From an air mattress to a $72 billion company. History of Brian Chesky and Airbnb
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San Francisco. Rausch Street, SoMa neighborhood. On Airbnb, a room is rented for short periods. The Golden Bridge is a few kilometers to the north. It has a double bed, a sofa, a small desk illuminated by large windows. But above all a mattress. A “real mattress”, explains who rented it. “Not an inflatable one, like the one we put there in 2008.” The room in question has two peculiarities: the first is that it is not available until 2025; the second is who the owner is Brian Chesky, managing director and founder of the short-term rental platform. Chesky on September 28 will be a guest of the Italian Tech Week at the Ogr in Turin, where he will dialogue with John ElkannCEO of Exor and chairman of Stellantis, Ferrari and the Gedi publishing group.
Year 2008. ‘Air Bed and Breakfast’ is born
Airbnb was born in that room. The very name of the company says it all: “Air Bed and Breakfast”. Air Bad, air mattress, like the one that Chesky and his roommate (and later co-founder) Joe Gebbia, in 2008 put their apartment on the floor offering it for $80 a night to people looking for a place to sleep in San Franscisco during a sold-out event in the city. Breakfast (breakfast) was included in the price.
Even his room was sold out in those days: a 30-year-old Indian who arrived in Silicon Valley to look for work, a 35-year-old from Boston and a 45-year-old traveling from Utah slept on the air mattresses. Airbnb was registered a few days later. But it took time before it became the colossus of the shared economy that we know today, capable of accommodating 1.4 billion people from 4 million owners in 220 countries around the world.
Who is Brian Joseph Chesky, Polish father, Italian mother
Born in 1981, Brian Joseph Chesky was born in Niskayuna, New York state. His father, Robert, is of Polish origin. His mother, Debora Campese, is Italian. He studied art and design before moving to San Franscisco. His personal history and that of his company merge with each other. They are often told together, as a paradigmatic example of the then nascent startup economy.
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The reason is understandable. It contains all the narrative that has fed the story of this new generation of entrepreneurs for years: a personal urgency, that of finding a way to earn money; the identification of a common need, that of having a place to sleep; the ability to find an answer, exploiting the potential of online platforms.
Airbnb is the result of these factors, plus one: the ability to revolutionize an entire market sector, that of hospitality. It then became a model for other startups which, starting from the idea of renting out unused properties, have become platforms for sharing cars, garages, dinners. One of the first pieces of what later took the name of Sharing economy.
Airbnb: the first difficult years of a “failed” idea
Getting started for AirBedAndBreakfast.com wasn’t easy. Not even the Silicon Valley venture capitals believed in it much. Many thought it was a doomed idea. That no one would make a room in their apartment available to everyone from all over the world. Or a property.
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Even Chesky and Gebbia are beginning to believe it, the former will admit. Then they decide to give it a try anyway. To finance their idea they decide to create a company that sold cereals with cartons dedicated to Barack Obama And John McCain, the two US presidential candidates in 2008. A couple of boxes of cereal are still on a shelf in their rented room on Airbnb. They sell for $30,000.
The money carries forward the development of the site and the acquisition of first customers. A new founder enters the team, Nathan Blecharcyzk. The following year, I entered Y-Combinator, the most famous startup accelerator in the world. It’s the turning point. They receive $20,000 in funding. The site name becomes Airbnb.
In 2010 they receive 7.2 million euros in funding, then another 112 million from the main investors in Silicon Valley. In 2012 they crossed the milestone of 10 million users. In 2014 another 475 million will arrive. In 2015 1.2 billion. Airbnb begins is already a giant of the Silicon Valley economy. It becomes a worldwide case.
The tourism market feels threatened and in that period protests and complaints begin from hotelier associations from all over the world, who see their market threatened by the small owners organized on the platform. They ask for rules. Restrictions (Airbnb is still restricted in some countries). But the Airbnb recipe works.
“The language of business is the language.” Do business as a designer
“Someone once told me that numbers are the language of business. It is not true. The language is the language of business,” Brian Chesky said on a FastCompany podcast a few months ago. His liberal arts background somehow shines through in the way he continues to lead the company.
Although it is now listed on the Nasdaq (IPO in 2020) and has a capitalization of 73 billion. The numbers are there, but they are not everything. “I lead my company by looking at design. I don’t see any contradiction in it. Design and business go well together”. Chesky has always advocated a different way to run a business. Until the listing on the stock exchange. In the year in which the biggest threat hit his business. Unpredictable, difficult to manage.
The impact of the Covid-19. And the challenge: Airbnb at the Nasdaq and surprises everyone
“I remember in the meeting I said, almost without thinking: ‘Wow, if Covid spreads outside China it would be a huge problem’. Within eight weeks, our business dropped by 80%”, recalled Chesky in various interviews, including the one granted to Italian Tech. In those weeks, the major financial newspapers reported how the pandemic and the confinements were bringing the tourism sector to its knees.
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Startups like Airbnb, incredibly agile in growing quickly, but equally fragile in times of crisis, were the number one suspects. Several analysts began to speak of endless crises. If not quite the end of an entire world of economics. Chesky and his team decided to go public anyway. In full pandemic. A challenge to the market. Perhaps even to analysts. And the quotation went better than expected, contradicting all predictions. Investors understood that Chesky’s cure was working. And they trusted the company.
Chesky’s cure: layoffs to rethink Airbnb on the Apple model
“Every crisis is an opportunity,” Chesky explained. “If you think you’re done, everyone else will think they’re done. But if you are hopeful and optimistic in a realistic way then everyone will understand that there is a way to recover, and creativity in finding ways to move forward”. Airbnb has fired almost half of its 7,000 employees during the Covid period. Chesky tried to take inspiration from Apple’s 1997 crisis. he He redesigned his he company. He made it into something smaller but more effective.
Everything had to become more functional, more adherent to an effective design: it closed 10 divisions, reduced the marketing departments to one. “We spent a billion on marketing, we wiped it out. Do you know what happened? Nothing. Our brand was stronger and more solid than we thought,” she admitted. Less is more. Less is more. Apple’s lesson had worked.
To figure out how to improve his company, he decides to live for six months as a guest in rental houses on Airbnb: “I’ve visited a dozen. I’ve spent weeks, months as a guest on Airbnb, from one house to another,” said Chesky “That helped me understand some issues. That a small percentage of issues logged by hosts weighed on everyone.”
A choice dictated by a need: “To change things you have to touch the product firsthand, analyze it from different points of view. This allowed me to look at (Airbnb) with new eyes. Going back to the original spirit of when we founded the agency”.
Airbanb, “doomed to fail” before it was born, the company that challenged conventions and habits, on which the unknown factor of Covid weighed like a boulder, today has resumed breaking rental records and landlords willing to put offers online. With Airbnb, criticism of its model has also returned.
Today many accuse it of causing the depopulation of historic centres, of large cities, with owners who prefer short-term rentals to those for workers and students. A thorny subject. Urgent also in Italy. Who knows if Apple’s lesson will help here too. If fewer rents can mean greater economic and social sustainability. A challenge that should stimulate the creativity of a designer manager.
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