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1-Page Summary of The Airbnb Story

Overview

Most of us were taught as kids to not get into a stranger’s car, yet today we have no problem at all sleeping in a stranger’s house. This is made possible by Airbnb, which allows people to rent out their homes and make money doing so.

Airbnb is a company that helps people rent out rooms or apartments to tourists. It’s popular and growing quickly, earning $1.6 billion in 2016 and predicted to earn $2.8 billion by 2017, then reaching $8.5 billion by 2020. Here are some key points about Airbnb: how it started; why they spent six months looking for their first employee; how they tackled concerns about safety, discrimination and legality

Big Idea #1: Airbnb began as a way for two broke designers to cover their rent.

In 2007, Brian Chesky and Joe Gebbia were struggling to pay their rent in San Francisco while they were trying to establish themselves. They had two choices: stay or go back home.

While studying at Stanford, the pair came up with a creative idea to generate some extra income. They decided to rent out their three air mattresses in their apartment for $80 a night during the Industrial Designers Society of America conference in San Francisco. They discovered that there would be a shortage of hotel rooms and promoted it on design blogs using ads that focused on their apartment’s features like its “design library.” Within just a few days, they had booked three customers. From there, after receiving positive feedback, they started thinking about how to act as middlemen by renting other people’s apartments and making money off them for various events such as South by Southwest festival in Austin or the 2008 Democratic National Convention (DNC) in Denver.

The designers of both Airbnb and the DNC wanted to add a user interface that would make their products more friendly. They chose Nathan Blecharczyk for this role, as he had worked with them before on other projects. However, they still struggled to get people to open up their homes or share information about the event. So they decided to take out ads on local blogs and were surprised when it attracted national attention. The New York Times ran an article about it and many people signed up as hosts, resulting in 80 successful bookings at the DNC convention.

Big Idea #2: Airbnb took off after launching a cereal-based marketing stunt and adopting greater flexibility.

A group of people wanted to advertise their website, but it didn’t get any traffic. They were desperate for ideas. Then they remembered that they had experience with a bed and breakfast service, so they came up with the funny idea to sell Obama O’s cereal and Cap’n McCain cereal as collector’s items.

But more importantly, they got the attention of Paul Graham, a tech billionaire and founder of Y Combinator. He didn’t like their idea for AirBed & Breakfast but appreciated their tenacity after hearing about the cereal. So he gave them three months to work on it with him and his team.

Graham helped the trio realize that they needed to focus on their New York City market. They moved there and worked on improving the pictures of available apartments, while also fine-tuning technical aspects of their site. The team started getting creative with their business model by making changes such as dropping the requirement for breakfast and air mattresses in order to appeal more to a wider audience.

During their early days, Chesky and Gebbia went out in the field and organized host meetups to show people how they could make money by renting out their apartments. They were soon bringing in $1,000 a week in revenue.