History of Airbnb: From Selling Cereals to a Billion-Dollar Company

Airbnb’s story is all those things you attribute to life. There is determination, persistence, hard work and hustle in Airbnb story. The key to building any business is finding the problem and solving it, same is the case with Airbnb. Airbnb fought against all the odds to remain relevant in the market. Here presenting you the history of Airbnb.

Airbnb Logo

How Airbnb was Started?

A history of Airbnb summed up in a brief. Brian Chesky, Joe Gebbia, and Nathan Blecharczyk started Airbnb when they couldn’t afford the rent of their flat. The rent of the room increased by 25 percent and that’s when Nathan decided he would leave the room.

Founder of Airbnb
Airbnb founders Joe Gebbia, Nathan Blecharczyk, and Brian Chesky.

Joe Gebbia called his friend Brian Chesky from Los Angeles to stay with him in San Francisco. Brain quit his job and came to San Francisco to be an entrepreneur.

The rent of the room was high and Brian had already quit his job, so he did not have money to pay the rent.  They both were website designers and there was a designer conference looming in the town. So, Brian and Joe decided to rent one of their rooms to cover the rent.

Brian did not have a bed for the room but he had an air bed, so they named their services air bed-and-breakfast. They built the site and advertise about it in the local newspaper, from which they got three customers. Brian and Joe attended the conference with the customers and also showed them the city. They got around $1500 dollar which was enough to pay their rent.

Finding Opportunity in Problem

At this stage also, Air bed-and-breakfast was just a problem solver for them.  In January 2008, Nathan also quit his job and three of them decided to start a business together.

When Brian and Joe told Nathan what happened in October 2007, he realized the concept could work. They realized there may be another situation and people who are in need of similar services, so they decided to launch their business as Air bed-and-breakfast.

Air Bed-and-Breakfast

Brian and Joe, both website designer built the site in two weeks and the business was set to go on the floor. That was how Airbnb was Started and now it is one of the most popular unicorn startups.

Early Years of Airbnb

Airbnb’s story in the early years is facing a problem and learning from it. In the early days, the payment could not be done via a website. They realized that if the payment was taken care of in advance then the host will have no problem or second thought about providing top-class hospitality experience.

Air Bed-and-Breakfast

The air bed-and-breakfast service was at first available to only those people who used to come to the city to attend events. Afterward, people who were just coming to the city also asked if they could use Airbnb, but the founder did not allow. If the hosts know for what reason you are in the city then trust can be built between the customer and the host.

A frequent request from the customer prompted the founders into thinking, how cool would it be if you can book a house the way you book a hotel. They created a mechanism where people could book a house in 3 clicks. First, you search the area, find a suitable house for you and book it. 3 clicks to book it, they started building the system in the summer of 2008.

Building a Website

In the summer of 2008, Brian and Joe built the site to book house in just 3 clicks. They were looking for the perfect event to launch the site and they found out that Democratic National Convention. It was going to take place at Denver in August 2008 where Barack Obama was going to receive the Democratic party’s nomination for the presidency.

Website

It was going to be a historic event so they had upgraded the venue to a stadium that holds 80000 people. This event seems the perfect launch for their website. They started their research about the hotel in the area and their capacity. There were only 17000 hotel rooms in that area, so they knew right away that there was going to be a problem.

People who wanted to come to the event needed alternative places to stay as the hotel rooms in the city were not adequate enough to occupy all the people. They built this website in three months and launched it two weeks before the event.

Many locals were looking to go out of the town to earn money so they registered their properties on Airbnb. They were lucky in that regard, about 800 properties were listed on the site within one week of launch.

Launching the Website through an Event

In the meantime, the news of many people wanting to go to an event but not having places to stay started floating in the newspapers and television. So the founders of Airbnb wrote to the local newspaper that they have 800 Places up for grabs right now on their website.

Event

Many newspapers picked their story and by the end of the week, most popular news portal CNN International picked too. CNN did the video interview with Air bed-and-breakfast founders and suddenly everyone across the nations knew about this new concept.

Air bed-and-breakfast got everything you want while launching your company but this was just the beginning for them. Everything has a lifecycle and so does a startup company. The beginning was great but after one week no one cared for them. This was a tough period for the company as nothing was going their way but they had to keep looking forward.

Be a Cereal Entrepreneur

They had run out of money and they had to find out ways to finance their company. Till that time, they had done a lot of air and bed but not much of breakfast. The presidential election was near and they needed the income to run their business. So, they decided to sell presidential themed cereal Obama Owes and Captain McCain’s.

Cereal Boxes

The idea was that they create an all original art designed boxes of two presidential candidates. They bought the cereal from the supermarket and re-stuffed that cereal into their box.

