Money. It’s what makes a business and what stands in the way of a business. In the early stages of every new business, the very first concern and top priority are always where the money will come from. Used to be that in order to start a business the route was to visit the bank, provide reasonable collateral, and secure a loan. These days, with an economy that is often highly volatile and with the advent of the internet constantly changing the landscape of how things are done, the era of the bank loan is rapidly going the way of the dodo. Crowdfunding has taken the place of traditional overhead capital in many cases through sites like Kickstarter. But what if you want to circumvent even these modern traditions and find a way to raise capital even more independently?
The fact of the matter is, there are countless ways to secure yourself a little extra green on the side, the only obstacle is the limits of your imagination. Just ask Brian Chesky, CEO and founder of the now ubiquitous vacation and short term rental platform Airbnb. In the early days of this business, Chesky and his co-founders Nathan Blecharczyk and Joe Gebbia had a problem. They were rapidly running out of money to run their nascent, unknown startup.
The business itself was the result of chance. When a design conference flooded into San Francisco creating a space issue–there simply weren’t enough hotel beds to fit every participant–the three co-founders used the lack of space to their advantage. Low on funds and needing to pay the rent, they opened their loft space to conference participants. Three air mattresses plus complimentary breakfast at $80 a pop not only helped three visitors find a place to stay, it got the rent paid and gave rise to what would become Airbnb.
Fast forward to Denver, Colorado in 2008. The Democratic National Convention was presenting the very same issue as the San Francisco design conference and Airbnb was still in its very early stages. The team needed to solve a fundamental problem which was figuring out how to fund their business enough to market and bring in more paying customers.
They already knew that the DNC was a tremendous opportunity. The idea of people opening their homes to others was catching on. But things weren’t growing quite fast enough, they needed another way to keep their little boat afloat.
That’s when they came up with a most unconventional idea in order to capitalize on the convention in town. They would sell cereal.
You read that correctly.
They would sell cereal. The team ordered 1,000 boxes from a local printer, got themselves a glue gun and some cereal and went to work. They created a limited edition series of politically themed cereals, namely Obama O’s and Captain McCain. Each variety had 500 boxes each, individually numbered and filled with real cereal. In the lead up to the Democratic National Convention, the team sold off their cereal boxes for $40 each. It was thinking so far outside the…well…box and they had no idea whether their plan would pay off.
It took a bit of hustling to get the word out about their limited edition breakfast series. The team turned to small-time bloggers asking them to run features to small audiences. This marketing began to snowball and eventually landed them on national network news giving them, and their cereal start-up funding, an enormous boost.
Against all odds, the Airbnb founders sold every last box raising $40,000 that would allow them to dig out of the serious debt running their little business had put them in. They took their capital and their unusual idea to Paul Graham asking him for a spot in his startup accelerator Y Combinator.
Graham was skeptical at first, this was 2008 and the markets had just crashed setting off what would become the great recession. He was looking for businesses that could survive during the austere times ahead. He was unconvinced that a rental company was one of those businesses.
Just when it looked like Airbnb would have to seek elsewhere, they revealed their unusual method of raising capital. Graham was so impressed by the success of the cereal boxes, he offered the team a spot. Their absolute ingenuity proved to the entrepreneur that they had what it takes to keep a business going even when the going gets rough.
When it comes to funding your business, the sky’s the limit as far as ideas go. As an artist, you have a serious advantage in that you are already used to thinking in ways that are completely different to the traditional ways the world goes round. Make this perspective work for you. Create and imagine ways you can earn money to keep your business afloat. Learn from the example of the Airbnb crew that sometimes, when the moment is right, the most outlandish ideas are the ones that will get you the furthest.