I’d be lying if I said I’d always wanted to cover Chesky and Airbnb. I hadn’t really read much about either of them. The business itself sounds pretty humdrum. People renting out apartments, spare rooms. Nothing really new or exciting there. And Chesky himself has always flown under the radar.
But each week the story I pick just depends on what catches my fancy and last week, for whatever reason, I thought, you know what, I know absolutely nothing about this guy. I want to dig into it.
And what a story.
Because Chesky and his co-founders basically took one of the crappiest business ideas — renting out airbeds on apartment floors — and through sheer tenacity and a fantastic understanding of how a product should work, they turned it into a $100 billion company.
But it’s really the stories behind the company that make this so good. Making their own cereal to clear their debts. Not knowing what a slide deck or an angel investor was. Coming up against the king of the clones, the dreaded Samwer brothers from Germany, losing 80% of their business when Covid hit.
It all makes for a cracking story.
From Hockey and Art to Industrial Design
Brian Chesky was born in 1981 and grew up in Niskayuna (nisky-OON-ah), a town in upstate New York. His parents were both social workers.
And Chesky wasn’t some exceptionally bright kid — he was pretty normal really, with two big interests. Hockey and art. And it’s the art part that ends up having a huge bearing on this story.
In 1999, he finishes high school and goes to the Rhode Island School of Design, RISD, to study industrial design. And this is where he meets Joe Gebbia.
The two of them work very well together. Chesky later said: “We kept building on each other's ideas... when we get together, ideas typically get bigger, not smaller.”
And at one point Gebbia says to Chesky: “One day we’re going to start a company together.”
After they graduate, they go their separate ways. Chesky moves to Los Angeles and joins a product design consultancy. Interestingly, around this time he also becomes a bodybuilder. You can Google photographs of him.
He works on products for companies like Mattel, but pretty quickly starts to realise this career just isn’t for him.
As he later put it: “I knew that this whole thing of getting a job, health insurance, it wasn’t all it was cracked up to be, because I just wasn’t happy.”
And around this time — we’re talking 2007 — Chesky reads a biography of Walt Disney called The Triumph of the American Imagination.
Disney fascinates him because here was an artist, a creative person, like Chesky, who ended up building this enormous business.
And Chesky would go on to treat Disney, along with Steve Jobs, like a mentor, studying how they ran their companies and taking management ideas from both.
He credits the book with helping him quit his job and move to San Francisco, where Joe Gebbia is living.
And the two of them decide to start a company.
The only problem is, they don’t really have a very good idea for their business.
The Airbed Idea
So there’s an international design conference coming to San Francisco and the hotels are booked out. Chesky and Gebbia think, well, maybe we can turn their small apartment into a bed and breakfast.
Now, they don’t have beds. What they have are air mattresses.
And as for breakfast, Pop-Tarts.
So they call the thing AirBedandBreakfast.
They put together a basic website and eventually three people stay, paying $80 each per night.
Now, staying with strangers wasn’t new. Couchsurfing and other websites were already doing it. But generally those were based on free accommodation.
What was different here was that three complete strangers had actually paid money to sleep on air mattresses.
So big deal, still a pretty crappy and fairly unoriginal idea.
But in their minds, they had proof of concept.
Sort of.
And they bring in Nathan Blecharczyk (bleh-CHAR-chik), a Harvard-educated computer scientist who had previously lived with Gebbia, as the technical co-founder.
A Bust in Austin
Their next big test is South by Southwest in Austin.
Now this looks perfect. Tens of thousands of people are coming into the city, hotel rooms are scarce.
Chesky goes onto Craigslist, finds people advertising spare rooms in Austin and contacts them directly.
He gets 15 hosts onto the site but they only get two bookings.
And one of those bookings is Chesky himself.
So it’s a complete bust except for the fact that while in Austin, through a mutual contact, Chesky meets Michael Seibel, one of the founders of Justin.tv, an online streaming company which just the year before had been backed by Paul Graham’s Y Combinator. I did an episode on Paul Graham and Y Combinator in June 2025, so that one is well worth a listen.
Justin.tv would eventually become Twitch, which Amazon bought in 2014 for $974 million.
Now, Seibel knows Silicon Valley. He knows fundraising.
Chesky knows almost none of this.
