This is session 18 of Technology-enabled Blitzscaling, a Stanford University class taught by Reid Hoffman, John Lilly, Allen Blue, and Chris Yeh. This class features Reed Hoffman interviewing **Brian Chesky**, the Co-Founder and CEO of Airbnb.

It's a great honor for us to have Brian Chesky here.

Brian's obviously CEO and co-founder of what I think is actually the most interesting of the up and coming unicorns on all kinds of levels.

Not just the way the world should be, but also various things that

I learned about kind of what are the right ways to be an entrepreneur in this set.

And So it's a great honor for us to have him here.

Let's start with, it may be known, but it's worth starting with the story of Airbnb.

So Airbnb, many people would say that, or a number of people said it's the worst idea that ever worked.

Or at least I can say a lot of everyone at the time seemed to say it was the worst idea ever, and it worked, so maybe that's the nice connection.

Airbnb, I'll just do a really quick kind of background before Airbnb.

So I'm different than most technology founders insofar that I actually went to art school.

I went to the Rhode Island School of Design, I don't know if you guys know that school.

And I studied industrial design, and industrial design, I know they teach that here in Stanford, it's kind of like product design, everything from a toothbrush to a spaceship, they used to say, and everything in between, bless you.

And, and, I, growing up, I never really thought about being an entrepreneur.

I don't even know if I ever heard the word entrepreneur.

That would have been an almost absurd thing to say in upstate New York, where I grew up, to use that word.

In fact, in hindsight, the only entrepreneur I knew was Bob from Bob's Pizza.

And I didn't really want to have a pizza shop, so I don't think it would have occurred to me to start a company.

My mom used to have a joke, she said, I chose a job for the love and I made no money, so you should choose a job for the money.

And I said, well, I'm going to art school.

And she said, oh my God, you chose the only path in life that's gonna pay less than a social worker because you're gonna be an artist and get paid nothing.

And so she said, if you do that, make sure you don't move back home, live in my basement.

And that if you get that job, that make sure that job has health insurance.

This was like a grand ambition for my parents.

So it wasn't about starting any kind of big company or scaling up a company.

And so I wasn't gonna be able to call my parents, oh my God, what do I do, I have 100 employees, how do I scale?

I ended up going to RISD, and the school had a profound impact on me, probably much like here in Stanford, because growing up, you're taught to look straight ahead, like, growing up, you don't get rewarded for being disruptive, you just go to the principal's office, and I was there quite often.

And so, got to RISD, and teachers were like, you're a designer, you can redesign everything around you.

Basically, they're saying is you can change the world.

That's not something that most parents tell their kids, you can change the world, they tell you to behave.

And So, I ended up, 1 other thing happened at RISD, I met my co-founder, 1 of my co-founders at RISD named Joe Gebbia, and 1 day Joe says, Brian, I think 1 day we're gonna start a company together.

Well, I'm living in LA, working as an industrial designer, and I remember my life, and you may confront these decisions where everything in front of me in my life looks like everything behind me.

In other words, the road is like a disappearing road into the horizon.

And it kind of terrified me because it was that job with health insurance.

And at RISD I was told, no, I can do anything.

I can change the world and you're not doing that.

And so I had this impulsive moment where I go into work, and my roommate, or my friend Joe at RISD was trying to convince me to leave my company and go to San Francisco, and we were gonna start a company.

We had no idea what this company was gonna be.

We just thought, well, think of the big idea.

And so, 1 day, I go to work, I quit my job, and I'm living in a house with a bunch of friends that moved across the country with me, and I say, okay guys, I'm gonna leave.

And they thought I had an early life crisis, they thought they needed to have intervention, but no, no, I'm fine.

I rolled it up in the backseat of an old Honda Civic.

And with $1, 000 at the bank, I drive up to San Francisco.

I get to San Francisco, and Joe tells me the rent is

That weekend, this international design conference was coming to San Francisco.

We went to this conference website, and we noticed on the conference website they had a Hotels tab, and we clicked on the Hotels tab.

