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How Airbnb Got Funded by Cereal Boxes

Airbnb is the world’s largest short-term rental company with over 150 million active users worldwide. When Brian Chesky and his co-founders came up with the idea for Airbnb, they had to figure out how to raise startup money. They initially racked up a little over $20,000 in credit card debt to finance the initial stages of the startup. However, with that debt hanging over their heads, Chesky’s team needed to figure out how to raise more money without falling into more debt.

The team decided to make a novelty cereal box based on the upcoming 2008 Presidential Election. They worked with a local print shop to make 1,000 cardboard boxes of “Obama-O’s” and “Captain McCain”. They filled the boxes with Cheerios and Captain Crunch cereal and began selling their novelty cereals online. They quickly raised over $30,000 from the cereal sales, enough money to cover their credit card debt. The spectacle also brought media attention to the small startup and helped bring in new customers.

The cereal boxes helped Airbnb one last time when they applied for venture capital funding from the Silicon Valley startup accelerator, Y Combinator. Chesky recalls the interview with investor Paul Graham going very poorly. Thinking they were about to lose their chance to get venture capital funding, Chesky whipped out a cereal box in the meeting. Paul Graham confusingly asked what the box was. Chesky quickly told Graham how he and his team managed to raise essential funds by selling boxes of novelty cereal. Graham was very impressed with their ingenuity, leading to the Airbnb team securing a large investment from Y Combinator as a result. Securing startup funds, especially during economic downturns, requires creativity. This case study from the Airbnb founders demonstrates how you can use upcoming events and local resources to creatively raise money for your startup.

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