How did they meet up with Nathan? How did they convince him to join them?

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• Joe said you guys quit your jobs as soon as Brian moved up from LA; what was the plan?

Founder-specific info

Brian Chesky

Joe Gebbia - The Airbnb Story

• This is a very useful postmortem.
• They used the media to get the word out and grow, just like Elon Musk.
• They used publicity stunts to get media attention, just like Richard Branson.
• One lesson from this is that they were able to take something that had been done poorly by Craigslist, do it better, and make it into something that lots of people used.

How many of you have one of these? This is a Moleskin. [NW: Confluence is my equivalent.] This is a sketchbook. This is a container for ideas. Keep your hands up. Wow! That's a lot of people. Actually, hold your book up if you have one. Wow. Okay, when I say 'Cue Moleskin', I just need you to do that again. Awesome.

Well, my book is just like yours. My book is full of ideas, it's full of sketches, it's full of stories and inspiration. My book also has blank pages, just like yours. Pages that are waiting for us to fill them with stories and concepts. This book has seen a lot. There are some crazy product and business ideas in here that have never seen the light of day. Today I want to tell you about one that's jumped from these pages into the real world, and the story is Airbnb.

 And it starts here (shows slide), at the Rhode Island School of Design, where I was pursuing a double-major in industrial and graphic design. This Moleskin saw a lot of use. It got a workout. It was at RISD where we learned to solve problems creatively. It was also at RISD where I met this guy. This is Brian Chesky, and we were industrial design students together at RISD. And besides studying the same subject, we had something else in common: we both knew that one day we wanted to be entrepreneurs. So, this feeling was so strong that I actually sat Brian down before we graduated and said, "Brian, I know that one day at some point in the future we're going to start a business together." And Brian looked at me and he kind of laughed it off. But I knew there was some truth to that. So he moved off to Los Angeles, I moved to San Francisco...and I moved here to be an industrial designer, I was working in the city for a book publisher, doing package design for them (NW: So that's where the cereal boxes came from. He had experience doing that kind of thing.). I was living in this great apartment, right in downtown San Francisco. It was spacious, it had lots of light; it was great way to get Brian to move up from Los Angeles to San Francisco. And he did. The minute that he did we both quit our jobs to become entrepreneurs. We let go of the salary, we let go of the paycheck and the benefits, and we took the plunge into the unknown. And there was a problem. The minute he moved up, our rent went up. And suddenly we found ourselves unable to afford our own apartment. We had to think and we had to think fast. It just so happens, that same weekend a design conference was coming to San Francisco that was so big that all the hotels had sold out in the city (NW: So look for situations where the existing supply isn't able to satisfy demand.) So: Cue Moleskin. We started to think creatively about how we could solve our problem of not being able to pay the rent. So we're sketching away in our living room and we're starting to think, "Hmm...man, we've got some extra space here (shows picture)...there's more over there! (shows picture...oh, look at all this extra space! (shows picture). And we started to come up with this idea of, what if we were able to blow up an air mattress, put it in our living room, and rent it out to designers who needed a place to stay for the conference?...We could go so far as to cook them breakfast...By the end of that night we had this concept called "AirBed & Breakfast" (laughter from audience).

So naturally we wanted to list our airbeds somewhere on the internet, and we made the logical next move, we went and we looked at Craigslist. This made sense, right? No! These people are going to be sleeping in our living room! We want to know who they are! So we decided to make our own site. (NW: This doesn't explanation of their motivation doesn't make sense to me. Even with their own site they would need to exchange identifying information with the other party.)

This is the first version of AirBed & Breakfast; we made this in 24 hours.  Image Added We had a site up and we encountered our next problem, which was, "How are people going to find out about AirBed & Breakfast?" So that night before bed, Brian and I, we emailed the top design bloggers that we could think of, and when we woke up the next morning it felt like Christmas. There we were at the top of some of our favorite blogs: SwissMiss, Core77, Unbeige. And suddenly, this idea that we had 48 hours earlier was now live on the internet. And we had people start writing us from around the world who wanted to stay in our living room.

