- it's a great honor for usto have brian chesky here. brian's obviously ceo and co-founder of what i think is actuallythe most interesting of the up-and-coming unicornson all kinds of levels. not just the way the world should be, but also various thingsthat i learn from brian. i learn about design, i learn about, kind of,what are the right ways to be an entrepreneur in this set.
and so, it's a great honorfor us to have him here. thank you for coming--- thank you, thank you. - let's start with, it may be known, but it's worth startingwith the story of airbnb. - yeah. - how did you get the idea? what were the early days like? - right, right.
well, thanks, thankseveryone for listening. sorry, my thing's coming out. so airbnb, many people would say that, or a number of people said, "it's the worst idea that ever worked." or, at least i can sayeveryone at the time seemed to say it was the worst idea ever, and it worked,
so maybe that's the nice connection, it's the worst idea that ever worked. airbnb, i'll just do a reallyquick, kind of, background before airbnb. i'm different than mosttechnology founders in so far as i actuallywent to art school. so i was an artist by training. i went to the rhodeisland school of design. i don't know if you guys know that school.
and i studied industrialdesign, and industrial design, i know they teach that here in stanford. it's kind of like product design, everything from a toothbrush to a spaceship, they used to say, and everything in between. bless you. and i, growing up, i never really thought about being an entrepreneur. i didn't even know that existed.
i don't even know if i ever even heardthe word entrepreneur. that would've been analmost absurd thing to say in upstate new york, where i grew up, to use that word. in fact, in hindsight theonly entrepreneur i knew was bob from bob's pizza. and i didn't reallywanna have a pizza shop, so i don't think itwould have occurred to me
to start a company. my parents are both social workers. my mom used to have a joke. she said that i chose a job for the love and i made no money, so you should choose a job for the money. and i said, "well i'mgoing to art school." and she said, "oh my god. "you chose the only path in life
"that's gonna pay lessthan a social worker "cause you're gonna be anartist and get paid nothing." and so she said, "if you do that, "make sure you don't move back home, "live in my basement. "make sure that you get a job one day "and that if you get that job, "make sure that job has health insurance." and this was like a grandambition for my parents.
so it wasn't about startingany kind of big company, or scaling up a company. and so i wasn't going tobe able to call my parents, "oh my god, what do i do? "i have 100 employees, how do i scale?" that wasn't going to happen in my family. i ended up going to risd, and the school had aprofound impact on me, probably much like here in stanford,
because growing up you'retaught to look straight ahead. growing up, you don't getrewarded for being disruptive, you just go to the principal's office. and i was there, quite often. and so, got to risdand teachers were like, "you're a designer, you canredesign everything around you." basically, they're sayingis you can change the world. that's not something thatmost parents tell their kids. "you can change the world."
they tell you to behave. and so i ended up, one other thing happened at risd, i met my co-founder, one of my co-founders at risd, named joe gebbia. one day, joe says, "brian, i think my neighbor and i "are gonna start a company together."
well, i'm living in l.a. workingas an industrial designer, and i remember my life, and you, maybe, confront these decisions, where everything in front of me in my life looks like everything behind me. in other words, the roadis like a disappearing road into horizon, and it kinda terrified me, because it was that jobwith health insurance. and at risd, i was told,no i can do anything.
i can change the world, and you're not doing that. and so, i had this impulsive moment, where i go into work and my roommate, or my friend, joe at risd, was tryin' to like convinceme to leave my company and go to san francisco, and we were gonna start a company.
we had no idea what thiscompany was gonna be. we just thought, we'llthink of the big idea. and so, one day i go to work, i quit my job, and i'm living in a housewith a bunch of friends that moved across the country with me, and i say, "ok guys, i'm gonna leave." and they thought i had,like, an early life crisis. they thought they needto have an intervention,
but no, no, i'm fine. and i took some old foam mattress, i rolled it up in the backseat of an old honda civic. with a thousand dollars in the bank, i drive up to san francisco. this is october 2007. i get to san francisco and joetells me the rent is $1,150. i didn't have enough money for rent. that weekend, thisinternational design conference
was coming to san francisco. we went to this conference website, and we notice in the conference website, they had like a hotels tab and we clicked on the hotels tab. and in the hotels tab,there are always hotels and next to every hotel, it said, "sold out", "sold out", "sold out." and at that point, we just had this idea.
we said, "well, designersneed a place to stay, "we literally have no money, "in fact i don't knowhow i'm gonna make rent." so we thought, what if we justcreated a bed and breakfast for the design conference? naturally, that's maybenot what most of you would think to do, butthat's what we thought to do. you know, go to risd, you're like, "oh, i'vegot a creative solution."
so we thought, "let's createa designer bed and breakfast "for the conference." unfortunately, i didn't have any beds. joe had, he just moved up there. it would be like a floor and breakfast. that's like not the best thing. and so, joe had three air beds. he had gone camping, and he had kept some air beds.
and we pulled the airbeds out of the closet, we inflated the air beds, and we called it theair bed and breakfast. and that's where the name comes from. airbedandbreakfast.com so a lot of people hear thename, they think it's like, air is like the platformand bnb is the house. no, it's just air beds. that's all this was. (laughter)
this was just air beds. and so, we end up hosting three people from around the world. a 35 year-old woman from boston, a 45 year-old father of five from utah, and a 30 year-old from india. and, now, i gotta tell you, the reason we started doing this is 'cause we thought it wasfunny, cool and we'd make money.
'cause we had to make rent. there's something that happens, though. when somebody lives with you, it's kind of like the arc of a friendship gets contracted from a year to a day. in other words, if you were to meet somebody, maybe here at stanford,or in the real world, and you get to know them,
how much time does ittake to like invite them over to your house andhave dinner with them? it might take months, even a year. you don't just get to know people. and it, what it did we realized, is it contracted this year long friendship into a couple days. and so these people came as strangers, they literally left as friends.
we ended up keeping in touch with them. in fact, one of the guests ended up inviting me to his wedding. the other guest, this woman, moves from boston to san francisco. and i think we're realizingthere's a bigger idea here. i asked joe, i said, "who's the bestengineer you know?" 'cause joe and i were designers.
joe could do front-end engineering, but we were both designersand product people. and joe said, "well, myold roommate, nate is." nate, joe met on craig's list. he went to harvard, hewas a computer scientist. and so the three of us got together and we said, we basicallyhad this core idea. we said, what if youcould book someone's home the way you could book a hotel,
anywhere in the world? and that's basically how it started. the one caveat i'll make to the story is, after that very first weekend, there wasn't this flash that, "oh my god, "this is gonna be huge!" we actually didn't doanything for four months. in fact, the thing wedon't usually talk about, is after that, we started exploring
creating a roommate matching website. 'cause we thought no one would ever do this air bed and breakfast thing, but people need roommates. and we thought roommates meetscraig's list meets facebook. roommates with profiles. until one day we typed roommates.com in and realized somebody hadbuilt that site. (laughter) and this was like threeweeks or four weeks later
and i said, "why the hell didn't anyone "type that site in the first day?" 'cause i just wastedfour weeks. (laughter) so, we didn't know what to do. we went home for christmas, and people are like,"what are you workin' on?" and i'm like, i didn't want to tell everyone in my family i was unemployed. so i said, "i'm an entrepreneur."
of course, my mom said, "you're actually unemployed." i said, "no, i'm actuallyan entrepreneur." and that's also when i learned, when you're starting out, the difference between unemployedand being an entrepreneur is in your head, it's usually a mind set. and i was, in my head, an entrepreneur. and they said, "well, whatare you entrepreneuring?"
and i'm like, 'cause it wasn'treally a common word there, and i said, "well i got thisthing, air bed and breakfast." they're like, "air bed and what?" and we just started toget used to pitching it. we're like, "maybe weshould actually do this." and, it was still not obvious. the original idea wasairbeds for conferences. so we ended up launching at south by southwest in 2008.
and we just, that whole idea was, if you're going to a conference and you don't have a lot of money, you could sleep in someone'shome on their air bed. and we ended up, the second version ofthe website we built, and we had two customers,and i was one of 'em. so that's kind of how it started. it was frankly, it wasn't thefacebook story, two weeks.
it was a longer road. - by the way, i hadn't known the roommatesthing until just now. we don't usually talk about that. - my first start-up, myself,was called socialnet. and it was a social platform for a variety of matching services, it included a roommate service. - nice!
