How Airbnb Solved a Lodging Crisis and Got Its Big Break

by Ellen Lee on February 15, 2011
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Brian Chesky was an aspiring entrepreneur trying to figure out how to make next month’s rent when he stumbled upon the idea that would become Airbnb.

A design conference was in town in San Francisco and all the hotel rooms were booked. That’s when Checky and roommate Joe Gebbia had their “ah-ha moment.” They offered their air mattress to conference attendees looking for a place to crash — and they got takers.

Shortly thereafter, Chesky, Gebbia, and Nathan Blecharczyk launched Airbnb, an “airbed bed and breakfast.” It lets people offer their couch, their spare bedroom, or their Lake Tahoe retreat for rent for short periods of time. Since its start in August 2008, it’s expanded to offer travelers a place to stay in more than 8,000 cities and upwards of 170 countries.

One of the startup’s biggest hurdles was convincing people to sign up and try it out. How could they get people to list their place for rent? How could they persuade travelers to book a place in someone’s home instead of a traditional hotel room?

“We built the site, and had absolutely no idea how to get people all over the world to use it,” Chesky says.

Then they found their answer: the Democratic National Convention in Denver in the summer of 2008.

Tens of thousands of people were flooding the city for the big event but all the hotels were booked and they had no place to stay. Airbnb stepped in and offered a solution: People looking for some extra cash could host and people needing a place to crash could book it. Airbnb’s service was just the solution required and it arrived at just the right time, and during the convention it drew the attention of the New York Times and CNN, which published pieces about Airbnb.

The momentum grew from there. The struggling economy helped, as people looking for some help to pay their rent or mortgage turned to Airbnb for a little extra cash. For travelers, it also offered a bargain, such as a living room couch in a San Francisco home for $25 a night.

It also enrolled in Y Combinator, which offered early funding and coaching. It pushed the trio to focus solely on Airbnb, adding the features and elements required to attract more users and introducing them to the movers and shakers in Silicon Valley.

Nowadays, it’s not just couches that travelers can rent on Airbnb, but also igloos, castles, and other exotic getaways. More than 800,000 nights have been booked through the site and they expect to hit 1 million this year. Things are looking up from here: Last year, the company raised $7.2 million in venture capital funding from Sequoia Capital and Greylock Partners.

Interested in Airbnb? Here’s how it works, in the company’s own words.

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