Power Play­ers

How To Sell Ce­real And Be­come A Bil­lion Dol­lar Com­pany

Industry Leaders - - Content Features - By this time, Brian Ch­esky had raked up $30,000 in credit card debt. It came to a point where the bank stopped giv­ing credit cards to him.

This is the story of Brian Ch­esky, a 21st century ‘ce­real’ en­tre­pre­neur. With no in­vestors and thou­sands of dol­lars rak­ing up in credit card debt, the en­tre­pre­neur had to re­sort to sell­ing ce­re­als to keep his com­pany afloat. It took al­most two years be­fore Airbed & Break­fast saw some trac­tion. Air Bed & Break­fast, sounds vaguely fa­mil­iar? To­day, peo­ple all over the world know it as Airbnb. Sit­ting in San Fran­cisco, you can book a hol­i­day home in Kathmandu, Nepal.

Like all good sto­ries, this one starts with the hum­ble beginnings. Grow­ing up in up­state New York, Ch­esky never re­ally thought about be­com­ing an en­tre­pre­neur. His par­ents were both so­cial work­ers, and his fam­ily wasn’t ex­actly

wealthy. His mother would of­ten joke say­ing she chose a job for the love, and made no money. She wanted him to take up a job that gave him money. When Ch­esky said he wanted to go to art school, his mother thought he had cho­sen the one job that will make him even less money than a so­cial worker.

It was at art school that Ch­esky met Airbnb co-founder Joe Geb­bia. Af­ter four years of work­ing as an in­dus­trial de­signer in L.A., Ch­esky quit his job. Many thought he was hav­ing some sort of early life cri­sis. In 2017 in San Fran­cisco, Brian Ch­esky and Joe Geb­bia has just moved from New York. The two young men were un­em­ployed,

and had trou­ble pay­ing their rent and ba­sic ex­penses. They were look­ing for a way to earn a healthy liv­ing, when they no­ticed that all ho­tel rooms in the city were booked, as a lo­cal event at­tracted a lot of visitors.

The two men saw this as an op­por­tu­nity. They bought a few airbeds and put up a side called Air Bed and Break­fast. The idea was to of­fer visitors a place to sleep and break­fast in the morn­ing. The idea suc­ceeded and the duo wel­comed the first Airbnb guests, charg­ing $80 for a night’s stay. Airbnb’s first cus­tomers were a 35-year-old woman from Bos­ton, a 30-year-old man from In­dia, and a 45-year-old fa­ther of five from Utah.

Soon af­ter, Har­vard grad­u­ate Nathan Blechar­czyk joined Airbnb as the third co-founder. By this point, the founders faced one big chal­lenge: the site only had one user. The com­pany re­launched in Au­gust 2008 af­ter chang­ing the web­site, right be­fore the Demo­cratic Na­tional Con­ven­tion in Den­ver. Over 80,000 peo­ple were ex­pected to visit Den­ver, and there were only 27,000 ho­tel rooms. Dur­ing the

event, Airbnb re­ceived around 80 book­ings. The week­end af­ter they were back to no book­ing. The founders orig­i­nally aimed at cater­ing the thou­sands of peo­ple that came to the con­ven­tion.

Ch­esky and Geb­bia had tens of thou­sands of dol­lars in debt dur­ing the 2008 Fi­nan­cial Cri­sis.

The founders had of­fi­cially reached rock bottom, and the idea of do­ing Air Bed & Break­fast wasn’t work­ing out. The pes­simistic thought blos­somed an­other vague idea of sell­ing ce­real. One day, Geb­bia bought thou­sand pieces of gi­ant card­board to sell lim­ited edi­tion ce­real at 40 dol­lars a box. Now who would pay 40 dol­lars a box? Peo­ple do! Turns out, the founders made $30,000 by sell­ing lim­ited edi­tion ce­real boxes.

But $30,000 can only get you so far. In Novem­ber 2008, Ch­esky’s mother called him to of­fer fi­nan­cial help.

Soon af­ter, Airbnb raised $20,000 in its first fund­ing rounds from Y Com­bi­na­tor. At this point, there were still mak­ing only $200 a week, and de­cided to use the money to go to New York to meet some of their users. It didn’t take long to dis­cover that one of the big­gest prob­lem was the pic­tures on most list­ings were far from good. Of course, they had to buy a cam­era and go house to house to take pretty pic­tures.

In 2009, the three founders were in­vited by Paul Gra­ham at Y Com­bi­na­tor to con­vince ven­ture cap­i­tal­ist Fred Wil­son to in­vest in Airbnb. While Wil­son de­cided to not in­vest on what would be­come a bil­lion dol­lar com­pany.

Ch­esky’s de­gree in art is piv­otal in his suc­cess. Most founders in Sil­i­con Val­ley went to Stan­ford or MIT. On the other hand, Ch­esky stud­ied in­dus­trial de­sign – ba­si­cally ev­ery­thing from space­ships to tooth­brushes. He cred­its his ed­u­ca­tion for the dis­rup­tive think­ing.

The com­pany fi­nally de­cided to fo­cus on all types of ac­com­mo­da­tion in­stead of shared spa­ces. In March 2009, Airbnb had over 2,500 list­ing and had al­ready closed over 10,000

reg­is­tered users. To­day, Airbnb has over 3 mil­lion list­ings in 190 coun­tries and 34,000 cities. The com­pany has hosted over 50 mil­lion guests. To­day, it is val­ued at 30 bil­lion. Airbnb’s im­age was re­built in 2012, when it re­sponded to a host who wanted to of­fer her prop­erty free to those made home­less by Hur­ri­cane Sandy. Since then, Airbnb has also played the role of a com­mu­nity pro­vid­ing free hous­ing for global dis­as­ters.

Brian Ch­esky and co-founders Joe Geb­bia and Nathan Blechar­czyk are cred­ited for dis­rupt­ing the most es­tab­lished play­ers in the hos­pi­tal­ity in­dus­try, gen­er­at­ing bil­lions of dol­lars in rev­enue, and for cre­at­ing a source of in­come for the users. What started as a means to make rent, quickly turned into a bil­lion dol­lar busi­ness. His

friend Mark Zucker­berg of­ten says the idea of Face­book was con­ceived in lit­tle over 20 min­utes. It wasn’t the same for Airbnb founders. Af­ter Air Bed & Break­fast had its first three guests, the founders did noth­ing for months. At one point, the founders were even try­ing to cre­ate a room­mate match­ing web­site.

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