Early on, cofounder and CEO Brian Chesky was rejected numerous times by investors when he tried to pitch his business, he said in an interview at Stanford Graduate School of Business in February, noting that investors struggled to see why people would want to sleep in strangers’ homes. 

A $40 cereal box was responsible for getting the company its first investment.

When Airbnb was founded in 2008, Chesky and his cofounders, Joe Gebbia and Nathan Blecharczyk, saw a boost in demand for their “Air Bed-and-Breakfast” services during the Republican and Democratic national conventions. But soon after the events ended, demand dropped. In an effort to salvage their business, the three cofounders designed and sold cereal boxes for then presidential candidates Barack Obama and John McCain, and earned around $30,000 from that, Chesky said. The money was used to fund Airbnb’s operations. 

When Chesky and his team later pitched Airbnb to Paul Graham, founder of startup accelerator Y Combinator, and his partners, Graham asked why people would actually live with strangers. But before he could leave after the somewhat failed Airbnb pitch, the trio showed Graham their custom-made cereal box. Graham was intrigued. 

“Well, if you can convince people to pay $40 for $4 boxes of cereal, maybe, just maybe, you can convince strangers to live with each other,” Graham told the Airbnb cofounders, according to Chesky. And just days later, Airbnb won a spot in Y Combinator’s three-month startup program. The accelerator, which has also funded DoorDash, Reddit, and Dropbox, gave Airbnb $20,000 in exchange for a 6% share in the company in 2008. 

Today, 16 years since it was founded, Airbnb is worth more than $75 billion. By the end of 2022, the company had over 6.6 million active listings in 100,000 cities worldwide. 

Ups and Downs

Airbnb has had its hard times—the COVID-19 pandemic was one of them. As people stayed home amid lockdowns, the San Francisco–based company suffered from a lack of users. The number of listings in top Airbnb locations dropped dramatically between May of 2020 and 2021, a study found. But the guests who used Airbnb often stayed longer. To cope with the pandemic, the company laid off 25% of its staff and suspended activities outside its core short-term rental business. The pandemic also forced the company to delay its initial public offering that was originally planned for early 2020. Airbnb went public in December 2020, with a $100 billion valuation, marking the largest IPO that year.

In recent years, the home rentals company has also come under fire for its illegal listings. New York has had a long-drawn battle to curb Airbnb’s growing pool of illegal listings, which, at one point last year, contributed to there being more short-term rental units in the city than the number of apartments available for rent. To maintain better accountability of Airbnb listings, hosts on the platform will be required to register with the city to receive a license starting in July. 

The post-pandemic boom has worked in Airbnb’s favor as people took on remote work. A year ago, Airbnb announced it would let its own employees work from anywhere. Despite the threat of an impending recession and economic downturn, Chesky told Fortune in November, Airbnb could still thrive. 

“The economy will probably continue to slow down. If that is the case, people more than ever are going to want to make extra money. One of the best and easiest and most straightforward ways to make extra money is [to] take the biggest expense of your life—for most people, it’s their housing—and defray the cost by sharing it when you’re not using it,” Chesky said.