[Music] [Applause] good morning morning I titled uh this presentation today Be A Serial entrepreneur that's uh cereal of a sea for like breakfast cereal I'll explain exp that in about 15 minutes what you should know though that Be A Serial entrepreneur is a core value at Airbnb it means not only be an entrepreneur but be creative and be Scrappy do more with less and it's a big part of our story and this morning what I'm going to share is the Airbnb founding story um there's three of us that started this company together myself Nathan Joe
on the left and Brian on the right and we were all roommates at one time uh we lived here in San Francisco this apartment and in October of 2007 the rent on this apartment was increased 25% and I and another roommate decided we had had enough and I was moving out so Brian who was not yet living in the apartment he was in Los Angeles Joe called Brian and said why don't you come to San Francisco to be an entrepreneur so Brian quit his job in Los Angeles drove to San Francisco and upon arrival was
told that the rent would be $1,150 but Brian only had $1,000 in his bank account and had just quit his job so he had a math problem um so the two of them are both designers and it just so happened that there was a design conference that was coming to San Francisco the following week and they got the idea to rent out one of the extra bedrooms as a bed and breakfast well there was no bed in this bedroom uh but Joe had an airbed in the closet so instead of calling it a bed and
breakfast they called it an airbed and breakfast and they created a really simple web page using Wordpress just the blog to put up an advertisement they wrote to a number of local bloggers who uh gave them links and within a day they had three people who wanted to stay with them there was uh a 35-year-old woman from Boston a father of four from Utah and a man from India and that weekend they made not only $1,000 um but they showed their guests around the city and they all went to the conference together and made wonderful
friendships so much so that the man from India invited them to his wedding two years later and so fast forward a couple months it's now January 2008 and I had just quit my job and the three of us decided we wanted to start a company together and uh the guys told me the story that had happened in October and we reflected on that and we said there must be other people and other situations where this concept would be a good idea and so we set out to build a website and what we did was is
actually very simple it's different than what you see today but basically it was a directory of events where locals could put up their spare bedroom just for the event and those coming in from out of town could look it up and uh basically give you a phone call it was a directory it was a glorified Craigslist basically very simple site it only took three weeks to build and we decided to launch it for South by Southwest in 20 2008 March 2008 we thought this is where Twitter had launched a year before this was where we
were going to make our big launch so we finished the site about a week and a half before the event we got about a dozen properties on the website and I think two or three people might have actually used it one of which was Brian himself so Brian flew down to Austin Texas and his host picked him up at the airport brought him to his house and uh the guy's wife had made Brian dinner really nice H the uh the airbed was set up with a chocolate on the on the pillow wonderful hospitality well at
the end of the night the host asked Brian do you have the money because this was before we accepted payment through the website and so Brian said oh I'd forgotten to go to the ATM can I bring it to you tomorrow and the guy said hey no problem so the next night before bed the host asked Brian again uh were you able to get that money for me and Brian had forgotten again to go to the ATM now at this point the host started to get a little suspicious of Brian he said who is this
guy that I don't really know that I met on the internet who's sleeping on my bed and uh the hospitality began to wore off and um we thought to ourselves afterwards how nice would it be if you could just take care of the money up front so when you arrive you can really focus on the hospitality there was another thing we learned from this event which was that afterwards uh people would ask us I'm I'm going to London but not for an event can I use your service we said of course not you can only
use it for events because that's how you build trust if they don't know why you're coming to town who will let you into their house but then we really got to thinking and we came up with a new vision for air bed and breakfast and that was why don't we just try to make it just as easy to book someone's home as it is a hotel we had this motto three clicks to book it basically you would go to our homepage type in a destination see some search results and hopefully find something you like and
if you liked it you could click book it three clicks to book it and these are all screenshots from the early days and so this is what we set up to build later in the summer of 2008 and we had to figure out how are we going to launch this New Concept this new website and we decided why don't we use an event once again um and that summer everybody was talking about the Democratic National Convention uh which is going to be held in August 2008 in Denver it's where Barack Obama was going to receive
the Democratic um party's nomination for C presidency and um big historic event they had upgraded the venue to this stadium that holds 880,000 people and while we looked up in Denver there's only 17,000 hotel rooms so we knew right away there was going to be a problem that there's going to be a need for Alternatives and so we rushed to build this website in three months and again we launched it two weeks before the event and we were lucky there were a lot of locals who were looking to get out of town and make some
money and So within the first week we got 800 people to put up their properties on our website uh because people wanted to be sure that they found a booking and um meanwhile the news was doing stories about how so many people want to come to this historic event and participate um but that there aren't any places to stay and so we said we wrote to the local newspaper and we said actually uh we have 800 places that are confirmed available right now on our website and he said that's interesting let's do a story about