And in the Hotels tab, there were always hotels, and next to every hotel it said sold out, sold out, sold out.

And at that point, we just had this idea.

We said, well, designers need a place to stay.

We literally have no money, in fact, I don't know how I'm gonna make rent, so we thought, what if we just created a bed and breakfast for the design conference.

Naturally, that's maybe not what most of you would think to do, but that's what we thought to do.

You know, go to RISD, you're like, I've got a creative solution.

So we thought, let's create a designer bed and breakfast for the conference.

Joe had, he just moved up there, it would be like a floor and breakfast, that's like not the best thing.

He had gone camping and he had kept some airbeds, and we pulled the airbeds out of the closet, we inflated the airbeds, and we called it the Airbed and Breakfast.

And that's where the name comes from, AirBedAndBreakfast.com.

So a lot of people hear the name, they think it's like, you know, like air is like the platform, and BB is the house, no, no, it's just AirBeds.

And so, we ended up posting 3 people from around the world, a 35-year-old woman from Boston, a 45-year-old father of 5 from Utah, and a 30-year-old from India.

And now, I gotta tell you, the reason we started doing this is because we thought it was funny, cool, and we make money, because we had to make rent.

When somebody lives with you, it's kind of like the arc of a friendship gets contracted from a year to a day.

In other words, if you were to meet somebody, maybe here at Stanford or in the real world, and you get to know them, how much time does it take to invite them over to your house and have dinner with them?

And what it did, we realized, is it contracted this year-long friendship into a couple days.

In fact, 1 of the guests ended up inviting me to his wedding.

The other guest, this woman, moves from Boston to San Francisco, and I think we're realizing there's a bigger idea here.

I asked Joe, I said, who's the best engineer you know?

Joe could do front-end engineering, but we were both designers and product people.

And Joe said, well, my old roommate Nate is.

And so the 3 of us got together and we said, we basically had this core idea.

We said, what if you could book someone's home the way you could book a hotel anywhere in the world?

The 1 caveat I'll make to the story is after that very first weekend, there wasn't this flash that, oh my God, this is gonna be huge.

We actually didn't do anything for 4 months.

In fact, the thing we don't usually talk about is After that, we started exploring creating a roommate matching website.

We thought no 1 would ever do this air bed and breakfast thing, but people need roommates.

We thought roommates meets Craigslist meets Facebook, like roommates with profiles, until 1 day we typed roommates.com in and realized somebody had built that site.

And this was like 3 weeks or 4 weeks later, and I said, why the hell did anyone type that site in the first day, because I just wasted 4 weeks.

We went home for Christmas, and people were like, what are you working on?

And I didn't want to tell everyone in my family I was unemployed.

Of course, my mom said, you're actually unemployed.

I said, no, I'm actually an entrepreneur.

And that's also when I learned, when you're starting out, the difference between unemployed and being an entrepreneur is in your head, it's usually a mindset.

And I was in my head an entrepreneur, and they said, well what are you entrepreneuring?

And I'm like, because it wasn't really a common word there, and I said, well I got this thing, Airbed and breakfast.

And we just started to get used to pitching it, we're like, maybe we should actually do this.

And it was still not obvious, the original idea was air beds for conferences.

So we ended up launching at South by Southwest in 2008, and the whole idea was if you're going to a conference and you don't have a lot of money, you could sleep in someone's home on their air bed.

And we ended up with a second version of the website we built, we had 2 customers, and I was 1 of them.

It was frankly, it wasn't the Facebook story, 2 weeks, it was a longer road.

By the way, I hadn't known the roommates thing until just now.

My first startup myself was called SocialNet, and it was a social platform for a variety of matching services, included a roommate service.

We had dating, professional networking, activities, and roommates.

The idea was that AirPen and Breakfast was not the big idea.

We thought there was a big idea, and we didn't think it was that.

So we had enough time to think of the big idea.

And we thought the big idea was some social networking something.

And of course it turned out that the crazy little idea that we thought no 1 else would do became the big idea.

