The Exchanges

Q Ok, alright, then what was the next step? You've got now a website that works just for you. What are you doing after that?

A Right. So here we are. It was back in October, 2007. We did it one weekend. No idea of doing a business. All of a sudden, maybe there's something bigger there. Trying to solve our own problem. Then people are saying, well, I have the same problem. At that point, you know, a few months went by, you know, and kind of had other things going on in our lives. And I remember Joe and I, we went home for Christmas. Um, you know, you talk to your families, everyone's like, you know, you go to home for the holidays, people say, well, what are you working on? And, you know, we probably both had similar conversations. Well, you know, I'm doing this project and that project, but we also have this other thing, air bed and breakfast. Air bed and what? And then you get into the conversation, and we started realizing everyone was really excited. They would love to do it. We came back from New Year's, and, you know, I, I remember asking Joe a question. You know, we're both designers by trade. I asked him, who's the best developer you know, best hacker you know? And it turns out that, um, Joe's old roommate, you know, that, like, that moved out so I could take the room, was our third co-founder, Nathan Boczarcik. Um, you know, he, he was a really, really talented developer, um, you know, with, um, from Harvard, and he funded his education by a business he started in high school. Very impressive. …

AI assessment note: “who's the best developer you know... was our third co-founder, Nathan”

Q Alright, um, something that you guys told me in the email before we set up the, before we, um, before the interview was that you have multiple launches. What do you mean by that, and how does that help you get press?

A Right. So, you know, we're not even, we're, we're only like halfway through the, the story, the launches, um, and it was funny because we spoke at Y Combinator and, you know, the kind of thing we tell people, um, whenever we're giving advice is don't go for the Super Bowl launch. Um, don't go for one single thing. Um, you don't have to worry about exclusive story. You think about it. We had our first launch, the one day website. The second launch was South by Southwest. That was like the three week website. The third launch was August of 2008. It was this thing we're just talking about. And we actually had, like, three or four, kind of, like, launches after that as well. So, you know, when you're a really small company, like, you have the opportunity to retell your story many, many times. As long as every time you tell it, there's something different about it. So for us, the first story was in our apartment. That was a different story, right? The next story was we're providing housing for conferences. The next story was we're solving this crisis. After that, what do we do next? Well, logically, the DNC works so well, we did the same exact thing in Washington, D.C. for the inauguration. And it turns out that the people that covered us on CNN did another piece about us, and then even more people covered us.

AI assessment note: “you have the opportunity to retell your story many, many times”

Q up with them one after another, after another, after another, makes me say, how? How are you able to come up with all these ideas? While, by the way, You're not just in college. You're not just smoking a bong. You're not just hanging out. You've got responsibilities. How do, how do you do it? I'd like to, I'd like to be able to crank out great ideas like this.

A Um, how do we do it? Well, I, so, we, we have a background in design, and I remember we used to be in studios together, and we would literally just, I think what happens is, we don't just sit around and have, like, a light bulb idea. This idea came from a conversation, and actually very much evolved. So the first thing was, it would be cool to, like, have, to be able to give a breakfast to somebody, and like, ok, that's cool, we're talking about it for a while, we're brainstorming, we, we don't immediately have the brilliant idea. It's kind of, you know, it takes a bit of time for us to realize, That we should end up doing a serial, right? A non-perishable that we can brand. Ok, we're gonna do a DNC serial, RNC serial. You know, as we're talking about this, then we start saying, well, you know, there's all this Obama's, all this Obama propaganda, and it's like, you know, um, materials. We should create an Obama-themed serial. And, uh, McCain-themed cereal. At that point, we're like, ok, we're creating an Obama-themed cereal, a McCain-themed cereal, we're brainstorming, and then we're, at this point, we're just brainstorming names, but I, I guess the key was, we didn't just one day say, we're going to create, oh, Obama-o's. It was very evolutionary. We're then brainstorming names for Obama-o's, names for Cat McCain's. It's a, I think it's a constant, like, conversation that we h…

AI assessment note: “This idea came from a conversation, and actually very much evolved.”

Q of it. Um, ad buys. A couple of people in the, oh, actually, sorry, before I go to my question, Andrew SG in the audience is saying, Really, you guys didn't understand that bigger pictures and better descriptions would lead to more bookings? Now, in retrospect, it seems obvious. Why do you think that at the time it didn't seem as obvious as it does now to us in retrospect?

