In late 2007, Brian Chesky moved into his friend Joe Gebbia’s San Francisco apartment with just $1,000 to his name and could not make rent. What followed was one of the most remarkable startup stories in business history — involving air mattresses, rejected investor emails, presidential cereal boxes, and eventually a $100 billion company that permanently changed how the world travels.
Rent Crisis
Brian Chesky arrived in San Francisco short $150 on his first month’s rent. Spotting an international design conference coming to town, he and Joe Gebbia posted an offer letting attendees sleep on air mattresses in their apartment for a small nightly fee to cover their costs.
First Guests
That weekend, they hosted three paying strangers — a woman from Boston, a man from Utah, and a man from India. Brian cooked breakfast every morning. The guests arrived as strangers and left as friends, quietly planting the seed of what would eventually become a global hospitality empire.
Site Launches
After recruiting Harvard computer scientist Nate Blecharczyk, the trio launched Airbed and Breakfast with listings, individual property pages, and a payment system. They debuted at South by Southwest and recorded just two site visits the entire day — one of which was Brian himself checking his own website.
Investors Reject
The founders pitched 15 investors, targeting $150,000 at a $1.5 million valuation. Half never responded. A quarter replied, saying the idea did not fit their investment strategy. The team was left deflated, deeply frustrated, and forced to fund the company entirely through personal credit cards.
Debt Mounts
With no investor money coming in, Brian and Joe accumulated $30,000 in credit card debt, keeping the company breathing. They desperately needed a breakthrough. The 2008 Democratic National Convention in Denver offered a temporary lifeline, generating 80 bookings — but momentum collapsed completely the following week.
Cereal Born
Facing mounting debt and zero bookings, Brian and Joe hatched an unlikely plan. They created two limited-edition presidential-themed breakfast cereals — Obama O’s and Cap’n McCain’s — timed perfectly to the 2008 presidential election campaign that had captured the entire nation’s attention and imagination.
Boxes Sold
The duo sourced 1,000 free cereal boxes, spent days folding them by hand in their apartment, and sold every single one. Obama O’s and Cap’n McCain’s generated $30,000 in revenue — enough to completely wipe out their credit card debt and keep the struggling startup alive one more time.
Graham Impressed
At Y Combinator, founder Paul Graham initially thought the Airbnb idea was terrible and lawsuit-prone. Then Nate handed him a box of Obama O’s. When the founders explained they had funded their startup by selling $40 novelty cereal boxes, Graham immediately reconsidered — telling them anyone creative could surely get strangers to share homes.
YC Accepted
Y Combinator accepted Airbnb into its program, unlocking a seed round of $600,000 at a $2.4 million valuation. The acceptance validated the founders’ relentless determination and opened doors to serious Silicon Valley investors who had previously dismissed their idea without even reading the full pitch email.
Empire Built
From that San Francisco apartment, Airbnb raised $4.74 billion between 2009 and its 2020 IPO, going public at nearly a $100 billion valuation. The company blazed a trail for marketplace startups like Uber, DoorDash, and Instacart — proving that the greatest businesses sometimes start with nothing but an air mattress.
