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December 2020  
  
To celebrate Airbnb's IPO and to help future founders, I thought it might be
useful to explain what was special about Airbnb.  
  
What was special about the Airbnbs was how earnest they were. They did nothing
half-way, and we could sense this even in the interview. Sometimes after we
interviewed a startup we'd be uncertain what to do, and have to talk it over.
Other times we'd just look at one another and smile. The Airbnbs' interview
was that kind. We didn't even like the idea that much. Nor did users, at that
stage; they had no growth. But the founders seemed so full of energy that it
was impossible not to like them.  
  
That first impression was not misleading. During the batch our nickname for
Brian Chesky was The Tasmanian Devil, because like the cartoon character he
seemed a tornado of energy. All three of them were like that. No one ever
worked harder during YC than the Airbnbs did. When you talked to the Airbnbs,
they took notes. If you suggested an idea to them in office hours, the next
time you talked to them they'd not only have implemented it, but also
implemented two new ideas they had in the process. "They probably have the
best attitude of any startup we've funded" I wrote to Mike Arrington during
the batch.  
  
They're still like that. Jessica and I had dinner with Brian in the summer of
2018, just the three of us. By this point the company is ten years old. He
took a page of notes about ideas for new things Airbnb could do.  
  
What we didn't realize when we first met Brian and Joe and Nate was that
Airbnb was on its last legs. After working on the company for a year and
getting no growth, they'd agreed to give it one last shot. They'd try this Y
Combinator thing, and if the company still didn't take off, they'd give up.  
  
Any normal person would have given up already. They'd been funding the company
with credit cards. They had a _binder_ full of credit cards they'd maxed out.
Investors didn't think much of the idea. One investor they met in a cafe
walked out in the middle of meeting with them. They thought he was going to
the bathroom, but he never came back. "He didn't even finish his smoothie,"
Brian said. And now, in late 2008, it was the worst recession in decades. The
stock market was in free fall and wouldn't hit bottom for another four months.  
  
Why hadn't they given up? This is a useful question to ask. People, like
matter, reveal their nature under extreme conditions. One thing that's clear
is that they weren't doing this just for the money. As a money-making scheme,
this was pretty lousy: a year's work and all they had to show for it was a
binder full of maxed-out credit cards. So why were they still working on this
startup? Because of the experience they'd had as the first hosts.  
  
When they first tried renting out airbeds on their floor during a design
convention, all they were hoping for was to make enough money to pay their
rent that month. But something surprising happened: they enjoyed having those
first three guests staying with them. And the guests enjoyed it too. Both they
and the guests had done it because they were in a sense forced to, and yet
they'd all had a great experience. Clearly there was something new here: for
hosts, a new way to make money that had literally been right under their
noses, and for guests, a new way to travel that was in many ways better than
hotels.  
  
That experience was why the Airbnbs didn't give up. They knew they'd
discovered something. They'd seen a glimpse of the future, and they couldn't
let it go.  
  
They knew that once people tried staying in what is now called "an airbnb,"
they would also realize that this was the future. But only if they tried it,
and they weren't. That was the problem during Y Combinator: to get growth
started.  
  
Airbnb's goal during YC was to reach what we call ramen profitability, which
means making enough money that the company can pay the founders' living
expenses, if they live on ramen noodles. Ramen profitability is not,
obviously, the end goal of any startup, but it's the most important threshold
on the way, because this is the point where you're airborne. This is the point
where you no longer need investors' permission to continue existing. For the
Airbnbs, ramen profitability was $4000 a month: $3500 for rent, and $500 for
food. They taped this goal to the mirror in the bathroom of their apartment.  
  
The way to get growth started in something like Airbnb is to focus on the
hottest subset of the market. If you can get growth started there, it will
spread to the rest. When I asked the Airbnbs where there was most demand, they
knew from searches: New York City. So they focused on New York. They went
there in person to visit their hosts and help them make their listings more
attractive. A big part of that was better pictures. So Joe and Brian rented a
professional camera and took pictures of the hosts' places themselves.  
  
This didn't just make the listings better. It also taught them about their
hosts. When they came back from their first trip to New York, I asked what
they'd noticed about hosts that surprised them, and they said the biggest
surprise was how many of the hosts were in the same position they'd been in:
they needed this money to pay their rent. This was, remember, the worst
recession in decades, and it had hit New York first. It definitely added to
the Airbnbs' sense of mission to feel that people needed them.  
  
In late January 2009, about three weeks into Y Combinator, their efforts
started to show results, and their numbers crept upward. But it was hard to
say for sure whether it was growth or just random fluctuation. By February it
was clear that it was real growth. They made $460 in fees in the first week of
February, $897 in the second, and $1428 in the third. That was it: they were
airborne. Brian sent me an email on February 22 announcing that they were
ramen profitable and giving the last three weeks' numbers.  
  
"I assume you know what you've now set yourself up for next week," I
responded.  
  
Brian's reply was seven words: "We are not going to slow down."  
  
  
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