“Great companies are started by people just solving their own problems” – Chesky The cliché “experience is the best teacher” best explains the invaluable experiential insights shared by Brian Chesky of AirBnB. In an interaction with African entrepreneurs during the recently concluded Global Entrepreneurship Summit (GES) in Kenya, the co-founder of the US$25.5 billion peer-to-peer
“Great companies are started by people just solving their own problems” – Chesky
The cliché “experience is the best teacher” best explains the invaluable experiential insights shared by Brian Chesky of AirBnB. In an interaction with African entrepreneurs during the recently concluded Global Entrepreneurship Summit (GES) in Kenya, the co-founder of the US$25.5 billion peer-to-peer apartment rental service shared insightful experiences and lessons drawn from the challenges faced by AirBnB with African entrepreneurs during its founding days.
AirBnB was co-founded by Geddia and Chesky at a time when he (Chesky) was down and low. Growing up, Chesky never thought of becoming an entrepreneur. In fact, he had promised his mother he will get a job with health insurance after graduating from the Rhode Island School of Design, which he did. But later quit when he wasn’t enjoying the work. With just $1,000 in the bank, Chesky packed his things and drove to San Francisco in October 2007.
“I get to San Francisco and Joe (his co-founder) tells me rent is $1,150. I thought what am I going to do? I probably should have asked [the cost of renting] before I moved up to San Francisco.”
But that weekend an international design conference was being held and most hotels were fully booked.
“We said: ‘What if we turned our house into a bed and breakfast for the design conference?’ Unfortunately I didn’t have any beds. But Joe had just gone camping and had three air mattresses. We inflated them and we called it the AirBed and Breakfast,” said Chesky.
The small things in an entrepreneur’s life that they would like to see changecan become big business, even if initially it doesn’t seem like a “huge world problem” – Chesky
Although Airbnb is a success today, eight years ago many people didn’t think it would ever take off. Even Chesky’s mentor thought it a poor idea and suggested he should look at other options.
“I remember telling my mom about Airbnb and [she] said…‘let me send you money. That is crazy, you cannot have strangers staying at your home’,” he recalled.
“If you start a company you have to be willing to be ridiculed and thought of as ridiculous. If you have an idea most people will think it’s crazy – and if they didn’t think it was crazy maybe they’d have done it themselves.”
His mother’s reservations did not deter them as they opened their home to three strangers and made over $1,000. They also built friendships with their guests and the idea of meeting new “ordinary people” and making extra money became attractive. Voila! A company was birthed. But the road wasn’t all smooth as Chesky reveals.
HITTING ROCK BOTTOM:
In 2008, Chesky received many rejections from investors. He was trying to raise $150,000 in exchange for 10% of the company which would have given it a valuation of just $1.5m.
To survive, the duo relied on credit card debts and in just a year amassed between $60,000 and $70,000 in debt. This was a frustrating time, and with every rejection by people who were smart, experienced and had a good reputation, Chesky began to believe them.
“I would go to bed at night, my heart pounding [unable to] sleep. I would get up [wondering] how I got myself in this position? This was probably rock bottom.”
“We weren’t sure if we were going to continue working on Airbnb. We almost stopped working on it. [But] I thought back to that very first weekend with those three people that stayed with us. We believed that if people could experience what we experienced that weekend that this would be an idea that would spread around the world.”
However, with much perseverance and belief, 2009 became the year for AirBnB when one of the advisors at Y combinatory- an incubator they had enrolled in urged them to shift focus from trying to scale the business, to offering better service to the few customers they had. The duo flew to New York, which was their biggest market with 25 hosts, and visited them all. One suggested Airbnb should have photographers to take pictures of the homes so Gebbia and Joe got cameras and became the company’s photographers. And to offer better customer service the two put their mobile phone numbers on the website.
Later in the year as the housing crisis hit the US, many people started using Airbnb to raise extra income to save their homes.
“Little by little… city by city it started growing. It started growing because we stopped focusing on growing, we stopped focusing on being successful – and we started focusing on building something people love.”
Adapted from ‘how we made it in Africa’.