How Airbnb Unlocked the Nomadic Dream
“Traveling — it leaves you speechless, then turns you into a storyteller.”
Ibn Battuta, who traveled the whole world, rightly quoted the above. Traveling the world and living the nomadic lifestyle is a dream for many, but in the age of expensive hotels and overpriced rooms, Airbnb is the messiah for many due to how affordable the rooms can be. From budget beds to boutique rooms, Airbnb has it all worldwide. But how did this massive giant become so famous? How did it all start? Today, we are going to be answering all the questions. So, without further ado, let’s dive into the history of Airbnb.
The Rental Crisis That Started It All
The story of Airbnb’s beginnings can be dated all the way back to a loft in San Francisco, California, in 2007. Two roommates studying at the Rhode School of Design shared the loft and were facing a severe rental crisis as they could not pay the money for their cozy loft. With this crisis on top of their heads, Brian Chesky and Joe Gebbia needed to arrange some extra cash, but they had no means at that time.
San Francisco, in 2007, was the host of an Industrial Designers’ Conference. Chesky and Gebbia noticed a shortage in existing hotel stays, and that is exactly when the Airbnb idea started taking shape in their minds. To accommodate people by renting out their homes with airbeds and homemade breakfast at just $80 a night. They bought three airbeds and converted their loft into the first Airbnb property, just in time for the conference. To attract customers, they also created the first iteration of the Airbnb website, airbedandbreakfast.com (did not know that Airbnb was a short form).
To attract customers, they became tour guides for the guests coming to San Francisco, and they succeeded in attracting their first three guests: a man from India, another man from Utah, and a woman from Boston. After their first successful night, Chesky and Gebbia knew they were onto something, and they partnered up with their ex-roommate Nathan Blecharczyk to make their idea into a full-fledged business. Soon, they started a service that matched people looking for roommates for around four months. That is till they encountered roommates.com, who were also doing the same, so they dropped the idea and returned to the OG Air Bed and Breakfast idea.
The Downs Before The Ups
With the original idea back on the board, the trio of Chesky, Gebbia, and Blecharczyk tried to launch their venture using media attention at various conferences, but they did not receive positive reviews. With debt creeping up their spine, the trio decided to get funding. They tried their luck at SXSW but only got two customers this time, with Chesky being one of them. After this, they revamped their entire website and made the booking process easier for the users, allowing them to book a room with three simple clicks. After the overhaul, the trio approached a total of fifteen angel investors, all of whom rejected the Airbnb idea, with two companies not reverting!
With knee-deep debt, the trio understood that their ‘bed’ angle was poorly received and needed to do something. The 2008 Democratic National Convention in Denver was right around the corner, and it was the perfect time based on their previous experiences. When there are big events, many people look for a hotel for the night. With websites hardly getting any attention, they turned to design limited edition presidential-themed cereal boxes, Obama-O’s, The Breakfast of Change, and Cap’n McCains. The trio sold each box at $40; each box came with a limited-edition number and a description of their company, which ultimately helped them earn $30,000 in revenue.
This finally caught the eye of one Paul Graham, a One Venture Capitalist who invited the trio to join Y Combinator, a renowned startup accelerator. Y Combinator gave money to startups for equity or partnerships (think of Shark Tank). Chesky, Gebbie, and Blecharczyk worked tirelessly for three months to perfect their product. Yet, they were rejected multiple times by various investors, including Fred Wilson, who, to this day, regrets not investing in the idea. Airbnb became successful due to the trio’s perseverance; they constantly overhauled their website to make it more user-friendly and never looked back. The founders also personally went house to house to stay with the hosts, write reviews on the website, and take professional images of the rooms for the website.
The Meteoric Rise
In March 2009, the company’s name was changed from Air Bed and Breakfast to the one we all know and love today: Airbnb (short and sweet), allowing them not to be related to air mattresses anymore.
At the end of their Y Combinator program, the trio had built a strong relationship with their customers. With $20,000 in seed funding, they moved base to the concrete jungle where dreams are made of, aka New York, to be closer to their target demographic community. Within a month of their name change and move to New York, they secured funding of $600,000 from Sequoia Capital. This was the moment that Chesky, Gebbie, and Blecharczyk awaited. Airbnb started to grow exponentially, and the website went through various iterations to make it as user-friendly and attractive as possible.
Four years after the first airbed mattress idea, in 2011, Airbnb was present in over 89 countries, with 1 million nights booked. Airbnb also won the award for the best break-out mobile app at SXSW, which is ironic considering that that is where they tried launching three years ago. Soon after that, the founders raised $112 million for Airbnb with the help of various Venture Capitalists, making it a Unicorn startup in Silicon Valley with a valuation of $1 billion.
Challenges After Success
While riding the wave of success, Airbnb started facing new challenges. Many hosts complained about patrons leaving their houses in an ‘unruly’ state. To tackle this, Airbnb introduced a new coverage policy called ‘Host Guarantee,’ which was $1 million in 2012.
This was just the beginning of new challenges.
Soon, various cities around the States started having problems with Airbnb rentals. With multiple issues popping up, Airbnb decided to redesign its logo, and after unveiling the new logo, the public criticized the company even more. Soon, cities like New York, San Francisco, and others started to ban Airbnb rentals in the city. They even began imposing fines on Airbnb hosts and also made renting out a unit for more than 30 days illegal. Even while facing these challenges, Airbnb still saw a steady rise, and according to research, users who once stayed at an Airbnb never returned to booking hotel rooms!
Progress Over the Years
By 2018, Airbnb had an annual revenue of $3.6 billion and had 34 offices globally. Airbnb even impacted the economies of countries like the United States, Canada, Italy, the United Kingdom, France, Spain, Portugal, and more. According to a report, the patrons visited Airbnb’s neighborhood cafes and restaurants, helping local businesses grow.
In 2020, during the preparation to become an IPO, Airbnb recorded having $3.5 billion in cash, out of which $25.9 million was raised through various funding rounds. In the same year, Airbnb made over 400 agreements with the local and national governments to automate the collection of tourism taxes, which, in return, generated $2 billion in tourism-related taxes.
But with highs also come the lows, and soon the pandemic of COVID-19 hit the globe, stopping all travel worldwide. Due to travel restrictions, Airbnb lost $637 million, a 67% drop in quarterly revenue. 1,900 employees out of 7,500 were laid off during the pandemic (the Dark Ages!).
As of 2022, Airbnb has acquired various companies, like LocalMind, Accoleo, Luxury Retreats, International, and Tilt.com. Airbnb is also present in over 220+ countries with 4M+ hosts worldwide!
Conclusion
The story of Airbnb is one of many ups and downs, but it only proves one thing: perseverance is key to success. Even after failing to secure funding from fifteen investors, the founders of Airbnb did not give up and kept moving forward. In a medium article, Brian Chesky, CEO of Airbnb, explained how the company got rejected by different investors. He also has added the emails he received from other investors, rejecting Airbnb. Brian Chesky concludes the article with:
“Next time you have an idea and it gets rejected, I want you to think of these emails.”
So the next time your idea gets rejected, remember that Airbnb, one of the world’s biggest companies, was rejected fifteen times before finally taking flight and reaching the heavens! So the next time your idea gets rejected, remember that Airbnb, one of the world’s biggest companies, was rejected fifteen times before finally taking flight and reaching the heavens! If Airbnb’s story hypes you and you are hungry to present your ideas to investors, check out our pitch deck template collections. Our collection contains real-life examples of pitch slides used by companies to secure funding, like the Canva pitch deck slide and many more!
