Let’s say a friend of yours graduates from college this year. They get placed in a highly reputed company through campus recruitment. However, the offer is withdrawn by the recruiter before the joining, on account of uncertainties brought in by the pandemic. Your friend tries to look for a new job, but to their utter despair. However, there’s always light at the end of the tunnel, isn’t there? This light is what I call entrepreneurship.
This is one of the examples of people who have been rendered unemployed owing to these stressful times. Now ideally, these people would be working in a bank or IT company, but the recession or arrival thereof, has shoved them out of the corporate world. Instead of running in this mindless rat race, one of them decides to walk the dreaded street where hundreds of businesses start everyday and thousands of them end.
The characters in the story of Airbnb were a part of this herd. Like millions of others they couldn’t afford their rent. The duo, Joe Gebbia and Brian Chesky, who had met at college, ditched the traditional way to earn money and pay rent and decided to invite some paying guests over. Using the skill of coding and designing available at home, they launched a website. They had three people come over and sleep in their loft on air mattresses. But that was pretty much it for their first website.
It was a few months later, when the third co-founder, Nathan Blecharczyk came in. A technical architect, he was one of their old roommates before it all started. Upon giving more time and thought to their idea, they somehow landed on the idea of a roommate matching service. They worked on it for four whole months only to realise that Roommates.com had already grabbed the first mover advantage. Oscillating back to the original plan of bed and breakfast, they launched a new website for the second time, but not a single soul visited the wesbite, let alone their property.
But as Bryan Chesky rightly quoted, “If you launch and no one notices, just launch again”. And, so they did, putting their faith in the old adage – third time’s a charm. In August 2008, they launched again. This time, they had two customers. Unsurprisingly, Chesky was one of them.
But soon after this, they identified an opportunity to get famous. It was the 2008 Democratic National Convention in Denver. Their math suggested that the supply of hotel rooms in Denver was not enough to meet the demand. They contacted a press agency when this mismatch came to light. The agency gave them the attention they deserved. But this fame was short lived. It subsided quickly like a wave in the ocean. But waves keep coming back, don’t they?
The immediate plan was to portray themselves as a directory of events. Every time an event came up, the website would witness multiple bookings. However, this is not how they projected their business to look like in the long run. The hunt for investors, therefore, began. As usual, they weren’t off to a good start, with a dozen of potential investors not even replying to their email, let alone setting up a meeting. It was so bad that one of the venture capitalists walked out of the cafe while Bryan was pitching his business. The founders knew that it was a novel idea, but nobody wanted to volunteer and become their guinea pig.
They decided it was time to rethink their business. The latter half of their name wasn’t being given the required attention. The focus was now shifting to improve the breakfast in bed and breakfast. To fund their startup, they began selling election-themed cereals. The Airbnb founders managed to make a whopping $30,000 selling the Obama O’s and Cap’n McCains. That’s when they were branded ‘Cereal Entrepreneurs’. But as Nathan revealed in one of his talks, the $30,000 was equal to the cost itself. They came back to the point of zero revenue.
They requested to arrange a meeting with Paul Graham, a venture capitalist. At the outset, he mocked their business plan asking why people were participating in this at all? After rounds of unfiltered and unapologetic criticism, Obama O’s cereal caught his attention. He acknowledged their innate creativity and the effort that they were willing to put in. Having achieved this milestone, the trio knew no bounds thereafter. It was a hockey stick growth despite the tumbling economy in 2009.
They personally visited New York’s BNBs and advised owners to improve their profiles, lower their prices and professionally photograph the place of stay. The guests in one country, largely impressed by the idea of Airbnb, would make the decision to don the owner’s hat back home. This is how their startup spread to 192 countries and currently stands at a valuation of $31 billion.
Their USP is very obvious. You stay at a house in a foreign country and experience a local’s life instead of a tourist’s. You share your culture and also your bed, but not quite literally. This is what makes the community stick together.
There had been news about Airbnb going public, but I think we can safely say that that’s out of the picture for now. They have dodged the opportunists who started Fairbnb, an ethical alternative of Airbnb. The company is seeing its worst phase this year and will continue to do so for the year ahead. But that’s a story for another time. The point here is that necessity is really the mother of invention. The unemployment and housing crisis were the two most crucial ingredients of this recipe. I’m sure that if someone ever claims that starting startups is for rich kids, we will remind them that Airbnb happened because the founders literally could not pay their rent.