The Cereal Box That Saved Airbnb

A note to young leaders.

It looks like we’re heading into stagflation.

Stagflation is the economic equivalent of a nuclear winter for startups. And in a nuclear winter, only cockroaches survive.

It’s January 2009. The financial world is in free fall. A fledgling startup called Airbnb gets its lucky break: a 10-minute pitch to the most famous incubator in the world, Y Combinator.

The pitch falls flat. None of the Y Combinator interviewers – including the legendary Paul Graham – were excited about the idea of strangers sleeping in strangers’ homes. The founders could feel it slipping away.

As they were leaving the room, defeated, one of them handed Graham a cereal box of Obama O’s and Cap’n McCains. Graham asked where they got them.

“We made them ourselves,” they told him. And then they told him the full story – how they’d designed the artwork, printed it, hot-glued them on $4 cereal boxes and sold them at political conventions for $40 each. That’s how they funded their company when they were running short on cash.

Graham was stunned: “Wow, you guys are like cockroaches. You just won’t die.”

He also reasoned: “If you can convince people to pay $40 for a $4 box of cereal, you can probably convince strangers to stay in other strangers’ homes.”

Airbnb was accepted into Y Combinator’s Winter 2009 batch and went on to become the world’s most profitable hospitality business.

But not before they were willing to be scrappy – to forage amongst the ruins and survive.