- and that was in '97. - we both, we're kind ofcircling similar ideas. - i didn't actually realize i was, we had dating, professional networking, activities and roommates. those were the four things. - that's amazing. - that's hilarious, i had no idea. - yeah, the idea was thatlike air bed and breakfast
was not the big idea. we thought there was a big idea and we didn't think it was that. we thought it would pay the rent so we had enough time tothink of the big idea. and we thought the big idea was some social networking something. and, of course it turned outthat the crazy little idea that we thought no one else would do,
became the big idea. and i think there werea couple lessons there. number one, all these reallygood ideas or big ideas often sound like stupid ideas. somebody once told me in the early days, don't worry about anyonestealing your idea. if it's any good,everyone will dismiss it. and that was exactly the truth. and the second thing wasthat a lot of these ideas
are you solving your own problem. and they're not somelife changing problem, it's in a nuisance. and that was clearly the case for us. - so tell us a littlebit about the early days. you really had to hustle to keep it going. - oh man, so we're one of the companies that launched a bunch of times. i actually learned something,
'cause, we kept doing launchesto get a lot of press. if you launch and no one notices, you can actually justkeep launching. (laughter) and so, we just kept launching. like, "we've launched!" and people would keep writing about it, as if we launched. we're like, we'll just keep launching until we get customers.
and we would change thingsand change the name, and we'd launch again. and so the first so-called launch was that first weekend, but that was just three people. the second launch was air beds and conference united states. and we had two customers, i was one of them.
and so we decided, we'lllaunch at least one more time. when i, i used it in south by southwest. at the time, there was no payments and you had to stay in an airbed. and a bunch of people wastelling me a bunch of things. they said, "why do i have to... "like, i want to go to london,but there's no conference." and we're like, "why does this "have to be for conferences?"
at the time, that wasn't even obvious. why would anyone stay in anyone's home if there wasn't a conference? it would be too weird. and then we thought, "wait, why does it haveto be on air beds?" at the time actually, we had a rule. you had to have an air bed, so you had to inflate an air bed
and put it on your mattress. (laughter) and everybody was like, "why am i putting air beds on my mattress? "it's so uncomfortable. "and i wake up on one side of the bed "and i wake up and the other "it's like rolled around me, it's hot." we're like, "ok, fine. "you don't need to have an air mattress.
"you may have a real bed." and the final thing was payments. we may very well be thefirst website on the internet where you could actuallybook with somebody else and pay them directly. in other words, there was ebay. and ebay used paypal, but you didn't feel -- - before paypal, there was checks.
- there was, yeah, yeah, checks. exactly. and we had, there wasn'ta lot of legacy there. 'cause we looked at, there was ebay and etsy. and they were both before us. and etsy used paypal and both of them you would book, and it would send you on a paypal gateway.
and we want it to feellike booking a hotel. you never leave airbnb. we would hold, collectand remit the money. and so, where as they were paying direct and they would take a cut and there was twodifferent payments, so... and that was kind of a crazy idea. it almost scared us. it seemed insane that you would actually
be able to pay somebody else and be able to book something with them, and you would get a reputation system. we decided, let's just do it. and at the time we're like, "this is a little too crazy. "it's a little too scary. "i don't know if we're allowed to do this. "i'm not sure if it will work."
we decided to do it anyway. so then, in the summer of 2008, we ended up basically designing the final version of the product. so, we designed this product where you could book someone's home anywhere in the world. we had a rule, three-clicks-to-book-it button.
because there were so many clicks and so many different ways to get a home that it was just too hard. and i remember hearing the story of when steve jobs developing the ipod, no matter where he was in his ipod, he wanted to make sure he was always three clicks from a song. and we said, you shouldalways be three clicks
from being able to have a paid booking. and so we created this, basically a home page with a search bar, listings, the home andthat's exactly the product as you see it today, with reviews, payment system and customer service. and we basically ended up landing on that. but that was the thirdversion of the product. we kept basically redoing the product.
at this point, i get introduced to a whole bunch of investors. probably 15 angel investors. we were raising $100 to$150 thousand dollars at a $1.5 million valuation. we were at $1 million and eventually someone convinced us we'dget $1.5 million valuation. an extra $50,000. so we were trying tosell 10% of the company
for about $150,000 and of the 15 people we got introduced to, i think about, you know, we got introduced over email. i think about six, seven or eight of 'em didn't even reply to the email so we never heard from 'em again. about seven or eight replied, of those, half of them said,
"this doesn't fit my investment thesis." which is weird, 'cause their investment thesis was like consumer internet companies, we were consumer internet. so i assumed that we fit their thesis, but we didn't. or they said the market wasn't big enough. one person said,
"i'm just not excited abouttravel as a category." so we're like, "okay." and then we ended upmeeting a few more investors and they all passed on us. the low point was, we ended up launching in august 2008, we meet with the angel, mike maples. and we decided, i was so cocky i said, "i'm not even bringing a deck.
"i'm just gonna showhim the live website." we launched that day on techcrunch. we had 10,000 people visit our website. i go there without a deck. i have a website, i type in the website, it doesn't work. so i basically sat in frontof him for like an hour, and i didn't know what to say. i'm trying to explain to him this concept,
and he's like, "i have no ideawhat you're talking about." so, needless to say -- - mike's never told me that story. - yeah, yeah, yeah itwas pretty embarrassing. and, always have a deck. as a backup if your website goes down, or a least just don'tlet your website go down if you're meeting an investor and it's the last money you have.
so, you know those binders that kids used to putbaseball cards in the sleeves? we put credit cards in them. we probably, i probably went$30,000 in credit card debt. i would get credit cards, like a typical $5,000 max and i would just keep getting credit cards till the companies stoppedgiving me credit cards. and joe did the same thing.
and you know, we went tens of thousands of dollars in credit card debt. we ended up launching for the democratic nationalconvention, though. and we were able to -- so 2008, what was like, the number -- we had this basic idea, we need to get people to talk about us and we had this thing called
the chicken and egg problem. how do you get guests come without homes? well, you can't get homesif there's no guests. now, how do you get them at the same time? and how do you do that on a travel website where you can't just focus on one city, 'cause people go to other cities. so you have to focus oncities all over the world at the same time.
and basically, the thing we thought is we need to just get a ton of press. so it's like this spontaneous combustion and so we thought, maybe events, higher profile versionsof the founding event. and just thought, what'sa high profile event? and we thought, the democraticnational convention. barack obama was coming to denver. there were 80,000 people coming
or there was an 80,000seat football stadium and they had 27,000 hotel rooms. we thought, "wow! there'san opportunity here." plus, it's very grass roots. and we contacted new york times, cnn and they thought, "what are you talkingabout? this is crazy. "no one's ever gonnastay with other people." so we ended up just reaching out
to the local newspapers. they ignored us, and we had this idea, why don't we just start by getting anyone to write about us? we felt like if somepeople write about us, other people would refer to them. so we literally started with bloggers. i wouldn't be surprisedif some middle-school student wrote about usfor the school paper.
but, if we literally gotbloggers to write about us, then people would google "dnc," they would see us come up, 'cause all these bloggers wrote about us. then the local newspaperswould write about us and eventually we worked our way up until cnn, new york times got it. it started getting traction, but we were still in debt.
we got 80 bookings, or maybe less, for the democratic national convention. we got one or two bookings for the republican national convention. that did not work out too well. and then, the following weekend, we got no bookings. we realized, if only therewere political conventions every week, we'd have a business.
but we have nothing. so, this is now almost ayear into the business. we're tens of thousands ofdollars in credit card debt, every investors said no to us, we've launched three times, we've got national press, and we have almost nocustomers every single day. and now my, one of my co-founders decides he's moving toboston, he's getting engaged,
and his fiance's maybe not interested in living in the west coast and it was unclear if wewere gonna stay together as a founding team. everyone hits rock bottom, for me this was rock bottom. we're totally in debt, we don't know what to do, we're desperate, late at night, it's midnight,
maybe one in the morning,and joe and i think, maybe, we're air bed and breakfast, the air beds aren't working out, maybe we could sell breakfast. (laughter) i mean everyone needs to eat! so we thought, "let's just getin the breakfast business." so, we ended up making, we weren't gonna make eggs
so we decided, "let's make cereal." so we started making breakfast cereal. and we made presidential-themedbreakfast cereal. we made a barack obama themed cereal. we called it obama oh's, the breakfast of change. and we created john mccain themed cereal. we called it capt'n mccain's, a maverick in every bite.
and we literally handcrafted our own cereal boxes. and we basically used a gin up press and also, frankly desperation. and i hadn't been eating at this point, so i was probably also startingto get slightly delirious. but, we called general mills, they were like, "whatare you talking about? "you seriously think we're gonna make unlicensed presidential-themed cereal?"
we're like, "okay, i guess you won't." and so then, we called thesemedium-sized cereal companies. they're like, "great, justsend us a non-refundable check for $200,000." i'm like, "ok, that's not gonna work." so we found this guy in berkley. he was an alumni of risd. he says, "i can't print you100,000 boxes of cereal, "but here's what i'll do.
