If you’re looking for the silver lining in the US elections, I wrote this post for you: In every doorway of distraction there’s always a key to positive action. That’s what Brian Chesky found out in the 2008 US elections with an election idea that led to a $30 billion business.
In the midst of the US election campaign, Brian and his co-founders, Joe and Nathan, were working on their startup – renting out air beds and breakfast. But their company, Airbnb, was seriously struggling. They had maxed out a wallet full of credit cards and were tens of thousands of dollars in debt.
Brian remembers: “We got 80 bookings during the Democratic National Congress. The downside was, after the DNC we had no bookings, we were a year into the business, we were in debt, every investor said no… We were at rock bottom.”
That’s when they came up with the idea of selling cereal instead: “In debt and desperate one midnight, we had the idea if the ‘air beds’ in ‘air bed and breakfast’ wasn’t working, maybe we can sell ‘breakfast’ instead.”
“We started thinking about president themed cereal and we convinced a producer to make cereal for us (called “Obama O’s and Cap’n McCain’s) and since we couldn’t pay them he would get a portion of the sales.”
“We hand folded 1,000 boxes of cereal… It was like origami in my apartment.”
Brian hot glued and stacked the boxes, and says “I was thinking at the time, that Mark Zuckerberg was never hot gluing anything at Facebook – so maybe this is not a good idea.”
They numbered each one, and then sold them at $40 a box. The Obamo O’s sold so well, they ended up packaging in the Cap’n McCain’s in a Buy 1 Get 1 free special. Brian says “We sold $30,000 worth of cereal and this is how we funded the company and came up with the phrase “be a cereal entrepreneur”.
Without that money, the company may not have survived, and it’s unlikely Airbnb would have grown into the company it is today.
But it was more than the cash that came from the idea. Brian and Joe were trying to get into the Silicon Valley startup accelerator, Y Combinator. They got a chance to pitch Y Combinator founder Paul Graham, but the interview wasn’t going well. So Joe pulled out a box of Obama O’s and offered some to Paul.
“What’s this?” he asked. They then explained what they had to do to fund themselves. Paul’s reaction: “Wait, you guys funded your company based on selling breakfast cereal?”
Paul sensed there was a market crash coming (which hit just a few months later) and said he was looking for founders who would survive the crash.
He said to the two of them “Wow. You guys are like cockroaches. You just won’t die.” He then added “If you can convince people to pay $40 for a box of cereal, you can probably convince them to pay to sleep on each other’s air mattresses. You guys are in.”
Those cereal boxes – and that decision – led to AirBnB getting the mentoring they needed and Y Combinator getting its biggest success story.
Last month, Airbnb raised $555 million from Google and other investors at a value of $30 billion. The company has gone from making 1,000 cereal boxes to serving 60 million guests in almost every country in the world. All within two election cycles.
With this year’s US elections dominating the media and social media, I wanted to share with you Brian’s story. In all the distraction he found a key to action – a key worth $30 billion.
Are you getting caught in the distraction, or seeing opportunities for action?
Are you getting stuck in the negative, or finding a path to the positive?
Are you caught in the conflict, or creating the connections?
In four years time the cycle will come around again. It will be 2020. Where we’ll be then will have less to do with the politicians we elect and more to do with the opportunities we take – and the movements we create.
“Until you remove the noise, you’re going to miss a lot of signal.” ~ Seth Godin