And I think there were a couple lessons there.

Number 1, all these really good ideas or big ideas often sound like stupid ideas.

Somebody once told me in the early days, don't worry about anyone stealing your idea.

If it's any good, everyone will dismiss it.

And the second thing was that a lot of these ideas are you solving your own problem, and they're not like some life-changing problem.

So what, tell me, tell us a little bit about the early days.

You really had to hustle to keep it going.

Oh man, so we, so we're 1 of the companies that launched a bunch of times.

You know, I actually learned something, like, because we kept doing launches to get a lot of press.

If you launch and no 1 notices, you can actually just keep launching.

We launched, and people would keep writing about it, as if we launched.

We're like, we'll just keep launching until we get customers.

And we would change things and change the name and we'd launch again.

And so the first so-called launch was that first weekend, but that was just 3 people.

The second launch was AirBeds and Conference of the United States.

And so we decided we'll launch at least 1 more time.

At the time, there was no payments, and you had to stay in an airbed, and a bunch of people was telling me a bunch of things.

They said, why do I have to, like, Like, I want to go to London, but there's no conference.

We're like, why does this have to be for conferences?

Like, why would anyone stay in one's home if there wasn't a conference?

And then we thought, wait, why does it have to be on airbeds?

You had to have an airbed, so you had to inflate an air bed and put it on your mattress.

And everyone was like, why am I putting air beds on my mattress, it's so uncomfortable.

And I wake up, I went inside of the bed, I woke up, and the other, it's like rolled around me, it's hot, and we're like, okay, fine, you don't need to have an air mattress, you may have a real bed.

We may very well be the first website on the internet where you could actually book with somebody else and pay them directly.

In other words, there was eBay, and eBay used PayPal, but you didn't feel.

And we had, there wasn't a lot of legacy there, you know, because we looked at, there was eBay and Etsy, and they were both before us, and Etsy used PayPal, and both of them you would book, and they would send you on a PayPal gateway, and we wanted to feel like booking a hotel.

We would hold, collect, remit the money, and so, whereas they were paying direct, and they would take a cut, and there were 2 different payments.

So, we, and that was kind of a crazy idea.

It seemed insane that you would actually be able to pay somebody else and be able to book something with them and you would get a reputation system.

And at the time, we're like, this is a little too crazy, it's a little too scary, I don't know if we're allowed to do this, I'm not sure if it will work.

And so then in the summer of 2008, we ended up basically designing the final version of the product.

So we designed this product where you could book someone's home anywhere in the world.

We had a rule, 3 clicks of the book it button, because there were so many clicks and so many different ways to get a home that it was just too hard.

And I remember hearing the story of when Steve Jobs developed the iPod, no matter where he was in his iPod, he wanted to make sure he was always 3 clicks from a song.

And we said, well, you should always be 3 clicks from being able to have a paid booking.

And so we created this, basically a homepage with a search bar, listings, the home, and that's exactly the product as you see it today with reviews, payment system, and customer service.

And we basically ended up landing on that.

But that was the third version of the product, we kept basically redoing the product.

At this point, I get introduced to a whole bunch of investors, probably 15 angel investors.

We were raising 100 to $150, 000 at a 1 and a half million dollar valuation.

We were at 1000000, and eventually somebody convinces us we get 1 half million valuation, an extra $50, 000.

So we were trying to sell 10% of the company for about

And of the 15 people we got introduced to, I think about, you know, we got introduced over email.

I think about 6, 7, or 8 of them didn't even reply to the email, so we never heard from them again.

Of those, half of them said, this doesn't fit my investment thesis, which is weird, because their investment thesis was like consumer internet companies, we were consumer internet, so I assumed that we fit their thesis, but we didn't.

Or they said the market wasn't big enough.

1 person said, I'm just not excited about travel as a category.

And then we ended up meeting a few more investors, and they all passed on us.

The low point was we ended up launching in August 2008.

We meet with the angel Mike Maples, and we decided, I was so cocky, I said I'm not even bringing a deck.

