Airbnb: The concept nobody believed in

Would you invest in a tiny startup based on travelers being willing to pay for a night’s sleep on an air mattress in the living room of a complete stranger? Back in 2007, the two college buddies Brian Chesky and Joe Gebbia got rejected from every investor they invited to join their “AirBed & Breakfast” project. But that wasn’t enough to make the two broke roommates give up. Here are five fun facts about how their little startup made its first steps on its way into a community of four millions hosts in 100 000 cities all over the world.

#1: They could hardly pay their rent

As Brian and Joe struggled to pay rent in San Francisco, they looked for easy ways to make some extra bucks. A big design conference was coming to town, and hotel rooms were in short supply. That’s when they bought three air mattresses and set up a simple website: airbedandbreakfast.com. Three guests showed up, paid 80 dollars each, and they saw it as proof of concept. This could really work!

^{The adventure of Airbnb started here at 19 Rausch Street in San Fransico - you can see the façade at the top of the page. It was here that Brian Chesky and Joe Gebbia rented out three air mattresses in their apartment in October 2007, to earn some extra cash. Thus, the idea was born. Photo: Airbnb}

#2: They went four months in the wrong direction

The first iteration of their business idea, was one they would soon abandon. In SF, rent is expensive, and people need someone to share their rental flats with. So Brian and Joe started working on a roommate-matching service with their old roommate Nathan Blecharczyk. The duo spent four months trying to figure out how to make it simple for people to find the right roommates, only to realize that roommates.com was already taken.

#3: All the investors turned them down

They went back to their original idea and launched it again just in time to book attendees for the big design conference in Texas in 2008. It didn’t fly: They only had two customers, and Brian was one of them. They reworked the concept again, and presented it for 15 private investors – hoping they would see the potential, despite the lack of traction. Eight investors said no straight away. The other seven didn’t even bother coming back with an answer.

#4: They sold cereal boxes to fund the idea

The 2008 Democratic National Convention resulted in a hotel room shortage in Denver, and they went at it again. This time with a plan B: They made custom Obama and McCain cereal boxes for supporters of the two presidential candidates, and sold them for $40 bucks on the streets. Each box had a limited edition number, and information about Air Bed & Breakfast printed on the side. They earned $30 000, and made one single investor notice.

#5: A startup accelerator made them fly

Paul Graham was the venture capital guy who believed in their idea, and invited the young founders to join Y Combinator – an accelerator that provided capital and training in exchange for a part ownership. They dropped the air bed-part of their name, and went with just «Airbnb». They also visited all their hosts in New York personally, photographed their places and wrote reviews, to make the places shine. It worked.

^{Brian Chesky graduated as an industrial designer in 2004 and was broke by 2007. Today he is a billionaire who has become a controversial leading star in the tourism industry. Here he is interviewed by Bloomberg together with former Minister of Trade Penny Pritzker. Photo: Global Entrepreneurship Summit/Public domain}

At BI, we believe that you can make your passion and your best ideas into your very own business.

The Airbnb story is one of many startup stories about struggle and roadblocks. But the founders believed in what they had, and finally, in April 2009, the first seed investment came in the form of $600 000. Two years later, Airbnb was in 89 countries and saw Silicon Valley’s biggest venture capital players put $112 million into the project.

Today, Airbnb is the dominating company for traveler accommodation – despite having to fight legal battles and strong regulations from big cities trying to protect their hotel businesses. But during the pandemic, Airbnb has been able to stay afloat in a way no one believed when the entire travel industry took huge blows. The secret? A totally different approach, focusing more on the hosts than the guests.

^{Graphic design is a very important part of the Airbnb universe, which was started by two industrial designers - here is Brian Chesky on stage. The logo has even been given its own name - Bélo - and symbolises belonging by combining the outline of a heart, a head, and a position needle. Photo: Airbnb}

– What is truly special about Airbnb is the everyday people who host their homes and offer experiences, Brian Chesky wrote in an open letter in February 2021 – two months after the company went public. He made it clear that Airbnb isn’t about beds, but about belonging.

– People are feeling increasingly disconnected in the world, and loneliness is pervading our society. The opposite of loneliness is belonging — the feeling of deep and genuine connection to a person, a place, or community. It’s the feeling of being “at home", Chesky wrote.

In the hopefully last stretch of the pandemic, in June 2021, Airbnb is seeing a surge of bookings from people tired of staying at home. And this time around, people are spending 20-30% more per night than before the pandemic hit. People are obviously starving for new places and new experiences. And there to serve them all the opportunities, are three old roommates who never stopped believing they had a good idea.