In a company’s beginnings, learning to sell to investors is pivotal. By gaining funding, startups can hire more employees or spend more on customer acquisition. Selling to investors, however, is difficult. Investors are knowledgeable, busy, and likely have many other startups they could invest in. This means you must craft your sales pitch carefully. In particular, it is important to have evidence that you can convince people to use your product. Investors are much more willing to work with startups that have a proof of concept—not just a prototype.
Airbnb founders Brian Chesky and Joe Gebbia exemplified this in their sales pitch to enter Y-Combinator. At the time, Airbnb was struggling and had no revenue. As such, they created their own cereal brand that featured presidential candidates John McCain and Barack Obama. They sold $35,000 worth of cereal, the first big amount of revenue they received with Airbnb. This is where the phrase “Cereal Entrepreneur” derives from.
During their Y-Combinator interview with Paul Graham, they did not have much to say about
Airbnb itself. Graham was surprised that people were even using Airbnb. Chesky and Gebbia, feeling dejected, gave Graham a box of their cereal to thank him for his time. He was impressed that Airbnb was able to attract as many people as they did to buy the cereal. So, in the interview’s final seconds, Graham changed his mind and accepted Airbnb into Y-Combinator.
Why did Paul Graham change his mind so quickly? The answer is simple: Graham predicted that if Chesky and Gebbia could sell their customers cereal, perhaps they could do the same with Airbnb. Although they had no success with Airbnb itself, it showed they had the skills to sell a product. What is the lesson here? Prove the validity of your product by showing you can sell to your customers. Investors want to see if the people behind a company can sell. A product may be a great idea, but it requires effective sales skills to actually go anywhere.
Sources
https://getpaidforyourpad.com/blog/the-airbnb-founder-story/
https://www.ycombinator.com/blog/the-airbnbs/
Aliyah Shelatz 
Ethan David 
Caroline Marie Dawson
This is really interesting, Liam! It goes to show ho valuable good sales technique is and goes to show why the “sell me a pen” mentality/exercise is so relevant. If your idea is good but your sales technique isn’t, you’ll never gain revenue, but AirBnB is a great example of how sales techniques can take you far and give you opportunities that you’d never get by just having a good product alone.