The Story No One Believed – Brian Chesky, Co-Founder and CEO AirBnB

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the first round of financing we did was the visa round well what do I mean by the visa round you know those binders you put baseball cards in but we put credit cards in those I absolutely I actually have a binder with 20 or 30 credit cards Joe and I were in so much debt and by the way I don't know if you have you maybe this is a unique thing to me maybe it's like my own neuroses but like I remember for the first two years we started the company um I would wake up in the morning and I would just have this like kind of panic and maybe it was maybe this binder was part of that panic but it was just like everyone thought it was crazy no one supported us we had no money it was the best weight loss program ever I probably lost 20 pounds and I have any money for food and I would wake up in the middle the morning like my heart pounding I was like how the hell did I get myself in this situation like what am i doing like and over the course of the day I would think I would convince myself that everything's going to work out no no I got a plan it's all good and by the night I would like go to bed really confident I was like no no now things are turning the corner I go to sleep it was like a reset button all signed like and like it would just jolt me out of bed again my heart would start pounding again and it was like Groundhog Day it was like every morning it would be like this and I don't think this binder really helped so you know we launched for the Democratic National Convention so we this is August now 2008 almost a year after we had the original idea we you know we built three versions of the website there's a saying that if you launch no one notices just launch again so we did we launched three versions the website by the third version it was the Democratic National Convention all the hotels in Denver sold out to be this idea what if we you know this we got all these Obama supporters to open up their homes other Obama supporters we launched um and I remember the day we launched we had a meeting with a well-known investor and the site was down I didn't bring a slide deck so that wasn't a super successful pitch it was mostly just me and him staring at each other for an hour um and they did not invest at this moment we had about 20 20 investors had been introduced to Airbnb and I mean any of them probably could have owned 10% of the company for $100,000 because I think a million that I was willing to do 1.5 pre-money valuation is like around funding that was like it just puts things in perspective now just to put in perspective that seems like today a good deal that then know like we were interested twenty investors I think like fifteen of them didn't even reply to my email I remember one of them I was having a I met with him at University Cafe he ordered a smoothie in the middle of the conversation he just kind of gets up and leaves and I thought he had the part like you know I thought it is like his you know as a I figured you know like pretty naturally Oh Joe don't worry he'll be back is a car you know probably need to put more money in the meter and that's the last I've ever seen of him so I don't think he's still trying to figure out where's cars but that was like four years ago so um that was actually not unlike the stories of many of the people that like kind of met with us so you know at this point we were in debt and we had to figure out a way to pay our rent the Democratic National Convention had come we filled up like about IDI people staying with Airbnb and then the week after the convention it was kind of back to zero and I had this revelation of only there were political conventions every week we'd have like an amazing business but now would we do we built this website we'd spending a year on it no one's using it it was a chicken-and-egg problem no one wanted to come to Airbnb and list their homes because there are no travelers no travelers wanted to come to a website where there were no homes and by the way this was like a social experiment right like no one wants to be the first person to try an idea like this right oh and wonders is a good idea you know I'll be the guinea pig no one want to be that person to figure out this was actually a good idea most people thought it was insane and we had no way to get critical mass or network effects so how do you get a network of critical mass in cities all over the world we're in 34,000 cities so one night September 2008 without any money Joe and I are this is another kind of weird turn of the story Joe and I are thinking about how the hell we're going to pay our rent how we're going to get ourselves out of this debt and how we're going to keep the company going and we have this idea we said at the time we were called air bed-and-breakfast so half of our business with basically breakfast if you think about it that way and we're like it would be great if we could provide breakfast to people going to the Democratic National Convention and we're thinking what would a breakfast be like what kind of breakfast we provide for them we're not going to mail people perishable like eggs in the morning what if we have like a branded like cereal cereal something we can mail them and we came up with this idea and the idea we came up with was Obama OS basically Cheerios we call them Obama O's the breakfast of change and we said well for have Obama themes here oh we have to have a John McCain theme Syria as well so we came up with John McCain themed cereal called cap McCain's a maverick and every bite so we designed these boxes of cereal and um we had absolutely no money we figured we can like get General Mills or we can get Kellogg's to actually we licensed it to them they could sell millions of boxes and we'll make hundreds of thousands of dollars and that's how we're going to raise money because no one was going to raise money by the way this is fall 2008 a wonderful time to raise money for an ie idea to rent air beds in your living room when you have zero experience and you don't know what TechCrunch is so we called Kellogg's and General Mills um and probably not to our surprise they just did not pick up and I think they even like called security we called local cereal companies and they said great we're happy to work with you all we need is a non refundable deposit for $250,000 like who's going to print thousands of boxes of cereal so Joe and I were just like hustling around we meet this guy in Berkeley he's an alumni of the Rhode Island school design he's got a print shop not a cereal company he says guys I want to help you I can't print you a hundred thousands boxes of cereal and I don't even have a cereal company by the printer and I'll pin you a thousand boxes basically these die-cut boxes for free and if you succeed you sell these just give me a royalty because he said that he wanted to help a fellow Bruce the alumni and that's when we came we call zero entrepreneurs and um Joe and I literally were assembling these boxes in our kitchen I mean basically had a thousand boxes it's like poster board and we're assembling them with hot glue and by the way they shouldn't call haku they should call it like burn glue because it's hot and I had a perfect one-to-one ratio of burn to box and there were a thousand these boxes and I remember like like we were like gluing always boxes we needn't have we didn't have any cereal so we go to the grocery store to get cereal but we didn't have enough money to buy all the cereal boxes so we would go every night to buy 50 boxes because that's all the money we had and we went to like the really cheap grocery store because that's where you get dollar box of cereal and Joe and I had to be like a spotter because like he was afraid something would happen to him in this grocery store because in a really bad neighborhood and I remember at some point something like dawned on me because I'm in middle of the kitchen I'm assembling cereal boxes I'm like I wonder if Mark Zuckerberg was assembling cereal boxes when they first launched Facebook I don't remember when it which like took off like him one year later assembling cereal I wonder this is a good sign or a bad sign and I thought to all the other entrepreneurs that were in my predicament of one year later assembling cereal for technology company and that's when I kind of worried about our prospects I remember one day my mom called me she's like are you guys a cereal company now and the scary thing wasn't the question but what the answer was because I think technically we were at that point anyways we had this idea we mailed these boxes of cereal to press in a matter of a couple weeks we had a pretty ingenious idea to how to get it out we actually end up selling 30,000 dollars for the cereal boxes and that was our first round of financing so you know this is now a year in no money we told 30,000 boxes of cereal we're like back to broke which is like a great thing for me and then that's when we decided to enter Y Combinator and I remember meeting with Paul Graham and he the first question he asked me is people are doing this like the Airbnb and we go yeah and he goes what's wrong with them and that was the beginning of my interview so I I could kind of tailed and that was like the highlight it kind of went down from there he just halfway through the interview tried to convince us to like start a bank and because he just is always trying to convince you to start a different business than when you tell him and somehow we were going to be the cumbia starts a bank I think that became stripe um but um and so so we're about to leave he thinks this is the worst idea ever and then we handed my box Obama owes and he basically says if you can people to buy a four dollar box here for $40 maybe convince him to stay in other people's rooms and so he led us into Y Combinator

