It was unfathomable, frankly. I mean, it was really scary when the floor drops out from underneath you and you are sitting on $3 billion of other people's money that you suddenly have to return and you don't know if we'll make it out of this thing.
Welcome to Leap Forward, a show about founders and the people who believed in them before anyone else did. I'm David Rusenko and on today's show we talk to Nate Blecharczyk. Nate is the co-founder and chief strategy officer of Airbnb. He's managed the company through crises that seemed insurmountable, including tackling the biggest problem of them all: how to get people to rent a room from a stranger. To understand how he did that, I also talked to Sam Angus, the lawyer who originally incorporated Airbnb and championed it from the beginning.
I reached out to a lot of different investors in the Silicon Valley. I could not for the life of me get these investors interested. And to this day, I have more than a few of them who come up to me and say, 'God, I should have listened to you and invested in Airbnb today.'
How to build trust in times of crisis with Nate Blecharczyk.
Love to start just at the beginning. You know, where were you born, where did you grow up, and what was home life like?
Yeah. I was born and grew up in Boston and my dad is an electrical engineer. So, you know, we had a computer at home and this is early '90s, right? So not everybody did, but we had a computer. I was of course playing games on it, but at the age of 12 I was homesick from school and I went to my dad's bookshelf and just took off a book and started flipping through it. And it was a book about the DOS operating system and how to create batch file scripts, which I thought was interesting because in order to play a game back then, it wasn't as simple as point-and-click. You had to type in a bunch of commands to make the sound work, to make your CD-ROM work. And so I started creating simple scripts just to help me get my games up and going. But that ignited in me a curiosity for learning how to program. And so that Christmas, a couple months later, I asked for a book on programming, which I received. And it was basically 'Teach Yourself QBasic Programming in 21 Days.' And it took me more than 21 days, about 30 days, but not bad for a 12-year-old. And it began a hobby of mine, coding.
I remember QBasic. Well, I remember someone gifted me like an old 8086 laptop, and I used to love to program in QBasic. And we also had a computer at home. I remember deleting autoexec.bat. If you remember what that was, that was a disaster.
Exactly. Never do that. No, never do that.
But you know, kind of around that time, you know, either kind of when you were tinkering in high school, did you ever think of starting a company? Did you think of starting a side business or have much exposure to startups at that point in your life?
Well, no, but the way it all unfolded was I taught myself coding at the age of 12 through the books and I got that one book at Christmas and then thereafter each month I'd be going to Barnes & Noble and buying yet another book and devouring that. And so, I was posting my work on the internet and I was saying, 'If you like my work, please send me $5.' Well, nobody ever sent me $5, but at the age of 14, I got a phone call and this guy said, 'I saw your work on the internet and I'd like to pay you $1,000 to create something similar for me.' So, I told my dad, 'Hey, somebody from the internet wants to pay me $1,000.' And he just laughed. He said, 'Son, nobody from the internet's going to pay you $1,000,' especially at that time, right, in like 1995 or whatever. But I said, 'Whatever, Dad. Like, this is my hobby. I'll just do it and I'll see what happens.' And so, I did. And 30 days later, I made 1,000 bucks, which was super exciting for a 14-year-old. But also, more importantly, he introduced me to other people who needed similar things. And so, I met more people who needed contract programming done, and I did jobs for them, and I was making money doing contract programming. But I noticed like a lot of these folks I was being introduced to needed similar things. And I thought to myself, well, instead of doing a bunch of one-off jobs, why don't I try to create a software product and just simply sell licenses to it. So that's what I did. And it began a business that I ran for the next four or five years throughout high school and a little bit into college. Over this time, I made over a million dollars, so quite well. It was just me. I had no employees. And I think it was from that that I knew I wanted to be a lifelong entrepreneur.
What did your parents think about that? I mean, obviously that's, I think, pretty surreal.
Well, I mean, I still kind of wonder what they were really thinking because I would basically give them financial reports at the end of each week. And back then, these were like the early days of the internet. I couldn't even accept credit cards online. So, the way you would receive money was by printing off checks. So, people would enter in their checking account details and then I would print it onto a check and then I would just at the end of the week be showing them all these checks that I had printed off my printer for like $600 here, $800 here, and giving them these financial reports. And it just must have been pretty crazy because being 14, 15 and doing this kind of stuff is obviously unusual.
I mean, they had to have, like, they must have gone with you to the bank to open up a bank account and co-signed with you because I don't think you could open your own bank account at 14, right?
