The Cereal Box Billionaires: How Airbnb Survived on $40

At a Glance: The Hustle Stats

| Metric | Details |
| :--- | :--- |
| Founders | Brian Chesky, Joe Gebbia, Nathan Blecharczyk |
| Original Name | AirBed & Breakfast |
| The "Low Point" | Selling "Obama O's" cereal to pay rent |
| The Rejections | 7 prominent VCs said "No" |
| The Result | Valuation over $80 Billion |

The Hook: "This is the Worst Idea Ever"

If you told someone today, "I am going to let a complete stranger sleep on an air mattress in my living room," they might call you crazy.

In 2007, investors didn't just call it crazy. They called it dangerous.

Brian Chesky and Joe Gebbia were two design students living in San Francisco. They had a problem: They couldn't pay their rent.

A design conference was coming to town, and all the hotels were sold out. They had an idea. They pulled three dusty air mattresses out of the closet, blew them up, and put up a simple website: "Air Bed and Breakfast."

Three people showed up. They paid $80 each. The guys made rent. But they didn't know they had just started a revolution.

The Struggle: Launching into Silence

Most startups launch once. Airbnb launched three times.

• Launch 1: Nobody noticed.
• Launch 2: Nobody noticed.
• Launch 3: They launched at the SXSW festival. Only two people booked a room. (And one of them was Brian).

They were broke. They had maxed out every credit card they owned. They were $30,000 in debt and eating plain pasta because they couldn't afford sauce.

The "Cereal" Savior

This is the part of the story that sounds fake, but is 100% real.

It was 2008. The US election between Barack Obama and John McCain was heating up. The founders needed cash to keep the website running, but no investor would give them a dime.

So, they stopped being a tech company and became a cereal company.

They bought cheap generic cereal. They designed funny cardboard boxes by hand.

• "Obama O's" (Hope in every bowl).
• "Cap'n McCain's" (A maverick in every bite).

They hot-glued the boxes together in their kitchen. They sold them as "limited edition" collector's items for $40 a box.

It worked. They sold $30,000 worth of cereal. That money didn't buy them Ferraris; it kept the servers running for a few more months.

The Turning Point: "You Guys are Cockroaches"

They eventually got a meeting with Paul Graham, the legendary founder of Y Combinator (a startup accelerator).

Paul hated the idea. He thought people sleeping in strangers' homes was weird. But as he was walking out of the room, Joe Gebbia pulled out a box of Obama O's.

Paul Graham asked, "What is that?"
They told him the story.

Paul smiled and said: "If you guys can convince people to buy a $4 box of cereal for $40, maybe you can convince people to sleep in strangers' beds. You are like cockroaches. You just won't die."

He accepted them into the program. Not because of the idea, but because of the hustle.

The Lesson: "Do Things That Don't Scale"

Even with funding, the site wasn't growing. The photos of the apartments looked terrible.

So, Brian and Joe did something unscalable. They grabbed a camera, flew to New York, and went door-to-door to every single host. They took professional photos of the apartments themselves.

They didn't write code. They didn't run ads. They just met their users.
Suddenly, revenue doubled. Then it tripled. The rest is history.

3 Lessons for Founders

1. Be a "Cockroach"

Startups don't die because of bad ideas. They die because the founders give up. Airbnb survived because they were willing to glue cereal boxes together when everyone else would have quit.

2. Solve Your Own Problem

Brian and Joe didn't try to "disrupt the hotel industry." They just needed to pay rent. The best businesses start with a personal need, not a whiteboard session.

3. Love Your First 100 Users

Airbnb didn't try to get a million users instantly. They treated their first few hosts like royalty, visiting them personally. Build a product that 100 people love, not one that 1,000 people kind of like.