24 thoughts on “The Story No One Believed – Brian Chesky, Co-Founder and CEO AirBnB”

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  2. this psycco talking about airbnb like its sometthing new ??!! and the site is so simple…on the other hand is the only serious site in this category…not to mention airbnb customer service which is a disaster….dude,chill out ,and that aaandd aaaaand ….democratic convention,…ok dude,you are liberal we got it.

  3. AirBnB is a great idea – and it works wonderfully until it doesn't! My recent experience was horrific and it didn't have to be…They just don't have it together enough to do the right thing! I have come to know then as a bottom line type of company!

  4. Became a very difficult startup, but now then it took off, it's really one of the best startup Superstars. Compare it with Snapchat, Uber, Lyft. Airbnb has the most solid business, no serious competition,able to take hotel business piece by piece.

  5. I love the story of how the Jo & Brian funded through the Visa round by selling Obama themed so much cereal, that we've actually just created a video animation of it on our channel!

  6. What did they need so many credit cards for? And what did the 30k they raised go towards? It's a very simple site, what the hell cost so much?

  7. Love hearing about their start! All the guys are such great speakers; very smart. Wish they'd divulge how they kept up with the credit card payment, though :/

  8. Just started a listing with AirBNB.  Love the concept since I have always loved traveling in hostels and loved the homestay when I studied abroad.  Hopefully, it's also a great way to make extra money and meet new people.  Let's do this AirBNB.  It's also an amazing story of perseverance as entrepreneurs.

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