What is the history of Airbnb? How did the company grow from a seedling to a billion-dollar juggernaut?
The history of Airbnb is a success story of an unassuming start-up started by two housemates who, strapped for cash, were looking for a “way to make a few bucks.” Little did they know that they were to become the founders of one of the most valued companies in the world.
Read about the history of Airbnb from 2007 to 2016.
2007-2016: The History of Airbnb
Airbnb epitomizes disruptive innovation. The company has disrupted the hospitality industry and created a brand new travel lodging experience. Here is the history of Airbnb from 2007 to 2016.
2007-2009: From Conception to Inception
Sept 2007: Brian Chesky is in Los Angeles, working at a design firm and making furniture on the side. Joe Gebbia is currently working at a book publisher and making CritBuns cushions on the side. Gebbia sends Chesky a cushion, and Chesky makes up his mind to live in SF. Strapped for cash, Chesky asks if he can rent the couch for $500/mo instead of paying for a bedroom. Gebbia declines, saying Chesky needs to pay for a full bedroom to make bills work.
Sept 22 2007: A design conference in SF is coming up. Gebbia sends Chesky an email proposing a “way to make a few bucks – turning our place into a designer’s bed and breakfast.”
Sept 25 2007: They launch airbedandbreakfast.com with wordpress, and circulate the site to city design blogs.
Oct 2007: Amol Surve, is their first guest. The idea doesn’t immediately strike them as THE idea – they continue brainstorming ideas for new companies over the next three months.
March 2008: For South by Southwest, they launch a new version of the website, with Nathan Blecharczyk as engineer. They email anyone in Austin who listed their room on Craigslist to sign up for AirBed & Breakfast. They get two reservations – one being Chesky. Chesky meets with Michael Seibel of Justin.tv who offers to introduce him to angel investors.
April-August 2008: Blecharczyk moves back to Boston, considering Airbnb just a side project. They plan for Denver’s DNC in August and launch a 3rd version of the site, making search easier. They meet with angels and VCs, all of whom pass. Chesky and Gebbia are getting deeper into debt.
August 2008: 80 people use service to stay in Denver, and they get press mentions, but after DNC the # of reservations per week drops below ten. To keep funding themselves during the debates, they create Obama-O’s and Cap’n McCain cereal boxes. They get press and sell out in three days, earning $39 * 500 boxes = ~$20k.
- Beforehand, Nate and Seibel are dismayed, thinking it’s a dumb idea and a distraction. Paul Graham later uses this as an exemplar of grit.
Winter 2008: Airbnb enters startup incubator YCombinator. In what is now part of startup lore, Airbnb notices that hosts in New York aren’t advertising their properties appealingly. Constrained by budget, Chesky and Gebbia personally visit hosts in the guise of professional photographers and take photos to improve listings.
March 2009: Greg McAdoo at Sequoia convinces Airbnb not to pitch at YC demo day, instead investing $585k for a 20% stake.
Through 2009: Chesky feels success isn’t coming quickly enough. “When you’re starting a company it never goes at the pace you want…You start, you build it, and you think everyone’s going to care. But no one cares, not even your friends.”
Late 2009: Airbnb starts two growth campaigns centered around Craigslist: 1) email anyone who posts a rental property on Craigslist; 2) in the reverse, allow Airbnb users to cross-post their Airbnb listing to Craigslist frictionlessly. It also optimizes Google and Facebook ads, delivering customized ads like “Better than couchsurfing.com!” and “Rent your room to a Yogi” (based on Facebook interest) respectively.
2010-2012: Airbnb Grows
Summer 2010: NYC votes on a law making short-term subletting illegal.
Fall of 2010: Airbnb has booked 700,000 nights in 8,000 cities. It’s introduced an iPhone app. It raises a $7.2MM Series A from Reid Hoffman and Greylock.
April 2011: German company Rocket Internet launches Wimdu, a clone of Airbnb. Soon after Oliver Samwer meets with Airbnb founders and investors, showing their formidable operations and financial backing, and offers an ultimatum: merge with us or we will make your life miserable.
Jul 2011: Airbnb bookings have been growing 40-50% every month. Andreessen Horowitz leads a $112MM Series B at $1.3B valuation, with Jeff Jordan, a former eBay president.
Jul 2011: Host EJ publishes an account of home destruction by a guest: “they smashed a hole through a locked closet door…they used my fireplace to reduce mounds of stuff to ash.” Chesky responds in Techcrunch that Airbnb had been in close contact. EJ rebuts, saying compensation never came. Tech press has a field week piling on.
- Airbnb previously had a libertarian view of users self-policing each other and removing bad actors through reviews. Now they offered a host of improvements: a $50,000 damage guarantee, 24-hour customer service hotline, and a new trust and safety department. (Next year the guarantee would increase to $1 million).
