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April 8 - June 5, 2018
Chesky had walked up to one of the designers he’d most revered to tell him about this new business idea, only to have him immediately dismiss it as ridiculous (“I hope that’s not the only idea you’re working on” were his words).
“The problem with a book,” he says, clearly having given it some thought, “is that it’s a fixed imprint of a company at a particular moment in time.” I wasn’t sure where he was going, so I asked him to elaborate. “I’m thirty-four,” he continued. “Our company is young.
“Where everyone thinks Airbnb is today,” he said, “is where we were two years ago.”
I made a mental list of all the other companies that already existed that offered the ability to rent someone’s home or space in it: HomeAway, VRBO, Couchsurfing, BedandBreakfast.com. I wondered how this new company could be so different. What is it about these tech start-ups, I remember grousing to a colleague, that think they can take an old, unoriginal idea; gloss it up with a slick, minimalist, design-friendly website; and re-release it back onto the marketplace as something new?
Yet the company still has low awareness and low penetration in the housing market. Analysts predict it will get many times larger than it is today.
The average U.S. host made around $6,000 a year in 2015,
Chesky likes to point out that the only person who didn’t tell him Airbnb was a horrible idea in the beginning was his grandfather, who, when he heard what his grandson was up to, just nodded and said, “Oh, of course. That’s how we used to travel.”
“One of the signature elements of the sharing economy is that the ideas themselves are not new,”
What is new, though, and what Airbnb specifically has done, is to toss aside the barriers and build an easy, friendly, accessible platform inviting anyone to do
(Many people suggest that Airbnb is not a technology company, since it traffics in homes and spaces, but it has one of the most sophisticated back-end engineering infrastructures in Silicon Valley.)
One of the unique aspects of the company’s rise is the sheer lack of corporate experience that its founders had when they started out—and the sped-up time frame in which Chesky, Gebbia, and Nathan Blecharczyk (whom Chesky and Gebbia pulled in after that first weekend as their third and technical cofounder) had to learn to become leaders.
He looked at me very seriously, gestured toward the slide deck he had just showed me, and said, “I hope that soon this will be the ‘old’ Airbnb.”
Gebbia was in the fourth year of a five-year dual degree in industrial and graphic design, and Chesky had just graduated—were part of a RISD-sponsored research project with the Conair Corporation, the company best known for its hair dryers and other personal-care products. Companies would often partner with RISD for access to its industrial-design students. Under this particular program, Conair had hired the school, which assigned a group of students to essentially work solely on designing products for the company over the course of six weeks. Most of the work would take place on the RISD
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“There’s something I need to tell you,” he said. “We’re going to start a company one day, and they’re going to write a book about it.”
Chesky started pitching Gebbia on—of all things—letting him rent his sofa three days a week so he could commute and essentially live in both places.
Chesky said a quick goodbye to his life in Los Angeles—he broke up with his girlfriend, delivered the news to his housemates, left his apartment and most of his possessions, and set off for San Francisco in his Honda late on a Tuesday night.
“It was a hack on both our sides,” he says. “I was trying to hack and go to the conference, and they were trying to hack and make rent. It was, like, a perfect match.”
Chesky managed to edge into a crowd surrounding a well-known designer he’d looked up to for years. He introduced himself and told him about their new concept. The designer was not impressed. “Brian,” he said, “I hope that’s not the only thing you’re working on.”
“If you launch and no one notices, you can keep launching. We kept launching, and people kept writing about it. We thought we’d just keep launching until we got customers.”)
Seibel told them he’d help give them counsel, and as they began to devise something more tangible, he could maybe introduce them to some angels. Chesky had no idea what he was talking about (“I’m, like, ‘Oh my god, this guy believes in angels. What the hell?’”
“He [Seibel] just kept us in check,” Gebbia says. “Whenever we went off the guardrails, he’d be, like, ‘Guys, what are you doing? Back this way.’ ” They called him their “godfounder.”
instead of targeting sold-out conferences, it would be a website where booking a room in someone’s home would be as easy as booking a hotel.
One investor they met with at the University Café in Palo Alto simply got up with no warning and walked out halfway through the meeting, leaving his half-full smoothie on the table. Gebbia and Chesky took a photo of the smoothie.
It should be said that at this point the founders were looking for someone to buy 10 percent of their company for $150,000, valuing the company at $1.5 million. Under certain scenarios, that $150,000 could have been worth a few billion dollars today. But at the time, it was a radioactive idea. “No one wanted to touch this,” Chesky says.
The press strategy worked, and things began to happen: eight hundred people listed their rooms, and eighty guests booked.
Chesky and Gebbia retreated into a mode they were familiar with—the creative hustle—and found a RISD alum in Berkeley who had a printing shop.
(And yet even during these difficult times, Chesky was still strategizing. At one point Deb Chesky remembers urging her son to go buy some milk. “No, we’re just going to struggle through,” she says he told him. “It’ll be a better story someday.”)
“People are actually doing this? Why? What’s wrong with them?”
“If you can convince people to pay forty dollars for a four-dollar box of cereal, you can probably convince people to sleep in other people’s airbeds,” he said. “Maybe you can do it.”
After what Chesky would later refer to as an “intervention,” Blecharczyk finally agreed to relocate to San Francisco for three months and moved back into the Rausch Street apartment.
Anyone who was accepted to YC that year was offered the chance to defer and wait for a better investing climate.
“We got office hours with Paul Graham every single week, even though he doesn’t have time to do office hours,”
He also noted that, having seen several hundred start-ups come through the program, he’d observed an interesting pattern: the most successful companies always end up being the ones that participated most eagerly.
These concepts, he said, were “so far out of the thought process of the traditional vacation-rental business, yet it was very clear to me that they solve some if not all of the challenges of bringing together hosts and guests at scale.”
A few weeks later, the Airbnb founders had a term sheet from Sequoia for $585,000. Youniversity invested $30,000, for a total of $615,000. The investments valued the company at $2.4 million.
Chesky’s process could best be described as obsessive, methodical, and interminable. He calls his practice “going to the source”: instead of talking to ten people about a particular topic and then synthesizing all their advice, he reasons, spend half of your time learning who the definitive source is, identifying the one person who can tell you more about that one thing than anyone else—and then go only to that person. “If you pick the right source, you can fast-forward,” he says.
