Airbnb's prospectus tells its founding as rent and 3 first guests. No cereal boxes, no debt, no 6% stake

An IPO prospectus is usually a document of numbers. The one Airbnb filed in 2020 contains one section that is a story. Titled “The Beginning,” it starts in 2007 with two designers trying to work out how to pay their rent.

An international design conference had come to town, and every hotel was full. The two built a site called AirBedandBreakfast.com and rented the airbeds in their apartment to conference attendees. Three designers, Michael, Kat and Amol, took them up on it and became the first guests. The prospectus names its first guests.

Some things do not appear in that section: the roughly $20,000 of debt each founder carried, the election-themed cereal boxes that raised $20,000 to $30,000, and the 6% stake handed to Y Combinator. In books, these numbers sit at the centre of the founding story. What follows lines up the story the statutory filing chose and the numbers it did not. Listed companies fall outside this site’s criteria for cases, so only the first two years before the listing are covered, as a column.

From airbeds in October 2007 to the name change in November 2010

What the prospectus writes in its own voice is only the three first guests and the dates of incorporation and renaming. Every money figure sits with other writers.

The prospectus named its first guests

Guests’ names rarely appear in a statutory disclosure. In place of numbers, “The Beginning” offers the first three names and the line “strangers will never stay in each other’s homes.” The listing document writes only the moment of founding as a story.

What the desk is looking at here is what got chosen. The three named guests show directly the moment Airbnb’s model first worked. The debt and the cereal boxes are numbers about how the founders survived before the model worked. The prospectus chose to write the former and left out the latter. The founding shown to investors was the story of the model.

The numbers left out were in the books

The numbers left unwritten survive in two books published nearly a decade after the founding. In 2008 the two bought 1,000 boxes of commercial cereal, repackaged them in boxes themed on the presidential candidates, sold them and raised $20,000 to $30,000. After the Democratic National Convention, each reportedly carried about $20,000 in debt. In early 2009 they received $20,000 from Y Combinator and gave up 6% of the company in return.

The ranges have a reason. The cereal-box revenue moves between $20,000 and $30,000 depending on which book is the source, and the encyclopedia gives the range as is. Both books are based on interviews with the people involved, not on sales ledgers.

What follows is inference: this split into two layers does not look accidental. What goes into a listing document carries legal responsibility. There is no reason to put debts and cereal revenue of uncertain size into that document. The numbers of the founders’ struggle had no place to go except books, which carry no such responsibility.

A Y Combinator co-founder wrote about 30 days of hand work

In 2013, Y Combinator co-founder Paul Graham wrote that Airbnb’s founders went door to door in New York recruiting users and took “professional” photos of their first hosts’ apartments themselves. Early Airbnb was very fragile, he wrote, and about 30 days of meeting and engaging with users in person made the difference between success and failure.

Written from the investor’s side, this is a different kind of record from both the prospectus and the books. Not a single dollar figure appears in it. What it records instead is how long the founders held up a newborn model by hand. Those 30 days connect the first three guests shown in the prospectus to the cereal boxes kept by the books.

Records of gathering the first customers within arm’s reach exist for small businesses too

Records of gathering first users by hand exist for much smaller businesses as well. Traffic Think Tank, a paid community for SEO practitioners, announced itself through the three founders’ personal email lists and social accounts and filled its 100-member cap in under a week. Afterwards, about 95% of new members came by word of mouth.

The list setting Airbnb beside other legendary companies is in the column tracing 22 founding legends to their sources.

What could be confirmed

The limits need stating. In what could be read, the prospectus’s founding section gives not a single dollar figure and does not mention Y Combinator. The debt, the cereal boxes and the Y Combinator terms were checked against summaries based on interview-driven books, not ledgers or contracts. How much the first guests paid per night could not be confirmed in the sources read. The year 2007 comes from the prospectus’s account, and the June 2008 incorporation date from its corporate information.

The statutory filing chose the story, and the numbers of struggle stayed in books

Airbnb’s founding years survive split among three kinds of writers. The prospectus wrote the names of the first three guests. The books wrote the debt, the cereal boxes and the 6%. The investor wrote the 30 days of hand work.

What the legend usually repeats is the cereal-box story. But the founding the company wrote in its own name, under legal responsibility, was the story of two people who could not make rent and three who slept on airbeds. Which numbers it wrote itself and which it left for others to write: that choice is the most accurate record of this company’s founding years.