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The Airbnb Startup Story: An Odd Tale of Airbeds, Cereal and Ramen

airbnb startup story, airbnb app on smartphone was the truncated form of The change in the website’s name occurred around the time the company was expanding its listing. It went from airbeds and shared spaces to a wide array of properties including entire homes, private rooms, apartments, manors, castles, and private islands. To date, Airbnb has a valuation of $38 billion. It offers six million listings in 191 countries and regions all over the world.

With this scale, Airbnb is the leading global online marketplace and hospitality service dominating the market today. More than a decade since the company’s launching, the Airbnb startup story of resilience, perseverance and creativity is a tale worth telling. Airbnb founder Brian Chesky and his simple idea went a long way, creating communities around the world.

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Airbeds and Rents: The Airbnb Startup Story

The first Airbnb startup story revolves around airbeds and rents. Back in October 2007, the to-be Airbnb founder and his roommate Joe Gebbia were looking for means to pull in extra cash. With the upcoming Industrial Designers’ Conference in San Francisco, there was a shortage of hotel rooms and accommodations. Both unemployed and with their San Francisco apartment rent due in a few weeks, the pair saw this as an opportunity. The duo rented out their apartment loft to designers looking for a place to stay. Immediately, Chesky and Gebbia launched a simple website –, and offered airbeds and a homemade breakfast for $80 each night.

When three people showed up at their doorstep, Chesky and Gebbia thought that they may have stumbled upon a big idea. Joe Gebbia’s former roommate, Nathan Blecharczyk joined the team as one of the Airbnb founder and developed a business model around the idea.

However, thinking that the idea may not fly, the Airbnb founder shelved Airbnb. Chesky and Gebbia then tinkered with the concept of roommate matching services. Four weeks into the project, the founders realized that was already existing. With no other alternatives, the team went back to Airbed and Breakfast.

The Airbnb founder, along with Gebbia and Blecharczyk, staged various attempts to launch the venture since 2008. One was during the SXSW 2008 Conference where the website received only two bookings, one of which is Chesky. Secondly, learning from experience that room shortage meant people looking for alternative accommodation options, the team launched again during the 2008 Democratic National Convention in Denver, with dismal results. While the team was able to get media attention, user traction did not follow. This part of the Airbnb startup story was what Airbnb founder Brian Chesky called, The Trough of Sorrows. Neck-deep in debt, Airbnb was in dire need for funding.

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In the context of the Airbnb startup story, generating revenue and finding investors came from an unusual source. Since the “bed” part of “bed and breakfast” was not getting favorable results, Chesky thought of focusing on the breakfast side of the equation. Riding on the election fever, Chesky and Gebbia thought of creating presidential-themed breakfast cereals – The Obama O’s; The Breakfast of Change and Captain McCain’s; A Maverick in Every Bite. The founders handcrafted, numbered and sold each limited edition cereal boxes for $40 apiece.

The cereal box idea will go down in the Airbnb startup story as the much-needed break that kept the company afloat for a few more months. The proceeds from the cereal boxes almost pulled the company out of debt and gained Airbnb some national press coverage. In November 2008, Y Combinator founder Paul Graham was not convinced that the Airbnb business model would work. But through the presidential-themed cereal boxes, the venture capitalist was impressed by the founders’ spirit and passion.

Chesky hopes to inspire the same level of determination and creativity from every Airbnb employee.

Mission: Ramen-Profitable by Demo Day

The company’s inclusion in the Y Combinator program pushed the Airbnb founder to focus on making the company ramen-profitable by demo day. The tide of the recession was hitting the shores. There was a high possibility that no investors would show up on the demo day. In order to prepare for this possibility, the goal of each startup within the batch is to be ramen-profitable by the end of the program. Ramen-profitable meant that the business is profitable if you just live on ramen.

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With a $20,000 seed funding, a clear goal, and a better work structure, the founders of Airbnb traveled to New York – where a majority of their community was located. In the Airbnb startup story, this is the part where things started to head in the right direction. For the next three months, Airbnb focused on developing a relationship with their customers. The founders supported their hosts by uploading photos that showcase the properties. They also guided the hosts on how to create the best homestay experience. By the end of the Y Combinator program, the founders were able to create a group of loyal customers who not only loved the company but also helped the company grow its customer base. Also, Airbnb was able to secure $600,000 funding from Sequoia Capital. From this point, Airbnb was unstoppable.

At face value, letting a stranger into your home sounded like a preposterous idea. But the world of startups have proven time and again, that what sounded like a crazy idea may actually be the next big idea. The Airbnb startup story is proof. Breaking the mold has been Airbnb’s strength. Through Airbnb’s founding years, this quality has propelled the company’s mission of “creating a world where anyone can belong anywhere.”

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