I certainly had to go to the bank. I don't remember exactly the account ownership structure, but certainly, yes. And then also another funny story is back then the connection to the internet was over the phone line, right? It was a dial-up modem. So the house had one phone line. And so when I was using it, which was pretty much all day after school, nobody could make a phone call and nobody could call the house. And I remember sometimes my mom would pick up the phone and it would knock me off the internet. And one of my clients was like, 'This is so crazy. You need to get another phone line.' And I'm like, 'Yeah, well, my dad doesn't want to or whatever.' And he's like, 'Put your dad on the line. I need to talk to him.' And so eventually we got a second phone line for the house. And then we got a third and before we knew it we had like 10 or 20 of these phone lines going to the house. And it was pretty funny because they would come up to install yet another phone line thinking it was a business and it was just a house in a neighborhood. And all the lines ran through my neighbor's backyard and at one point they had to install a new telephone pole in his yard to hold up all the wires.
So take me through, okay, so you've had some pretty good success. I mean, really good success for that age starting this company. What were you thinking? Like, you decided, am I going to go to college? Am I going to pursue this full-time? Like, talk me through that decision.
Yeah. Well, my parents, I think, they were just very supportive and open-minded. Like, one of the things they said was, 'Hey, you know, this is clearly quite impressive what you're doing and if you don't want to go to college, if you just want to lean into this, that's okay, too. It's up to you.' So, they gave me the option of getting an RV and putting it in the driveway and having my own space and doing my business, but I was like, 'No, I'm interested in continuing the academic pursuits.' I graduated top of my class in high school and ended up going to Harvard, studying computer science there. And at first, I tried to do both. I tried to continue my business and do school. And for the first year, that was fine. But by the second year, things got tougher. It got real. And I decided to shut down my business and just do the college thing and I was confident that there would always be new entrepreneurial activities that I could get back into.
So, you graduate from Harvard with a degree in computer science. Were you thinking, 'I'm going to start another company'? How did you decide what to do after college?
Yeah. Well, first of all, there wasn't much entrepreneurship happening at that time in Boston or at Harvard. So, I wasn't getting that kind of inspiration or seeing those pathways all around me. But I, through a friend of a friend, get connected to an entrepreneurial opportunity out in Silicon Valley. So, I moved to San Francisco and I came out on very short notice. So, in two weeks notice I made the decision to move and I showed up in San Francisco. For the first month I stayed actually with the parents of my college roommate. So I was kind of crashing with them. But very soon I needed to find my own place. And so I went out on Craigslist looking for places to live and I found this apartment in SoMa of San Francisco. And Joe was one of the housemates who had posted the ad. And so I went and saw it and said I was interested. And Joe called me the next day and said, 'Sorry, we gave it to somebody else.' There was another person, a designer, and yeah, we had to choose, so we chose the designer. So, I was bummed out, but a couple days later, Joe called me back and said, 'Well, actually, that other person fell through, if you're still interested, we'd love to have you.' So, I said, 'Yeah,' I moved in with Joe.
And then, so is that, I mean, that's originally how you and Joe really got to know each other presumably at that point. And then Brian moves in at some point.
Yeah, basically I'm living there at first from April 2007 through August 2007 and over this period of time two really important things happen one after another. One, after work, nights and weekends, both Joe and I are working on our passion projects. You know, we're not off socializing or hanging out, we are hard at work doing what we're passionate about. And so I noticed that about Joe and he notices that about me, that we have a similar work ethic. Second of all, he's a designer, I'm an engineer. We start helping each other out on our projects. So, he's creating marketing materials for me and I'm helping him code his website. So, we start to see that our skill sets are complementary. And so, I think, out of that there's a mutual respect and a realization that we can make a good team. Then, it's now late August 2008. Joe calls me to tell me that the rent on the apartment has been raised 25% because the landlord has realized that all the original signers of the lease are no longer living there. So, he can just jack the rent. So, it's going up 25%. I say, frankly, that's too expensive. I'm moving out. This place is not worth that to me. So, I bail. So does the other roommate. But Joe wants to stay. And Joe calls up Brian who's living down in Los Angeles. And Joe and Brian know each other from university and convinces Brian to quit his job and come to San Francisco to be an entrepreneur. So Brian shows up and I don't know, I guess they didn't really talk about how much the rent was going to be because the rent was too much for Brian and was still too much for Joe. Both had quit their jobs to become entrepreneurs, also known as unemployed. So they had no money but as designers they knew and saw that an international design conference was coming to San Francisco. And they saw that all the hotels were sold out for this. And they thought to themselves, why not rent out this extra bedroom to designers who might need a place to stay during the conference. And so they set up a simple blog and emailed it out to some other bloggers. And they were just expecting guys like themselves to want to crash there. And instead, they got a father of four from Utah, a man from India, and a 35-year-old woman from Boston. So, kind of an eclectic group, all different backgrounds. The guests got an affordable place to stay. I think it was like $80 a night times four nights times three people, almost 1,000 bucks. So that was meaningfully helpful with the rent for Joe and Brian. And they all went to the conference together and had a great time and Joe and Brian introduced them to their friends. They went out to dinner and so it was a whole social experience on top of just a place to stay. And so it was a great win-win. But funny enough, that all happened and that was almost the end of it because there was no aha moment that this was a bigger idea than a one-off way to earn some extra cash that weekend. And to kind of prove it, for the next two months, at this point, I'm quitting my job. And the three of us get together trying to brainstorm startup ideas because we know we all want to work together. We think we're going to make a good team. Having gotten to know one another, we just had to figure out what the idea was. And so for two months we sit around in the apartment brainstorming all kinds of ideas like roommate finding services and other things without ever talking about this story that I just shared with you. So I tell this story and it's so obvious how this one inspirational moment leads to the founding of the company, right? But actually in the moment it was not obvious and two months elapses before in January 2008 Joe and Brian share this one-off weekend project that they had done and how maybe we could do this for other events, which is what we set out to do in early 2008.
