The below tweet intrigued me to learn what Airbnb is doing differently.
I had read stories about how Brian Chesky went to their initial partners in New York and took photographs to jazz up their listings on the Airbnb site. Apart from that and using Airbnb a couple of times, I did not know much about the company.
On a side note, Airbnb has confidentially filed for IPO with SEC.
I read a comment somewhere about how Airbnb founders sold Cereal to fund their business in the early stages of the company. This story intrigued me more!
The podcast episode was fun to listen, and there were so many interesting stories shared by Brian Chesky and Joe Gebbia. The music and the pace of "How I built this" makes the series fun a little less intense. You don't feel like sitting with a pen and paper while listening to the podcast. You want to hear and absorb as much as you can.
A chance encounter led to Brian, letting a stranger sleep in the living room of their flat on an Airbed. Though he felt a tad bit scared, he latched onto the idea that he could use the extra space in their flat to let strangers stay. The motivation was to make money to pay the rent, which was increased by 25% the second month of them living in their apartment!
They started by targeting the designers who were going to attend an International conference in SF. All the hotel rooms were booked, so there were takers for $80 per day stay in a fellow designer's apartment. It turns out people were sending their resumes to let Brian and Joe decide who can fill in the limited three slots.
They found the early adopters who did not find living in a stranger's place creepy. The initial success encouraged them to target the attendees of the SXSW conference. They found a lot of people listing their houses before the conference. The success though was heavily reliant on the conference, and the numbers when there was no conference was disappointing.
The first three users of Airbnb who had lived with Brian and Joe were asking if they had listings in the places they were travelling to. This incident opened up the idea of expanding the scope to travel. And then they switched it to a travel site. At the same time, they realised that people found exchanging money inside their homes weird. To make it easier, they allowed people to pay online on their sites and rather serendipitously bumped into a business model. They were now taking a commission for every booking.
In the beginning, they were maxing out their credit cards as they had not found the elusive product-market fit. It turns out there is a phrase for this stage of Startups, and it's called Trough of Sorrow.
It's this little long period where you don't have product Market fit in in the data or the analytics it looks like the Midwest of analytics because it's perfectly flat there's zero growth and in this is when people tend to quit.
To fund their Startup, they also sold Cereal during Obama and Mccain's campaign. They purchased Cereal from the local stores and made boxes with the help of an illustrator friend. The illustrator agreed to make 500 boxes of each variant (Obama & Mccain), and this led to Brian, making them a limited edition Cereal. They sold it for $400 per box and making a neat $20,000. The money was enough to cover their credit card bills.
On a fateful day, when they did not have enough to survive, they were having dinner with their existing investors. They were recommended to join the incubator program called YCombinator. They realised that the last date of the application was the previous night. To their luck on their investors called up Paul Graham and asked if they could still apply. Paul, to his credit, allowed them time until midnight to apply. They had two hours. They rushed back and applied and started preparing for the interview.
The first question in the YC interview by Paul Graham was "Do people pay for this?". It went downhill from there. However, Brian went back into the room to gift Paul Graham a box of Cereals they had made. Paul was intrigued and asked where they got this box. Brian explained their hustle in 60 seconds. Impressed by it, Paul called them later and included them in the incubation program!
This story is the second time I am seeing Paul Graham giving entrepreneurs a chance; not for their idea but for their hustle and desire of making it big. Reddit founders told the same story.
Brian saw a listing on their website for a 5-acre island in Fiji, and that made him realise that Airbnb had made it big and captured the imagination of the world. Back when the podcast was aired, Airbnb was valued at more than $20 Billion. In April 2020 they were valued at $30 billion.
Irrespective of how the IPO goes and how they come back in the post COVID world; what started as a way to let people rent out the extra space in their homes has now made a dent in the world.