Last night, we listened to a great evening of stories from Airbnb co-founder Brian Chesky. The event was hosted by PandoDaily, and it was the best conversation I have ever witnessed with a founder of a startup. Did you know that at one point Brian was so deeply in debt, he ate dried cereal? The story I recount in this Quora answer, (not sure why I answered it anonymously), but I will reprint it here.
The company at one time was fueled only by a baseball card collecting binder of maxed out credit cards, is now valued at over $2 billion. He and his co-founders literally had no money. They had taken out credit card after credit card in the hopes that someone would eventually get their idea. Chesky was introduced to 21 angel investors (may have to check the math), eight of whom agreed to talk to him. One of them, he said last night, met him in University Cafe, and ordered a smoothie. The investor got to halfway through his smoothie and then promptly stood up and left. Chesky and his co-founder took a shot of the smoothie, because they thought it was so bizarre. Where is that shot now, I wonder?
here is why I think you don't need much money or even a strong pedigree to build a great startup. I answer someone's question in Quora about why you don't need money to make money -- ostensibly saying that it has nothing to do with the money. It has to do with the product outcome:
You actually do not need money to make money. In some cases that is true, but take Brian Chesky, who co-founded Airbnb, worth now $2 billion. Yes, he got an angel round and then VC investment, but prior to that, he borrowed money from a long list of eventually maxed out credit cards. He got to $30,000 in debt.
Then he started selling Obama O's and Cap'n McCain cereal at $40 each during the election that saw President Obama get into office. He goes to try out for Paul Graham's Y-Combinator and one of his co-founder's Nate, tells him and the other co-founder to not take the cereal boxes, which they were going to bring to Paul Graham as a gift.
Keep in mind, at this point, Chesky is eating the dry cereal because he has NO MONEY at all. He goes to the meeting, Paul Graham listens, and can't undersatnd why anyone would want to use Airbnb.
The meeting finishes up with a perfunctory, "well, that's it, thanks." And one of the co-founders at the end of the meeting pulls out the two cereal boxes. Nate, who warned against it allegedly looks on in amazement. What the....???
Paul Graham asks, what is this? Co-founder explains, oh, we made this cereal to pay for our company.
Paul Graham allegedly says, "You just don't quit. You guys are like cockroaches!"
Eventually Paul Graham calls them back and asks them to join Y-combinator. The reason he gave was that if they could convince people to buy $4 cereal for $40, they could convince someone to rent someone's bedroom for a night.
You don't need the money. You need the faith in your idea, the right network, and the conviction to keep struggling, because your startup or your investment or your idea is born out of a struggle.
Your crisis is your salvation. Forget the money.
Here is what I learned from Brian's talk:
1. Entrepreneurs have no clear path to a successful project / product, but they have a very strong focus on how other people make choices.
2. Things that come out of left field will not be understood by the majority of people because, as Chesky said, "people listen for patterns." And patterns are what people already know.