From Air Mattresses to a $100 Billion Company The Brian Chesky & Joe Gebbia Story

Brian Chesky and Joe Gebbia, founders of Airbnb, were sleeping on air mattresses in their living room, broke and rejected by investors. Today, they run a $100 billion company. How? They refused to quit. Back in 2007, Brian and Joe were living in a tiny, cramped apartment in San Francisco. They were struggling to make ends meet, barely able to pay their rent. At one point, Brian couldn't even afford to buy groceries. When a huge conference came to town and all the hotels were booked, The two friends had a wild idea: turn their apartment into a place for people to crash. They put air mattresses on the floor, called it Air Bed and Breakfast, and advertised it as a cheap, comfortable place to stay. It wasn't glamorous. They didn't have money. They didn't have a team. They didn't even have an official website. But they had heart. They rented out their space to 3 guests, and for the first time in months, they made enough money to pay the rent. But that was just the beginning. They knew they had something special. But every single investor they pitched said no. Some even laughed in their faces, saying it was a terrible idea. The rejection hurt. They were broke, emotionally drained, and struggling to keep the dream alive. But they refused to give up. They sold cereal boxes with custom designs just to keep the lights on. They kept hustling. Finally, after relentless persistence, they secured their first real investment. Airbnb took off, and the world began to take notice. The company went from a few air mattresses on the floor to revolutionizing the entire travel industry. Today it's worth over $100 billion. Brian and Joe went from being broke, rejected, and living on air mattresses to changing the way we travel. If they can push through rejection, failure, and doubt, what's stopping you from making your dream a reality? Don't quit. Keep believing. Your breakthrough is just one step away. If you've been here before, drop a hashtag #believe in the comments below so I can feature you here in a future video. And if you're new, Welcome to Believe Nation, the only channel that helps you believe in yourself daily, one video at a time. Struggling to pay rent in 2007. In 2007, Brian Chesky and Joe Gebbia had just moved to San Francisco after graduating from art school. They were designers from the Rhode Island School of Design, new to the city with no steady jobs, and they were anxious about not being able to pay rent. In fact, they had taken a 3-bedroom apartment but could barely afford even their share of the rent. Desperate for cash, the duo started brainstorming for ways to make extra money fast. As luck would have it, they discovered a golden opportunity right in front of them. A major design conference was coming to San Francisco, and all the hotels in the city were sold out. Thousands of attendees were scrambling for a place to stay. Brian and Joe looked at their empty spare room and then at each other and saw a chance, a crazy idea: air bed and breakfast. What if they turned their apartment into a makeshift bed and breakfast for conference-goers? Joe emailed Brian with an idea: put some air mattresses on the floor and offer cheap lodging with breakfast included. It sounded a bit crazy, but it just might work. They dubbed the project Air Bed and Breakfast since the plan was literally to rent out air beds on their floor and cook breakfast for guests in the morning. Brian and Joe got to work. They bought 3 air beds and set up a simple website advertising a place to stay for $80 per night. They emailed design bloggers, promoted it on social media, and reached out to the conference organizers anything to get the word out. Incredibly, it worked. 3 guests, a woman and 2 men, booked the air mattresses in their apartment for the conference, each paying around $80 a night. For the first time in months, Brian and Joe had money to cover the rent. But not everyone was impressed. At the conference, Brian excitedly told a famous designer he looked up to about their new airbed and breakfast venture. The designer's response was a cold dose of reality. Ryan, I hope that's not the only thing you're working on. Chesky was hurt by the remark. Their hero basically told them that their idea was a joke. Still, he couldn't deny that their crazy idea had put some much-needed cash in their pockets and proven that strangers would pay to sleep on an air mattress in somebody else's home. That seed of a big idea had sprouted, even if few others believed in it yet. And fun fact, many people assume the air in Airbnb means some high-tech or online, Originally, it quite literally stood for those unglamorous air beds on the floor. Also, if you want to take real action out of this video, I made a free worksheet just for you. It covers the top lessons from today, gives you space to write your biggest takeaways, and helps you build a simple action plan. It's 100% free. Just click the link in the description below to go grab it. Let's start building some real momentum in your life and your business. I'll see you there. Failed attempts and rejections. Flush with the small success of that first trial, Brian and Joe decided to keep going. They wondered, Could this concept work for other big events? Early 2008, they targeted the South by Southwest conference in Austin, hoping to replicate their idea for another crowd. They revamped their website, now calling it airbedandbreakfast.com, and even came up with a new tagline: Finally, an alternative to expensive hotels. But that attempt was a flop. The site received only 2 bookings for South by, and one of those was Brian himself trying to make the site look busy. It was a humbling failure that showed them the that their idea needed more work and that demand wasn't automatic. On the positive side, a few people did