January 2nd, 2017 | By: Sarah Lacy | Tags: Stories
Brian Chesky’s dad wasn’t thrilled he had decided to go to art school. Chesky promised him he would not move back home to live in their basement, and that when he was done, he’d get a real job with health care benefits.
And he did. But at age 22 he was overcome by a “weird feeling of mortality.” A sense of “this is my life”: Commuting in LA traffic alone to a job in a design company. It was a let down after he’d started to believe the high-minded rhetoric from Rhode Island School of Design that designers could “design the world around them.”
He quit that job, rolled up a foam bed into his crappy Honda Civic and moved in with his old design pal Joe Gebbia in San Francisco. In a bid to pay rent, they opened up their home to attendees of a design conference coming to town.
Most profiles will tell you that “the rest is history.” But that skips over the best part of the Airbnb CEO’s story. So, back in 2013, I sat down with Brian to discuss the sheer insanity that stood in between that “aha!” moment of Airbnb and anyone in Silicon Valley wanting to fund this thing.
Airbnb absolutely should have died long before it got close to Y-Combinator. Why they didn’t is a story of $40,000 in maxed out credit cards, dozens of rejections, a lost cell signal that almost tanked the company, burned fingers, a high fiber diet of “Cap’n McCains”, everyone around him thinking he was nuts.
No matter how screwed your startup may seem, the early days of Airbnb was even worse.
Brian Chesky: When I was at RISD, I wanted to also pursue some sort of sports, and we didn’t have very many sports, so I just started weightlifting.
I like to say that I’ve lived like a number of lives. The first life was as a hockey player, second life was as an artist. Then, for a period of time, I was a bodybuilder, then I was an industrial designer. Now, here I am as an entrepreneur.
BC: Yeah. It’s all on the Internet. I did this before I realized the consequences of the Internet, and so here I am.
BC: Our backgrounds were considered a liability when I got here. A lot of investors did not want to invest in us because of who I was.
BC: The artist more than the bodybuilder. They never found that part out. Going to the Rhode Island School of Design wasn’t an asset. I remember when I went to RISD and…It’s an incredibly competitive time. For the very first time, you’re meeting other artists that are really good. You want to imagine that you’re going to be one of the best.
The first day of class I had this teacher and he asked us to do this self‑portrait. We designed the self‑portrait and everyone spends eight hours. You spend all week. We want to do this amazing project. We go in front of the class. We all put our self‑portraits on the wall and everyone’s like, “Oh, I should have tried harder, I should have done this. I should have done that.”
You complete the assignment and then the teacher gives you next week’s assignment. Next week’s assignment is to do 200 self‑portraits.
BC: Suddenly you just spent eight hours and now clearly there’s not enough hours in the week. The point was it was a seemingly impossible solution, but with creativity you can always find a way. Another thing they taught me at RISD was that everything that exists around you that’s man‑made was designed by somebody. That somebody was a designer.
When you know that, you know you can change that. Because you’re a designer, and you can design the world around you. You can live in a world of your own design.
I think that’s a really powerful thing. I think one of the things that entrepreneurs love is they can actually live in a world of their own design. When you’re building a company, you’re building a world which you get to live in and it’s a world of your values.
You create the rules, you create the values, and, eventually, if you’re successful, that world grows. I think all of these things came from our education at RISD.
This is totally different where I came from. I grew up in upstate New York. My parents are social workers. My dad had some anxiety about me being an artist, about me going to art school, because it seemed to mean that I was eventually going to move back home and live in their basement or something, which is probably not totally unreasonable.
My dad said to me, “I’ll support you in going to RISD, but make sure one day you get a job with health insurance.”
BC: No. He said, “Make sure one day you get a job with health insurance, and do not come back to our basement, please.” After graduation I did actually move back home, so that was hard, but eventually I got a job. But, RISD was an amazing experience for me. I went to RISD, Rhode Island School of Design, with my cofounder now, Joe Gebbia, and we were the two entrepreneurs on campus.
We ran these sports clubs. I ran the hockey team, he ran the basketball team. To run an athletic team in art school…by the way, that’s the biggest marketing challenge in the world: To get an art student to go to a hockey game.
BC: Yes, exactly. So, we were these two entrepreneurs on campus…The day of graduation, Joe looks at me and says, “Brian, I think one day we’re going to start a company together.”