A Well, I think that you can answer that question by saying that in retrospect, our business seemed obvious, right? You're looking back, like, didn't this business seem entirely obvious? Well, at the time, you know, all of our friends were really, really smart. Like, they didn't really piece it together. Um, in fact, our photos were still bigger than Craigslist photos. Craigslist, they have four tiny little photos. Our room photo was the same size. It was, we thought that was okay. Um, You know, on Couchsurfing, they had, like, a big profile photo, but there was no listening room. So we figured, you know, we took the same size, like, the photo from Couchsurfing, the photo from Craigslist, put it together. That was interesting to us. And, you know, I, I agree that looking back, it seems so obvious, except that we talked to so many people, and our entire business, not just the room photos, our entire business didn't seem obvious until we started doing it. You know, now everyone looks back and says, why didn't I think of that? But it turns out that, as you can see, for us, it wasn't like we had this brilliant idea one day. Like, it was very iterative.

AI assessment note: “our photos were still bigger than Craigslist photos. Craigslist, they have four tiny little photos”

Q Okay, then let's stop there. How did you get those people?

A So we, um, what we did was we really, so, so from the very beginning, we always tried to get a lot of press. We tried to leverage the fact that people started talking about our story, and so, um, I believe that we had gotten a Mashable, um, blog post. It was a very little one, I know the website wasn't very substantial, but we did get blogged and Mashable. We got a number of the old design press. So all of our presses always started from a pyramid. We always get the smallest, you know, blog that anyone who wants to cover us to cover us, and then go to the next guy and say, well, they covered us, and you kind of, like, move up the ladder. And so what we did is all the original blog posts, you know, blog, uh, design sites, we tried to get them to mention us again. And, of course, it wasn't totally efficient, right? We had to get a number of blog posts just to get a couple users. Later on, we started realizing it'd be better to get more specific and targeting people and going to the city. At this point, we didn't know that. So, at this point, all we knew was people seemed to like to talk about us on the internet. We should just keep getting people talking, people find out more about us. So, our strategy was to get a number of people to blog about us. And, of course, we're talking about, like, 30 users. We're not talking about thousands of users. So, the models, the goals are prett…

AI assessment note: “from the very beginning, we always tried to get a lot of press.”

Q Y, oh, one more thing before we continue the backstory. We've referred to this business as Air Bed and Breakfast or Airbnb. A couple of people in the chat room didn't hear of the site before, so I want to make sure that they know that it used to be called Air Bed and Breakfast. You simplified it, now it's called Airbnb. Ok, so, how does Y Combinator fit in?

A So, after we had the cereal, here we were, we had a lot of confidence, um, a number of people knew about the website, but it still, it wasn't even close to rubbing profitable. We still had the chicken egg problem. People were listing the rooms, some people were booking, but clearly we didn't, we still didn't have enough momentum to keep going. We needed something from the outside to, like, kind of keep us going, and it wasn't just the money. We felt like we really needed, like, a great coach or mentor, somebody to get involved. Um, by the way, you know, after a couple months, after selling these boxes, We literally were, were such, like, such financial hardship that I started literally eating the Captain McCains, because we couldn't sell the Captain McCains, so I was just eating those.

AI assessment note: “We felt like we really needed, like, a great coach or mentor”

Q What other, how big a source of traffic is that for you? What percentage of your overall business is coming from Google now?

A So, um, there, there's maybe like four fundamental ways that we get traffic, but, you know, there's many others. One is just word of mouth, right? People use this. Press. Press kind of is like the thing that starts it. Then after people use it, word of mouth kind of keeps that going. And the other two big, like, things are, um, is, and they're very unique to travel. They're unique to every site, but travel is specific. SEO and SEM. And they're becoming more, more important to us. You can't disclose exactly the amount of revenue coming from them. But, you know, as one of you, I think Andrew had mentioned SEO, like we have a lot of work to do. I would agree. We have a lot of work to do with SEO. And with SEM, we also have a lot of work to do. Um, but we know that in our key markets, it makes sense because our traffic is monetizable. In our business model, it's very simple. We take a 10% transaction fee. So, you know, if we can acquire a user for a certain dollar, we know exactly the conversion rate we need to have in that user in order to be able to afford those keywords. And so, you know, we go after our key markets, our key cities. You probably typed in New York. Maybe you typed in a couple other of our popular cities. We buy up the common keywords people are searching in those cities, and as long as the conversion rate's high, then SEM works well for us. And SEM in the travel …

AI assessment note: “You can't disclose exactly the amount of revenue coming from them.”