartment to people attending a design conference that was taking place nearby. Here’s the actual email that started it all:
They spun up a quick website, called airbedandbreakfast.com, bought a few air mattresses, and recruited their old roommate Nathan Blecharczyk to join them. Together, they became three co-founders. Airbnb was born.
These early days for Airbnb were rough. They tried and failed four times to get their idea off the ground. Barely anyone would sign up. Their fourth attempt was during the 2008 Democratic National Convention in Denver. That weekend they got eighty bookings and thought they’d finally made it, but then the next weekend they only got two bookings, and the week after they got none.
Their idea was dying and they were broke, so they had to pivot. Since the air beds weren't selling, they decided to focus more on the ‘breakfast’ part.
They custom-designed Obama and McCain-themed breakfast cereals. They glued 1,000 of them together by hand and made $30,000 from that to keep their company afloat. Brian jokes that they were ‘cereal entrepreneurs’ back then.
Throughout 2008, they tried to raise money and approached more than a dozen investors, but they were turned down by all of them. Back then, the idea of renting out your home to strangers was crazy!
The one investor who finally took a chance on them was Paul Graham at Y Combinator. It wasn’t the idea itself that got them into YC, but rather their resilience, grit, and hustle as entrepreneurs. It’s written that Paul said to them “You guys are like cockroaches. You just won’t die”... and he also said, “If you can figure out how to get people to pay $40 for a $4 box of cereal, then maybe, just maybe, you can figure out how to get strangers to live with each other.”
On day one of YC, Brain said he received the best piece of advice he’s ever gotten, which is: it's better to have 100 customers that deeply love you, rather than a million people that kind of like you.
“Most founders focus on scale, but if you focus on value instead, you can build a perfect customer experience, and then your customers become your own marketing department and you start growing through word of mouth.” - Brian Chesky
They fully embraced this approach and visited all of their hosts in New York to personally stay with them, write reviews, and professionally photograph their places. That’s how Airbnb took off. With this approach, they managed to achieve in 10 years the same amount of growth that took Hilton over 100 years to achieve.
By 2011, just four years after their first ever air mattress guests, Airbnb was in 89 countries and had gotten 1 million bookings. That same year, Airbnb was valued at over $1 billion.
The rest is history.
Looking for a quick summary? Here are the highlights:
1️⃣ September 2007 - Brian Chesky and Joe Gebbia had the idea to rent out their air mattresses to help cover their rent.
2️⃣ March 2008 - Nathan Blecharczyk joined Brian and Joe as their third co-founder and CTO.
3️⃣ August 2008 - They failed at their fourth attempt to launch their website and raise funds. They pivoted to selling Obama and McCain-themed breakfast cereals instead.
4️⃣ January 2009 - They got into Y Combinator and pivoted back to hospitality.
5️⃣ April 2009 - They raised their Seed round from Alfred Lin at Sequoia Capital.
6️⃣ February 2011 - Airbnb was in 89 countries, and they got their 1 millionth booking.
7️⃣ December 2020 - Airbnb went public.
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