He doesn’t even know what an angel investor is.
In fact, when Seibel mentions some angels he knows, Chesky is quoted as saying:
“Oh, my god. This guy’s crazy. He believes in angels. What the hell?”
He doesn’t know what a slide deck is either.
So Seibel basically starts teaching him how Silicon Valley fundraising works and Chesky and Gebbia start trying to work out what this business could become.
By this stage they’re looking at not just air mattresses but individual bedrooms as well.
The model is simple. Somebody books through the website and they take roughly 10% of the transaction.
So they try to calculate how many people might eventually rent rooms and they come up with a total potential market size of about $30 million.
Now, somewhere around this time Chesky also meets Sam Altman. I’m guessing through Michael Seibel because Altman’s startup, Loopt, had also been backed by Y Combinator.
Altman looks at the business model, and especially the $30 million market size and tells Chesky, “You’ve got to change the M’s to B’s. Investors want B’s, not M’s.”
So they basically change the market size from $30 million to $30 billion.
Seibel emails around 20 investors on their behalf.
They get a few meetings.
At one meeting, the investor orders a smoothie, and then gets up and walks out while they’re in the middle of their pitch.
Chesky said, “we thought he just had to [move] his car. I haven’t heard from him since.”
And they actually took photographs of the abandoned smoothie.
I love that detail.
They’re not even being politely rejected. The investor literally can’t be bothered finishing his drink before getting away from them.
Denver, Debt and Obama O’s
Now, the next big opportunity comes in August 2008.
The Democratic National Convention is being held in Denver. Barack Obama’s acceptance speech is in an 80,000-seat football stadium and demand for accommodation is enormous.
So they start promoting AirBed & Breakfast first on blogs, then the Denver Post picks it up, then local television and eventually national press.
They get around 800 people in Denver to list rooms.
But they only get around 80 bookings.
As Chesky said, “In the matter of two weeks, we went from three guys in an apartment with no business, no money, and no press to three guys in an apartment with still no business and no money, but we were on the New York Times.”
And that really sums up where they are.
Because once the convention ends, the bookings disappear again.
They have no salaries, no investors are interested and between living costs and keeping the company alive they’ve built up around $40,000 in credit-card debt.
So they come up with this ridiculous idea to get themselves out of debt.
They bulk-buy cereal and create two breakfast cereals: Obama O’s and Cap’n McCain’s.
They design the boxes themselves, while a friend in the printing business provides the boxes.
And unbelievably, it works.
They sell the cereal through their website for $40 a box and wipe out most of the debt.
But these are obviously desperate times.
And this is when Michael Seibel throws them a lifeline.
Y Combinator Backs the Founders
In January 2009, he managed to get them an interview with Paul Graham at Y Combinator.
And look, I’m thinking at this stage, why is Seibel or Graham even doing this?
Because I’m looking at what AirbedandBreakfast is at this stage and thinking there’s almost nothing really here, they’re renting air mattresses and now rooms, and they haven’t really shown that it can work.
And it’s clear that Graham thinks pretty much the same thing.
According to Chesky, the interview is going badly until Gebbia pulls out one of the boxes of Obama O’s and explains how they created the cereal and sold it to help clear their debts.
And that gets Graham’s attention.
He says: “You guys are like cockroaches. You just won’t die.”
And that, really, is why Graham backs them.
He isn’t backing the idea.
He’s backing the guys.
He can see that they’re tenacious. So Y Combinator invests $20,000 for 6% of the company.
And in the words of Chesky: “it ended up being the best thing that ever happened to me.”
Then Graham asks them a very simple question.
Where are people actually looking for places to stay?
And based on the searches on their website one city stands out.
New York.
So Graham tells them to go there. Meet the hosts. Stay with them. Talk to them. Figure out why people are looking at these listings but not actually booking them.
New York Changes Everything
And Chesky and Gebbia start flying back and forth to New York, meeting hosts and trying to understand what isn’t working.
And one of the first things they notice is the photographs.
They’re terrible.
Dark, blurry, badly framed.
And look, if you’re asking somebody to hand over money to stay in a stranger’s house, the photographs matter.
So Chesky and Gebbia rent a decent camera and start taking the photographs themselves.
And New York revenue doubles.