At that point I had finally succeeded in getting my job with health insurance in Los Angeles, California, in a tiny design firm.
The first six months, I really liked it, because when you’re a designer, the thing you want most is to get something on the shelf. It’s like a screenwriter wants their screenplay to actually become a movie. That’s the most important thing.
I worked in LA. I started designing products. Over the course of a year, I became so alienated. Here, I went to RISD. At RISD, they said you can live in a world of your design, that you can change the world.
People actually said to me, “You can change the world.” That seemed absurd, given my background. I wasn’t told to change the world growing up. I was taught to fit in. I was taught to fit in. I was taught to keep quiet, sit down, stop drawing, stop doodling, pay attention, do your homework.
I was taught to conform and fit in. Here, I went to a school where I was taught, “You can change the world. You can do whatever.” Then I go back to the workplace, and actually, it was like growing up. Just sit there, be quiet, deliver this assignment, whatever.
I remember one day, it was like I woke up. It was like I was in a car. I remember having this vision. I was in this car, I could see the road disappearing in the horizon. I would look in the rear view mirror, and it was the same road. It was like that was my life. I had this weird feeling of mortality, like, “This is my life.”
BC: I was 22, 23.
BC: Yeah, because I was like, “Oh, I guess this all I’ll end up doing. I guess it wasn’t like they said it would be at RISD.” I was just not really knowing what I wanted to do with my life. I knew that this whole thing of getting a job, health insurance, it wasn’t all it was cracked up to be, because I just wasn’t happy.
I was also living in LA, and I was miserable in LA. I remember I would be sitting on the 405. I’d spend an hour and a half getting to work. I would be in a car, like a 2,000‑3,000 pound vehicle that seats five people, by myself, looking next to me, in front of me, behind me, on every side at these giant vehicles made for multiple people with one person in it, everyone basically going into the same buildings, and the same streets.
The whole thing to me seemed like, “This city is absurd. The way LA’s designed is absurd. What they value is absurd.”
Everything just seemed crazy to me. I visited Joe in San Francisco, and I realized San Francisco was awesome. It really is. This place, so many people are entrepreneurs.
In LA, everyone was a producer. I’ve never met so many producers in my life. I’m not really sure what a producer does. They hand out business cards. I think that’s what they do. Here I am, and I realize I have to move to San Francisco.
BC: No, absolutely not. Joe and I were going to do something together. We were going to start a company. I thought it was going to be a design company.
And by the way, I was living in a house in LA with three of my friends whom I convinced to move across the country to live in this house. Now I’ve got to explain to them, “Guys, I’m actually going to leave the house that we all got together, and I’m going to pack things up.”
I rolled a foam mattress in the backseat of my Honda Civic. If you’ve ever tried to roll up a mattress, it’s just the worst experience ever. I have a thousand dollars in the bank account, and I got this old crappy Honda Civic. I remember just driving up in the middle of the night to San Francisco, not knowing…I get there at midnight on a Tuesday night. I’m like, “What the hell did I get myself into?”
Joe tells me the rent is $1,150. I have $1,000 in the bank. I realize I probably should have asked that question before I came up to San Francisco. That’s the artist in me. We’re in this apartment, this three bedroom apartment, the two of us, and we don’t have enough money for rent.
We’re looking at each other like, “Oh, shit. This is not so simple.” It turns out that weekend I was in San Francisco, this international design conference was actually coming to San Francisco. It’s called IDSA, Industrial Design Society of America.
We wanted to go to this conference, because we figured, “We’re designers. We’re going to start a design company. Maybe we can meet and network with other designers.” We went on the conference website, and they’ve got this hotel section.
We look on the hotel section, and all the hotels they were recommending are sold out. It’s like the Marriott’s sold out, the Hyatt’s sold out, sold out, sold out, sold out. Joe and I, we look at each other, and we say, “Well, why don’t we just create a bed and breakfast for this conference? That seems like it makes sense. We’ve got all of this extra space.”
We’ve got a living room, a kitchen, two bedrooms, and no furniture. There was no furniture in the apartment. A bed and breakfast without a bed, it’s like a floor and breakfast, and we couldn’t really afford breakfast, so it wasn’t really super romantic.
I said, “Joe, this is a problem. We don’t have any beds.” Joe said, “Don’t worry. I just went camping.” He brought some air beds out of his closet. I have no idea why he had all these air beds. He said he went camping.
