Everyone today knows about Airbnb, the popular housing service that allows anyone to rent their home for one or more nights. But only a few know the beautiful story that led Airbnb's founders from 0 to global success. This is a story of persistence, determination, and most of all, hustle.
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The beginning: AirBedandBreakfast.com
Airbnb is a shortened version of its original name, AirBedandBreakfast.com. Why the word "air"? A little history will make us understand better.
Shortly after moving to San Francisco in October 2007, roommates Brian Chesky and Joe Gebbia came up with the idea of putting an air mattress in their living room and turning it into a bed and breakfast.
The idea was to offer visitors a place to sleep and breakfast in the morning. They charged $80 each night. The idea succeeded and the first Airbnb guests were born: a 30-year-old Indian man, a 35-year-old woman from Boston, and a 45-year-old father of four from Utah sleeping on their floor.
The guys assembled a great team, but they were having trouble getting people to open their homes up to strangers. So they decided to buy ads on small local blogs.
Amazingly, this move was a success and attracted a lot of press attention, with great results. In fact, after the New York Times ran an article on it, 800 people signed up as hosts, resulting in 80 successful bookings.
The first funding
When the reservations on the site have stopped, the guys came up with the funny idea to serve election-themed cereals. They simply reboxed cheap cereal and earned nearly $30,000 selling their new products as collectors' items.
But more importantly, they got the attention of Paul Graham, a tech billionaire and founder of Y Combinator, a popular launchpad for Silicon Valley start-ups. While Graham didn't like the idea of AirBed&Breakfast, after hearing about the cereal, he appreciated the tenacity of the team and gave them a three-month mentoring period.
So they raised their first funding, $20,000. Now they decide to use the money to travel to New York, their biggest market, to meet their users. They discover that the main problem is that the pictures of most listings aren't good. They buy a camera and go door-to-door to take better pictures of the listings.
The Craigslist Hack
In 2010, Craigslist was a popular website for viewing and posting local advertisements. Airbnb perfectly knew that Craigslist was the place where people who wanted something other than the standard hotel experience looked for listings—in other words, Airbnb’s target market.
As we read on Growth Hackers, Airbnb offered users who listed properties on Airbnb the opportunity to post them to Craigslist as well.
How? Simply sending to their users e-mail with cool headlines like these:
- “Increases your earnings by $500/month”
- “Click here to re-post A couch in the mission in 1 click”
The benefits of the Airbnb/Craigslist integration were numerous. The fact that Airbnb listings were far superior to the other properties available—more personal, with better descriptions and nicer photos—made them more appealing to Craigslist users looking for vacation properties. Once those Craigslist users made the switch, they were more likely to ignore Craigslist and book through Airbnb in the future.
After visiting their users in New York, the company finally gets some traction. The focus is changed from shared spaces to all types of accommodation. It's March 2009 and Airbnb has 2500 listings and 10,000 registered users.
This success grabbed the attention of Greg McAdoo at the investment firm Sequoia. He had previously invested in Google and Apple and was well aware that the vacation rental business was worth $ 40 billion. With a $ 585,000 investment from Sequoia, Airbnb rapidly found itself valued at $ 2.4 million, propelled by the renewed confidence of McAdoo's faith in their idea.
As they say, the rest is history. The most recent statistics show that Airbnb now has over 2 million listings in over 190 countries and 34,000 cities. Airbnb hosts have hosted over 40 million guests. The company is worth an estimated 25.5 billion, based on the latest round of funding of 1.5 billion.