So think for a minute: What type of person do you think would sleep on an airbed in somebody's living room? Probably dudes, probably pretty young, strapped for cash, just out of college? That's what we thought, too. We had three people stay with us, all over the age of 30. We had Kat, Amol, and Michael. Together the three of them helped us solve our problem: we made our rent that month. We made $1,000. They saved our apartment. But they actually did more than that. They shared their stories with us. Amol–Amol was a grad student in India, told us about his amazing thesis project; he was doing artificial intelligence. Kat's a web designer from Boston who gave us tips on how to improve the website. Collectively, the three of them inspired us to make AirBed & Breakfast real. So we added a new teammate. This is Nathan Blochosizk, our third cofounder. We now had design and engineering expertise on a founding team. And together the three of us decided, "Hey, this works for a conference in San Francisco...what if we did this for conferences around the United States? That makes sense...people can share airbeds for conferences." (NW: I'm reminded of Peter Thiel's advice to go after a particular niche and then expand from that.) So we saw that there was a conference coming up in Austin, Texas: every year around March, South by Southwest happens. And every year the same thing happens: hotels sell out, people need a place to stay last-minute, so we thought this was the perfect opportunity to launch the next version of AirBed & Breakfast. One problem: we had 14 days. After a couple of all-nighters, a lot of Redbull, we got the next version of the site up. This was "housing for conferences" Image Added AirBed & Breakfast 2.0. So we used the site ourselves to go to Austin, and we learned two invaluable things that forever changed the company: the first is that it's extremely awkward to exchange money in person. We were having a great experience with our host, and suddenly the conversation turned to, "Where's my money." And we were like, "Agh, gosh, this just feels so wrong." So we started to wonder, what if you could book a room with the simplicity of using your credit card? Just like a hotel–you could book an average person's room just like a hotel room. The second thing we learned is that people want to travel beyond conferences. We were so limited in our scope that we didn't see the bigger picture, and the bigger picture is that people want to travel this way anywhere around the world. And so we revamped the site, AirBed & Breakfast 3.0 launched Image Added in the summer of 2008, and we now had online transactions, and you could book a place anywhere in the world.