"i'll print you 1,000boxes of cereal for free, "just give me a royalty." we're like, "thank you!" one day, joe comes back with 1,000 pieces of giant cardboard. i'm like, "what the hell is that?" he's like, "these are the cereal boxes." they were just pieces of cardboard we had to fold and glue into boxes.
no one told me that. so, to fund the companywe basically folded, like giant origami, 1,0000 boxes of collectiblebreakfast cereal, had to pack cereal in them, and we sold them for $40 a box. we thought who was going to pay $40 a box, but they were limited edition, so we hand numbered every one.
we called it limited edition. and we ended up selling $30,000 of cereal. and that's actually howwe funded the company. and now we have a core value. it's called, "be a cereal entrepreneur" with cereal with a c. i know it's a bad joke, but... and that's basically how we started. and, this is the last part of the story.
the last part of the story is, it was november 2008, (laughs) we got back to almost broke, it's more than a year in, we've been on the national press, we have only a couple customers a day, everyone says this is crazy. i told one mentor ofmine about this business. he said, "brian, i hopethat's not the only idea
you're working on." my mom said, "if you need money, "you don't need to havestrangers stay in your home. "let me send you money." so people were very worried. and you start wondering about the decisions you'vemade in life to get here. so i could tell you, i didn'tfeel successful or smart, or talented at this moment.
i felt like the world was against me. i'd go to sleep, my heardpounding every night. i'd wake up like wide awake, like what am i gonna do, how am i gonna get through the day? we have no money. and a bunch of people recommended we go into y combinator. and we were kind of like,
"well, we've already launched, "we're way beyond that." they're like, "you're dying." and we're like, "okay, i guesswe're not beyond anything "if we're dying." and so we meet with paul graham at y combinator. and he thought the ideawas absolutely terrible. in fact he said, "peopleare actually doing this?"
and i said, "yeah." and the second question was,"what's wrong with them?" and i said, "oh shit!" so i thought this wasa really bad interview, but by the end of the interview, joe hands him a box of obama oh's. and paul graham thoughtthat we just bought this stupid box of cereal. and he's like, "no, this ishow we funded the company."
and paul graham said, "if you can convince people to pay $40 "for a $4 box of cereal, "maybe you can get strangers "to stay in other strangers homes." and he also liked us 'causehe said we were cockroaches. and he said, "it's aninvestment nuclear winter "and the only people thatwill survive are cockroaches "and you're a cockroach." (laughter)
and so i'm like, "thank you!" it was actually the nicest thing. for six months, that wasthe only compliment i got, was i was a cockroach. and i remember calling my mom like, "mom! i'm a cockroach. "i got in!" so that's how we got into y combinator and that kinda was a turning point for us.
- and so, but y combinator itself didn't make the numbers change. what was the thing that you did, or the couple of things that you did to change the inflection? - there were two -- is this still on?- yeah. - there were two things. the first thing was y combinator did was,
it basically created a structure for us to work on it fulltime, and live together. so in other words, we were all kind of working on it, but it was like everyone had other things going on in their life. and i think the enemy of a start-up is everyone else's life. it's true.
you have a life and you have vacations and you have conferences and you go away and you do other stuff and it's like, that's the enemy of start-up. you know, paul graham used to say, "start-ups don't die,they just fade away." and so, you know, we basically decided, for three months, nate would move fromboston to san francisco
and we'd wake up at 8:00. we'd go to bed at midnight,seven days a week, and we'd work from eight to midnight, every single day. and seven days a week, we'd get a full night'ssleep, but that was it. and we would, in that dedicationfor three to four months, created this real serious rhythm where we weren't doing other things.
we were totally focused. that was the first thing. the second thing was, paul graham. i think the second thing was paul graham gave us a series of advice that probably changedour business forever. probably the most importantsingle piece of advice i got, which is probably advice that is probably the most important advice i can give you,
or one of the most important advice, is he basically drew out this chart and he basically said, it's better to have 100people that love you, 100 customers that love you, than a million customersthat just sort of like you. if you have 100 people thatabsolutely love your product, they'll tell 100 people, andthen they'll tell 100 people, or even 10 people, andthis thing will grow.
we call it growing virally. in fact, almost all movements in history have grown this way as well. there's like deeply passionate followers and they grow it. and they're customer advocates. and the problem is, in silicon valley, the general wisdom is, i need to build some app,
this thing it needs to havethis viral coefficient. i need to get millionsof people to use it. and they gotta like it enough to share it. that's totally the wrongway to think about it, especially if you're in aservice business like ours. so paul graham said, "all you have to do is get100 people to like you. "don't worry about millions of people." that was totally freeing.
'cause until then i waslike, "how the hell am i "gonna get a million people to do this "if i can't even get mymom or my sister to do it?" but i can find 100 people. and so we literally decided, do things that don't scale. if all you need to do isget 100 people to love you, it turns out, 100 peoplethat love you is really hard, 'cause it's easy, 100 people to like you,
100 people to love youmeans you need to meet them. you need to understand their problem. and so we literally wouldfly, during y combinator, from mountain view, we commuted from mountainview to new york. we would go, joe and iwould go to new york, and we'd go door to door, 'cause new york was wheremost of our community was. and we would meet withevery one of our hosts.
and we'd live with them. we literally would live with them, we'd write their firstreviews for the places. and in fact, i would gothere and i would be like, "wow, the photos are terrible! "this is actually a really nice house." and the host was like,"well, i can't figure out "how to get photos onto my computer." this is before really theiphone and high quality camera.
this was like people had toplug a camera into their laptop. so we thought, "what ifyou just clicked a button "and a photographer nextday would magically show up "and photograph your home?" and we thought that would be amazing. and so i went home with joe and we borrowed a camera from one of our friends in brooklynwho was a photographer, and we knocked on thedoor (knocking sound).
and they're like, "hello?" yes, i'm here, the photographer. and they're like, "wow,this is a small company. "the founders also photographing my home." i used to also carry abank ledger in my backpack. and if you need to get paid, i'd just write you out the check and knock on your door hand you a check. so, that was also a reminderof how small we were.
but the point was that doingthings that don't scale. if you just think about building something that even that just one person loves, it's super easy to createsomething a single person loves. especially if it's a service. and then you go person by person. once you have 100 people, then you just focus onfiguring out how to scale that. and it's a totally differentintellectual problem
to scale something that 100 people love than figure out what that is. and that was a turning point for us. and so by april 2009, we had hundreds of people that loved us. people started booking. and it became clear therewas a real business here. and we, paul graham said, "you have to be ramenprofitable by demo day."
demo day is the end of y combinator when everyone presents to investors. well, he said, beginning of 2009, it wasn'tclear there'd be any investors. sequoia capital had putout this slide deck, rip good times. that was the worst possiblething for me to see at the time. i'm like, what do you mean good times? this last year has beenthe worst year of my life.
what do you mean the good times are over? what's the next yeargonna be like? (laughter) 'cause it wasn't good the year before. i'm like, "oh my god. idon't know what this means." and what it meant was, paul graham said there may be no, he actually told us this. he said there may be noinvestors at demo day. can you imagine that?
at y combinator, there may bezero investors at demo day. and so if you want to defer a batch because there may be no investors, you can. and we decided, well we can't defer, we're gonna die. "well there might not be investors "so if you're profitable younever need to get funding." and so we decided,
let's be ramen profitable. ramen profitable means you're profitable if you just live on ramen. and i'm like, "well, that'smore than i'm living on now. "so that's totally fine." and so by april, we were ramen profitable. and sequoia capital invested $600,000. and at the time, thatwas a pretty big deal to get sequoia capital to invest.
they hadn't invested in many, they invested in linkedin, they invested in google, paypal sort of like, oh my god. it was a huge legitimization event for us. i think at the point,the rest was kind of, i don't wanna say history 'cause we're gonna talkabout what happened next, but that was the moment, at least,
the product market fit happened. and then it went from building a product to kind of building a company. - and how did you start getting to, like, you had this initialcommunity in new york. you actually got to knowyour customers very well, so you understood photography was key for unlocking the marketplace. you understood getting thehost connected in really well
was unlock the marketplace. how did you start thenmoving to many cities? - so the really unexpectedly great thing about our business was, it was, this word networkeffect gets kind of bastardized and it's unclear if itmeans anything any more 'cause everyone saysthey're in network effect, but we truly were a network. and i'll tell you how it happened.