ask if they could use the site to book accommodations for non-conference travel, which hinted at a larger market beyond just events. Then came summer 2008, which brought a much bigger opportunity and challenge. The Democratic National Convention, DNC, was scheduled in August in Denver. Barack Obama would accept the presidential nomination in front of 80,000 people, and Denver was expecting an enormous influx flux of visitors. Hotels were completely booked, just like in San Francisco before. Sensing another chance, the founders hustled harder than ever. They promoted Air Bed and Breakfast, relentlessly contacting media and bloggers. The result: 800 homes listed on their site and 80 bookings by travelers during the DNC. The little website even crashed from the surge in online traffic at one point. And for a moment, it seemed like they'd hit the jackpot. Air Bed and Breakfast was featured in the press, and people were actually using it. Success at last! But it was short-lived. As soon as the convention ended, the flood of users dried up. The traffic spike was just that, a spike, not sustainable growth. Bills were piling up again, and the founders were no closer to a viable long-term business. By late 2008, Brian and Joe were on the edge of another financial crisis. Worse, every attempt to find investors had led to rejection. The founders pitched their idea to anyone who would listen, dozens of angel investors, and they heard no from every single one. In fact, after meeting with 15 different investors, all 15 passed on the opportunity. About half of them didn't even bother to reply to Brian and Joe's emails at all. The notion of strangers renting space in each other's homes sounded crazy to Silicon Valley investors in 2008, and Brian and Joe got the door slammed in their face. Soon they were beyond broke with no investors and no income. They resorted to living off of credit cards. One card turned into many, and Brian maxed out cards until he was $30,000 in credit card debt just to keep their fledgling website online. He later recalled those days as absolutely terrifying. I'd wake up in the morning, and had this panic. Everyone thought it was crazy. No one supported us. We had no money. It was the best weight loss program ever. Chesky was literally losing weight from stress and skipping meals. The situation was that important, that dire. By the end of 2008, the company, which was now being called Airbnb for short, had its back against the wall. They were out of cash, deep in debt, and still nowhere near profitable. It seemed like the end of the road for them. Let's sell breakfast. The cereal lifeline. Facing a cash crunch and nothing left to lose, Brian and Joe decided to pivot in a completely unexpected way. Their startup was called Air Bed and Breakfast, and the air beds weren't making enough money. So why not focus on the breakfast? It started as a half joke during a desperate brainstorming session. It was October 2008, right in the heat of the U.S. presidential election. Brian and Joe noticed the intense enthusiasm around the Obama versus McCain race, and they saw an opportunity. Using the design skills, they created limited edition cereal boxes featuring the two presidential candidates: Obama O's, the cereal of change, and Captain McCain's, a maverick in every bite. The boxes were playful parodies, brilliantly designed to look like real cereal. The Obama O's box, for example, had a cartoon of Obama on the front and came with a tagline playing on his campaign slogan. The founders tapped their network, including a friend who had a printing hookup, to print hundreds of cardboard boxes with these designs. Then they went to the supermarket and bought tons of cheap bulk cereal, the kind that comes in generic bags. And back at their apartment, Brian and Joe, with their small team, hand-packed each box, pouring cereal into the custom boxes and sealing them with hot glue guns on the living room floor. It was painstaking assembly line work that went on for hours. It was like an arts and crafts project, Jebria later joked, but they were determined to make any money they could to keep their dream alive. They marketed Obama-O's and Captain McCain's as collector items, a fun novelty for the election season. Despite the $40 price tag per box, the cereal sold like hotcakes. It turned out people love the idea of supporting two scrappy entrepreneurs and getting a piece of political memorabilia cereal in return. In the end, Brian and Joe managed to sell about $30,000 worth of cereal in a matter of weeks. That cash infusion was just enough to pay off their credit card debt and cover expenses a little bit longer. This weird cereal stunt had literally kept Airbnb alive when they were on the brink of collapse. Brian and Joe even embraced the joke fully, calling themselves cereal entrepreneurs. It was a pun to lighten the dark days. Importantly, the cereal lesson taught them a valuable lesson. When you have almost no resources, extreme creativity and hustle can save the day. They refused to let the company die. If that meant turning into cereal salesmen for a month, then so be it. The Y Combinator breakthrough. The $30,000 from cereal boxes gave the founders a brief reprieve, but it was not a permanent solution. By the end of 2008, a few months after the cereal miracle, their bank balance was back to almost zero. They needed a more sustainable lifeline. In a last-ditch effort, Brian and Joe applied to Y Combinator. That was a prestigious startup accelerator program in Silicon Valley that gives seed funding and coaches young companies. If they could get into Y Combinator, they'd receive a small investment and more importantly, mentorship and credibility. Initially, Paul Graham, uh, Y Combinator's co-founder, was not impressed with Airbnb. The idea of strangers staying in strangers' homes sounded weird and risky