We encountered our next problem: How do people find out about AirBed & Breakfast? Well, it just so happens that in the summer of 2008 the press are writing stories about a really big event that's coming up. If you remember back to August of 2008, this was happening (shows a picture of the DNC). The Democratic National Convention in Denver, Colorado. Barack Obama was giving his acceptance speech to 100,000 people, but only 30,000 hotel rooms. The press were having a heydey with this–they said, "Housing panic hits Denver", "Where will they stay?" So we timed our launch just in time for the Democratic National Convention (NW: Good example of piggybacking on national news.) And it worked. It actually felt like the design blogs all over again, except this time it was national. So we went from three guys working out of a living room with no money to...three guys working out of a living room with no money, but we had a ton of press. We thought we made it Image Added (shows graph of site traffic) Look at this! Look at that spike! This is it! Hallelujah! (Clicks to show the rest of the graph, showing a flattening out) Image Added We were wrong. In fact, it was this lull, this time in the history of Airbnb where a lot of people don't know about us...in the startup world they call this the trough of sorrow, where nobody's using your website, and you have to figure out how to get people to actually use it. So when you have a marketplace and nobody is using your marketplace, you have a lot of time on your hands. And that's when we cued Moleskin and we had this crazy late-night brainstorm in the kitchen, where we thought, "What if we were able to give our hosts a gift? Maybe a breakfast that they could give to their guests?" So we said, "Well, let's give them a breakfast cereal that they can hand off to their guests..." and one thing led to another, and we just started to brainstorm, "What if Obama had his own breakfast cereal?" And we said, "Well, that could actually be kind of funny..." we had this caricature of him, rays of light coming from behind the cereal bowl, and we came up with a really funny name for this breakfast cereal called "Obama O's" (shows a picture). In fact, I brought a box here. So we actually made the cereal from an idea we had in our Moleskin, and we thought, "Man, this design is so cool, we bet people would want to buy this, but how are we going to get the attention of people?" So, we went so far as to create a jingle for the cereal. Do you wanna hear the jingle? (Plays jingle.) So, we're a bipartisan company, if you do an Obama cereal you have to do a McCain cereal, this is during the presidential election, don't forget, so, knowing John McCain was an officer in the Navy, we came up with Cap'n McCain's, "A Maverick in Every Bite". And as you can imagine, we created a jingle for Cap'n McCain's as well. (Plays jingle.) So those are the two jingles. We ended up making 500 of each box, we numbered each one at the top, it was a very limited edition collector's item, and they ended up on CNN. So here we were on CNN doing an interview on breakfast cereal. After that piece went live orders started flying in; we were selling the boxes for $40 a piece. These were very limited-edition collectors items. So we'd have to go to the grocery store and buy hundreds of boxes of cereal at a time. We'd bring 'em back to our kitchen, and we'd actually box every single box of cereal in our kitchen. Meanwhile, Nate's like, "Cereal? Guys, I gotta go back to Boston." The Obama O's went on to be resold on eBay, they went on to be sold on Craigslist for $350, and we ended up selling out of Obama O's, and at $40 a box and 500 boxes, we made over $20,000 from breakfast cereal, and this is how we funded Airbnb in the early days. By selling cereal. The Cap'n McCains, by the way, didn't sell so well, and we ended up eating those for breakfast. But it was this project that got the attention of an incubator program in California called YCombinator. They loved the hustle, they loved the scrappiness that we had, and we applied to the program and we got in. It's harder to get into this program than it is to get into Harvard, so we were very, very fortunate to get into this program. The best part about it was that it brought the team back together. Nate flew back from Boston and for three months he slept on an airbed on the floor of my room. And together the three of us decided: for the next three months, we were going to do whatever it took to make Airbnb a profitable company, and when I say "profitable", what I mean–there's a term called "ramen profitable", where you're making just enough to pay rent and buy ramen. So, in order to reach this goal we drew a graph of what we would need to make, per week, on the site in order to reach ramen profitability. We taped the graph to our bathroom mirror and every morning we looked at it, every night we saw it before we went to bed. And we got back to work. A lot of late hours, working out of the apartment, but we knew that we needed to do something a little bit different. And that's when we cued Moleskin and we started to think creatively about how we could get the site going a little bit more. And one of those ideas was to actually leave our apartment and go out into the world and go meet the people using our website. So we did just that. We traveled all around the country meeting our users, and they gave us some of the best feedback we could ever have gotten. Word started getting out. (NW: was meeting with users a way of helping to get the word out?) People were talking about us. (Shows tweets.) (Quoting a tweet:) "I think airbnb is about to change my life. ha." And then this guy signed up (shows a picture of a listing.) This is David. He lives here in New York City. David is the drummer for Barry Manilow, which means he's on tour quite a bit. He's out of his apartment 2-3 weeks out of every month, and when he's not there he lists it on Airbnb. And this was the first entire apartment we had listed on our site. And so the marketplace started to widen a little bit. We went from airbeds, to private rooms, and now we had entire apartments. And the way you could book this now was very simple, you click the "Book it" button, put in your credit card, you get a reservation. After the stay David leaves a review for you and you leave a review for David. The marketplace continued to expand: we have places in the Hamptons now; we have beautiful places in the heart of Paris, entire apartments; you can even stay in a Frank Lloyd Wright house in Wisconsin, you can actually book this by the night. Before Airbnb it would just be impossible to find this place. (Shows a picture) Another architectural great: the Richard Meier Smith house in Connecticut, now available on Airbnb. (Shows a picture.) The market's expanding: we actually have treehouses on the site. This is Harrison; he built this treehouse for his kids who then went off to school, and suddenly he's like, "Hmm...what can I do with this treehouse?" He discovered Airbnb and listed it. There's now a six-month waitlist if you want to stay in the treehouse. Harrison pays his mortgage every month by renting the treehouse. (Shows a picture.) There's boats on the site–you can stay in boats all around the world. You can stay in a castle. We even have private islands on the site. You can literally book an island for $400 a night. So, did you guys think I can outdo this? (Shows a picture.) You can even book an igloo. So the market's expanding even beyond accommodations, people are listing all types of things, including cars: you can book a Tesla in San Francisco through Airbnb. This is a coworking space; you can actually book an office / coworking space through our site. This is an event space–it's an art gallery in Chicago that you can book by the day. So the marketplace is widening. In fact, just as this (waving around the Moleskin) is a canvas for us to get our ideas down, Airbnb has become a canvas too...(shows a picture) This is what we call the iPhone tent. This is the Apple store in San Francisco...(laughter from the audience)...you can see where this is going...This guy decided he wanted to be first in line, and so he put his tent up on Airbnb and he rented out the extra space in his tent. He got picked up across the internet, and he ended up renting his space and it paid for his iPhone. So what's happened is, we've started with airbeds, and what we've done is we've blossomed into this open marketplace of space, much like eBay did with stuff. (Shows a picture.) This is where we are today. We recently crossed a million nights booked on the site. (Applause.) Thank you. A lot of those nights were right here in New York City. So I asked a firm out in California named ____ to help us do visualizations of Airbnb's story in New York City.

(blah blah)

 So, it's this social connection, connecting with the person and their spaces, it's about real spaces and real people with Airbnb. This is what we never anticipated, but this has been the secret sauce behind Airbnb. I've found a couple other people who feel these sentiments as well. (Shows a tweet.) "Biggest difference between Airbnb and a hotel? I've never wanted to leave a thank-you gift in a hotel." (Shows a tweet.) "I have the sweetest couple from Germany staying with me tonight through airbnb!" (Shows a tweet.) "Airbnb is probably the greatest thing since sliced bread, this is going to change the way people travel" 

(blah blah blah) 

• https://www.producthunt.com/podcasts/how-i-built-this-airbnb-joe-gebbia

Nathan Blecharczyk

• 2013 - YC - Nate Blecharczyk at Startup School 2013