so we launched in new york. or, we didn't even launch. i mean we launched anywhere that you could accessthe internet basically and there was google maps. but, new york was thebig city we launched in. the thing is that we were atravel product in new york, which meant unlike other companies where the supply and demand,
like uber, the drivers andriders were in new york. on airbnb, the hosts were in new york but the travelers camefrom all over the world. so people from all over the world would hear about anddiscover homes in new york. they would travel to new york, and they'd also travel to san francisco, and then they'd go back to their city and they'd spread the idea.
the other thing is they wouldgo from a guest to a host. and so the network naturally grew. but we also targeted events, so... we targeted the democraticnational convention. we built d.c. throughthe inauguration 2009. we focused on musicfestivals and concerts. the world cup, the olympics, these are early, not the most recent one, but the one before.
so events and pr were probably the main ways that we bootstrapped. and then we built this one-clickpost-to-craig's-list tool, that craig's list allowed us to do until they shut it offa couple years into it. but, we allowed hosts to basically, we built a tool where they could, with the single click of a button, click and distributetheir post to craig's list
to get more distribution. and so the listings would getre-listed onto craig's list and they would feed back. we started a little bitof google advertising. but the main way it grew was through word of mouth and pr. and pr, we used to promote the events. we didn't have any partnerships. we tried to partner with event companies.
we tried to partner with, partnerships in your early stage company i found never work, 'cause there's so much red tape and paper that by the time you ever get done, you're dead. and so, but pr is super. if you've got an idea that's noteworthy, people will talk about it.
and almost the more absurd the idea, in some ways, the better,because it's worth writing about. like, it was absurd people were doing this so they couldn't stop writing about it. and so that was actually a good thing. being kind of a provocative idea was good to get the word out. "if we just get enough people to use it, "they'll tell everyone else about it."
and so this idea primarilygrew through word of mouth. and then we would go to cities and then we would educate the host. we would do these meet-ups. so we'd go to a city, and we called it turning on a market. we would do a meet-up. we would meet the 10 or 20hosts, we'd educate them. but the other thing is that,
in san francisco or here at stanford, it's not novel for you to meet somebody who's started a website. that's like not a big deal and you just had 15people come talk to you. you go to boston, you go to austin, texas, you go to san diego, most people don't gothrough their day-to-day
meeting a person who builta product they've used. it's very novel. and if they liked the product, they wanna go meet that person. and so you're in town, so we literally went city by city. we went to paris, we went to london. we'd meet the host, we'd educate them,
and then one thing we'd didn't realize is, they would get so excited they met us and they thought we werereasonably nice people, that they would telltheir friends about it. and their friends would start doing it. and they'd get more engaged. we noticed, after you meet us. you would get more engaged. and then we'd also photograph your home,
give you tips, and so these markets started turning on. and we kept getting press. we kept having some funnyobama oh's type stunt to get people to keep talking about us, and we just religiouslyfocused on making sure customers really loved us. and we felt like if you loved us, you would tell more of your friends
and eventually it would grow. - i think that's a great warm-up story. - yeah.- and i'll get into scaling. oh my god, i'm just warming up. holy shit! - yeah, exactly. (laughter) - what's next? - it's the canonical ideal one. so let's first startwith a couple of things that you guys do very uniquely
from all the other consumer internet. for example, because youand joe are designers, you have an attention to design that's much more intense. - even my socks, if you notice. - yes, yes exactly. but you have this conceptof seven-star design. - yep, yep. so the concept goes as follows.
on the internet, especiallymost marketplace businesses, the paradigm is five stars, right? so a youtube video, airbnbor uber or whatever, it's five stars. and the problem with fivestars is, five stars -- the only reason you wouldleave less than five stars is because it was horrible. if you rate an uber ride four stars, your life might have been in danger.
in other words, the bar to do five stars is really low. on airbnb, the bar is, people actually do leavefour and three star reviews. but our goal wasn't to get to a five star. 'cause a five star mighthave been nice enough for other people to book it, but we wanted to build a product where you loved it so much youwould tell everyone about it.
and it would have a meaningfulimpact on your life. and we believe that travel has the impact to transform your life. i've taken trips and i've met people where it has an impact on your life. and we wanted to have that. and so we thought, whatif you booked an airbnb and we sold you a product andyou didn't leave five stars, but you emailed the companyasking for a sixth star.
'cause the product was so good, you had to almost go above and beyond. and so we imagined, when we design products, we imagine this is what customers expect. they expect to have afive-star experience. and then we basically askthe intellectual question. let's take airport pick up, for example. what's a five star-check-inexperience on airbnb?
the five-star check-in experience is, they give you the address,you get to the house, you knock on the door and they're there. and they open the door andthey let you in the house. and that's five-star. and anything worse thanthat, you start to leave -- four stars is you call them,they're five minutes away, and you'll probably leave a four-star. one star is obviouslythey never showed up.
so the bar's kind of low. you knock on the doorand they open the door. that's a really low bar. so we asked, "well, what's a six-star?" well, a six-star is, they probably pick you up at the airport. so you don't knock on their door, they actually pick you up at the airport. so what's a seven-star review?
you can actually play,this is kind of fun. well, seven stars is, they don'tpick you up at the airport, they send a limousine. and you open the limousine door, and they know that you like pringles. sorry, that was a weird example, but this is like improvso we're rolling with it. so there's pringles thereand there's coconut water and they know you are into surfing
and there's some surfing magazine, even though you're in san francisco, you're not going to surf, that's fine. so that's a seven-star. so what's an eight-star pickup? well, an eight-star check-in is, you get to the airport and they're like, "we're coming." and you're like, "where are you?"
and all of a sudden, yousee a giant elephant. an elephant is walking bythe gate, the terminal. and there's a parade in your honor. you get on top of the elephantand you are paraded away. and you said, "what'sa nine-star check-in?" if that's an eight-star check-in, how do we get to nine stars? a nine-star check-in is, you get off the planeand you don't even --
the moment you step off the plane, there are 5,000 screaming13 year old women and boys. and they're holding signs. i call it the beatles check-in. it's the beatles in1964 coming to america. and they're just cheeringfor you, screaming for you. and you basically they follow you and they do a press conference in the front yard of your airbnb.
and so then, what's a 10-star check-in? well, i can go to 30 but i won't. 'cause it'd be a long day. the 10-star is, you get to the airport, and there's a little cardand it's got your name on it, and you're like, "great! there's my ride." but you realize the persondressed in the limo suit is elon musk and hejust takes you to space.
i've exaggerated to make a point. usually we don't go all the way to 10. the whole point is that if you, if what you need to do is justfind 100 people to love you, then it's very easy to take for granted that the five-star is what people expect, but to build something that people love, you almost need to do somethingmore than they expect. and so, every moment is an opportunity
to do something slightlymore than people expect. and we play this out, you go all the way to 10. now, we're not gonna do all that, but maybe, suddenly sixstars doesn't seem so bad. now we should have a service, airport pickup or something like that. so we do this almost everyframe of the experience. and this also can applyto almost anything.
office assign or how you hire people. you know, we storyboard, end-to-end, the interviewing experience. - i think one other thing in your seven-star design principle that you haven't yet captured, which is really important, is,it's not just the web page. it's not the mobile app.- yes. yeah, i think...
one time i told somebodyabout our product. in fact, there's this person who works for the executive at disney... i'm like, "yeah, we have a product team." and he thought, "a product..." he said, "product, do youmean, like, the house?" and at airbnb, we'vehistorically called the product the website and theapplications, the technology. and i'm like, "oh, that's kind of weird."
see at facebook, mark zuckerberg calls theproduct the website or the app. but technically speaking, the product is whateverthe customer's buying. the customers are not buying our website, and they're not buying our application. that's just a storefront of communication. what they're buying is a house. and frankly, what they'rebuying more than a house
is the host. experience of hospitality. this idea of belonging. and so, we realized very early on that we are an online-to-offline business. in fact, in china they're called o to o, online-to-offline. but we kind of started, i think the sharing economy...