that and so we very quickly got in the newspaper and by the end of the week it had gotten picked up by CNN International and we were doing a video interview and suddenly everyone Across the Nation maybe even further uh was hearing about this New Concept uh air bed and breakfast and for this event we probably had a hundred people stay in our service it felt great everything that you would want when launching your company unfortunately it's just the beginning and this is the typical life cycle emotionally of a startup it starts with a lot
of excitement climaxing when you launch your company and hopefully you get some some press cover and you just feel on top of the world but that quickly wears off and for us one week later the crickets were chirping nobody cared about us we weren't relevant anymore um and that began a very long period known as the trough of Sorrows where no matter what you do it doesn't get any better and it only actually gets worse and eventually if you're lucky things do get better um but during this period we had to find some solutions to
finance the company and generate press so after the convention we had uh the contact information for many reporters who we had gotten in contact with and been featured with uh for the DNC and we were thinking how can we leverage those political reporters contact details to get more press and so the election was coming up very shortly in November two months away and we thought to ourselves our name at the time was airbed and breakfast we've done a lot with the airbeds maybe we should do more with the breakfast and we came up with the
idea to create a presidentially themed cereal Obama O's and Captain McCain's and so the idea was we created this concept all original artwork designed signed we got boxes printed we even went to the supermarket and bought cereal and restuffed that cereal into our boxes and we mailed a hundred of each box to uh the reporters and we thought if we email them they'll just delete the email but if we send them a box like this they're going to have to ask us questions they're going to want to know where did this come from they're going
to want to hear our story and sure enough it worked within a week of having done that we were on CNN again talking about the breakfast cereal and actually this became the number one political video of the day and was featured on the homepage and uh well we had actually created 400 additional boxes of each and we had made on our website a place where we were selling these boxes for $40 each and that day when we were featured on the homepage we sold a $40 box of cereal every 3 minutes within a week we
had sold $330,000 worth of cereal and that's how we financed the company in the early days not ideal and this is where the term Be A Serial entrepreneur comes from this story right here to be Scrappy to think creatively and be entrepreneurial of course we had tried to raise money the traditional way as well so over this summer we had been reaching out to different Angel Investors different Venture capitalists and uh not with much luck investors ran from us like we were the plague and one particularly memorable story we met with a angel investor at
a well-known Cafe in pal Alto and uh we were pitching him and halfway through the pitch he just got up and walked out and he left his drink half half drunk this smoothie and we had thought he got out had gotten up to maybe just put some money in the parking meter and he was going to come back but we waited and waited and he never came back and this was a picture of taken of Brian looking perplexed on another occasion we were going down to sandill road to pitch a venture capitalist and we were
looking at the slide deck the night before and this was one of the slides in the deck and it basically says that we were going to make $200 million in Revenue within our first three years and I'm a very analytical person my two partners are designers and I was trying to explain to them that doesn't really make sense there's no way will can ever make $200 million in 3 years if you do the math and so we agreed that night that we would change it to 20 million that that was going to be more realistic
and so the next day we're in the meeting and they come to this slide and they had changed it they had changed it to two billion I was like what and of course the uh the guy that we were pitching wasn't buying any of it but I asked him later why did you do that and said one of our trusted advisers had told him that investors don't want M's they want B's baby I mean he is right but we didn't have the story to go along with it so times were just about to get worse
actually so this was just the beginning of the recession fall of 2009 we had been at this for nine or 10 months without jobs without having been able to raise any money except for $330,000 from cereal which really was actually the cost of all the cereal to begin with um and seoa capital published this uh this presentation basically saying that the good times were over and that everyone was going to need to save up Capital because you might not be able to fund raise again so if as if things weren't hard enough things got more
Bleak and we were basically at the point of asking ourselves when should we give up when should we quit it's almost been a year now now uh and despite whatever we do we're only making $200 a week we can't seem to increase that and one of our advisers said you should apply to y combinator y combin combinator is an accelerator program very welln run by paulr and our adviser had gone through this program him himself he said this would be really good for you it'll really pull you together get you focused and we realized that
up until now although we had worked very hard we still hadn't given it 100% um meaning that I was Moonlighting a little bit on the side the other guys had some other commitments I was in Boston they were in San Francisco we weren't 100% focused yet and we realized that before we could quit we had to say we gave it our best shot so we agreed to uh to try out for why combinator you have to apply and you we are lucky enough to get an interview and when you interview it's a f minute interview
it goes really quick and within two minutes into the interview basically Paul Graham the guy who runs this program was trying to convince us to do something else so our interview wasn't going very well and then it was over five minutes later and as we were walking out Joe took out of his back a box of the Obama and gave it to PG and he said uh what's this did you buy this for me and we said no we made this and he says I don't understand so we told him the story of the cereal
and he loved that story so much because it proved to him that we were Scrappy and resourceful and he has this this uh this very well-known quote um about the importance of uh being like a cockroach basically being unkillable and very Scrappy and so because of that story he led us into the program and that's when things began to Chang we got super focused and very disciplined I moved to San Francisco again and we all lived together in that same apartment I showed you before and we got hyperfocused we woke up at the same time
