Billionaire Brian Chesky’s Path To Airbnb
Brian Chesky, a former bodybuilder and industrial design student, is now worth $10 billion thanks to his founding Airbnb. Follow Founder Stories as we dive into the rise of Brian Chesky.
In 2015, Time Magazine named Airbnb co-founder Brian Chesky one of the world’s “100 Most Influential People”. In December 2020, Airbnb went public in a hugely successful IPO that saw its share price more than double to upwards of $144. As of May 2023, Airbnb’s market capitalization is $74.9 billion, and its 42-year-old CEO has a real-time net worth estimated at $9.3 billion.
However, things were not always rosy for Brian Chesky, who majored in industrial design in college and was involved in hockey and bodybuilding in his 20s. It wasn’t until a big design conference that led to a shortage of hotel accommodations in San Francisco inspired an idea that would later evolve into Airbnb.
His is a remarkable story of how excess demand for hotel spaces grew into a multi-billion-dollar business and a Silicon Valley giant. Notably, Chesky achieved all this with little tech knowledge before starting Airbnb.
Who is Brian Chesky?
Born on August 29, 1981, in Niskayuna, New York, Brian Chesky is the son of Robert and Deborah Chesky. His father is of Polish ancestry, while his mom has Italian roots. During his childhood, the young Chesky developed a love for art and design, including drawing replicas of paintings and redesigning shoes and toys. Later on, he also became passionate about landscape architecture and design. He chose “I’m sure I’ll amount to nothing” as his high school yearbook quote, which he found hilarious, unlike his father.
In 1999, Brian Chesky enrolled at the Rhode Island School of Design (RISD) and served as their hockey team captain. He completed his RISD program in 2004 and was awarded a Bachelor of Fine Arts in industrial design. While at RISD, Chesky met Joe Gebbia, who would later become his best friend, housemate, and one of Airbnb’s co-founders. In his early 20s, he also became a competitive bodybuilder, and a 2014 profile said he still had “16-inch biceps.”
Birth of Airbnb
After completing his RISD program, Brian Chesky relocated to Los Angeles. Subsequently, he found an industrial designer job that fetched $40,000 annually. He moved over to San Francisco shortly after to link up and cohabit with Gebbia. Being unemployed then, both friends soon became so broke that they could not afford to pay rent for their San Francisco apartment.
In October 2007, the San Francisco design conference led to demand for hotel accommodations far exceeding supply. Because of this accommodation shortage, Gebbia suggested to Chesky that they rent out their space to conference attendees who couldn’t find a place to stay. This event became career-defining and life-changing for both.
Chesky accepted the idea, and both friends established a website, airbedandbreakfast.com, for their new business. The business also needed some assets, so they purchased three air mattresses and arranged them in their loft.
The two friends quickly realized the commercial potential of their experiment. They approached their former roommate, Nathan Blecharczyk, to help translate their idea into a viable business. For four months, the three friends tried to build a roommate-matching service. They scrapped that angle when they discovered that an already existing business, Roommates.com, was serving the same purpose they were conceptualizing.
Instead, they revived the Air Bed and Breakfast idea. Their second attempt at Air Bed and Breakfast did not attract any clients. In contrast, their third try at participating in the 2008 SXSW attracted only a few customers (Chesky was one of them).
Search for Funds
Undeterred by the little or no patronage, the three men continued work on their project. By the summer of 2008, they had arrived at a final version of Air Bed and Breakfast. After that, they decided it was time to seek investors for much-needed funding.
Despite their best efforts, none of the first 15 angel investors they approached saw the business as viable. Eight of those investors rejected their proposal, while seven completely ignored it. The three friends, now broke and in debt, still decided to launch Air Bed and Breakfast again, this time at the 2008 Democratic National Convention in Denver. This new attempt was motivated by that early lesson that a shortage of hotel accommodations could make people search for alternative options. Still, not much success was recorded.
Eventually, however, Paul Graham, a venture capitalist investor, did trust Brian Chesky and his friends enough to invite them to become part of Y Combinator. This prestigious startup accelerator offers both cash and training to budding startups in exchange for a small stake in the company. At the accelerator, they spent the first quarter of 2009 improving Air Bed and Breakfast. Even while at the Y Combinator program, the company still did not find favor among investors.
One of those who rejected them was Fred Wilson of Union Square Ventures. Wilson would later admit in 2011 that he had failed to look beyond the Air Bed and Breakfast name to see its viability as a business. He said, “We couldn’t wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal. Others saw the amazing team that we saw, funded them, and the rest is history.”
Air Bed & Breakfast Becomes “Airbnb”
Air Bed & Breakfast officially became “Airbnb” in March 2009. A month later, Sequoia Capital finally awarded a $600,000 seed investment to Airbnb. Brian Chesky described it as going from eating only leftover cereal to being “ramen-profitable.”
After this significant change in fortune, the company’s growth efforts gathered new momentum and pace. Growth was so speedy that by 2010, Chesky famously decided to stay exclusively in Airbnb apartments for a few months when Airbnb employees crowded out the bedroom space in his apartment. According to Chesky, “In June 2010, I moved out of my apartment, and I have been mostly homeless ever since, off and on. I just live in Airbnb apartments and check in different homes in San Francisco every week.”
By 2011 (just four years after those first three San Francisco air mattress guests), Airbnb had established a presence in 89 countries with 1 million nights booked. Recognition also came in the form of the break-out mobile app award at SXSW, the same venue where it experienced its tepid launch in 2008.
2011 also saw a further $112 million injection into Airbnb by some of Silicon Valley’s biggest venture capitalists, which increased the company’s value to over $1 billion. With that investment, Airbnb became a Silicon Valley “unicorn.”
Recognition and Philanthropy
In May 2015, Brian Chesky was made an “Ambassador of Global Entrepreneurship” by then-President Obama. That same year, Forbes listed him among “America’s Richest Entrepreneurs Under 40”. Apple’s former design chief, Jony Ive, noted that Chesky’s “audacity is fabulous.”
On June 11, 2016, Chesky became a member of Warren Buffett and Bill Gates’ “The Giving Pledge,” a group of billionaires declaring they’ll donate most of their wealth to charity. In May 2022, the Obama Foundation announced a $100 million gift from Brian Chesky.
Brian Chesky’s Road Ahead
Today, Airbnb has overcome business challenges such as customer relations issues and regulatory bottlenecks to continue its growth trajectory. It now boasts a community of over 4 million hosts who have welcomed more than 1.4 billion guests across over 220 countries and regions.
Brian Chesky remains Airbnb’s CEO. These days, his main focus is on Airbnb’s future activities. Chesky recently spent six months living in his company’s rentals — and found core problems with Airbnb that he intends to solve. He also regularly solicits feedback from people on Twitter, a strategy Elon Musk has praised. If history is the best teacher, Chesky should have no problem adapting to the next wave of challenges.
Sources
https://en.wikipedia.org/wiki/Brian_Chesky
https://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2?r=US&IR=T
https://companiesmarketcap.com/airbnb/marketcap/
https://news.airbnb.com/about-us/leadership/brian-chesky/
https://news.airbnb.com/about-us/
https://www.forbes.com/profile/brian-chesky/?sh=47d781c244d3
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