we're kind of like a nextwave of the internet. so there was a wave of theinternet, things online. amazon, books online. there was another wave of the internet, connecting together. linkedin, facebook. but then there's anotherwave of the internet, the internet going backinto the real world. and airbnb was one of those examples.
and so, we startedstoryboarding the experience and realizing it's really about every moment of the experience. and we have to be responsible, not just for the onlinepart of the product, but the offline part of the product. and so that's what we did. - so, as a bridge to getting to how you also design culture,
i think it's worth sharing with people how you also apply design to the office. - yes. - as part of embodying culture. i feel like there's all these things... lemme back up and say, before i say that, let me say this, i consider myself a designer by trade but i think a designer...
you know, steve jobs used to say, "design isn't how something looks, "it's how something works." and i think when you realize design's how something works, you imagine almost everythingneeds thought and design. that you don't just designa website or an application, you design everything,you design a company. and you design your organization,
you design your buildings, everything. and so, we started thinking, once you realizeeverything can be designed, then you don't have to pulleverything out of a box and plug it in. in other words, your company doesn't need to looklike every other company. everything can be reinvented. now, not everything should be reinvented.
you shouldn't reinvent management, and hr systems, but there are some basic things that might be core thatyou should reinvent. and for us, we decidedthe space we work in should be reinvented. first of all, our corecompetency was showing cool space around the world. we better have a cool space.
and i also realized early on that a really cool, interesting space would be a hugedifferentiator to hire people and that you would spendmore time in your office than you will in your home. and so it was deeply important that people were comfortable and happy. and so that was the kind of hypothesis and i think it's pretty much a no-brainer,
but i think that it's a moment that people completely take for granted. it's totally a afterthought. and, i said that's great that it's an afterthoughtfor everyone else. it's going to be acompetetive advantage for us. and one of the things we decided was, how can we reinvent the office? there were like 100 ideas,
but i'll just give you one of 'em. one of our offices that we had, you walk in the lobbyand there were photos of our homes around the world. and so you go to this lobby, and i remember people were just walking in our lobby and lookin' atall of these homes, like, "oh, these are awesome." and i thought, i couldn't figure it out,
but i thought there'sgotta be a better way than just showing photos of our homes. and i couldn't figure it out. one day, i'm walking home, i'm walking from my house to -- i'm walking down the street. and i pass a furniture store and it's late at night and the furniture store was lit up.
they light it up at night and it's like, there's afloor to ceiling window. and i just look in and it's a showroom. they've basically recreated these rooms. and it was hilarious. i thought it'd be reallyfunny just to have a meeting in the showroom. and in fact, the next day itook somebody to a meeting in the showroom and we werehanging out in the dining room
of a furniture store, but you feel like you're in a living room. it was actually kind of fun. it was kind of absurd. you're like having a meeting in ikea, but it was actually kind of fun. and suddenly we realize, what if all of our meeting rooms were actually modeled piece by piece
after apartments on our website. and we ended up doing that. and so, i remember onetime we emailed somebody. we said, "hey, do you mindif we recreate your home "in our office?" and they were like, "what?" and i'm like, "yeah, alli need is an inventory "of everything in your home." and so some people did it,
and we literally recreated the rooms. so you go there and our meeting rooms are literally homes you walk into. like showrooms of our homes. it's a subtle little reinvention. it doesn't cost a lot of money 'cause people's homes, the furniture they putin is actually cheaper than most office furniture.
it's really creative and wehave tens of thousands of people a year who fly or come to ouroffice to tour our office now. and our office has become ahuge competitive advantage in hiring. and people like to stay over. but that's just a tiny examplewhere almost everything is a creative opportunity. - and that was actually one of the ones that i was like, "oh mygod, this is a great idea!"
because part of what you're tryin' to do, and when you create a culture is you're tryin' to create a norm of what are we all focused on, what are we doing.- yes. - and tactile visual--- yes. - here it is, is awesome. - it's so critical thatthere's no dissonance between what's inside the building
and what's outside the building. and i remember, i'd beento some companies before. like one time i wentto this travel company, this travel magazine. and i imagined their officebeing this awesome place and i don't know what i imagined, but i got there, it was gray, it wasdrop ceilings, cubicles and you could have putany logo on the front
and it could have beenliterally any company. and i thought, peopleneed to be in the mindset of your product. and so you have to put yourproduct in the building. people need to be immersed in the world 'cause they're working in that world. and so when they work for you, that's kind of like they're working in the center of the universe.
the center of theuniverse of your business needs to be the most potent. and the problem is, with most companies,it's the least potent. it's like just gray withdrop ceilings and cubicles. and so i thought that was ahuge opportunity to reinvent. and we've now had a lotof ceo's and other people come to our office to get inspiration, even as of last night i wasshowing somebody around.
- well, it certainly hadthat effect for me too. actually before we getto design and culture, that actually brings up one other point that i think is useful. you spent, i think it was nearly a year. - living in airbnb's.- yes. - why don't you say a little bit about why you did that andwhat you learned from it. - i did it out of kind of necessity.
so here's the thing. when we started airbnb, we started in our three bedroom apartment. and we started working on the apartment. and unlike most companies, most companies when they start hiring, they find an office space. and we decided we were gonna work out of our apartment indefinitely.
in fact, originally we wereinspired by craig's list who works in a house. we thought, maybe we couldput 100 people in a house. we didn't do that, thankfully. but we started working andwe hired people so quickly, we couldn't find a office in time. at one point, we had ithink 15 or 17 people working out of a three bedroom apartment. we literally had meetings in the bathroom
and in the stairwell. it was kind of odd. by the way, never interviewsomeone in the bathroom. it's apparently a huge violation. but at some point, we had no space so we turned our bedroomsinto meeting rooms. and i decided i'm justgoing to give my bedroom over to the company. you guys can turn it into a meeting room
and i'll find a place to stay. and my first instinctwas, well where do i go? i've never lived without roommates. so i'll go to roomates.com,i'll go to craig's list. and then, i don't know,for some reason i thought, "wait a second. "why the hell will i go on craig's list? "we have thousands of homeshere in san francisco. "maybe i can rent one for the month.
"or a couple months." and then i thought, "wait a second. "why don't i just -- "actually it'd be kind offun if i stayed in them "for a few nights each andactually could test 'em. "and i could travelwithout leaving my city." and so i ended up doing this. i thought for a few weeks,turned into a few months, turned into almost a year, ithink it was 10 or 11 months
where i would stay in a different home every three to five nights. people were like, "where are you from?" i'm like, "three blocks away." and they're like wait a second,what's going on right now? but it was this hugemessage of the company and the message of the company was, this is not a job, thisis not even a career, this is a calling, this is a passion.
and i think a strong cultureis when people believe and feel in what you're doing. and they're not, there's this old parable about two men. they're laying bricks, a guy comes up to one man he goes, "what are you building?" he goes, "i'm building a wall." he asks the other person,"what are you building?"
he goes, "i'm building a cathedral." i think simon sinek wrote about it. but it's the idea that you're not... you're not building financial systems, you're not building a website, you're not designing differentscreens and mock ups. you're building this mission. you're creating this kind of world. and that's only possible
if you're constantly using the product. and even if you're a travel company, you can be living andbreathing the product. and i always felt like every one of us has to be a product person. you can't be a business person, you're a product personfirst and foremost. and product needs to rule, and product is the thing you're selling.
so we need to be deeplypassionate, all of us, about everything that we'redoing with the product. and it really told people in the company, you should use theproduct when you travel. you should use theproduct when you're home. you should be hosting, andyou should become an expert in every part of your product. and the number of people i see that work at some big companies
where they are so disconnectedfrom the end customer, those are the companiesthat get disrupted. - yep. so the last piece on the, kinda, well, there's a lot of thingsthat are unique about airbnb, but the last thing from thepoint of view of the class before we get to the scalingpart of it, designing culture. - so part of the reason why we started with the role modeling with you as ceo,
what you did to the office, those are two of the elements, but what are the other things? 'cause the design of theculture was one of the things that i see you put more energy into than any other young entrepreneur. - yeah, i... culture, first of all, culture i define as a shared way of doing things.
and so that's it. and i don't think there's necessarily good and bad cultures. you could argue there arecultures that are bad. that's usually subjective. i think there's weakcultures and strong cultures. and what i consider a bad cultures, others might consider good cultures. just, that's the way they do things.
and i wanted to have a strong culture. a culture where everyone was on a mission. it was shared and peoplewere deeply passionate and there was a set way thatcertain things were done. and there were like a seriesof beliefs that we all had, and there were a few governing ideas. and so i decided we wantedto have a strong culture. we ended up touring zappos. alfred lin's on our board.