In the first week of February, Airbnb makes $460 in fees.
The following week, $900.
The week after that, $1,500.
So it’s still tiny, but at least something is starting to happen.
Around the same time, they make another important change.
The name AirBed & Breakfast is still tied to the whole original air mattress idea.
But by now they’re mainly renting rooms and apartments.
So they shorten the name to Airbnb.
And by March, they’ve got around 2,500 listings and almost 10,000 registered users.
Now, just to be clear, Airbnb hasn’t invented this market.
Websites have been renting holiday homes for years. Craigslist is full of rooms and apartments. And Couchsurfing lets people stay in strangers’ homes for free.
What Airbnb does differently is make the whole thing much easier and much more flexible.
Anybody can list anything from a spare bedroom to an entire house, for one night or for much longer, and Airbnb handles the booking and the payment.
And crucially, the host doesn’t have to pay just to advertise.
Airbnb only gets paid when a booking actually happens.
So within the first few months of 2009, they’re doing around $5,000 a week.
Again, tiny, but it’s growing — they have some momentum.
Designing the Product
And in April 2009, Sequoia invests about $600,000 for 20% of the company, valuing Airbnb at just under $3 million.
And this investment gives Chesky and Gebbia the chance to really start developing and fine-tuning the business.
Or maybe product is the better word.
Because this is the thing about Chesky and Gebbia that I didn't understand until I researched this story.
The fact that they’re product designers is crucial.
And they’re obsessed with getting the product right.
They’re constantly thinking about how to make the whole thing incredibly easy for both the host and the guest.
So now they redesign the website.
Cleaner pages. Better photographs. Fewer steps.
A guest can find a place, choose it and book it in three clicks.
And that sounds obvious now.
But back then an awful lot of websites were clunky as hell.
Then they tackle the much bigger problem.
Trust — because just as the guest doesn’t know the host, the host is letting a complete stranger into their home.
So Airbnb introduces two-way reviews. Guests review hosts. Hosts review guests. Everybody starts building a reputation.
And Airbnb holds the payment for 24 hours after check-in, so if the place is nothing like the listing, the host doesn’t get paid.
And these little changes start making a difference.
Word spreads.
And importantly, it starts spreading outside America without Airbnb having to go and open offices in every country.
By late 2010 Airbnb has around 50,000 listings around the world and more than 700,000 nights have now been booked through the site.
Revenue has been doubling every month and reached around $10 million for 2010.
The Network Effect
So this huge growth catches the attention of Reid Hoffman.
Hoffman, of course, had built LinkedIn, and together with Peter Thiel was one of the first investors in Facebook, and by now he’s a partner at Greylock, the venture capital firm.
And through LinkedIn and Facebook, Hoffman understands network effects probably as well as anybody.
Basically, the more people who use a service, the more useful that service becomes, which attracts even more people.
And he can see this starting to happen with Airbnb.
So in November 2010, Greylock and Sequoia invest $7.2 million, valuing Airbnb at around $70 million.
But not everybody at Greylock agrees with Hoffman.
One of the senior partners tells him: “Every venture capitalist has to have a deal that they can fail on. Airbnb can be yours.”
But Hoffman is right.
Airbnb keeps growing at a very, very fast rate.
And of course, once you have an internet company growing this quickly, competitors are going to start appearing.
And look, you have competitors.
And then you have clones.
The Clone Wars
And nobody, absolutely nobody, does clones quite like the Samwer brothers.
Now, these guys are fascinating.
They’re three German brothers — Oliver, Marc and Alexander Samwer — and they’ve become billionaires by spotting internet businesses that are working, mainly in America, recreating them in Europe and then executing very quickly.
Wired did a brilliant profile on them in 2012 called Inside the Clone Factory.
Well worth reading.
And I’m definitely going to do an episode on these guys at some stage because this is a cracking story in itself.
But just to give you an idea of their MO.
They built an eBay clone in 1999 and sold it within 100 days of launching it to eBay for $35 million.
They built a Facebook clone and sold it to a publishing company for $85 million.
They launched an Amazon clone that they eventually sold to Alibaba for $2 billion.
They built a Groupon clone, sold it to Groupon within months and took shares that were worth $1 billion when Groupon floated.
Now, as you can imagine, the Samwers aren’t very popular with lots of people.
