When Airbnb was first shopping its idea to investors five years ago, it faced a lot of skepticism. Today, even as valuations of the apartment-sharing company hover around $10 billion, Airbnb is still pushing against a wall of naysayers. The San Francisco-based startup is in the midst of legal battles with the State of New York and its CEO has recently had to answer for wild orgies happening in rented apartments.
If Airbnb's founders had perfectly thought through every single scenario and unintended consequence of having strangers rent accommodations from each other, they probably wouldn't have entertained the business idea for more than half a beer. But determination is what makes a successful entrepreneur, above all else, says Airbnb co-founder Nathan Blecharczyk. If you wait for perfection, you will miss some epic opportunities.
Success as an entrepreneur is “less about the idea and more about the person,” Blecharczyk told an audience at a conference on the sharing economy at New York University’s Stern School of Business last week. “All along the way, people said, ‘No, this isn’t going to work, don’t do this.’”
Some investors that Blecharczyk and his partners Brian Chesky and Joe Gebbia approached in their early days walked out halfway through the meeting. “I remember going to somebody who we respected, pitching them about what we were doing, and he said, ‘Ah, I hope that’s not the only thing you are working on.’”
Five years later, Airbnb – for all its controversy – is seen as a missed opportunity by some investors. One of the premier venture capital firms in the U.S., Union Square Ventures in New York City, was approached by Airbnb when the founders had graduated from the Y Combinator accelerator program. The founders had run short on cash and were desperately searching for backers. Unable to come up with any funds from investors, the Airbnb cofounders bought a bulk supply of generic Cheerios, put the cereal in boxes labeled “Obama-Os” and “Cap’n McCains” in honor of the presidential election happening at the time and charged $40 a box. The Obama-Os were more popular and so the co-founders ate the remaining Cap’n McCains to save on food money.
Fred Wilson, co-founder of Union Square Ventures, still has a box of the Obama-Os sitting on a mantle in his conference room. “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,” wrote Wilson of his investing blunder. “We missed Airbnb even though we loved the team. Big mistake. The cereal box will remain in our conference room as a warning not to make that mistake again.”
Wilson wasn’t the only investor to miss the Airbnb boat. Luke Williams, the executive director at the Berkley Center for Entrepreneurship and Innovation at NYU Stern, said that 15 A-list venture capitalists all listened to Airbnb's pitch and declined to invest.
Since those early days of constant rejection, Airbnb’s growth has been exponential. In the first four years, Airbnb served 4 million guests. In its fifth year alone, it served 7 million guests.
Still, despite Airbnb’s international success, there are still loads of doubters and countless hurdles for the company to navigate. Regulators struggle to define how to classify Airbnb guests and income for tax and rental purposes. Blecharczyk recognizes that there are issues to be worked out, but says that if they had waited to have all of the pitfalls bridged over before launch, a tremendous amount of benefit would have been forfeited at the feet of hesitation.
“Sometimes there is an expectation that all these problems should already be solved, and you just can’t do everything at once. We are certainly very eager to address them as quickly as possible,” said Blecharczyk.
Rather than a “No, don’t do that” attitude, entrepreneurs need to have a “Yes, but please come up with a solution” attitude, he says. And he argues that regulators and city officials should, too. “We should be looking forward and asking ourselves what kind of future do we want to create.”
Blecharczyk is determined to create a future that he himself wants to live in. Even as the co-founder of a company with a valuation in the billions, NYU's staff was unable to convince Blecharczyk to let them book him a hotel for the conference; he only makes arrangements through Airbnb. “I have spent most nights this year living on Airbnb," he says.