Airbnb co-founder says the lack of investors leads to entrepreneurs

A growing number of economists are forecasting that a U.S. recession may begin later this year. Airbnb's co-founder and chief strategy officer, Nathan Blecharczyk, says this shouldn't stop entrepreneurs from diving head first into their business ventures.

In 2007 Blecharczyk, co-founders Brian Chesky and Joe Gebbia, started building the home-sharing platform in San Francisco, during the financial crisis.

In times of economic uncertainty, both customers and companies may change their behavior and can become more creative when looking for solutions, said Blecharczyk.

For example, Airbnb's earliest users were people who had just lost their banking job, for example.

The couple had a lifestyle, they had a good apartment, and they wanted to be able to afford it, he said. They were open-minded in their approach to new ways of solving the problem. Regardless of whether it's a tough economic climate, a key mistake entrepreneurs make is assuming they are going to make a lot of money in their first year, Blecharczyk said.

It never happens that way, he said.

In the case of Airbnb, the group spent a year failing to get investors to bite on their idea because people couldn't see past what could go wrong, Blecharczyk said. One of the potential investors, a potential angel investor, walked out of their pitch in the middle of their pitch. Despite making $30,000 from a marketing stunt selling cereal boxes Obama O's and Cap'N McCains in the 2008 presidential election, he said, the business didn't have traction and wasn't growing. But they persisted, remained a strong force.

If you're going to go on a difficult journey for 12 months, 36 months, you must set certain expectations with yourself, with the others in your life, so that you can stick with it, he said. You'll be faced with setbacks and failure if you've got a lot of persistence. It wasn't until Airbnb was accepted into Paul Graham's startup accelerator program, Y Combinator, in October 2008, that the company got its first round of seed funding about $20,000 in exchange for a stake in the company. With a seed investment of $585, Sequoia Capital took a chance on the company which had only a few thousand listings and 10,000 registered users at the time. In November 2010 the trio raised $7.2 million for Series A funding.

It was not until 2022 that the global platform made its first full-year net profit.

Blecharczyk said he gained an appreciation for how long it takes to produce revenue. He also gained a appreciation for how easy it is to spend money when you have it or anticipate you're going to get it.

While working for Airbnb, Blecharczyk watched as his colleagues spent a lot of money with the belief that they were going to make millions within the first year.

12 months later, they had made $0, so they ran out of runway very quickly, he said.

The other problem is that entrepreneurs can easily spend their time on the wrong things.

In the first few years of Airbnb, Blecharczyk said they were given money from friends and family to help them stay afloat, but they spent it too quickly on things that didn't matter.

In order to be successful, the entrepreneurs realized that they just needed to think clearly about the right way to approach the problem that they were trying to solve, Mr. Blecharczyk said. It was more important to realize that they had the capacity to do it themselves, and didn't need to hire anyone or outsource anything.

Money is a double-edged sword, said John B. Blecharczyk of the New York Times. In some ways, not having access to money, whether it's because of the tough financial conditions or not, forces you to think harder about what you're doing and can actually set you up for success.