We pulled these three air beds out of a closet. We inflated three air beds, and we called it the “Air Bed and Breakfast.”
BC: We eventually cooked people Pop‑Tarts, yeah. They were really, really good Pop‑Tarts.
BC: Yes, exactly. We ended up building this website in three days.
By the way, you should have imagined when I called home, and told my mom about this idea. She said, “OK, so you built a website so that strangers could sleep in your home, because you don’t have enough money for rent? I guess you don’t have that job with health insurance anymore.” I said, “No, I don’t, but that’s not why I’m doing it.”
BC: Joe and I did. The first, first website was just a few simple pages. We knew basic HTML. If you actually look at the site today, it’s pretty ghetto. It was very, very simple. It was only slightly better than Craigslist, which is pretty bad.
We built this website, and we emailed the design blogs. We emailed the design conference, saying, “You should totally help us out. You should promote this.” They promoted it, because they thought it was a funny idea. It was an absurd concept.
I didn’t think it was necessarily a good idea. I figured maybe some young, hippie backpacker guys from LA would want to stay with us.
To my surprise, three people wanted to stay with me. They broke every one of my assumptions. The first was a woman, a 35‑year‑old woman that wanted to stay in our apartment. If you knew anything about me growing up, you would be very surprised that a woman would want to stay in my apartment.
That was the first thing that totally surprised me, or surprised everyone who knew me. The second thing that surprised me was a 45‑year‑old father of five from Utah ‑‑ he was Mormon ‑‑ came, and he wanted to sleep on an air mattress in our kitchen floor.
The third person that wanted to stay with us was from India. At this point, I’m like, “This is like a United Nations. This is a wide range of people. What is going on here? Why do they all want to stay with me?”
We only did this originally because we wanted to have a creative way to make rent, but the experience changed every one of my assumptions. What ended up happening is we ended up living with these people for a week.
In the process of living with them, we became friends with them. It turns out an Airbnb interaction basically takes the length of a relationship with a person and compresses it to a few hours.
You meet somebody at an event, and you’re going to talk to them. Maybe you’ll give them your business card. You’ll email them. You’ll talk to them. You’ll meet up when they’re at a bar. You’ll get drinks. Eventually, one day, they may invite you over to their house for dinner, or something like that.
That interaction gets compressed to a few hours. Suddenly, boom, you’re right in their home. It’s incredibly intimate.
BC: Yeah, and you really get to know them. There’s a certain amount of trust and intimacy that happens between two people who live together. Basically, what I realized, it was like I got to travel without ever leaving my home. I got to bring the world to my living room. This was a really powerful idea.
The woman ends up moving to San Francisco, because she loved San Francisco so much. We gave her an inside view of the city. The guy from India, he invited me to his wedding.
BC: He ended up having his wedding in Arizona.
BC: I didn’t go to his wedding.
BC: I know. I invited him to team meetings, though, and I still mention him at interviews like this.
As we’re waving them goodbye, Joe and I are like, “Maybe there’s a bigger idea here,” but we didn’t know how big the idea was. I asked Joe. I said, “Who’s the best engineer you know?”
Joe says, “My old roommate, Nate, is. Nate went to Harvard. He was a CS grad.” The three of us got together, and our original vision was: “What if you could book someone’s home the way you could book a hotel anywhere around the world?”
At this point, I was incredibly naïve about Silicon Valley. I had not heard of TechCrunch. I had not heard of Mashable, or any of these blogs, or anything like that.
BC: Absolutely not. In fact, I didn’t know what angels were. One of our early advisers was Michael Seibel. He says, “I have these people named angels that could meet you.” I’m like, “Oh, my god. This guy’s crazy. He believes in angels. What the hell?”
Oh, my god. This guy’s crazy. He believes in angels. What the hell?”
He goes, “No, no, don’t worry. They’re these guys. You can have dinner with them. You could over dinner get a check for $20,000.” I’m like, “Well, I was living in LA. I don’t want that kind of relationship, either.”
He’s like, “No, no, no. That’s not what I mean. Angels: You give them a pitch, a slide deck.”
I’m like, “What the hell is a slide deck?” Then he sends me Sequoia’s slide deck template, and it was 15 slides. I’m like, “Oh, all I have to do is make 15 slides.”
I made these 15 slides into a slide deck based on Sequoia’s template. Joe and I have no idea what we want to do. We have total market size. We guessed $30 million.