he ran zappos with tony hsieh. and we did a lot of research. and one thing i learned is, a strong culture is aplace where the founders, it's a founder-like culture and it's where the founders really impose this kind of strong kindof way of doing things that people buy into and they're deeplypassionate about being there.
and again it's not a job. weak cultures, it's lame tohang out with your co-workers. strong cultures, it's totally natural. and so the first thing i realized that the most important cultural event is every time you hire somebody. when you're starting a company, the most importantcultural decisions you make are the people you surround yourself with.
the second most important is deciding when people aren't fits, removing them. there's a hundred other cultures, but i think hiring's the mostimportant thing to culture 'cause you're bringing people in and so the culture becomesthe people around you. and so the main thing is the hiring. i decided to interview every single person which is not crazy whenyou're five employees,
but i think i interviewed thefirst few hundred employees. i don't know what the number, but i remember people were begging me to stop interviewing employees. and about a year after thatpoint they started begging, i actually did stopinterviewing every employee. but i literally wouldinterview every employee. and today, when you interview at airbnb, you have to go through functionalor technical interviews.
so if you're an engineer, you go through engineering interviews or functional interviews, but you also have to gothrough culture interviews. and everyone goes through two. we have two people, 'causesometimes, you know, you make the wrong decision. so we have two people. and the people are basicallytesting for six core values.
i'll give you one example. one of our core values is to be a host. so are they passionate about the notion of giving and hospitality. and you can kind of tell bytheir life and their background if they are or not passionate about it. it's deeply hard to notbe a host in your dna and wanna work at airbnband be successful. it kind of is a weird thing.
so you get to learn these things. so these are just some of the things. we created a core values council. it almost sounds likean absurd thing to say. at most companies, i don't know any one that really does that kind of stuff. core values council, it's about 12 people that are experts in thevalues and the culture. and they're kind of this adviser group
to everyone in the company. so people aren't sure if this is the way to do something or not. i don't know if thisis something that feels on brand or not, you cankind of book office hours with these people and theycan give you some feedback. so this is kind of someof the stuff we do. we try not to be overlydogmatic about culture. i think it can go too far
where there's a set way of doing things you can never reinvent. so the things have to betimeless and more fundamental. not like, this is howwe make presentations. that's not culture. culture, like, beliefsthat should never change, under any technological conditions. - and how do you, i mean, obviously you'vegot a huge drive to that
by personally getting it, and then evolving that into a practice that includes a cultural interview. what are the kinds of things that as you begin to hit the scale, 'cause that's the precisething that one of the things-- - yeah, you can no longer do it. so you have to basically be relentlessly doing cultural things every week.
and so, i do as many culturalthings as i used to do, but now they're nolonger person-to-person. the main leverage pointsi have now with culture is having people do things on my behalf. you woulld call it leverage. they're doing it for you. so in the early days, idid all the interviews. then i trained people, i hand picked people and i saidyou should do the interviews
and here's what you interview for. so i spent days with themshowing them how to interview. so then they started interviewing. then we had all these people, so i had to create an inner circle that trained those people. i used to meet every single employee and give them a personal orientation. then i started doing weekly orientations
to groups of people. and now we've recorded it all 'cause we hire people all over the world and so we've institutionalizedthis whole on-boarding week and we carry all the videos and stories, i do the sunday night email series, i think you've seen some of the emails. every sunday night, i write an email to the company
that's not really a tactical email, but a more, kind of, above the trees, kind of, fairly thought provoking, kind of cultural email. because i find that,if, on your first day, you say something to somebody,they kind of remember, but then a hundred people saida hundred things after that. so you have to continue to repeat things. so i think culture is about repetition.
it's about repeating overand over and over again the things that reallymatter at a company. and then, it's about tryingto design as many things, like the space, when you check in, there's a key card, and when you check your key card, above it says, "champion the mission" it's one of the values which is like, and it reminds you every day to do that.
so there's a lot ofsubtle things that we do. and i think it's like that touch point. what is every moment that can be designed to reinforce how you wantpeople to value things. and it all can be designed. i think culture, some people i've heard, when i wrote this blog post, it was based on what peter thiel said, called, "don't fuck up the culture".
'cause i asked peterthiel's advice, and he said, "don't fuck up the culture." and i'm like, "oh shit.how's that happen?" but he way you don't fuck up a culture is by focusing on it and designing it. i've heard people giving it counterpoint. there's devils advocate which is to say, cultures are organic. they shouldn't be designed,and when they're designed,
they're fake and sloppy. i actually don't believe that, because most people who'vecreated cultures organically wake up with a culturethey don't usually love. now that doesn't mean youcontrol everything they do. the whole point of culture isyou only control a few things. like, everyone here's a host. and i'm not gonna tell you how to act, but i am gonna tell you,
everyone here has to be hospitable. and that i'm gonna impose on everyone. if you don't like it, go somewhere else. so you pick just a few things. you can't pick everything 'cause then you're like big brother. culture is the norms that define what is the team that we're playing on and what is the winning condition.
- and how do we holdeach other accountable, not through a hierarchy, but through a community. - yes, that's right.- each other. - and they work really wellthrough peer accountability. - yeah. that's why it's key. and as i was mentioning before the class, reed hastings also went into this. - a couple weeks ago.
so let's go to the challenges of scale. so now... a substantial time in the wilderness. - you know, vetting obama oh's- yes. - and cereal and moving on to the breakfast part of it. and then financing, beginning to get customers to love you, beginning to get a networkeffect by which guests would come
and then go be hosts andthen be spreading the world. and so now you've begun tohit your product market fit and you've begun to scale it. what were the things thatstarted changing for you that you had to now learn,now that you were scaling? - first one was--- that's a long list. first one was hiring. i think hiring and then management of the people that you hired,
that's still -- starting in mid 2008 until today, that probably became and it sustained to be the most important thing. and when you're just starting, other than picking the right co-founders, which is also kind of likethe most important thing, it ceases to be important. so, before product market fitother than your co-founders,
to find people around youweren't the most important because you and your co-founders presumably could do most of the work. and it's just really on you tofigure out almost everything. and so i found, before product market fit, i did everything. and i literally did everything but code. and then post-product market fit, you do very little except manage,
create a vision and hire people. and so suddenly you shift and you go from building a product to building a companythat builds a product. well, the company's mostly the people. and so i had to figure outhow to find great people, attract them, recruit them, and then, craziest thing isonce you hire these people, it's like what do i do now?
i gotta manage them. how do you manage somebody? what does that even mean? i had never been managed ormanaged somebody in my life. i mean, i worked at a company before, but in hindsight, i don't thinki was managed very closely. it was a small firm andi kinda did my thing. and i managed, i was like a camp counselorlike at a hockey camp.
that wasn't really management. they were like 12 year oldsand i'd tell them how to skate, but that wasn't really management. so i'm like, "oh god. "i don't really know what management is." and you're managing people older than you and that's also kind of weird. like, "oh my god." and so at first it's areally odd experience.
so you kinda learn, partiallythrough trial and error, by making tons of mistakes. like, a classic management mistake, people complain, so youimmediately appease them, so you basically rewardpeople that complain. and the people who don'tcomplain get disenfranchised, but they're not extroverted sothey just leave the company. there's just these littlethings that are kind of, in hindsight, intuitive, butthey seem counter-intuitive.
and so i had to learn, i think learning to hire and manage was one really big thing. i think learning how to move towards, from an intuition to data informed. 'cause i think when you'restarting and building a product, i think data is not themost important thing. i know people do a lot of a/b tests to try to figure out a product.
i really feel likepre-product market fit data is not the most important thing. it wasn't for us. we were really going off ofperson-to-person interactions. and then you have to work on moving towards data information. so, obviously a/b testing and cohorting and all these things thatwere completely foreign to me. saving data, kind of building people,
thinking more long term. when you're a start-upbefore product market fit, thinking long term seems preposterous, 'cause there may not be a long term. it's kind of like, if you're dying, you're not thinking about what you wanna do when you grow up. you're gonna think about how do i not die. and how do i plug this wound.
so you kinda move out of this terminal -- you start thinking more terminal. i think those are probablysome of the big things, but there were other things. like actually having a plan, a road map, a strategy. you don't have plans in a start-up. you don't have strategies, you don't have road maps.
