Brian Chesky once hot-glued 1,000 cereal boxes and sold them at $40 each to keep Airbnb alive

Chesky and cofounder Joe Gebbia had come up with the idea for Airbnb a year earlier, when they rented out air mattresses in their San Francisco apartment to visitors who couldn’t find a hotel room during a design conference. They called it AirBed & Breakfast. Chesky and Gebbia were later joined by third founder Nathan Blecharczyk.

An original election-themed idea

With the 2008 U.S. presidential election approaching, the founders designed two limited-edition cereal boxes: Obama O’s, featuring Democratic candidate (and future president) Barack Obama, and Cap’n McCain’s, featuring Republican candidate John McCain.

Years later, Chesky told a crowd at the South by Southwest conference that he and his cofounders hot-glued the boxes together by hand after a print shop shipped them 1,000 with their design idea. “It was like origami in my apartment,” he said, according to Business Insider.

The stunt would soon help convince the company’s first outside investor to take a chance on an idea others had rejected.

Paul Graham of Y Combinator was impressed by the founders’ resourcefulness, and Airbnb was accepted into the accelerator for its Winter 2009 class. Y Combinator invested $20,000 in exchange for 6% of the company.

Just a few months later, Sequoia Capital led Airbnb’s $600,000 seed round, per Business Insider.

What this can teach aspiring entrepreneurs

Before the Y Combinator break, the Airbnb cofounders’ predicament looked a lot like the one many entrepreneurs face when trying to get a business off the ground. They funded Airbnb themselves and piled up credit card debt along the way.

Chesky told CNBC he accumulated about $25,000 in credit card debt, while Gebbia was tens of thousands of dollars in debt as well.

“You know those binders that you put baseball cards in? We put credit cards in them,” Chesky said.

Their reliance on credit cards wasn’t unusual.

According to the U.S. Small Business Administration (SBA), 34% of small businesses used credit cards for financing, based on 2023 survey data. Personal savings are even more common when businesses are getting started. The SBA found that 80% of employer businesses and 76% of businesses without employees used personal savings for startup capital.

SBA data showed that in 2023, venture capital accounted for just 5% of small-business lending, while angel capital accounted for another 1%. Small-business loans and finance companies accounted for the remaining 94%.

Even the U.S. Chamber of Commerce concedes that getting outside capital is very difficult and recommends bootstrapping as a way to fund a business, with common practices including relying on personal savings, selling assets or using early sales to keep the business going.