BC: Yeah, we basically imagined how much we thought a room would be. We had the model of taking 10 percent, and then we made a giant guess of how many people may one day want to rent out their air beds every night.
BC: And Pop‑Tarts, exactly, for conferences. Then, of course, I remember meeting up with, I think after some point, Sam Altman of Y-Combinator. He said to me, “You’ve got to change the M’s to B’s. Investors want B’s, not M’s.” The night before one of our investor pitches, we changed all the M’s to B’s.
Suddenly, the market size was huge, except we were still selling air beds. Like, “We’re going to make $30 billion with these air beds. Everyone’s going to live on air beds.” That pitch did not work out so well somehow.
BC: Michael Seibel, who, as you know, founded Socialcam, and before that, Justin.tv. I ended up actually meeting him at South by Southwest, because I stayed on Airbnb. We built the site for South by Southwest in 2008, and I had never even heard of South by Southwest.
I remember we had two reservations that time, and I was one of them. I was shocked that there was someone else doing this. I stayed with this guy, and he, of course, blows up this air bed.He had these pillows, and a mint on the top. I’m like, “My god, this guy takes Airbnb more seriously than I do, and I started the website.”
So I end up meeting Michael Seibel. He’s staying in a hotel room in one of the hotels. The meeting was actually pretty funny, because he tells me to come up to his hotel room. I open the door, walk into his hotel room, and he’s sitting in his bed. He’s really comfortable.
He is in these tighty‑whities. He’s watching a special on John Wilkes Booth on the History Channel, and proceeds to ask me to pitch him on what Airbnb is.
This is when Michael Seibel tells me, “There are these people named angels.” He emails, I think, 20 people. Ron Conway, Mike Maples, Jeff Clavier, all these people.
I’d say of the 20 people he emailed, I think only 8 of them wrote me back. Of the eight that wrote me back, probably three or four of them said, “This doesn’t fit our investment thesis,” or something like that. Or, “We’re concerned with the size of the market.” A whole bunch of things.
I think we end up getting a meeting with a few of them, maybe they’ll remain nameless. One of them, I met him in University Cafe, and he ordered a smoothie. He was drinking a smoothie, and he gets up halfway through, and just left. Like it was just the worst idea he’s ever heard of. It was so absurd.
BC: I don’t think he even said goodbye. We ended up taking a photo of the smoothie.
Then we end up meeting with some other investors, and I remember them saying, “We’re concerned with the size of the market, and your lack of a technical team.” I understood the maybe size of the market, but they were concerned with the lack of a technical team.
I said, “We’re designers, and we think design’s really important.” They didn’t really appreciate this. At this point, we’re like, “We’re going to have to go it alone.” By the way, this is like six or eight months after I had no money. This is many months after I have no money.
The money I have is just dead. I get a credit card. I get a $5,000 limit, so I use it until I swipe, and they say I can’t use anymore. I get another credit card. I have a $5,000 limit.
BC: No. No one wanted to touch this. By the way, they could have invested and owned 10 percent of the company for $100,000, I would say. A million dollar valuation would have been awesome to me. No, no one invested. I didn’t even get close. This was a crazy idea.
BC: No, I didn’t get a whole smoothie. Exactly. I didn’t get the whole smoothie. It was really bad.
Joe and I just start funding the company on credit cards. Do you know those binders that you put baseball cards in? We put credit cards in those. We had sleeves.
BC: I don’t know. We have these sleeves of credit cards, and at some point, I remember I used to go to sleep at night, having convinced myself over the course of the day that everything I was doing made sense, and I was really smart.
I remember I would sleep, and then I’d wake up like, “I’m such an idiot. What the hell am I doing? How’d I get here?” Then I’d proceed to convince myself over the course of the day that everything was fine. I had this continued cycle of waking up panic, realizing I’m $30,000, then $40,000 in credit card debt.
This is the summer of 2008. We end up launching for the Democratic National Convention.
I remember Joe and I are sitting in the middle of our living room. We’re trying to figure out, we have this chicken and egg problem. Travelers want to go where there are homes, and people want to list their homes where travelers are going. How do you actually start that?
We wanted to be a site with a search bar, “Where are you going?” so you could go anywhere. How do you solve this chicken and egg problem in every city in the world at the same time?
