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Summary:

Brian Chesky, CEO and co-founder of AirBnB, shared the company’s story and the lessons he learned in three years of chasing a dream. One of the most valuable lessons? It’s better to be broke than well-funded. His other tip: Conventional wisdom is overrated + Video Interview

brianchesky

From the various conversations I have on a daily basis, we have entered that strange part of the Silicon Valley cycle where entrepreneurs are starting to conflate huge amounts of investment dollars with the future success of their startups. They should learn from AirBnB, a San Francisco-based start-up.

Brian Chesky, CEO and founder of the company, stopped by last week to shoot a GigaOM Start-Up Sessions (video above), during which he shared the story of AirBnB and the lessons he learned in three years of chasing a dream.

Chesky has already learned some lessons he wants to share with his fellow entrepreneurs:

  1. Conventional wisdom is overrated.
  2. Being broke brings an incredible amount of discipline and focus.
  3. What your company does in its childhood has a big impact on its future.
  4. In solving your own problems, you solve problems for other people, and through this, an opportunity often arises.

AirBnB is a classic Silicon Valley story of bootstrapping, rejection and eventually success. It is an idea that defies all logic. In fact, by conventional wisdom, it seems like a pretty dumb idea. Who would want to rent spare rooms to strangers from strange cities in their homes? And would you rent a room in someone’s house, instead of a hotel? (Couchsurfing, a non-profit service which offers a similar service — but for free — took years to develop critical mass with its user base.)

Brian and his co-founder, Joe Gebbia, decided to start a company, and they moved to San Francisco. There were just two little problems: They didn’t really have a startup idea and they didn’t have the rent money. There was a design conference in the city, and there were no hotel rooms for rent. Joe and Brian thought, it would be cool to rent air mattresses to conference visitors and make enough cash from that to make rent. Three people bought into the idea.

That little idea turned into what is now AirBnB. Along the way, they brought in their third co-founder Nathan Blecharczyk. Today, you can rent a tree house, a castle, a lighthouse or a houseboat on AirBnB, which lists rooms from 9,000 cities in 175 cities 170 countries. Between those three initial rentals to today, AirBnB has had tough journey. Brian and his co-founders sold special breakfast cereal in boxes that carried funky names (Obama O’s and Breakfast of Change) to attendees of the Democratic National Convention in November 2008 so they could keep AirBnB going.

“That was our seed money,” laughs Chesky. That hustle convinced Paul Graham to take on AirBnB in his YCombinator program, though he initially didn’t much care for the idea of the company. Today, looking back at those early days, Brian is pretty sure that lack of money has defined the company and its culture of frugality. That lack of money also made Chesky and his cohorts get used to rejection, which only helped steel their resolve.

AirBnB worked out of Brian and Joe’s apartment and when it ran out of space, Brian moved out of his bedroom and began living out of a suitcase. Over past six months, he has lived in 30 different locations he found on AirBnB. The more he used his service, the more he figured out ways to polish it.

Being broke and being cheap brings incredible amount of focus. “When you don’t have money you cannot have five strategies and you have to pursue one strategy,” says Chesky. “You cannot build things people don’t really want.”

Lately, AirBnB’s fortunes have changed. Late last year it snagged $7.2 million in funding from Sequoia Capital and Greylock Partners, on top of the $600,000 it received in seed funding. That infusion of cash hasn’t really changed Brian. He still lives out of a suitcase (actually a duffel bag). Most of the money is for growing the company into new markets and new verticals.

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  1. Incredible story. I know it’s hard to change what works but consider changing the name of your company. AIRBNB sounds terrible for anyone who has never heard of you. You’d be better off with a name that people are familiar with, that is easier to type.

    1. Agreed. What about just AirnB? I would make you think about R&B music.

  2. “… which lists rooms from 9,000 cities in 175 cities”

    Reads as an error. Do you mean 9,000 rooms in 175 cities?

    1. Thanks for point that out, Sylvie. It actually should be “9,000 cities in 170 countries.” I made the correction.

  3. This is really a great interview, and a new bookmark at the same time. Actually, I’m running into a problem their just solved. I’m going to London in 2 weeks time and having waited till the last moment to look for Hotels showed me that I would need to spend, at least, £300 a night, with AirBnB I can go and only spend £30-50 a night.

    Great Great Great find

  4. I would think the name AIRBED-N-B would have more resonance with people than the ones mentioned here. I have a start up with a name that has some issues so I hope AIRBNB finds a brand identity that works for them. Great story!

  5. Airbnb Hits 1 Million Nights Booked As European Clone Emerges | Bitmag Thursday, February 24, 2011

    [...] We’re quite big fans of Airbnb, the “community marketplace for space” here at TechCrunch, and we’re far from the only ones. [...]

  6. How AirBnB Uses Video to Boost Bookings: Online Video News « Tuesday, March 1, 2011

    [...] years of bootstrapping, AirBnB has finally reached critical mass with listings in more than 9,000 cities and 170 countries. The company raised a $7.2 million round [...]

  7. OneFineStay Gets $3.7M For Posh Peer-to-Peer Vacations: Tech News and Analysis « Monday, March 7, 2011

    [...] In many ways that approach of edited mediation between owners and travelers makes it the conceptual opposite of the aforementioned AirBnB, the scrappy Y Combinator company that matches the two groups directly (Om wrote recently about what other startups can learn from its approach). [...]

  8. Are You Ready for the New Peer-to-Peer Economy?: Tech News and Analysis « Friday, March 11, 2011

    [...] Just look at AirBnB, a perfect example of a peer-to-peer economy company. It offers a platform for folks to rent rooms (or villas) from other folks. The company takes a piece of the action for making the connection between the buyer and seller — who more often than not, are individuals. Typically, this would be an economic transaction between a traveller and an hotelier. Several other iterations of this basic idea have emerged; for instance, OneFineStay is doing peer-to-peer vacation rentals. RelayRides is another startup that allows you to share cars. [...]

  9. The P2P Evolution | User Manual Guide Sunday, May 1, 2011

    [...] the founders to earn a little extra scratch during a convention when tight hotel supply provided an opportunity to rent out air mattresses in their apartment, with the added touch of breakfast. The result today [...]

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