During the time of the convention, they had created relationships with many political reporters, so they thought of using them to generate press. They mailed these reporters with 100 boxes of cereal because if they only sent the mail, they would probably not look into it.

Their idea worked and the reporters called them about this project and for the second time they were on CNN doing an interview.

Funding Struggles

Selling cereals is not the ideal way to fund your hospitality service brokerage company i.e. Air bed-and-breakfast. But selling cereals was necessary for the company as they did not get the funds from traditional fund-raising campaigns.

They visited many angel investors and venture capitalist without any luck. During one meeting with the investors, the investors got up suddenly during the pitch and left the place leaving Brian, Joe and Nathan Shocked.

No investor was ready to fund their concept and the recession of 2009 made it difficult for them to get investment. There was talk going on the town about saving capital during the recession so nobody was interested to fund their startup.

Y Combinator- The Change of Fortunes

It had already been a year and the company had not shown any sign of growth. The founders were thinking of quitting as they were only earning $200 per weeks but one of their advisors advised them to apply for Y Combinator. Y Combinator is an accelerator program run by Paul Graham and their advisor also had gone to the program.

Airbnb in Y Combinator

Brian, Joe, and Nathan decided that they would give their absolute best so that they don’t have regret later on about not trying 100 percent. They applied for Y Combinator and were lucky enough to get an interview.

The interview duration is usually 5 minutes and onto 2 minutes of interview Paul Graham. The guy who runs Y Combinator was trying to convince them to do something else. As the interview got over, they knew it was not going to work out for them. So, when they were leaving the room, one of the co-founder Joe pulled out a box of cereal and gave it to Paul Grahams.

Paul Grahams asked what was it and they told their story behind it. He was particularly impressed with their attitude of being scrappy and creative enough to survive. Paul invited them into the program after he was impressed with their story of cereal.

Reaching out to Hosts

Paul Grahams played a pivotal role in the growth of Airbnb. He advised them to reach out to their users and see what can be done to make service experience better. The majority of their users were in New York. They decided to pay them the visit to see how they used to operate. There were only 25 users so it was not a hard task to meet them.

One thing the founders noticed was that the photo of the apartment used by the host was not up to the standards. The photos were dark and people would find difficult to judge if it was a good place to stay.

 Hosting and partners

So, they came up with the idea of clicking a photo of the apartment themselves and posting it on the websites. They called the host of the property and offered to click the photo of the apartment. At that time a professional photographer clicks for free to post on the website. As it was free service the hosts agreed to it.

 Apartment Photos

Brian and Joe, co-founder of the company rented the camera and went door to door of the host to click photos. They told the host their story which helped them to built trust with them.

Later they would call the hosts to change the description of the apartment, reconsider the price of the property and the hosts would agree to it. Hosts wanted them to succeed after hearing their stories. The visit helped them to gain the trust of the hosts. So, it was stepping in the right direction.

Serving 7 Million Customer in a Year

The result of taking quality photos, lowering the prices, improving the profile description and getting the hosts to cooperate with the company was a quality product at the hand of Airbnb.

Guests from around the world started booking the properties in New York, the hosts started earning money. The family and friends of the hosts were also impressed with the model and they also started adding the property on the site. Sometimes the guests also would go on to list the property on the website. So, Airbnb was finally growing and starting to generate revenue.

How it is emerging?

Properties started popping up in Berlin, Barcelona, and Hongkong all around the world. Suddenly there were a lot more places you could go to.

It took Airbnb 4 years to get the first 4 million guests but in 2013 alone Airbnb served 7 million additional guests.

Present Situation of the company

Air bed-and-breakfast later renamed as Airbnb is an American online marketplace and hospitality service brokerage company. It is based in San Francisco, California, United States.

Customers can book the house and can use the service to arrange or offer lodging, primarily homestays, or tourism experiences. The company does not own any of the real states instead it serves as a medium. It collaborates hosts of the property and customers who want to stay there.

Airbnb has now over 2 million property listed on its websites from 190 countries and 34000 cities. Up to now, Airbnb hosts have hosted over 40 million guests. The company is one of the popular unicorn startups with an estimated worth of 25.5 billion. It’s quite a great achievement for a company that once sold cereal to survive.

Tell Us What You Think

As the world is moving towards the advancement of the digital age. Travelling & tours are some of the major people recreation and refreshment activities. People can just explore the place virtually and book accommodation in just a few clicks. Airbnb has huge potential in the tourism industry in the upcoming days though it has many competitors. You can tell us what you think about our article. If you think we missed something on the Airbnb Story then tell us in the comment section. We are looking forward to your feedback.

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