Airbnb is, to put it simply, a room-letting website. Anyone, anywhere in the world, can list spare space (from a room to a treehouse, castle, or even a Fijian island) on the website and rent it out to travelers, or log on and book a night in someone’s house. Airbnb offers a professional photographer, deals with the money and provides a 24/7 customer support service (including $1 million insurance for the host). To date the company has had more than 10 million nights booked in more than 19,000 cities in 192 countries, mostly in Europe. It is now so popular that every two seconds someone books an Airbnb room.
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The HQ is in a three-story grey building in the design district of San Francisco, with fellow internet company Zynga (the social gaming company that created Farmville and recently bought Draw Something for $200 million) as its neighbor. Upstairs the walls are decorated with world maps dotted with hundreds of colored pins charting its world domination; downstairs the company history is drawn out like a huge comic-book sequence.
Airbnb started in 2007 when Joe Gebbia and Brian Chesky, then both 27, who had met five years earlier at Rhode Island School of Design, were struggling to pay their rent. There was a design conference coming to San Francisco and the city’s hotels were fully booked, so they came up with the idea of renting out three airbeds on their living-room floor and cooking their guests breakfast. The next day they created a website, airbedandbreakfast.com; six days later they had a 30-year-old Indian man, a 35-year-old woman from Boston and a 45-year-old father of four from Utah sleeping on their floor. They charged $80 each a night. ‘As we were waving these people goodbye Joe and I looked at each other and thought, there’s got to be a bigger idea here,’ Chesky told me, sitting on the edge of the sofa, still excited by their idea. Gebbia had already dabbled in entrepreneurship – designing a cushion for back sufferers and building a website for product designers to find eco-friendly resources – ‘sort of Amazon for sustainable materials’. Chesky had recently left his job as a designer on the Simon Cowell show American Inventor in LA – ‘the last straw came when I designed a new kind of toilet seat’ – and moved to San Francisco. Both wanted to be entrepreneurs, but neither wanted to ‘create more stuff that ends up in landfill’. The idea of creating a website based on renting something that was already in existence was perfect. They decided to target conferences and festivals across America, getting local people to list their rooms and travelers to book them.
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They enlisted Gebbia’s former flat mate, Nathan Blecharczyk, 29, a computer science graduate and ‘brilliant programmer’, to develop the website. Blecharczyk, who had funded his Harvard college fees with the proceeds of an internet software business he founded when he was 14, is the quietest of the three. When he told me about ‘eating up 500-page computer reference books’ as a teenager, the other two, with their design backgrounds, mocked him for being a geek. ‘They made me switch from my PC to a MacBook years ago,’ he smiled.
In summer 2008 they found the perfect kick-start for their business. Barack Obama was due to speak in Denver at the Democratic National Convention, and 80,000 people were expected to be there, but again, there was a shortage of hotel rooms. Gebbia, Chesky and Blecharczyk finished the website in time to launch it two weeks before the conference. Within a weak they had 800 listings. But the site wasn’t making any money. Taking advantage of election fever, they bought bulk quantities of cereal and designed packaging branded as ‘Obama’s O’s’ and ‘Cap’n McCain’ cereal. It was initially meant to be a PR stunt, but they sold 800 ‘limited-edition’ boxes at $40 each and made more than $30,000.
That was just the start of the money trail. In early 2009 they received $20,000 of funding from an angel investor, Paul Graham, the co-founder of Y Combinator (a start-up mentoring programme), which led to a further $600,000 from venture capitalists. Early on the team realised they had to handle payments, ‘otherwise it was just a messaging site,’ and charged up to 15 per cent of the booking (the host pays three per cent and the traveller between six and 12 per cent). By April they were making enough to pay living expenses (‘and we could stop eating the leftover cereal,’ Gebbia joked). In November 2010, they raised another $7.2 million from a venture capitalist; in May 2011 the actor Ashton Kutcher invested a ‘significant amount’ and now sits on the board as a strategic adviser. Then in July 2011 the company received a further $112 million in venture funding, and was reportedly valued behind the scenes at $1.3 billion.
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The funding meant they could hire more staff (they now employ about 500 worldwide) and move into an office – out of the flat where their first members of staff had to make sales calls in the bathroom and hold conferences in the kitchen. Today meetings are held in mock-up rooms of the most popular Airbnb listings dotted around its headquarters – so an apartment in Hong Kong is next door to a cabin in Vermont (‘you can come in for a strategic nap,’ one staff member said), all of which you can rent in real life. Online other Airbnb rooms range from the cheap and cheerful – a one-bedroom flat in Paris near the Eiffel Tower is £35 per night – to deluxe, such as a five-bedroom 11th-century manor house in Surrey for £1,470 per night, or a three-bedroom deluxe villa in Bali with swimming-pool for £328 per night.
By January 2011, the company had had one million bookings; by July that year it had had more than two million; at the end of 2011 it had had five million and in June it hit 10 million.
As of 2017, Airbnb Inc. has closed its new funding round at $1 billion that values the home-rental site at $31 billion, according to a person familiar with the matter, giving it an ample cash cushion to stave off an initial public offering.
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