grind

#TheUnknownHustle: Airbnb Founders Joe Gebbia and Brian Chesky

Airbnb founder story mobile v2
Airbnb founders Joe Gebbia and Brian Chesky / Photo courtesy of Airbnb

Social Mark Extra Background %281%29 4 0 0
September 4, 2018

Brian Chesky refers to himself and Joe Gebbia, the founders of Airbnb, as “cereal entrepreneurs.” You're probably wondering, doesn’t he mean serial entrepreneurs? No, you read it correctly the first time. The term “cereal entrepreneur” relates back to how Airbnb raised their initial round of funding when launching the company in 2008.

 

Most tech startups go the traditional route of using venture capitalists to raise money for their business. The only problem that Airbnb faced? Not a single VC was interested in what seemed like a hare-brained idea to rent out your spare room to a complete stranger.

After another failed investment pitch, Chesky and Gebbia decided to take a different route. It was 2008, and the democratic national convention was taking place in Denver. The founders came up with the idea of creating collectible cereal that was related to both candidates at that time, “Obama O’s, the breakfast of change” and “Captain McCains, a Maverick in every bite.”

 

Incredibly, their plan worked, and they sold more than 1,000 boxes of cereal at $40 a box, generating just over $40,000, which represented their seed round of funding and was enough to get them traction to launch the business.

 

Not long after that, Airbnb applied to Y-Combinator, one of the most sought after startup incubator programs in the world. As they were about to leave Paul Graham's office, the founder of Y-Combinator, they handed him a box of cereal. When he asked, “What is this?” Chesky and Gebbia explained that this is how they raised enough money to officially launch the company. Graham replied, “Well, if you can convince people to buy a $4 box of cereal for $40, then maybe you can convince them to stay in other people’s rooms.”

 

Graham offered Chesky and Gebbia a place in the Y-Combinator incubator program, along with $20,000 in exchange for 6 percent of the company. Looking back on it now, it was a pretty good investment. Today Airbnb is available in 81,000 cities, and is worth more than $31 billion. Some even offer a continental cereal breakfast.