at 8:00 a.m. I was sleeping on an airbed in Joe's bedroom we would work all day only taking breaks to go to the gym take a shower and maybe go grocery shopping make breakfast uh lunch dinner uh but otherwise we were working six days a week really focused and because because it was the recession PG told everybody he says revenue is going to be super important it's really important that by demo day which is um the kind of the culmination of why comat or after 13 weeks you go to demo day where you pitch investors
he said it's really important that on demo day you can show that you are profitable and uh we came up with this concept of uh Ramen profitability Ramen like the uh the soup noodles and basically Ramen profitability uh was for us was $1,000 a week it meant enough money to buy Ramen and pay the rent $1,000 a week and so we created this graph of our revenue and the red line was our goal and we would update it every week and we posted it all over the apartment it was over the fireplace and it was
right in the middle of the mirror in the bathroom so you couldn't get away from this thing it kept us hyperfocused on what we were trying to do it was during YC comor that we got some really valuable advice um this is from the the creator of Gmail actually and he told us that it's better to have a 100 users that love you than a thousand users that like you and so we thought about that and Paul Graham told us something else he said it's okay to do things that don't scale it's counterintuitive a little
bit you're making an internet company the whole idea is that it's self- sered and it can scale to Millions but he said when you're trying to find that product Market fit it's okay to do things that don't scale and he asked us where are your users and we said well our users are everywhere he said well no where do you have the most users we said New York he said go to New York and meet all your users which again was counterintuitive because we had no money how are we going to buy plane tickets and
do all this he said figure it out so over the course of four different weekends we went to New York and we met all of our users at the time we only had 20 or 30 hosts in New York so it wasn't that hard actually and we noticed something about our hosts we noticed that they had really bad photos of their properties uh this was again in 2008 2009 and uh camera phones weren't as uh as good as they are today so a lot of the photos were low resolution really dark and so we would
call the hosts up and we'd say uh would you like a professional photographer to come to your home and photograph your apartment for free and people were a little confused but they said sure why not it's free and so they got the knock on the door and who was it but Joe and Brian right the co-founders of the company so they were a little surprised by that um but they took the pictures uh with a camera that they had rented and uh while they're there they opened up the website and showed them how to use
the website and got product feedback and then also invited uh the hosts out to beer later on that that night and so we'd get together say 10 or so people at a time for beer and we'd we build a relationship build a rapport tell them our story try to make them into our evangelists uh and so much so that once we went back to San Francisco we were able to give them a call and ask them things like hey your uh your profile description it's only a paragraph and you have a really nice apartment do
you mind if we write two more paragraphs for you um or you're trying to charge $400 a night that seems a bit unrealistic to start with maybe we could start with $50 a night and if you get too many inquiries you can always increase it so had we not met these people and built a relationship we would have never been able to ask them that but because they were they had heard our story and they wanted us to be successful they were cooperative and as a result of taking high quality photos lowering the prices improving
the profile descriptions and just generally getting the host to cooperate with us and wanting us to succeed suddenly we had a really nice product and it was at this point that guests from around the world started booking these properties in New York and so the host started making money they would tell their friends their friends would come to the site see the really high bar that was established and they would emulate that they would put up their own property um and and take the good photos Etc and um meanwhile people were coming from New York
from around the world and then they would go home and often times the guests would become hosts themselves and so very quickly this idea began to cross-pollinate and so properties were popping up in Berlin Barcelona Hong Kong all over the world and suddenly you had a lot more places you could go to and today it's exploded there's 600,000 properties in 192 countries 40,000 different cities literally everywhere and those properties are being booked so it took us four years to get our first 4 million guests but in 2013 alone we serviced 7 million additional guests for
11 million today so classic hockey stick growth and On Any Given night there's about 150,000 people staying in other people's homes and so what we have realized though is it goes Way Beyond just Hospitality we've actually created a new generation of Serial entrepreneurs we did a study uh in Spain specifically surveying our hosts and what we found is that 28% of our hosts in Spain are entrepreneurs and that those entrepreneurs have been responsible for about 40,000 jobs here and these are new companies so half of them are younger than 5 years 25% are within the
last year and a third of them are located here in Barcelona but it's not just about the money that is helping these entrepreneurs to succeed they're actually using the service to meet other people 55% use it to meet other people 36% use it to meet clients and 25% use it to get opinions on their work and so with that in mind we partnered with the event here today four years from now and we thought how cool would it be if we could connect the entrepreneurs in our host Community with entrepreneurs who are visiting from far
and wide so I'm not sure how many of you were able to take advantage of this but we had many entrepreneurs staying with other entrepreneurs hopefully Making Connections hopefully propelling their uh businesses forward I hope you enjoyed this story I hope you found it inspiring uh I hope you you have a great rest of the week here thank you for having me [Music] a [Music] oh [Music] n n [Music] n [Applause] [Music] he [Music]