to him, just like it had to other investors. In January 2009, Brian and Joe arrived at Y Combinator to make their pitch. The meeting didn't start well. Graham was skeptical and questioned whether this airbed and breakfast thing could ever be more than a niche for conferences. But then the founders pulled out their secret weapon: a box of Obama O's cereal. They told Paul Graham the whole story— how to fund their startup. They had designed and sold breakfast cereal as a one-off gimmick and made $30,000 from nothing. Graham was astonished. If you can convince people to pay $40 for a $4 box of cereal, maybe you can get strangers to stay in other strangers' homes, he said, suddenly seeing the determination and the hustle behind these two founders. That moment changed everything for them. Airbnb was accepted into Y Combinator's winter 2009 batch on the spot. The founders finally caught a break. The program gave them about $20,000 in seed money for a 6% stake in the company. Not a huge amount of money, but enough to cover living expenses and keep the site running. More importantly, Y Combinator provided mentorship and structure. Brian, Joe, and their third co-founder Nathan, who was an engineer, moved into a small apartment in Silicon Valley and spent 3 intense months focusing on nothing but improving Airbnb. They coded new features, they fixed bugs, they learned how to present their business to investors. Under Paul Graham's guidance, they refined their strategy and they finally started to get some real traction. By the end of the 3-month accelerator, the Airbnb team had made enough progress to convince venture capitalists to take a chance on them. In April 2009, at Y Combinator's Demo Day, Brian pitched Airbnb to a room full of investors, this time with a working website, real users, and the credibility of Y Combinator. It paid off. They secured about $600,000 in investor funding led by Sequoia Capital, a top-tier venture capital firm. After more than a year of hearing no, Airbnb finally got its yes. Brian later said that was the end of the truly sleepless nights. For the first time, they had enough money in the bank to not worry about surviving tomorrow. The founders could finally draw a tiny salary and focus on growing the business. Without the immediate fear of always running out of cash. Hustling to make it work. Getting initial funding was a huge milestone, but Airbnb was far from an overnight success. Even in 2009, after Y Combinator, the website was small. The concept of home sharing was still very new, and trust was a big issue for users. The founders knew that to really grow, they had to make Airbnb something people loved. Paul Graham had taught them an important mantra: make something people want. One of his famous bits of advice to the Airbnb team was that it's better to have 100 users who love you than a million users who sort of like you. Brian and Joe took that to heart. They realized they needed to deeply understand and delight their early users if they ever wanted word of mouth to spread. So they looked at their user data and they noticed most of their bookings were happening in one city, New York. So instead of staying in California, Brian and Joe did something unorthodox. They flew to New York City to meet their users in person. They literally went door to door meeting Airbnb hosts and guests and asking a lot of questions. This was not a scalable strategy, but it proved to be incredibly insightful. They saw firsthand how their hosts were using and struggling with the service. Two big problems jumped out. First, hosts didn't know how to price their listings effectively. Many were renting rooms for way too cheap or too expensive. Second, the photos on the listings were often poor quality. They were dark, blurry snapshots that made even nice apartments look pretty unappealing. Because most hosts weren't professional photographers, their listings weren't showing their space in the best light, literally. So Brian and Joe rolled up their sleeves to solve these two problems. They became photographers and consultants for their own users. They would show up at a host door with a professional camera, take high-quality photos of the entire apartment, and even help write better descriptions and set appropriate prices. The hands-on attention started to make a real difference. Guests were browsing the site, were much more likely to book a room that had bright, wide-angle photos of a tidy, inviting space than one with blurry pictures. Airbnb's conversion rate improved. In fact, one early growth hack came directly from these visits. After upgrading listings in New York with beautiful photos and better descriptions, Airbnb's weekly revenue in that market nearly doubled. The founders realized they had hit on something crucial. Trust and user experience were everything in this business. By personally photographing their host space and fine-tuning each listing, the Airbnb team made their platform far more appealing to new users. The high-quality images gave the site a much more professional, trustworthy feel, which boosted guest bookings. Hosts were thrilled to see their places looking great online, and many started receiving reservations when they hadn't before. This kind of white-glove, unscalable effort showed Airbnb's commitment to its community. It helped kickstart the network effect with happier hosts and guests in New York City. Word began to spread and more people in other cities decided to give Airbnb a try. As they kept engaging with users, Brian and Joe also listened to feedback and removed early obstacles that didn't make sense. For example, originally, airbed and breakfast implied hosts should provide breakfast in the morning, but some potential hosts just wanted to rent out their entire apartment or an extra house they weren't living in. No breakfast or personal interaction required. In