December 2020To celebrate Airbnb's IPO and to help future founders, I thoughtit might be useful to explain what was special about Airbnb.What was special about the Airbnbs was how earnest they were. Theydid nothing half-way, and we could sense this even in the interview.Sometimes after we interviewed a startup we'd be uncertain what todo, and have to talk it over. Other times we'd just look at oneanother and smile. The Airbnbs' interview was that kind. We didn'teven like the idea that much. Nor did users, at that stage; theyhad no growth. But the founders seemed so full of energy that itwas impossible not to like them.That first impression was not misleading. During the batch ournickname for Brian Chesky was The Tasmanian Devil, because like thecartooncharacter he seemed a tornado of energy. All three of them werelike that. No one ever worked harder during YC than the Airbnbsdid. When you talked to the Airbnbs, they took notes. If you suggestedan idea to them in office hours, the next time you talked to themthey'd not only have implemented it, but also implemented two newideas they had in the process. "They probably have the best attitudeof any startup we've funded" I wrote to Mike Arrington during thebatch.They're still like that. Jessica and I had dinner with Brian in thesummer of 2018, just the three of us. By this point the company isten years old. He took a page of notes about ideas for new thingsAirbnb could do.What we didn't realize when we first met Brian and Joe and Nate wasthat Airbnb was on its last legs. After working on the company fora year and getting no growth, they'd agreed to give it one lastshot. They'd try this Y Combinator thing, and if the company stilldidn't take off, they'd give up.Any normal person would have given up already. They'd been fundingthe company with credit cards. They had a binder full ofcredit cards they'd maxed out. Investors didn't think much of theidea. One investor they met in a cafe walked out in the middle ofmeeting with them. They thought he was going to the bathroom, buthe never came back. "He didn't even finish his smoothie," Briansaid. 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 anotherfour months.Why hadn't they given up? This is a useful question to ask. People,like matter, reveal their nature under extreme conditions. One thingthat'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 andall they had to show for it was a binder full of maxed-out creditcards. So why were they still working on this startup? Because ofthe experience they'd had as the first hosts.When they first tried renting out airbeds on their floor during adesign convention, all they were hoping for was to make enough moneyto pay their rent that month. But something surprising happened:they enjoyed having those first three guests staying with them. Andthe guests enjoyed it too. Both they and the guests had done itbecause they were in a sense forced to, and yet they'd all had agreat experience. Clearly there was something new here: for hosts,a new way to make money that had literally been right under theirnoses, and for guests, a new way to travel that was in many waysbetter than hotels.That experience was why the Airbnbs didn't give up. They knew they'ddiscovered something. They'd seen a glimpse of the future, and theycouldn't let it go.They knew that once people tried staying in what is now called "anairbnb," they would also realize that this was the future. But onlyif they tried it, and they weren't. That was the problem during YCombinator: 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 profitabilityis not, obviously, the end goal of any startup, but it's the mostimportant threshold on the way, because this is the point whereyou're airborne. This is the point where you no longer need investors'permission to continue existing. For the Airbnbs, ramen profitabilitywas $4000 a month: $3500 for rent, and $500 for food. They tapedthis goal to the mirror in the bathroom of their apartment.The way to get growth started in something like Airbnb is to focuson the hottest subset of the market. If you can get growth startedthere, it will spread to the rest. When I asked the Airbnbs wherethere was most demand, they knew from searches: New York City. Sothey focused on New York. They went there in person to visit theirhosts and help them make their listings more attractive. A big partof that was better pictures. So Joe and Brian rented a professionalcamera and took pictures of the hosts' places themselves.This didn't just make the listings better. It also taught them abouttheir hosts. When they came back from their first trip to New York,I asked what they'd noticed about hosts that surprised them, andthey said the biggest surprise was how many of the hosts were inthe same position they'd been in: they needed this money to paytheir rent. This was, remember, the worst recession in decades, andit had hit New York first. It definitely added to the Airbnbs' senseof mission to feel that people needed them.In late January 2009, about three weeks into Y Combinator, theirefforts started to show results, and their numbers crept upward.But it was hard to say for sure whether it was growth or just randomfluctuation. By February it was clear that it was real growth. Theymade $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 sentme an email on February 22 announcing that they were ramen profitableand 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."
