In just four years, Airbnb has grown from three guests staying at CEO and co-founder Brian Chesky's apartment to a service that has allowed people to stay in other's homes for more than 10 million nights worldwide. Airbnb now has 500 employees and recently raised money at a $1.3 billion valuation.
Chesky explained at Fortune Brainstorm Tech how he started Airbnb. When he moved to San Francisco, he only had $1,000 in the bank but rent on his apartment was $1,150. The International Design Conference was coming to town and he and his roommate, co-founder Joe Gebbia, had three airbeds. So, they built a website in 72 hours and sheltered their first three customers. "We got paid to monetize the space we already had," he said.
It ended up being the right idea at the right time. "What if you could book someone's home the same way you book a hotel, anywhere in the world?" he asked. His advice for entrepreneurs is not to look for big markets, but find your own problems and solve them. "The difference between us and everyone else is we experienced it."
He is focused on providing an amazing experience in the travel business. Inspired by Walt Disney's creation of Snow White, he uses storyboards to help figure out how to plan the best travel experience. "People like to stay in homes," Chesky said. "That's why they live in homes."
Despite the apparent fast growth, the company tried to grow slowly. It has had a lot of slow times, and was initially financed on his credit cards. He spent nine months living in apartments he found on Airbnb, which gave him good insight into his customers.
His biggest mistake was in the summer of 2009 when he noticed there were people who were renting 100 apartments on the site, so for about six months, the company went after property management groups. Property managers wanted different features and didn't deliver the personal experience of homes, so that turned out to be a distraction. The company focused back on individuals instead.
Asked by Fortune's Leigh Gallagher about the potential for government regulation and taxing, he said Airbnb wants to be transparent and create something where the traveler, the host, and the neighborhood all win. He believes Airbnb has helped save thousands of homes from foreclosure.
Asked if people have had bad experiences with Airbnb, Chesky said, "The thing that surprises everyone is how well this works." He noted the importance of using real names, just like on eBay. With 50,000 people staying at an Airbnb residence every night, there have obviously been problems, he said. In one high-profile incident, someone's home was trashed, leading to a $50,000 theft and vandalism policy (now expanded to a $1 million policy covering theft, vandalism, and accidental damage.)
He compared the growth of Airbnb to eBay in a number of ways, and said that it is growing faster after four years he thinks it can be bigger than eBay.
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