THE STARTUP THAT SOLD CEREAL TO STAY ALIVE
In 2008, Airbnb wasn't a global company.
It wasn't worth billions.
It wasn't even close.
The founders were struggling to keep the startup alive.
And then they did something that sounds completely ridiculous:
THEY STARTED SELLING CEREAL.
AIRBNB HAD A MONEY PROBLEM
Brian Chesky and Joe Gebbia had launched their apartment-sharing idea.
But getting people to use it was difficult.
Investors weren't exactly lining up.
Money was running out.
The startup needed cash.
Fast.
THEN THE 2008 ELECTION HAPPENED
Barack Obama and John McCain were competing for the presidency.
The founders saw an opportunity.
They designed two limited-edition cereal boxes:
OBAMA O'S
and
CAP'N McCAIN'S
The cereal itself wasn't the important part.
The packaging was.
THEY MADE THE BOXES LOOK LIKE REAL PRODUCTS
They designed colorful cereal boxes.
They produced only a limited number.
Then they sold them for:
$40 EACH.
Remember...
This was cereal.
Not a hotel room.
Not software.
Not an Airbnb booking.
CEREAL.
AND PEOPLE ACTUALLY BOUGHT THEM
The founders reportedly sold around:
800 BOXES
That generated roughly:
$30,000
for the struggling startup.
For a company that desperately needed cash...
that was huge.
BUT HERE'S THE IMPORTANT PART
They didn't just sell cereal.
They sold:
A STORY.
People weren't paying $40 because the cereal was worth $40.
They were buying something unusual.
A limited-edition product.
A piece of the election.
Something they could talk about.
THE CEREAL BECAME A FUNDING STRATEGY
Think about what Airbnb did.
They had:
Almost no money
but they had:
Creativity
So instead of asking:
“How can we get another investor?”
they asked:
“What can we sell right now?”
And the answer was:
Cereal.
THE MONEY BOUGHT THEM TIME
This is the part people often overlook.
$30,000 doesn't sound like much compared with the billions Airbnb would eventually become worth.
But startups don't always die because the idea is bad.
Sometimes they die because:
THEY RUN OUT OF CASH BEFORE THE IDEA HAS TIME TO WORK.
The cereal gave Airbnb something incredibly valuable:
TIME.
THEN SOMETHING ELSE HAPPENED
The founders eventually got accepted into Y Combinator.
Paul Graham reportedly wasn't initially convinced by the business.
But the founders' determination and ability to make money in unusual ways helped demonstrate that they were willing to do whatever was necessary to keep going.
THE CEREAL STORY SHOWED SOMETHING
Imagine two founders.
FOUNDER A
“We need funding.”
Waits.
Pitches investors.
Gets rejected.
Runs out of money.
FOUNDER B
“We need funding.”
Creates something people will actually buy.
Makes money.
Keeps building.
Airbnb's founders behaved much more like Founder B.
THEY WERE WILLING TO DO EMBARRASSING THINGS
This is one of the most underrated parts of startup stories.
At the beginning, there is no:
CEO LIFESTYLE
No:
PRIVATE JET
No:
BILLION-DOLLAR VALUATION
Sometimes you're just trying to figure out how to pay next month's expenses.
And sometimes that means:
SELLING CEREAL.
THE CEREAL WASN'T THE BUSINESS
This is important.
Airbnb didn't suddenly become a cereal company.
The cereal was a fundraising hack.
The real business was still:
CONNECTING PEOPLE WITH PLACES TO STAY.
The cereal simply helped finance the journey.
THINK ABOUT THE PSYCHOLOGY
A traditional fundraising pitch says:
“Give us money because we believe this company will become huge.”
Airbnb's cereal effectively said:
“Here's something weird. Buy it.”
Someone gave them money...
and received something in return.
That's a completely different transaction.
THE BUSINESS LESSON
When you're running out of money, you don't always need a complicated solution.
Sometimes you need:
A PRODUCT
A CUSTOMER
A REASON TO BUY
The founders found all three.
THE CRAZY PART
The cereal wasn't some sophisticated financial instrument.
It was cardboard.
Cereal.
A funny presidential-election theme.
And a clever story.
Yet it generated enough money to matter.
THEN AIRBNB BECAME SOMETHING ELSE
The company eventually solved the much bigger problem:
How do you make strangers comfortable enough to book someone's home?
That required:
Reviews
Profiles
Photos
Payments
Trust
Technology
and eventually a massive global marketplace.
But none of that would have mattered if the company had died first.
THE BUSINESS LOOP
STARTUP RUNNING OUT OF CASH
↓
FIND SOMETHING PEOPLE WILL BUY
↓
CREATE LIMITED PRODUCT
↓
SELL IT
↓
RAISE EMERGENCY CASH
↓
BUY MORE TIME
↓
KEEP BUILDING
↓
FIND PRODUCT-MARKET FIT
↓
SCALE
The cereal wasn't the breakthrough.
Surviving long enough to find the breakthrough was.
AND THERE'S A DEEPER LESSON
People often imagine successful companies as if they were always destined to succeed.
They weren't.
Before Airbnb became a household name...
its founders were struggling to pay the bills.
They had to improvise.
They had to sell something completely unrelated to their main business.
And they had to keep going.
SIMPLE IDEA
A startup doesn't always need more money.
Sometimes it needs:
ENOUGH MONEY TO SURVIVE LONG ENOUGH TO FIGURE THINGS OUT.
Airbnb's founders found an unusual way to buy themselves that time.
They sold cereal.
MAACAT PERSPECTIVE
The world's biggest companies can have incredibly unglamorous beginnings.
Before Airbnb became a global travel company...
it was a startup that couldn't raise enough money.
So its founders made cereal boxes.
They sold them for $40.
They raised around $30,000.
And that tiny amount of money helped keep the company alive.
Sometimes the difference between:
“This startup failed.”
and
“This company became enormous.”
is simply:
having enough cash to survive one more month.