road map's the next two weeks, and suddenly, i got three engineers, they gotta know what to dofor the next three months. and so you start creating road maps. you start having wish list. how am i gonna get the word out? how am i gonna span, so things like that. - well the overall thesison blitzscaling, as you know 'cause you're one of the people
living it and doing it, is... what got you here is notwhat will get you there. and you're changing, like, you used to be entirelyvery short term focused where the results this week, today, this month matter, versus, what's my year plan? what am i actually, infact, trying to make happen one, two years from today, which changes.
the question of, "am i doing it myself "or am i essentially first hiring people, "then hiring managers,then hiring executives, "and keeping a culture in that." the game changes as you're going. and so what got you heredoes not get you there. - that's one of the weird things. it's kind of like there's this perception that when you start acompany, you grow a company.
see, everyone when theyask me about airbnb, they always ask meabout the founding days. it's as if you havethis idea, it takes off, and you just gotta finda way to manage it. and the truth is that so glosses over all the other stages. you have five stages. stages two, three, fourand five are as complicated or more complicated as stage one.
i mean, i think stage one is actually fairly straight forward. solve your own problem, do something you don't scale, find 100 people that love it, and have some really greatco-founders that you trust, make sure you are full stack, designers and engineers inyour founding team, ideally. they're just basic principles.
i don't think it's that complicated and even if it is, it'swell written about. but the thing after that, there's not a lot of books about and everyone gives you the wrong advice. you gotta figure it out andyou're kinda on your own. and the risk is, if i ask a ceo how to manage and they work at a huge company,
they're gonna tell me the wrong thing. it's like you talk about you're skating, but it's not ice it's water. the ice skates don't work yet. we invited a former ceo over, and he gave me this pieceof advice i'll never forget. he said, "every sixmonths you keep your job "it's a promotion." i almost think, inhindsight, it's better to say
every six months is atotally different job. so it's not like thismetaphor of you're an athlete and you're a tennis playerand you play small tournaments and you work your way up. you start playing tennis,then you're like a bowler, then you're like a football player and then you're playing hockey. the job changes so much, you're almost playing adifferent sport every job.
and this is why it's fairly, i don't know if it's rare, but it's hard to start a company, to be the right person to start a company and be the right person to manage it when it's a thousand people. because it means you have tobe different types of people. and it's totally different. at a large company,
you have to be extremelystrong at public -- usually you have to be fairly strong at public speaking or writing 'cause that becomes yourprimary management tool. how do i speak to the company? i either write 'em an email, or i say something in a video or in front of a bunch of people. in the early stage,
you're around a kitchentable and it's four people. so your interactions are different. there's just all thesesubtle things that like, the skill sets start changing. the most important thing, ithink, is being adaptable. 'cause no one's an expert at everything. but you gotta be very adaptable. and i've seen peoplewho've been able to scale and people who haven't been able to scale.
and i think there's two things that i've identifiedat being able to scale. one is just generalintelligence and talent. if you were over your head when you start, it's hard to ever not be over your head. but the other thing is people who are kind of curious and adaptable. i've found that, like, pablo picasso had a saying,
he said, "it took me four years "to learn to paint like raphael, "but it took me a lifetime tolearn to paint like a child." we have to kind of be kidsat heart in startups, i find. in the sense that you're curious, you're open minded, you're welcoming, you're adventurous andyou're not a know-it-all. know-it-all's will neverscale in start-ups. so if somebody's a know it all,
they know everything sothey'll never know more. so you're not going to scale. that's kind of the way i think about it. so, these are the thingsand i've had to be that. and i've sought out your advice, and if you're not a know-it-all, you are shameless about getting feedback. and so i've had to surround myself with people much smarter than me
and much more experience than me, including reed and many other people who have gone through whati haven't gone through yet. but you're right, it's not even like you'reslaying a different dragon, it's a different sport. - the term that i use forit is infinite learners, and you're actually one of thepeople i use as an example. 'cause literally the very first time
you and i did a press event, it was the first time thati had done a press event with an entrepreneur in my portfolio where the very first question you asked me when we got off the stage was "what should i have done better?' - it was literally, we walked out and it was like, "whatshould i have done better?" i'm like, you're the first timei've done this with somebody
and it's the first time that'sbeen the very first question. - anyway, infinite learneri think is actually, is key for managing thescale and the blitzscale. international. one of the things as you begin to scale, it changes competition. - oh yeah. - right, so you gotwimdu in the early days. how did that kind of change your notion
of how you were playingwhen you'd begun to see people being able to go from, "oh, that's crazy" to"oh, that's essential "and we're all now trying to compete." - yeah, there's like bunchof stages of start up. the first stage is, i think survival. meaning, you're not meant to survive so you start this company,you have this idea, and everyone's telling you you're crazy.
you can't get any money, you can't raise anymoney, you're co-founders, you don't even know if everyone's going to keep working on it. and so i call that survival. and not dying is workingon it the next day. no one actually killsyou, you just fade away, you stop working on it. the second stage isprobably like firefighting.
and so then you are firefighting, "oh my god, we're growing. "i need to hire these people,i don't know what to do." and then, once you getthrough the survival and some of the initial firefighting, you've gained the luxury ofhaving all these other people now decide to copy youand try to destroy you. so now it's existential threats. true existential threats.
and we had two. one was government relations and the other was competitors. and i'll talk about competitors. so we got the point where westarted getting successful only to have all thesepeople basically copy us. one day, it was early 2011, so about two years in from 2009 of it working.
so 2009, 2010, it kinda was working. 2011, so we had two year kinda honeymoon. i don't know if youwanna call it honeymoon, and then suddenly, by the way, in 2010 somebody, this guy howard hartenbaum, he's an investor at august capital. he told me, he says, "whatever you do, "all you gotta make sureis these two brothers
"don't copy your website." and i said, "what two brothers?" and he goes, "they'recalled the samwer brothers "and they're notorious "and usually when they copy your website, "they scale it and they kill you." and he's like, but he'slike, "don't worry though, "'cause you're fine.' 'cause they haven't copied your website
"and if they haven't by now, they won't." i'm like, "thank god, we're free." all of a sudden, we notice people, we noticed a lot off suspicious activity and people spamming our users and we're like, "something's up." we didn't know what was up. turns out, we find out the samwer brothers have their eye on airbnb.
now, i'll tell you how scary this was. in 2011, the hottest startup in the world was groupon. they went from zero dollars to, i think, a billion dollars in revenue in like a year, or two. at the time, that wascompletely unheard of. actually, it's still kind of unheard of. and groupon grew that fast, not because of us business,
but because the european business, which was called citydeal. that was actually the oliver samwer clone that groupon had to buy. so basically, thesetwo brothers, not only, i was told, would killanyone that they cloned, they're like the attack of the clones, but they also had built what was, at least being positioned at the time,
the fastest growing, most successful start up of all time. that was how groupon was positioned. that was not somebody that we were interestedin fighting, right. suddenly this giant dragon appears and you're like this isnot possible to beat him. and now at this point, we had raised 7 million dollars,
in fact, from you. (laughter)- yep. this is where i enter in the picture. - yeah, so, reed hadgiven us 7 million dollars and then suddenly, in 2010 i think, in april 2010. by january or february or march, some point 2011, they raised 90 million dollars.
and we had 40 employees, and it took us two and a half years to find these 40 people. and in 30 days, they hired 400 people. and they opened 20 offices and i had no idea how youeven opened a second office. we have one office, howdo i get a second office? do i fly there? do i get an apartment?
and they had 90 million dollars and i was like this is horrible. and they basically said, "we're gonna do in europe "what you did in the united states." now the problem with that is, most companies, if they lose europe, they're just a smaller company. in airbnb, if you lose europe,
there is no airbnb. a travel website whereyou can't travel to europe is like a phone without email or a phone without signal. there's no reason for it to exist. so this became a bet-the-company fight. and we didn't know what to do. we had a proposition to buy the company. it would have been very expensive,
but more importantly, it would have been ahuge cost, culturally. and i didn't know what to do. i remember, i called up mark zuckerberg because they cloned facebook, this (speaking french) so i called up andrew mason. andrew mason told me, "yeah, they're probably gonna kill you."
he had told me a story that oliver samwer was so good at copying companies that it was too easy for him. he needed to turn it into a challenge. so he decided to hiredevelopers from north korea. just 'cause, i don't know, and andrew described it as, 'cause he just wanted tomake it more challenging, the copy companies,'cause it was too easy.