I'm just gonna show him the live website.

We have 10, 000 people visit our website.

I have a website, I type in the website, it doesn't work.

So I basically sat in front of him for like an hour, and I didn't know what to say.

I'm trying to explain to him this concept, and he's like, I have no idea what you're talking about.

Yeah, yeah, yeah, it was pretty embarrassing.

And always have a deck as a backup if your website goes down.

Or at least don't let your website go down.

You're meeting an investor and it's like the last money you have.

So you know those binders that kids used to put baseball cards in their sleeves?

We probably, I probably went 30, 000 in credit card debt.

Like I would get credit cards, like a typical $5, 000 max, and I would just keep getting credit cards until the company stopped giving me credit cards.

And we went tens of thousands of dollars in credit card debt.

We ended up launching for the Democratic National Convention, though.

And we were able to, so 2008, what was like the number, we had this basic idea, we need to get people to talk about us, and we had this thing called the chicken and egg problem.

How do you get guests to come without homes?

Well, you can't get homes if there's no guests.

And how do you get them at the same time?

And how do you do that on a travel website where you can't just focus on 1 city, because people go to other cities, so you have to focus on cities all over the world at the same time.

And basically, the thing we thought is we needed to get a ton of press, so it's like this spontaneous combustion at the same time.

And so we thought maybe events, higher profile versions of the founding event, and she thought, what's a high profile event?

And we thought the Democratic National Convention.

There were 80, 000 people coming, or there was an 80, 000 seat football stadium, and they had 27, 000 hotel rooms.

We thought, wow, there's an opportunity here.

And we contacted New York Times CNN, and they thought, like, what are you talking about?

This is crazy, no one's ever gonna stay with other people.

So we ended up just like reaching out to local newspapers, they ignored us.

And we had this idea, why don't we just start by getting anyone to write about us?

We felt like if some people write about us, other people would refer to them.

I wouldn't be surprised if some middle school student wrote about us for the school paper.

But we literally got bloggers to write about us.

Then people would Google DNC, they would see us come up, because all these bloggers wrote about us, then the local newspapers would write about us, and eventually we worked our way up until CNN, New York Times got it.

It started getting traction, but we were still in debt.

We got 80 bookings, or maybe less, for the Democratic National Convention.

We got 1 or 2 bookings for Republican National Convention.

And then the following weekend, we got like no bookings.

And we realized if only there were political conventions every week, we'd have a business.

So this is now almost a year into the business.

We're tens of thousands of dollars in credit card debt.

We've gotten national press, and we have like almost no customers every single day.

And now 1 of my co-founders decides he's moving to Boston, he's getting engaged, and his fiance's maybe not interested in living in the West Coast, and it was unclear if we were gonna stay together as a founding team.

We're totally in debt, we don't know what to do, we're desperate, late at night, it's midnight, when you're 1 in the morning, and Joe and I think, maybe we're air bed and breakfast, the air beds aren't working out, maybe we could sell breakfast.

So we thought, let's just get in the breakfast business.

So We ended up making, we weren't gonna make eggs, so we decided let's make cereal.

And we made presidential-themed breakfast cereal.

We called it Obama O's, the breakfast of change.

And we created John McCain-themed cereal.

We called it Cat McCain's, a maverick in every bite.

And we literally handcrafted our own cereal boxes, and we basically used it to gin up press, and also, frankly, desperation.

And I hadn't been eating at this point, so I was probably also starting to get slightly delirious.

But, and we called General Mills, they were like, what are you talking about?

You seriously think we're gonna like make like unlicensed presidential themed cereal?

And so then, we called these medium-sized cereal companies, they're like, great, just send us a non-refundable check for like $200, 000.

And we're like, okay, that's not gonna work.

He says, I can't print you 100, 000 boxes of cereal, but here's what I'll do.

See all Greylock transcripts on Youtube

Blitzscaling 18: Brian Chesky on Launching Airbnb and the Challenges of Scale