I didn’t actually think all that through. I didn’t think about how hard it would be to get a network effect business going early on. I just figured Facebook grew in two weeks, so it’s going to be easy for us. Of course, we launch it, and it’s no one’s coming. They think it’s a weird social experiment. They don’t want to do it.
So I’m in the living room, and the Democratic National Convention is starting. Barack Obama, they move him from the 20,000‑seat Pepsi Center to a 80,000‑seat football stadium.
All these news channels all of a sudden were totally blowing it out of proportion, like, “DNC housing crisis.” Fox News is like, “The housing crisis of the century. Where are they going to stay?” All these people are doing stories about this housing supply problem.
We’re like, “Airbnb’s where they’re going to stay.” Of course, we would email CNN, and it would just go into some dark hole. We realized maybe we’ll start with smaller bloggers. They would write about it, and then other bloggers would write about it. We did an inverse pyramid. We started with the very smallest bloggers. Then a little bit bigger bloggers would Google you and see if other smaller bloggers are talking about you. Then they would write articles. Then eventually we got the Denver Post and the Rocky Mountain News to write about us.
Then we got on the local NBC news. When we got on the local NBC news, as far as I was concerned, we were the Beatles. We were just huge.
When national media events happen, the national news has stringers that go to those events. CNN, and New York Times, and Wall Street Journal were there, and they were watching, and following the local news.
In the matter of two weeks, we went from three guys in an apartment with no business, no money, and no press to three guys in an apartment with still no business and no money, but we were on New York Times.
I remember we launched on TechCrunch. It was August 11th, 2008. I remember that date. We launched, and I thought we were going to be huge. Then I read the comments section…
BC: Never read the comments section. Reading the comment section is like looking down while you’re trying to scale a cliff.
I was like, “Wow. Maybe I am an idiot,” after reading the comments. It’s was all like, “You’re serial killers,” and “This is the worst idea ever,” and “Who the hell’s going to do this?” and “This is the dumbest idea ever” and “TechCrunch is going downhill because they’re covering stuff like this.”
I realized, “Wow. If only there were political conventions every week, this would be an awesome business. But there’s not, and I don’t know what to do.”
At this point, we’ve spent all our money. We did the huge launch. People used it. They left. Now what? It was this really scary feeling, like, “Uh‑oh. Now what do we do?” I don’t know what to do.
We’re in the middle of our kitchen. We have all this debt. We have a website no one wants to use. We don’t know what to do.
We remembered we had had this crazy idea already. We were called Air Bed and Breakfast. We figured if we’re called Air Bed and Breakfast, we should have a breakfast that we could offer to people at the convention. We weren’t going to send them perishables, so we wanted to make a breakfast cereal for them. We said, “Well, what would a DNC‑themed breakfast cereal be?” We said, “We should do an Obama‑themed cereal.”
We were going to the grocery store. We look at Cheerios, like, “That’s it. Obama O’s, like, Cheerios. The breakfast of change.”
We ended up finding an illustrator. He designed this really cool character. We designed the box. In the back, it’s got these sprawling, rolling hills, like his logo. We did a jingle. It was hilarious, but we didn’t want to be viewed as a liberal left‑leaning website. We had to be a platform. We figure if we’re going to do that, we have to do one for John McCain.
We’re again at the grocery store. I remember reading about him, and realized he was a captain in the Navy. We ended up calling it, of course, Cap’n McCain’s, a maverick in every bite.
The puzzle on the back was you could take the straight talk express. We ended up designing this cereal.
At this point, Nate, our engineer thinks Joe and I are out of our minds. He’s like, “What the hell are you doing designing breakfast cereal?” We’re like, “No, it’s going to be huge. We’re going to blow up.”
But, we didn’t actually make it in time for the convention. And we don’t blow up. No one wants to use the site after the DNC. Most people think we’re crazy. My mom thinks I’m out of my mind. All of our friends later tell us they thought we were crazy.
Joe and I are in the middle of the kitchen one night after the DNC thinking, “Let’s just make that cereal.” We call Kellogg’s. Kellogg’s surprisingly doesn’t return our calls. Then we called these really small cereal companies.
They return our calls and say, “Yeah, sure, we’ll make cereal boxes for you. We just need a deposit for $200,000. No big deal.” We’re like, “That’s not going to work, either.”
I remember us doing math, like if we sell 200,000 boxes maybe that would be the same as if those angels had given us money. It’d be like a cereal round or something, and we could be “cereal entrepreneurs.”
