Before Airbnb had over 9 million listings worldwide, there was one sole lodging: three inflatable air beds at CEO Brian Chesky’s San Francisco home. He had quit his job and packed up all his belongings in a Honda Civic to make a cross-country move, and couldn’t pay his rent. That’s when he noticed all the local hotels were booked because of the Industrial Designers Society of America’s International Design Conference in San Francisco, and a business was born.
“We called it the air-bed-and-breakfast,” he told Fortune in 2017 at a World’s Greatest Leaders event.
Chesky and Airbnb cofounder Joe Gebbia were hooked on the idea of making money and meeting new friends through their makeshift accommodations, so they opened their home to three guests: “What if you could book someone’s home the way you could book a hotel anywhere in the world?” Chesky said about their inspiration. They launched Airbnb with Gebbia’s former roommate Nathan Blecharczyk in 2008.
Chesky’s social-worker parents in upstate New York (he was born in Albany) told him to pursue a high-paying career, but much to their chagrin he went to art school instead, at the famous Rhode Island School of Design.
“I’m going to become an artist,” Chesky recalls telling his mom, to which she responded: “You somehow managed to pick the only job in the world that pays less than a social worker. You’ll get paid nothing.”
Today, Chesky doesn’t have to worry as much.
Airbnb has a market capitalization of $112 billion, above its level from before the pandemic, which threatened its very survival as a business. The company lost 80% of its business in the first months of the pandemic, and Chesky reorganized it in a scramble for survival.
How was Chesky’s business ethos shaped by his creative background?
Though Chesky’s creativity is what birthed (and saved) Airbnb, it also meant business veterans did not initially take him seriously.
Chesky’s design background was at first a hindrance to a budding Airbnb. While looking for $150,000 to fund an estimated 10% of the company, Chesky met with over 20 potential investors, all of whom turned him down.
“Joe and I were designers, and as far as they were concerned, designers didn’t start companies,” Chesky said. “We didn’t look like a tech founder, which is ridiculous because I don’t think you should ever hire somebody because they look like something else. You want a new thing.”
Investors didn’t take an interest in Airbnb until it began designing presidential-candidate-themed cereal boxes, which eventually got the attention of Paul Graham, founder of startup accelerator Y Combinator.
“Creative companies are companies that tap into a sense of imagination,” Chesky told Time. “That they might come up with new breakthrough ideas, that people that were only beholden to near-term measurable outcomes won’t ever have.”
How has Airbnb navigated challenges?
Success at Airbnb has been a double-edged sword. Explosive growth has forced the company to refocus at times.
During the pandemic, Chesky told Fortune in 2023, he even opened his own home as an Airbnb to better understand the host experience and lived in various Airbnbs across the country for six months, where he discovered inconsistent and unnecessary practices across hosts, including complicated rent agreements.
Airbnb still faces challenges as waves of short-term rental regulations in New York and across Europe, where cities are implementing phase-outs, prohibiting rentals for less than 30 days, or no longer renewing tourist apartment licenses, for example. In the U.S., housing advocates have fought against Airbnb, according to the AP, claiming short-term rentals have essentially become hotels.
Airbnb has pushed back against regulations, saying that short-term rental bans would limit affordable accommodations for travelers.
Last month, Airbnb implemented a new “reasonable house rules and requests” policy, where the company has stopped asking guests to “complete tasks that require significant effort or time, or would typically be performed by a cleaner,” such as stripping the bed, washing and putting away dishes, or taking trash offsite. The new policy, which will go into effect on rentals booked on or after Nov. 20, has drawn pushback as hosts threaten to boycott or hike cleaning fees, and been a pleasant surprise to customers.
A version of this story was published on Fortune.com on Jan. 24, 2024.
More on Airbnb:
- Airbnb CEO Brian Chesky says ‘founder mode’ cost him almost his entire executive team: ‘They left or they didn’t want to work for me’
- Airbnb guests no longer have to wash dishes or strip beds. Furious hosts are threatening to boycott and raise cleaning fees
- Airbnb CEO Brian Chesky warns two types of people won’t survive the AI era: ‘pure people managers’ and workers who resist change
This story was originally featured on Fortune.com