Aug 2011: Airbnb moves to new offices at 99 Rhode Island St. Chesky rejects Wimdu’s offer to merge and starts international expansion, opening offices in 10+ cities.
Jan 2012: Airbnb announces the opening of its international offices. Its approach vs Wimdu is to export trust and a “soul in the business.” Ultimately, US travelers to Europe didn’t care about Wimdu’s early lead, and European travelers to the US had to use Airbnb.
- Airbnb also reaches 5 million nights booked.
Jun 2012: Airbnb reaches 10 million nights booked.
2013-2016: Airbnb Growth and Controversies
Late 2012-2013: A NYC host Nigel Warren is fined over $40,000 for fees. Initially getting little help from Airbnb, he gets covered in the New York Times, after which he gets more serious legal support.
- Warren eventually has most charges dropped and the fee reduced to $2,400, but Airbnb believes any punishment would set a bad precedent globally. Airbnb appeals and Warren is exonerated, feeling “happy but not grateful” given they swooped in primarily to protect their business.
Aug 2013: NYC subpoenas Airbnb to provide contact info and earnings for all Airbnb hosts in New York State.
- In Oct 2013, Airbnb files a motion to reject the subpoena. It also commissions a survey of Airbnb’s economic impact on NYC, arguing it generates $632MM in activity in one year, and that Airbnb guests stay longer and spend more than hotel guests.
2013: Airbnb has a $250MM revenue run rate and 500 employees.
Oct 2013: Airbnb raises a $200MM Series C from Founders Fund at a $2.5B valuation (up from $1.3B in Jul 2011).
Dec 2013: Airbnb moves to 72k square feet of office space at 888 Brannan St. It features meeting rooms modeled after Airbnb listings around the world and after the founders’ original apartment. It spends more than $50MM on renovation and $110MM on a 10-year lease.
Dec 30 2013: A guest dies of carbon monoxide poisoning in an Airbnb in Taipei. The family wants to sue Airbnb and settles for $2MM. This prompts Airbnb to require smoke and CO detectors, though there is no enforcement.
April 2014: Back in NYC legal issues, a judge rules the subpoena is too broad. Airbnb agrees to release a limited dataset. The attorney general later concludes that ⅔ of Airbnb rentals violated city law.
April 2014: Airbnb raises a $475MM Series D at $10B from T. Rowe Price, TPG, and Sherpa Capital.
Summer 2014: Portland is the first city to strike a deal with Airbnb, legalizing short-term rentals (below 90 days when the owner isn’t present) and requiring registration with the city. In return, Airbnb collects a 11.% lodging tax.
- Airbnb starts rolling out similar structures with cities worldwide, offering taxes as an olive branch.
- In reality Airbnb does little to enforce the regulation, not requiring a registration ID to sign up.
July 2015: Chesky travels with Obama to Kenya for an entrepreneurship summit.
Fall 2015: In San Francisco, Proposition F is put on the ballot. It reduces rentable host-absent days from 90 to 75, makes renting entire apartments illegal, and allows citizens to sue neighbors.
- Airbnb releases snarky ads with test like “Dear public library system: we hope you use some of the $12 million in hotel taxes to keep the library open later.” These go over very poorly.
- After campaigning from both sides, it is rejected 55-45%.
May 2016: Airbnb is sued for racial discrimination on the site. The suit is blocked because of an arbitration clause, but Airbnb releases a plan to reduce discrimination.
June 2016: SF passes an ordinance fining Airbnb anytime a host violated a local law. NYC passes a bill fining hosts who list entire properties without a host present for short-term rentals less than 30 days.
Mid-2016: Airbnb is booking 1.3 million guests a night, up from 1 million on NYE 2016 and 0.55 million on NYE 2015. It has 2600 workers.
Aug 2016: Airbnb has its best night ever, with 1.8 million bookings. 1 million listings are available by instant-book, roughly equal to Marriott’s number of rooms.
Nov 2016: Airbnb launches Trips, with the vision of producing locally-authentic itineraries to restaurants, tickets, and transportation – and taking a commission on bookings. Chesky sees this as the equivalent of Amazon expanding from selling only books to all products.
The History of Airbnb: Final Words
The history of Airbnb is a story of a start-up that was born out of necessity when its founders Brian Chesky and Joe Gebbia, were looking for ways to raise money to cover their rent in San Francisco. The company completely transformed the travel sector and created a brand new travel lodging experience. That said, Airbnb has struggled against a number of setbacks throughout its history, and still, it’s one of the most valued companies in the world.
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Here's what you'll find in our full The Upstarts summary :
- How Airbnb and Uber started as side projects before becoming the giants they are now
- How virality helped both Uber and Airbnb grow
- Why circumventing local laws was essential to growth