This cereal box is going to get us out of debt. It’s going to get us back to zero, which is also not an inspiring place to get to: Zero. “Yes! I’m broke again.”
We said, “Well, press worked last time. When we emailed press, they wrote about us.” What if we can scrounge up enough money to make a hundred boxes of cereal, and mail them to press?
But we had no money. So, we had to go places where you could find a $1 box of cereal. We ended up stuffing the box of cereal, and we ended up mailing it to press.
BC: Yes. We had no money to print the boxes. We’re so desperate that we find a guy from Berkeley that went to Rhode Island School of Design. He’s an alumni, and he has a printing shop. He doesn’t make cereal, but he’s got a printing shop.
He ends up saying, “I feel bad for you guys, and I want to help you, so I’ll print you 500 boxes each.” He just prints them flat. They just look like giant poster board posters. They have the guide lines, but you’ve got to fold them yourself. We come home with a thousand posters, and I had to hand‑fold them myself with hot glue. It was like I was doing giant origami on my kitchen table.
I was burning my hands. I remember reading the Facebook story. I was pretty sure Mark Zuckerberg never was hot gluing anything at Facebook. He never got hot glue on his hands making the Facebook website, so maybe this is not a good sign.
We didn’t know what else to do. We ended up mailing the boxes of cereal to press. We get all this attention. We end up selling out in like three days all of the Obama O’s, and not so many Cap’n McCain’s.
We start giving the Cap’n McCain’s away for free with a box of Obama O’s, because I didn’t know what the hell to do with all these Cap’n McCain’s. I had 300 boxes in my kitchen. You’ll find out later they came in handy.
People started reselling the boxes. We sold them for $40 a box. We sold $30,000 worth of cereal and basically were able to get mostly out of debt just selling cereal boxes. Then one day, I’m typing in Obama O’s on eBay and Craigslist and realizing people are now reselling the boxes of cereal for as much as $500 a box.
I look at Joe. I’m like, “Oh, my god. How did we not charge enough?” Who would have thought $40 was under-charging for a box of Obama O’s?
Now we’re back at zero, so still not enough money for food. I remember October and November, I’m just so hungry.
BC: This is over a year. I had probably lost 20 pounds at this point.
BC: People ask me now, “Why did you keep going forward?” I think it’s two reasons. The first was probably because we had each other. I do think when a lot of solo founders, the hardest part about being a solo founder is every idea is in your head. You can’t actually talk it through, and you have no one to lean on.
Being a founder, even with co-founders, is incredibly lonely and solitary. You just feel very alone. The other reason I think why we believed in it was because of that very first weekend. You see, I knew that that weekend was so incredibly special, that we had these connections, these relationships that changed my life.
It changed their lives. They were amazing. All people have to do is experience what we experienced. If they would experience what we experienced, then this is going to happen all over the world.
We said, “We’re ordinary guys. There’s got to be other ordinary people like us, people with a little extra space that want to make some extra money. There has to be.” That was the thing. We had experienced it.
Maybe we weren’t visionaries, maybe we were more like expeditionaries. We discovered something, and then we pursued that, knowing that we wouldn’t quit. Quitting never was something we’d ever considered.
The days got really, really hard. I remember one night ‑‑ this is 13, 14 months in, without any money ‑‑ I wake up. I go to the kitchen. I’m opening all of our cupboards, and there’s nothing but ketchup. There’s no food in the kitchen.
I’m just so hungry. I’m like, “Oh, my god. What am I going to do? I have to eat.” I look over, and luckily, we had 300 boxes of Cap’n McCain’s.
I lived on Cap’n McCain’s. It was a high fiber diet.
BC: No. I was eating dry cereal all day. Until Y-Combinator, Joe and I were living off of Cap’n McCain’s.
BC: I know. Exactly. At this point, Michael Seibel says, “You have to apply to Y-Combinator.” The next batch of Y-Combinator was happening in January. He’s like, “Guys, look at you. You’re dying.” I was literally wasting away.
BC: We got Justin Kan and Michael Seibel saying that they would put in a good word for us. They said, “You should apply. Maybe you could do it.”
We figured he’s got to give money to somebody. Why not us? We filled out the application, and we end up getting an interview. We convinced Nate to fly out. By the way, at this point, Nate had moved back to Boston.
BC: Yes. He’s like, “Alright. I’m out of here.” At one point, my mom asked me, “Do you run a cereal company now?” I had to actually think about that for a while, because technically, I was.