Jason Calacanis from the All-in Podcast tweeted: “The Samwer brothers are despicable thieves. How do they sleep at night?”
Anyway, in 2011 they turned their attention to Airbnb and launched Wimdu, basically an Airbnb clone. They back it with $90 million, hire 400 people and go after the European market.
Then Oliver Samwer invites Chesky and his co-founders over to Berlin.
They walk into Wimdu’s office and Chesky says hundreds of people are sitting almost elbow to elbow with two screens in front of them. One screen is Airbnb. On the other is Wimdu.
So they are literally looking at Airbnb while they build Wimdu.
And Samwer doesn’t even pretend otherwise. He tells Chesky they’re going to copy Airbnb and beat them by moving faster.
But he offers them a way out.
Airbnb can take over Wimdu in return for 25% of Airbnb.
So the first thing Chesky did was ring Andrew Mason, the CEO of Groupon, who had done the same kind of deal with the Samwers.
Mason says it helped Groupon expand quickly into Europe, but there were big integration issues, a big clash of cultures between both companies.
Mark Zuckerberg tells Chesky, “Don’t buy them; the best product will win.”
Paul Graham tells him to reject the deal and says of the Samwers: “They’re mercenaries, you’re missionaries. They’re like people raising a baby they don’t actually want.”
And Reid Hoffman says, “With Airbnb, we have a business that is already benefiting from network effects. We can win.”
So Chesky rejects the deal and goes to war.
He raises another $112 million, buys a smaller German competitor, opens international offices and flies around Europe doing press interviews.
Airbnb has the momentum. Wimdu can’t keep up and eventually closes in 2018.
And Chesky later admitted: “The Samwers gave us a gift. They forced us to scale faster than we ever would have.”
When Trust Breaks
Now, as Airbnb gets bigger, the problems get bigger as well.
One of the first serious ones happens in San Francisco when a guest trashes a host’s home, steals possessions and even starts fires.
It gets loads of publicity and this is a nightmare because the whole business depends on trust. Chesky gets hammered for Airbnb’s initial poor response and eventually publishes an open letter called “We Screwed Up.”
As a result, Airbnb introduces a $50,000 Host Guarantee to cover damage caused by guests, later increased to $1 million, as well as a 24-hour customer service line and a Trust & Safety team.
From Spare Rooms to Luxury Villas
By 2016 you have Beyoncé staying in a luxury Airbnb over Super Bowl weekend. So now you can go onto Airbnb looking for a €50 room or you can be looking for a €10,000-a-night villa.
And that is actually quite difficult for a brand to pull off. Once people associate you with cheap accommodation, it can be very hard to convince them that you also belong at the luxury end. And equally, when companies move upmarket, they can sometimes alienate the people who came to them in the first place because they were cheap.
But Airbnb manages to do both.
And I think Chesky’s design background is a big part of this. So whether you’re booking a room or a luxury home you’ve still got the same website, same reviews, the same booking process. It still feels like Airbnb.
Then as it grows Airbnb launches Experiences, adds boutique hotels and a travel magazine. By the end of 2019 revenue is $4.8 billion.
But it still hasn’t made a profit, mainly because Chesky is spending heavily on expansion, staff, marketing and all these new businesses.
Now, in terms of what Chesky is like as a boss, as mentioned, one of his big influences is Walt Disney, who liked to “walk the park.” Get out from behind the desk and see what the customer is experiencing.
Chesky takes that to heart.
He lives a semi-nomadic life, moving between Airbnb listings to test the product himself. And as recently as 2025 he was still renting out a guest room in his own home.
By all accounts, even though he has been very open and honest talking about his earlier shortcomings as a boss, he’s built a reputation as a transparent boss; he’s not elitist, not flashy and is very open and approachable.
Overall he comes across as a really down-to-earth good guy.
Anyway, back to 2019 and everything appears to be going gangbusters.
The Covid Crisis
And then Covid hits.
Within eight weeks bookings fell by more than 80%.
And in fairness to Chesky he doesn’t hesitate — he starts cutting hard. Advertising is almost completely cancelled, saving around $800 million a year. Non-core businesses go. And in May 2020 he lets 1,900 people go, roughly a quarter of the company.
