The 3 German Brothers That Almost Put AirBnB Out Of Business
In 2011, Airbnb was a small scrappy startup with 40 employees. Brian Chesky, the co-founder and CEO received bad news.
AirBnB struggled to keep the company alive when almost every investor turned them down. As they struggled to find investors, they got accepted into the prestigious Y-Combinator startup program because of their resourcefulness and hustle.
After the Y-Combinator program, they received $7 million dollars from Sequoia Capital and Greylock Partners.
As their business grew, they attracted competition in their space. No matter what business you’re in, competition always presents a deadly threat.
In AirBnB’s situation, their competition were 3 brothers from Germany. Oliver, Marc, and Alexander Samwer. The Samwer brothers are notorious in the startup world. They became billionaires by analyzing successful US companies, quickly creating copycats in Europe, and selling these “clone” companies back to the American inspirations.
The Samwer brothers first success was Alando. Alando was an eBay knockoff that they were able to sell to eBay for $43 million. They sold it just 100 days after launching it.
In 2011, Brian and the AirBnB founders began noticing that their users were being spammed by a new company named ‘Wimdu.’
Wimdu had just received $90 million in capital. This investment was the largest investment in a European start-up to date! Wimdu was founded in March 2011 and within weeks, the company hired a staggering 400 employees and opened 20 offices across Europe!
The Samwer brothers put Brian Chesky on the ropes. The Samwer brothers told Brian that they can have Wimdu for 25% stake in Airbnb. Regardless of the decision, each one faced a terrible consequence.
If Brian rejected the offer and faced the Samwer brothers, they would be at a disadvantage because Wimdu had 10 times the number of employees and 10 times the amount of capital. Competing with Wimdu would be a treacherous task.
Brain started reaching to world renowned entrepreneurs such as Mark Zukerberg, Andrew Mason (Founder of Groupon who faced the same problem with Samwer Brothers and lost 10% of the company), Reid Hoffmann and Y-Combinator’s Paul Graham.
Brian decided not to buy Wimdu as he was advised by his key advisors. Mark Zuckerberg told him “Don’t buy them...the best product will win.”
A few months later, AirBnB acquired the resources needed to scale and compete with the Samwer brothers.
Brian raised $112 million in additional capital and embarked on an aggressive international expansion. The acquired Accoleo, which was a smaller more affordable German AirBnB clone that allowed AirBnB to compete with Wimdu in its own market.
By 2012, AirBnB had opened 9 international offices.
Brian Chesky reflected on their growth and said: “The Samwers gave us a gift, They forced us to scale faster than we ever would have.”
Takeaway: With all of the advantages of having more money, human capital, and the knowledge of the European market, AirBnB came out on top. The decision not to sell was one of the greatest decision of all time for AirBnb. This decision paved the way for Airbnb to become a global leader at $40 Billion Valuation.