I remember I used to go home for Christmas telling everyone I was an entrepreneur, and my mom said, “No, you’re unemployed.” I’m like, “No, I’m an entrepreneur.” She’s like, “No, you’re unemployed.” That’s when I realized being an entrepreneur is often a state of mind, because before you have business, there’s a very fine line.
Being an entrepreneur is often a state of mind, because, before you have business, there’s a very fine line.
BC: Exactly. It’s like saying you’re a producer in LA.
BC: It wasn’t going very well at all. We’re about to go to the YC interview, and we knew this was our last shot. If I didn’t get into YC, I was at the end of the rope. What do I do without any money and huge debt? I don’t have what I’d probably consider Silicon Valley employable skills. I was an industrial designer. I didn’t know what to do.
BC: Yeah. At this point, there were no more changing M’s to B’s and selling a big dream. We wanted to know every single thing we could about our company and our community. Joe, Nate, and I would pretend to play good cop/bad cop. You’d sit in a chair, you’d memorize everything, and then I would go and, “Quick, how many active users do we have?” Joe would come up and slam the phone book down. This is what we imagined a Y-Combinator interview to be like.
BC: Exactly, like a Law & Order. We heard these YC interviews are 10 minutes. They’re really intense. They fire questions at you. We basically proceeded to create a Law & Order episode.
Then we’re about to go to YC for the interview, and then Joe takes a box each of Obama O’s, and Cap’n McCain’s. He goes to put them in his bag, because he wants to give them to Paul Graham.
Nate’s like, “No, no, no. You are not bringing out the cereal. Keep the cereal home.” Joe’s like, “OK, fine. I’ll keep the cereal home.” He sneaks the cereal in the box, and he doesn’t tell Nate. We drive down to the Y-Combinator interview. I remember the interview probably wasn’t going well, because the first question Paul Graham asked me is, “People are actually doing this?”
I go, “Yeah.”
He goes, “Why? What’s wrong with them?”
I was like, “This interview is not going to go well.”
Then we go through our story, and he’s pretty impressed that we seem to know a lot, but I can tell it’s not going well. He’s like, “Alright, thanks. The interview’s over.” We’re about to leave, and then Joe pulls out the boxes of Obama O’s and Cap’n McCain’s, and gives it to him.
BC: Nate’s like, “Oh, my God. I’m out of here.”
Paul goes, “What the hell is this? Are you buying me schwag?”
We were like, “No, we made this. This is how we fund the company.”
He goes, “What? You made this?”
We tell him this whole story and he says, “Wow. You guys are like cockroaches. You just won’t die.”
Wow. You guys are like cockroaches. You just won’t die.
I found out later that’s apparently a compliment, because in an investment nuclear winter, you want cockroaches, people who won’t die.
He accepted us. The reason he accepted us is he said, “If you can convince people to pay $40 a box for a $4 box of cereal, you could probably convince people to sleep on other people’s airbeds.”
I remember we’re driving back from San Francisco and he says, “I’ll call you if you get in.”
I remember seeing my phone ring and it’s his number. All of a sudden, there’s a point between Silicon Valley and San Francisco where there’s no cell phone signal.
He had said “You’ve got to accept on the spot, and if you don’t, we just go down the list and we go to the next person.” It’s pretty intimidating. I pick up the phone. He goes, “Hey, Brian, this is Paul Graham. I’d love to…” And then the line goes dead. I’m like, “Nooo!”
Me and Joe are freaking out. We’re trying to drive as fast as possible, weaving through traffic to get to somewhere with a signal. We finally get back to San Francisco and then my phone rings again, and he tells us we got in. He calls us. “OK, do you want to be in?”
I’m like, “Uh, let me think about it” and put ourselves on mute. I’m like, “Do we have any options? Nope? OK. Yeah, we’ll do it.”
We end up joining Y Combinator and it ended up being the best thing that ever happened to me.
Sarah Lacy is the Founder and CEO of Chairman Mom and Pando Media. She's been covering technology for nearly 20 years, previously for BusinessWeek, TechCrunch and many other publications. She's the author of "Once You're Lucky; Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Gotham, 2008); "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit from Global Chaos" (Wiley, 2011) and the forthcoming "A Uterus Is a Feature Not a Bug" (Harper Business, 2017). She lives in San Francisco.