From being Broke & unable to pay rent - to owning the largest Home rental service in the world. How AirBnb did it?
In 2007 Joe and Brian founded AirBnb while they were broke and unable to pay their rent.
Today AirBnb is a multi-billion dollar company with 7 million listings in more than 200 regions.
How they did it?
1. Idea
This is where most people struggle.
In 2007 Joe and Brian were broke and looking for a Job. They both were from design school so they decide to attend an industrial design conference in the city , hoping to meet some people and find job opportunities.
But they realized that most people who were coming from other states to attend the conference were unable to book Hotels. Due to high demand, all the hotels were Sold out.
They quickly saw an opportunity and bought few airbeds, placed them at the empty space in their apartment, and started a little business called “Air Bed and Breakfast.” The idea was to offer visitors a place to sleep and breakfast in the morning. They charged $80 per night.
And that's how their business was born. They got 3 customers: a 30-year-old Indian man, a 35-year-old woman from Boston and a 45-year-old father of four from Utah.
They got the Idea by simply paying attention to their surroundings. They saw a problem and tried to solve it.
2. Build & Leverage Network
To expand their business they needed a website that can manage property listings, payments, etc.
They didn't have any money to hire programmers, so they leveraged their network to find one. Fortunately, Joe's ex-roommate Nate was an engineer.
So they called Nate, and for the next three weeks, they worked out of Joe and Brian's apartment, day in and day out, building the website called Airbedandbreakfast .com.
Their Network helped them when they didn't have money. So learn to build and leverage your Network..
3. Adapt according to the market needs
Now, the next part was to get visitors on their new website.
So, In 2008, they decided to try their luck at the next big tech conference, South by Southwest (SXSW) in Austin, Texas. Their plan was to still target the attendees of big conferences, but on a wider scale.
But Unfortunately, they only got a single booking during that conference. Their plan FAILED.
They thought “We’re Air Bed & Breakfast. The air beds aren’t working out, maybe we could sell breakfast…So they decided to get in the breakfast business.”
Few months later, there was a Democratic National Convention in Denver, Colorado where Obama was set to speak in front of 80,000 people.
They again saw an opportunity, and designed custom Obama and McCain themed cereal boxes at home, they hand-folded the boxes and sealed them with a hot-glue gun, and launched the cheapest cereal in the market.
4. Understand Market Cognitive Bias
They labeled the product as a limited-edition item, they sold them for $40 a box. Weirdly enough, they ended up selling $30,000 of cereal.
Here they used Scarcity Bias, which is the tendency to value things more highly when they are rare or in short supply. When an item is limited edition, people may perceive it as being more valuable or desirable.
This strategy also helped them in getting approved for Y-Combinator program (a startup accelerator).
Paul Graham (founder of Y combinator) allowed them into the program after hearing their Cereal boxes story, he said: “If you can convince people to pay $40 for a $4 box of cereal, maybe you can get strangers to stay in other strangers’ homes.”
At Y-Combinator, they got the resources, and exposure they needed for their business. They continued reaching out to property owners and adding more properties to their site, and managed to get 10,000 users and 2,500 listings.
They also shortened the company name to Airbnb .com to sound more professional.
One month later, they managed to secure $600,000 of funding by Sequoia Capital — one of the most prestigious Venture Capitalists.
And the rest is History.
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It's amazing how 2 people who were once broke & unable to pay rent now own the biggest Home renting platform in the world.