But Chesky gets a lot of praise for how he handles it.
He writes directly to staff, explains what is happening. There’s none of the usual corporate nonsense about “rightsizing” or “unlocking efficiencies.”
And here’s a quote from Chesky:
“My view is, even if I said something ineloquent, it’s better than people thinking I’m bullshitting them. I don’t think most CEOs are as cold as they come across. I just think that there are people in HR and legal that round every edge off the person, to the point that they’re sometimes not people.”
He also increases communication. Company-wide meetings go from monthly to weekly and he takes far more questions.
As he put it, “In a crisis, you have to communicate four times as much.”
And then gradually the recovery begins, people start travelling locally to cabins, beach houses, small towns.
In December 2020, Airbnb floats. Its shares jump from $65 to $144 on the opening day, valuing the company at around $100 billion.
By 2022 revenue reaches $8.4 billion and Airbnb makes its first full-year profit of $1.89 billion.
But one problem that has been dogging Airbnb for years is getting hotter.
The Housing Backlash
And that brings us to probably the biggest criticism of Airbnb: what happens to a city when too many homes become short-term rentals?
You can end up with fewer homes for local people, higher rents and neighbourhoods full of properties being turned over to tourists every few days.
Because Airbnb is no longer just about somebody renting a spare room. Estimates suggest more than 60% of hosts have two or more listings, and some operators have dozens or hundreds of listings.
In 2023, New York passed a law requiring hosts to register and, in most cases, be present while the guest is staying. As a result, active short-term listings collapsed from around 22,000 to fewer than 3,000.
And New York isn’t alone. Barcelona, Amsterdam, Florence, San Francisco, London, Tokyo. Cities all over the world are trying to limit short-term rentals.
So is Airbnb responsible for the global housing crisis?
No. That’s far too simplistic.
Housing shortages are mainly caused by things like not building enough homes, planning restrictions and growing populations. So it’s easy, and politically popular, to blame Airbnb.
But Airbnb can definitely make an existing problem worse.
Because if an apartment that could house a local family is instead rented to tourists all year, well, that apartment has effectively disappeared from the long-term rental market.
And when thousands do it, it starts to matter.
There’s research showing that in some heavily affected areas, the growth of short-term rentals accounted for as much as 20% of the increase in rents.
Now, to Chesky’s credit, he does acknowledge this.
“We grew so fast, we made mistakes. We really need to think through our impact on cities and communities.”
And Airbnb has made changes.
They’ve introduced systems that help cities see what is being rented and identify illegal listings. And in places like London and Paris, Airbnb’s own software can stop a property taking any more bookings once it reaches the legal annual limit.
They’ve also banned parties. Their software now tries to identify bookings that look like they could be for a party and block them before they happen, while properties that repeatedly cause problems can be removed from Airbnb altogether.
Now, does all of that solve the problem?
No.
And an awful lot of these changes happened because cities forced Airbnb to make them.
But I think Chesky understands that if Airbnb wants to be around for another 20 or 30 years, it can’t spend that entire time fighting the cities where it operates. As he said himself: “Who wants to invest in a company the public doesn’t want to exist?”
A Brand That Became a Verb
And despite all of the issues, Airbnb has continued to thrive.
In 2025 it had more than 9 million listings, people booked 533 million nights and experiences, revenue reached $12.2 billion and profit was around $2.5 billion.
And by now Airbnb has become such a powerful brand that it’s achieved verb status. You know, in the same way people say they’re going to Google something, people now talk about Airbnbing a place.
And that has a huge commercial advantage because 90% of Airbnb’s traffic comes direct.
And that helps explain why, while Airbnb still spends close to $2 billion a year on marketing, that is significantly less than Booking.com and Expedia, which are each spending around $7 billion a year.
So look, I have a lot of admiration for Chesky — he took the really crappy air mattress idea, gradually moved into a market that already existed — as in renting homes — because most of their business comes from that now — renting individual rooms is only a tiny part of their business, and yet, despite the fact that this market had more or less existed for years before his involvement, through his focus and obsession with making small tweaks to the products, getting the product better than anyone else out there, he built a $100 billion business — and it’s a good business. My family and I book Airbnb a few times every year and have never had a problem — so I’m a fan, and I like Chesky himself — he just comes across as a good guy.