Brian Chesky is an Example of What it Means to be an Entrepreneur
Owning a company doesn’t make you an entrepreneur. There’s more to that.
“We want to help create a world where people can belong anywhere.” — Brian Chesky
Brian Chesky, a co-founder of Airbnb, is an example of what it means to be an entrepreneur in this modern world.
His company, Airbnb, offers a new way to travel. His solution was like nothing else in the market at the time.
Founded in 2008, after more than a decade, it has served more than 1 billion customers and generated more than $180 billion for the hosts.
For a tech startup less than 2 decades old, I say that is pretty impressive, considering that over 70% of startups fail within the first 2 to 5 years. Not to say not too many of them can ever reach 1 billion in revenue or valuation.
Now, regardless of how the company was founded or the challenges it faced, Brian Chesky and his company have had a remarkable track record so far. An interesting case study, so to speak.
Here is how it happened.
Brian and his friends, Joe Gebbia, and Nathan Blecharczyk were roommates, and they were struggling to pay rent in San Francisco.
But as how most people thrive in difficulties, these three dudes came up with the idea of renting out their air mattresses in their apartment.
They launched the website airbedandbreakfast.com and offered guests a place to sleep and included breakfast for $80 per night.
The result? They got their first customer in the summer of 2008 when the Industrial Design Conference was happening, and it was difficult for people to find lodging.
From this initial idea, the three founders decided to expand the concept and create a platform for people to rent out their homes or apartments to travelers. They built a website, launched in San Francisco, and started reaching out to potential hosts.
As the money was rolling in and they saw the potential in their business model, the team received investments from a startup incubator (Y Combinator), which provided them with training and $20,000 in funding in exchange for a 6% interest in the company. The money was then spent on finding and promoting users in New York.
Shortly a few months later, by March 2009, the site had over 10 000 customers and 2 500 listings.
Airbedandbreakfast.com was later shortened to Airbnb to avoid confusion. Also because they were no longer renting out only air mattresses but it included the whole room and properties.
However, the company struggled to gain traction in its early days, and at one point, it was running out of money. Despite the challenges, they continued to work on the platform, and eventually, the company began to take off.
In 2009, they raised $600,000 in funding, and by 2010, they were operating in several major cities around the world. That’s only 2 years after their first customer, which is, once again, a remarkable achievement.
Today, Airbnb is one of the most successful and well-known companies in the sharing economy, with over 6 million active listings and 220 countries and regions.
Sounds like a straightforward story of three young dudes making big bucks, right?
But it wasn’t.
The challenges
First, imagine that you’re a house owner and the idea of letting strangers stay in your place might terrify you. I mean, really? How are you sure your guests are not going to rob you and run?
And vice versa, how are you, as a guest, sure that you’re not going to be abducted by the hosts? You’re staying at a random stranger’s house after all. It’s not like a hotel, a business at a larger scale with government regulations. Remember that there was no such business model prior to Airbnb.
Trust was a huge issue to help the model take off.
To address this, the company implemented a number of safety features such as verified IDs and reviews, and also offered a guarantee to protect hosts’ properties. It helped as a result.
Another major challenge was regulatory and legal issues.
Airbnb faced opposition from hotel lobbies and governments in many cities, who argued that the company was operating outside of existing laws and regulations.
Airbnb doesn’t fall in the category of hotels or motels because it isn’t one. The business model was relatively new and different so there was a gray area there.
This led to a number of legal battles, fines, and restrictions on the company’s operations in certain cities.
For instance, short-term rentals in Ireland are allowed for a maximum of 90 days per year for primary residences, and registration is required with local authorities. It’s the same case for Airbnb’s properties in London.
Or another example is properties in Chicago where hosts are required to obtain licenses and guests are prohibited from a one-night stay.
Additionally, the company faced a lot of criticism for its role in driving up housing prices. The way how it work was instead of charging low-rate for long-term rentals, the hosts started to increase the rental rate, charging more for short-term stays.
Some hosts even went as far as illegally evicting current long-term stay tenants to convert their properties to Airbnb rentals for a higher return. Savage.
Lastly, In the last pandemic, the company faced a major setback as travel restrictions and lockdowns severely impacted the travel and hospitality industry. As a result, the company laid off a significant portion of its workforce and also had to adjust its business model to focus on longer-term stays and domestic travel.
As for any disrupting business models, mostly tech startups these days, Airbnb has been facing an ongoing list of challenges.
But it doesn’t prevent Brian and his friends from being true entrepreneurs and making a name for themselves.
What Does it Mean to be an Entrepreneur?
Consider this, if you want to sell something, you have two options:
- Create Need
- Satisfy Need
Creating need means you must invent something brand new for the public — for example, the invention of airplanes. People didn’t know they had the need to travel by air. But once it’s created, it becomes a necessity.
Satisfying need, on the other hand, means you capitalize on the existing market demand, in which case you already understand the customers’ pain point and now help solve the problem — for instance, the introduction of Zoom. Covid19 demanded people work from home, hence came the need for an ‘effective’ online communication tool. Zoom saw the opportunity and captured that market.
To be successful in either case, what you have to offer has to be different from what is already available on the market, if not entirely new. And that, to me, is what it means to be an entrepreneur.
Buying lawnmowers from China and selling them in the U.S. makes you a business person, not an entrepreneur. Similarly, opening a retail store anywhere makes you, again, a business person. Because chances are there’re many other retailers like you.
Founding a tech startup about smart home management, integrated with AI, voice command, internet of things (IoT), etc. however, makes you an entrepreneur. It’s something that has not been done by others. And you would need to include brand-new features in the system.
This is a common misconception people make between being a business person and an entrepreneur. Creating any new company doesn’t automatically make you an entrepreneur. You have to consider what the business is about.
“An entrepreneur is someone who is always looking for new ways to solve problems and improve the lives of others.” — Sara Blakely, founder of Spanx
Now with that being clear, you would understand how Brian Chesky is an example of a true entrepreneur.
His business model is different from the traditional accommodation when traveling. It gives people more options and experiences besides hotels or motels.
Conclusion
Although Airbnb has achieved remarkable results, the story of how it was born was not the first of its kind.
Think of Uber, founded by Travis Kalanick and Garrett Camp in 2009, it was a result of these two pals struggling to find a taxi on a freezing winter night. They realized that the traditional taxi system was outdated and inefficient, so they decided to create a new way for people to get around using their smartphones. And voila, Uber was born as the result.
Virgin Airlines (Virgin Atlantic Airways, or Virgin Atlantic), founded in 1984 by Richard Branson, is another exceptional story. Sir Richard was on a flight from London to Puerto Rico, but it was grounded. He hadn’t seen his girlfriend for 3 weeks so he wasn’t pleased.
Do you know what he did? The man figured out how much it cost to rent a plane by himself. In the end, he held up a chalkboard writing “$39 one way to BVI.” asking others to join him, instead of waiting indefinitely. That was the first Virgin flight.
What do Airbnb, Uber, and Virgin Atlantic have in common?
It was a product coming from the challenges and frustrations the founders faced. They were displeased with the situation. But they didn’t just complain about it and move on. They acted on it.
Are you upset and annoyed by how things work? It’s a gold mine right there. Come up with an idea on how to change it, how to make things better for yourself and for others.
Disrupt the market. Be a true entrepreneur like Brian Chesky.
Can you be the next successful one?
“We’re not trying to build a global brand. We’re trying to build a global community.” — Brian Chesky