Had you moved back into the apartment at that point?
At this point I am living in the neighborhood but not at the apartment. I don't move back into the apartment till much later. Actually, it gets complicated because I had been doing long distance with my girlfriend for three years at this point. And she was in medical school at that time and thinking about where to apply for residency. And so she was looking for some commitment from me before making this big decision. And so I knew that I need to get serious about coming to a resolution, making a commitment. And so I go back to Boston actually in spring of 2008 to be with her and figure out my personal life. Meanwhile, I'm still working on what was then Airbed and Breakfast. But from afar and this was obviously a strain on the team dynamics because Joe and Brian were designing and coming up with all these things that they wanted implemented and things take time of course. And I was wondering to myself, should I continue with this thing? I had a lot of other opportunities as an engineer. There were other ideas I had, other people wanting me to do things for them. And so I was doing a bit of both, frankly, for a while there.
So, you know, I just kind of want to just understand the dynamic a little bit. So, obviously Joe and Brian knew each other before, but you and Joe kind of knew each other because you'd been roommates for a little while, right? Did it feel like you were kind of coming into the two of them that knew each other really well or was it kind of like you were all three, you know, what was that dynamic like?
Yeah. Well, obviously they knew each other for, let's say, at least five years, more than I knew them. So yeah, they had a deep friendship already and familiarity and had gone to RISD together so had a shared experience and done projects together at RISD. And yeah, so they knew each other deeply and had a lot of trust and they're both designers too so they got excited about a lot of the same things. You know, I was frankly a little apprehensive. Especially back then, it was kind of unusual for a founding team to be only one engineer and then two non-engineers. And I just felt a little bit outnumbered. But I'll tell you what, living with Joe, I had respect over the work ethic and the passion. I remember having this conversation with Michael Seibel in the summer of 2008 and also with my wife about what should I do? I'm here in Boston, I have all these options, should I double down on Joe, Brian, and Airbed and Breakfast or go some other way? And I think one of the things that stood out was their level of commitment. They were clearly going to try to go do this and I think that really matters because in so many cases teams fall apart. There's different life dynamics, spouses, partners, finances, that tear the team apart. But in this case, I think knowing that the team was committed to one another and committed to the idea is what held us together. But if we fast forward, it wasn't until the end of 2008 when I agreed that I would come back to San Francisco and move back into the apartment and we would not have any side projects or any other distractions in our lives over the span of Y Combinator, which is a 13-week program with a hope of really moving the needle. Because at the end of the first year, we were basically on the brink of giving up and we said if we get into Y Combinator, then we'll give it all our best for 13 more weeks and if the situation doesn't improve, then we'll quit and we won't hold it against one another because we were all friends. We didn't want to let down the others.
More after the break.
And now back to the interview. Before getting to YC, I also just want to set the stage for what the world was like. I mean, this wasn't obviously a common behavior. People weren't going. I mean, we take it for granted now to go, you know, I just stayed in an Airbnb last weekend, but that wasn't what people were doing back then. A lot of people were saying it'd just be crazy to go stay at a stranger's house, right? Like, tell us a little bit about what things felt like coming up with this idea and trying to convince people in the world that it was a good idea.
Yeah. Well, first of all, it was all inspired by our own experience that happened very naturally, not because we wanted to build a big business, but just because we were solving our own problem one weekend. So, we knew that this could happen. Meeting somebody new and having a place to stay and having an experience, I think that was our north star amidst everybody else in our lives saying, 'This is crazy.' Like staying with a stranger, someone's going to get killed, right? Like that was the common wisdom and it's the reason why I think so many investors had zero interest. They couldn't see themselves using this product. They probably didn't think it was a big market too as a result, right? But yeah, it was common sense that this was a bad idea. Not just a bad idea, people had a visceral reaction like this is terrible.
