AIRBNB

In 2007, Brian Chesky and Joe Gebbia were two Rhode Island School of Design grads living in San Francisco and struggling to make rent. A big design conference was coming to town and every hotel was booked solid.

They bought three air mattresses, put up a simple website called AirBed & Breakfast, and charged $80 a night including a homemade breakfast. Three strangers actually showed up.

That was it — the entire origin story of a $75 billion company is three air mattresses and desperation.

They recruited Nathan Blecharczyk, a Harvard-trained engineer Joe knew, to build the real website. But nobody wanted to fund them.

They applied to 15 investors and got rejected by every single one. To keep the company alive during the 2008 election, they designed limited-edition cereal boxes — Obama O's and Cap'n McCain's — and hand-assembled 500 of each.

They sold the Obama O's for $40 a box and made $30,000. That cereal money literally kept Airbnb from dying.

Paul Graham at Y Combinator finally let them into the Winter 2009 batch — reportedly because the cereal stunt proved they were "cockroaches" who would never die. YC invested $20,000.

Within a few months, Sequoia Capital led a $600,000 seed round. The rest is history.

Airbnb is a two-sided marketplace. Hosts list their homes, apartments, treehouses, or whatever else they've got.

Guests book and pay through the platform. Airbnb takes a cut from both sides — roughly 3% from hosts and up to 14% from guests as a service fee.

That's it. They don't own a single property.

They just built the world's largest hotel chain without owning a single bed.

Airbnb Stays is the core product — book someone's home instead of a hotel. Airbnb Experiences lets you book local activities run by hosts, like cooking classes in Rome or surf lessons in Bali.

Airbnb Plus is a collection of verified, high-quality homes that have been inspected in person. Airbnb Luxe is the ultra-premium tier — think private islands, castles, and villas with dedicated concierge service.

Categories (launched 2022) lets you browse by vibe — treehouses, lakefront, tiny homes, mansions — instead of just searching by location.

The early growth was pure hustle. Chesky and Gebbia flew to New York — their biggest market — and went door to door visiting hosts.

They noticed the listings with bad photos got no bookings. So they offered free professional photography to every host.

Bookings exploded. That single move — better photos — was probably worth more than any ad campaign they ever ran.

They also pulled one of the most legendary growth hacks in startup history. They reverse-engineered Craigslist's posting system so that Airbnb hosts could cross-post their listings to Craigslist with one click.

Craigslist had millions of people looking for rentals. Airbnb had none.

The hack funneled Craigslist's traffic straight into Airbnb. It was borderline shady and absolutely brilliant.

Word of mouth did the rest. Every guest who had a great stay told their friends.

Every host who made easy money told their neighbors. The product sold itself because both sides benefited immediately.

By 2015, Airbnb had more listings than the top five hotel chains combined.

Regulation. Full stop.

Cities around the world have gone to war with Airbnb. New York, Barcelona, Amsterdam, Paris, Berlin — all have passed laws restricting or outright banning short-term rentals.

The hotel lobby has spent hundreds of millions fighting Airbnb at every level of government. In New York City, a 2023 law essentially banned most Airbnb listings overnight.

Then COVID hit. In March 2020, Airbnb's business dropped 80% in eight weeks.

Chesky had to lay off 1,900 employees — 25% of the company — in a single memo that became famous for how honest it was. He gave everyone 14 weeks of severance and a year of health insurance.

The company burned through its IPO plans and took on $2 billion in emergency debt at brutal interest rates.

But here's the thing — COVID also saved them. People stopped wanting hotel lobbies and started wanting isolated cabins and rural homes.

Airbnb's bookings came roaring back by summer 2020, and the rural/unique stays trend became permanent. They IPO'd in December 2020 at a valuation that stunned everyone.

Y Combinator, Sequoia Capital, Andreessen Horowitz, Greylock Partners, Founders Fund, General Atlantic, Jeff Bezos (personal investment)