Airbnb: Joe Gebbia

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You thought we made it. We're here. We got it.

From NPR, it's How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

On today's show, the story of how a side hustle to pay rent led Joe Gebbia to build a company that now has more rooms than the biggest hotel chain in the world.

10 years ago, even 5 years ago, most of us would have thought the idea of renting out a room in our home to a complete stranger a little creepy. But now it's not just normal, it's the preferred way to overnight for millions of people around the world. The company that made this normal is Airbnb. Joe Gebbia graduated from art school at RISD. His co-founder Brian Chesky was his college buddy. They played pickup basketball together. After graduation in 2005, both moved out west. Joe went to San Francisco and convinced Brian to move up and start a business.

And you guys were like in your mid-20s or 25. So you didn't need a whole lot of money presumably at this point.

Yeah. Why does everybody eat ramen? Everybody eats ramen. There's ramen. Ramen. Ramen. I mean, you can get rice.

Anyway, so you guys are there. You're eating ramen. And what? You're just like spitballing ideas.

I mean, the first week he comes, you're you're like,

Yeah.

25%.

And that's legal.

Yeah. And so were you freaking out?

Yeah, you have to give him a place.

So you're in your apartment, rent going up 25%, and you say, 'Let's rent out a room.'

So how did you get the word out?

That's a great deal.

Wait, at what point did you and Brian look at each other and say, 'Okay, this is our business'?

So what did you do next?

So you have your team. When do you launch?

And at that point, there's not a single listing, right?

Were you guys sad or laughing?

Actually, he moved back to Boston to be with his girlfriend. The band's falling apart.

How did it go?

You thought we made it. We're here.

What did they say? Why?

So after the convention, you're back in San Francisco with no money.

There's a name for this phase: the trough of sorrow. A long period without product-market fit, flat growth. This is when people quit.

In a moment, how Joe Gebbia and his partners climb out of the trough of sorrow. I'm Guy Raz, and you're listening to How I Built This from NPR.

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Just one more thing before we get back to the show. We've been incredibly inspired by the hundreds of stories you've sent us about the companies you are building. Let me just read a few examples. We heard from Seth Hill. He's got a company that's taking pre-orders for a product that grew out of a camping trip. On that trip, he says, 'We grabbed our nylon hammock, strung them up on a little island in the middle of a lake and froze our butts off.' So he's now got a prototype for a product he calls Sway. It's an insulated hammock that he says solves cold butt syndrome, which is a real thing. Look it up. We also heard from Leah Ferrazini. She started Semolina Artisanal Pasta two years ago in Los Angeles. She's never had a business before and she's had some real hurdles. Like she says she engaged in some hand-to-hand combat with her pasta extruder and she lost. But Leah is doing okay. Her organic pasta is already for sale online and in Whole Foods stores in Southern California. We also heard from Larry Moss of Rochester, New York. He writes, 'I built my business out of thin air based on a product that typically lasts a week.' And Larry is talking about balloons, like the kind you make balloon animals out of, except his balloon sculptures are gigantic. They can literally fill a whole building. You can check out his story and the amazing pictures on our Facebook page. And while you're there, we'd love it if you'd like us. And if you want to send us your story about what you're building, go to build.npr.org. That's build with a d.npr.org. It's How I Built This from NPR. I'm Guy Raz. So, it's 2008. Joe and his partners have no investors and a lot of credit card debt and they're trying to figure out how to raise cash. It was at this point that Brian and I are in the kitchen late one night. It's like 2:00 in the morning and we're just trying to keep each other's spirits up.

Wait, you made breakfast cereal? Like actual cereal to eat?

Just sell it on the street.

What? This is just a crazy story. I don't even remember about Airbnb. Where are we going? What's going on with this interview?

Yeah. Breakfast cereal.

All right. So you pay off your credit card bills and then what? You go back to Airbed and Breakfast?

Wow.

Wow. Let me say that's not a great way to start an interview of any kind.

All right. So you get into Y Combinator and what does it do for you guys? What happened there?

Yeah.

And you guys did not know that up until that point?

Huh. And what's very interesting, Guy, is that we didn't know this at the time. At what point were you able to attract money from investors? Was it around that time?

I'm wondering at what point do you remember sitting with Nate and Brian and saying, 'I think this is going to be really big.'

So you guys have obviously grown much bigger since then, bigger than most or all hotel chains, and you have some similar challenges to companies like Uber, with some cities saying you should be regulated like hotels. How do you respond to that?

When you think that Airbnb was valued at like $20 billion and probably more today, does that shock you? Does it mean anything to you, or is it just a number on a piece of paper?

Joe, by the way, the company he first tried to build before Airbnb was Crit Buns, which are basically butt cushions for art students. The company went dormant after Airbnb's success, but there is still a website for it. Every now and then, an order comes in and he still runs down to the garage to pack them up.

Wait, what's the website? Is it critbuns.com? Literally critbuns.com. Okay, we're going to plug this. Go to critbuns.com and order your Crit Bun. Only 600 left.

Hey, thanks for listening to the show this week. If you want to find out more or listen to previous episodes, go to howibuiltthis.npr.org. And if you have a chance, please subscribe to our show through iTunes and let other people know about it. You can also write us directly at [email protected] or tweet us. That's How I Built This. Our show is produced this week by Ramin Arablouie, who also composed the music. Thanks also to Neva Grant, Sanaz Meshkinpour, and Jeff Rogers. I'm Guy Raz, and you've been listening to How I Built This from NPR.

Hey, I want to invite you to come see How I Built This live on stage at the Now Hear This podcast festival on Friday, October 28th in beautiful Anaheim, California. Now Hear This is a three-day festival of your favorite podcasts, October 28th through 30th, with shows like NPR's Pop Culture Happy Hour, Dinner Party Download, and WTF with Marc Maron. We will be doing a live episode of How I Built This on Friday, October 28th. So if you can only make it for one day, make sure it's Friday or you'll miss out on our show. To get tickets and information about the full lineup, go to nowhearthisfest.com. Hope to see you there.