In 2007, Brian Chesky and Joe Gebbia couldn’t afford their San Francisco rent. A design conference was coming to town, and hotels were sold out. They had an idea: inflate three air mattresses in their living room and rent them to conference attendees for $80 a night. They called it ‘Air Bed & Breakfast.’ It worked, but barely—they made just enough to cover rent. When they tried to turn it into a real business, nobody cared. Investors rejected them repeatedly. They were so broke they sold cereal boxes to survive. The idea of strangers sleeping in your home seemed absurd and dangerous to most people.
The Turning Point
The turning point came in two waves. First, they got into Y Combinator in 2009, which gave them $20,000 and credibility. Paul Graham’s advice was brutal but transformative: stop trying to scale and go meet your users in person. Chesky flew to New York and stayed with Airbnb hosts, discovering their photos were terrible. He rented a camera and started photographing listings himself. Bookings doubled. The second breakthrough came during the 2008 Democratic National Convention when they listed properties in Denver. Suddenly, the use case became clear: peer-to-peer lodging for major events when hotels are full or overpriced.
The Strategy
Chesky’s strategy was obsessive focus on trust and experience. He built a robust review system so guests and hosts rated each other, creating accountability. He introduced professional photography services to make listings beautiful. He added insurance to protect hosts from damage. He created Experiences, allowing hosts to offer local tours and activities, deepening the platform. Most importantly, he positioned Airbnb not as cheap hotels, but as authentic local experiences—’Don’t go there. Live there.’ He also fought regulatory battles in every major city, refusing to back down when hotels lobbied against him.
The Results
Airbnb went public in December 2020 at a valuation of $100 billion, one of the largest IPOs in history. The platform now lists over 7 million properties in 100,000 cities worldwide, with over 1 billion guest arrivals to date. Brian Chesky’s net worth exceeds $10 billion. Airbnb fundamentally disrupted the $1.5 trillion hospitality industry, forcing hotels to rethink their entire model. What started with three air mattresses became a verb—people now say they’re ‘Airbnb-ing’ instead of staying at hotels.
