Airbnb was failing — then the founders sold $30,000 in cereal boxes and saved the company

In October 2007, roommates Brian Chesky and Joe Gebbia put an air mattress in their living room and rented it out during the Industrial Design Conference in San Francisco. They called it 'Airbed and Breakfast.' The idea worked for the conference — but after the attendees left, nobody wanted to rent an air mattress in a stranger's apartment. The platform had no sustainable business model.

By mid-2008, the founders were maxing out personal credit cards to keep the site running. The third co-founder, Nathan Blecharczyk, joined in February 2008. The site Airbedandbreakfast.com launched on August 11, 2008, but revenue was near zero. The company was weeks from failure.

In August 2008, the Democratic National Convention came to Denver. The founders realized that hotels were sold out and convention-goers needed places to stay. But they had no money for marketing. Instead, they designed collectible cereal boxes: Obama O's (a corn-based cereal) and Cap'n McCain's (a sugar-coated, 'maple-flavored patriotic blend'). They bought 1,000 boxes of cereal, repackaged them by hand, and sold them at the convention for $40 each. They raised $30,000.

The cereal sales caught the attention of Paul Graham, who was running Y Combinator. Graham was impressed by the founders' resourcefulness and invited them to YC's winter 2009 session. Y Combinator invested $20,000 for 6% of the company. In March 2009, the company shortened its name to Airbnb.com and dropped the 'Airbed' focus, opening the platform to any type of accommodation. By 2010, the company was booking millions of nights and had become one of the most disruptive companies in the travel industry.