the beginning, Airbnb's rules didn't really cater to that scenario. However, after hearing the requests, the founders quickly dropped the requirement to serve breakfast and allowed hosts to list entire homes, apartments without sharing any space. They stopped focusing only on air mattresses. You could list a real bed or any kind of accommodation. And these tweaks dramatically expanded Airbnb's appeal and their market. Suddenly, Airbnb wasn't just a site for event couch surfers, users. It could be used by anyone, anywhere, traveling for any reason. As a result of these changes and the personal touch that they were giving the hosts, the company saw its first consistent growth. In fact, once they made these pivots, Airbnb finally hit a modest but meaningful milestone. About $1,000 of revenue per week was coming in, and that number would only climb from there. Changing the world of travel. Airbnb had survived make or break early years by the skin of its teeth. Now armed with a bit of funding, a passionate user base, and an improving product, it began to truly take off. The years from 2010 to 2013 saw explosive growth. The company expanded beyond the US to Europe and Asia and beyond as people across the world discovered the concept of home sharing. By 2011, Airbnb was growing so fast that major venture capitalists came knocking at their door. In fact, in one funding round, some of Silicon Valley's biggest venture capital firms invested $100 $112 million, giving Airbnb a valuation over $1 billion and officially crowning it as a tech unicorn. This was just a few years after those same investors had laughed at the idea, right? What a difference a bit of traction can make. With each passing year, the numbers multiplied. Millions of travelers signed up, and hundreds of thousands, then millions, of hosts began to open their homes. The business that started with 3 air mattresses in a single apartment spread to over 220 countries and regions worldwide. And as of today, Airbnb reports a community of over 4 million hosts who have welcomed more than 800 million guest stays globally. The company that hotel executives once dismissed as a silly couch surfing scheme grew into a true disruptor of the hospitality industry. Traditional hotels were forced to take notice and adapt as Airbnb offered travelers something new. The chance to stay in real homes and live like a local, often at a lower cost than a hotel. The way people travel fundamentally changed. And remember those early investors who wouldn't give Brian and Joe a dime in 2008? By the late 2010s, Airbnb was one of the most valuable startups in the world. Finally, in December 2020, Airbnb went public on the Nasdaq stock exchange, a milestone that many doubted would ever come. On its first day of trading, Airbnb's valuation exceeded $100 billion, making it more valuable than most of the world's top hotel chains combined. The company that started as an act of desperation to pay rent had become a Silicon Valley titan. Brian, Joe, and Nathan were billionaires on paper, but more importantly, they had realized their vision of creating an entirely new category of travel accommodation. Their story had come full circle from renting airbeds to strangers to running a globally recognized brand that millions of people trust trust when they travel. It wasn't all smooth sailing, of course. Along the way, Airbnb faced challenges from trust and safety issues, like the famous incident in 2011 when a host's apartment was trashed, prompting Airbnb to introduce a $1 million host guarantee for protection, to regulatory battles in cities like New York and San Francisco over short-term rental laws. Each time, the company had to learn, adapt, and sometimes fight to keep growing. But through every challenge, Brian and Joe went back to their core principles: listen to users, solve problems creatively, and don't give up. Those principles had gotten them this far, and they would guide Airbnb into the future. Today, Brian Chesky is still CEO of Airbnb, and Joe Gebbia, who has since stepped back from the day-to-day operations to pursue other projects within the Airbnb ecosystem, remains an influential voice in the company's vision. They have pledged to give back. Both founders are now signatories of the Giving Pledge, promising to donate a majority of their wealth charitable causes. And it's amazing to think that just a decade and a half ago, they were both broke art school grads peddling cereal boxes just to stay afloat. What's your excuse? Brian Chesky and Joe Gebbia started with $0 in the bank, maxed out credit cards, an idea that most people thought was crazy. They had to face ridicule. They lived on ramen and cereal and literally put their last hopes into glue gunning cereal boxes together to keep their dream alive. They faced failure after failure, yet kept finding creative ways to overcome each one. And in the end, they revolutionized an industry and achieved a level of success they could never have imagined back in that cramped apartment in 2007. So if they can do it, why not you? The next time you're feeling discouraged about your own dream or your project, think of Brian and Joe inflating air mattresses on their apartment floor and getting laughed at by investors. Think of them shipping cereal boxes just to buy themselves a few more months of runway. Think of how many times they heard no but chose to keep going until eventually one yes changed everything. And congratulations, you're one video closer to who you're meant to be. Believe. To watch the incredible story of Uber's Travis Kalanick, check the video right there next to me. I think you'll love it. Continue to believe, and I'll see you there. Travis Kalanick and Garrett Camp were stranded in Paris. No taxis, no rides, nothing. That one moment of frustration led to Uber, a $90 billion company that changed the world.