Entrepreneurs

Airbnb's co-founders wouldn't recommend other start-ups do what they did

Joe Gebbia speaks on stage during #BoFVOICES on November 30, 2017 in Oxfordshire, England
John Phillips | Stringer | Getty
Joe Gebbia speaks on stage during #BoFVOICES on November 30, 2017 in Oxfordshire, England

Airbnb may seem like an overnight success story.

In 2008, three college graduates put their heads together from an apartment in San Francisco and completely reimagined the way we see vacation accommodation. Today, just ten years on, their platform features more than 4.5 million rental properties, from Scandinavian tree-houses to Fijian private islands.

But it wasn't always an easy path, and the company's founders certainly wouldn't recommend one of the steps that got them there, as co-founder Joe Gebbia told CNBC's "Managing Asia."

In the early days of their business, having faced a string of rejections from investors, including the backers of YouTube, Paypal and Google, Gebbia and his partners Brian Chesky and Nathan Blecharczyk decided to opt for an alternative form of funding: credit cards.

Raising a 'Visa round'

The trio had entered a "trough of sorrow," according to Gebbia, and were desperate to increase their income from the "bleak" $200 per month they were receiving from their then-tiny customer base.

"We only had one resort at this point, we raised a round through Visa. We called it the 'Visa round,' except Visa didn't really know about it," said Gebbia.

"We actually took out credit card after credit card. We definitely maxed it out. I wouldn't necessarily recommend that," he adding, referring to other entrepreneurs who might draw inspiration from the Airbnb founders.

"It was high anxiety and high stress. The credit card bills kept going up and we really had no idea when they were going to get paid off."

The boys' persistence did, however, eventually earn them a place on a Silicon Valley accelerator called Y Combinator, which gave them access to seed money and networks in exchange for a seven percent stake in the business.

Best advice for success

It was at that point that the trio received their best piece of advice from Y Combinator founder, Paul Graham, said Gebbia.

He told them to get out to their customer base, who at that time were predominately based in New York, and get feedback on how to develop and improve their product.

"We learnt early on to go meet the people, to go talk to the customers, to achieve what I would call 'enlightened empathy,' which is getting into the shoes of the customers as close as you possibly can to see the world through their eyes."

He said those insights could be brought back and combined with an entrepreneur's overall vision to create the best possible product.

CNBC's Christine Tan contributed to this report.

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