i don't really believe that story, but... and there was this whole mythology. mark zuckerberg told me,"don't let them sell, "whoever has the best product wins." and he ended up being right. paul graham gave me evenbetter advice though. he said, "you're missionaries,they're mercenaries "and often times, missionaries often win." so he said, "you shouldbasically just pretend
"like they had this baby, "but they don't wanna raise the baby." and so i thought, well we're founders. we wanna grow this company. so i'm like a parent andi want this child to grow into this wonderful company. and so i said... well, i didn't say this to oliver samwer, but my view was, my biggest punishment,
my biggest revenge on you is, i'm gonna make you runthis company long term. so you had the baby, now you gotta raise the child. and you're stuck with it for 18 years. 'cause i knew he wantedto sell the company, i'm like, "no, no. you'rerunning this company." and i knew he maybe could movefaster than me for a year, but he wasn't gonna keep doing it.
and so that was our strategy. and we built company long term. and the ultimate way we won is, we had a better community. he couldn't understand community. and i think we had a better product. and it was a do-or-die time. and we ended up flying to europe, we hired bunch of country managers,
we flew them all to san francisco and we basically trainedthem for a month or two. we said now go to your countries, hire your team, here's how you open a market, here's how you open cities and we opened, i thinklike eight or 10 offices in like three months. it was actually totally insane.
we hired hundreds of people and the whole speed of thecompany picked up at that point. and a couple years later, obviously, it was game over. - yeah, it was one ofthe principal triggers for airbnb going the blitzscale in the organization. - yeah, 'cause we were not -- i think the first moment was y combinator where we had to hustle up.
if we weren't successfulby the end of y combinator, we were probably gonna stop, so we hustled. and then we started moving, but we aren't moving as fast. then 2011 and boom! samwer, i mean the gift hegave us was a scale fast. and he, he took a companythat was kind of successful and he kind of compressed our time
to becoming aninternational network effect within a year. and by the end of 2011, it was clear it wasgonna grow really fast. - so two last questions before we go to a few questions from the audience. the first one is, the other one that triggered, obviously, was government regulatory.
and you and i both speak of this a lot. so you can find it in detail on youtube and google and news things. 'cause roughly speaking, this is the way the world should be. people should have thiskind of social belonging. people should be able to, you know, they can already rentthe room as students, they should be able to rent a bed.
people should be ableto connect with them. and obviously, we should makesure that this social space, the neighborhood, that'sall done the right way. but give a little bit of character, as we win to scale, here's how a unique challenge hits us. - yeah, so the problemwith all these challenges is they always hit you, and it's like, you're walking down the street and someone
just punches you in the side of your face, and you never saw 'em coming. and that's kind of what it felt like with everyone of these challenges. so samwer like hit usin the side of the face and the same thing happenedwith government relations. we had a number of big problems. the first problem i remember having was was june 2010,
when we got word that new york city was gonna pass a law. they hadn't heard about airbnb, but they were tryin' togo after this landlord that wasn't even on airbnb that was converting apartments into hotels without getting licenses. and we thought, "uh oh, this is a problem "cause this might affect our users."
of course it did. they said, "oh, the citywon't enforce against you. "it's just an enforcement based policy, "don't worry about it." and we're like, "ok, wewon't worry about it." so then, a couple years later, we get an email or a call, actually a physical letter from new york state attorney general
saying, well actually there is this law and you are violating it. or your users are violating it. and so we want the data of your users to enforce against thousands of people 'cause we don't knowif they're paying taxes and more importantly, we think they're breakingshort term rental laws. and so suddenly we'reconfronted with these huge,
potentially omnious challenges. and attorney generalsare very scary people. they actually have quite a jurisdiction and they have reputationsfor putting people in jail, especially new yorkstate attorney generals. his predecessor was elliott spitzer. and he was quite scaryas attorney general. so, you're just kinda, and suddenly, i remember us having conversations
like how do you know, do you fight an attorney general or not? and how do you do that? and i could tell you the detailsof how that fight happened, but i think it's more theprinciples of the matter. i mean the details were, he wanted specific personal information on tens of thousands of users, many of whom weren't violating any rules.
we thought, not on my state is one thing, but we're not just handing over so you can just discover rules people might be breaking. that's a fishing expedition. and we viewed that if wechallenged them in court, we'd win. we challenged them in court, we did win. we eventually compromised on a narrow set of user data,
which is not anydifferent than a subpoena, which all companies basically comply with, but that was overly broad. it was like a fishing expedition and so we didn't want to do that. but the bigger thing is, how do you learn how to dealwith government relations. it was a huge challenge. we had a lot of trial and error.
my first instinct was to fight. was to be like this fight for the people, mobilize people. in 2010 we wanted to do that. we staged a rally, a political rally. after i learned how to build a website, i had to learn how tostage a political rally. so we go to new yorkcity, go to city hall, and we'd give peoplesigns and they'd help.
and then we realized, that's not really theright approach for us. we're a company wherepeople are living together. and we're trying to teach people that people are fundamentally good and they're living together. a company where people live together is not a good company thathas a brand of fighting. 'cause the big fear is,
people are gonna fight intheir homes, this and that, we need to be partners with cities. and we want cities to know they love us. and so we decided, you know, we're gonna kill 'em with kindness. in other words, we're gonna show them that we wanna be partners. and i also learned another lesson from government relations, which is,
i always had this instinct that, if people don't like you, you should never talk to them. and somebody told me this saying. they said, "it's hardto hate somebody close." and so i kind of createdthis counter-intuitive thing which is that i will meeteveryone that hates me and the goal isn't to makethem not hate me at the end, you'll hate me lessafter you get to know me,
and i think you'll understand me. and that was totally counter-intuitive, 'cause i used to have this fear, that if i didn't thinki could convince them, i thought it'd be a bad meeting and i didn't want to have bad meetings. i wanted to avoid conflict. and so we basically had this view that we're gonna meet everyone.
and the more you hate us, the more we might be eveninclined to talk to you because we think there's misunderstanding. and it's not to get you to like us, but so that you will understand us and at least you will be informed. and so we decided togo on a listening tour. at one point in new york city, i am deciding i'll meeteveryone that hates me
or a lot of them. and i'm meeting like 40 different people, tons of horrible meetings,but months later, there was a lot less, kind of, vitriol against airbnb. i mean people suddenlyhad an understanding. and so that really helped a lot. now we have to meet with senators, all sorts of politicians,
we were on the ballot in san francisco. how do you fight a ballot initiative. there's like, it's just so crazy, because this... because we're a businessin the real world, the scope of things i'vehad to learn how to do are astounding. we've had, over the summer, almost a million peopleliving in a home every night.
how do you keep a millionpeople safe every night? that are staying in strangers homes, often from different countries. where sometimes the countriesnever even live together, like, these different cultures. so the bigger lesson is, you know, you had a saying, "starting a company'slike jumping off a cliff "and slamming into anairplane on the way down."
and i guess my point is, that never stops. that, it certainly happened for me, starting the company, but then it was always the next thing. and now i have new things. and so it never stops. and so i think the biggest thing i've had to learn how to do is learn. and learning means going to the source
and i don't know. - so, last question on the kind of things that surprise you as you grow these globally relevant companies, 'cause you just came back from it. paris. - yeah, oh god. so, everyone's obviously quite aware of the horrible things thathappened in paris last week.
terrorists killed, i think 129 people. isis. well, what you may or may not know is that i was in paris with ahuge part of the company while the attacks were happening. so, last week we had our annual convention or conference. we have this thing called the airbnb open. and it's an annual,
it's the third year ina row we've done it. and hosts from around the world fly in. last year it was up in san francisco, this year we had it in paris. and it's like our versionof what salesforce might call dreamforce or whatever. and hosts come together and we really kind of update them on the new products, thenew values, everything.
and we had 645 employees fly to paris to be a part of this, and about 5,000 hosts. and i was there in paris with all of them. and by the way, my parents were there, my sister, my girlfriend came with me, so kind of like everyonein my life was there. and i'm in paris, it's two days into the conference,
i did two keynotes, first day and second day, so i take a deep breathand i'm like, "i'm done. "thank god. i'm gonna relax." i had this dinner. a celebratory dinner. we called it the 10th street dinner. basically we had an officeon this 10th street. it was basically everyone,
it was the first 40employees of the company. they're still there. so we called it the early employee dinner. and we brought them together to celebrate and recognize them forbeing at the company for almost five years. and we're having this wonderful dinner, joe gives a toast, "thankyou all," da da da da. it's amazing dinner.
all of a sudden our phone starts buzzing and i see twitter and i'mlike, "attack in paris." and it was at a restaurantand there was a shooting. we're like, "oh that's reallyhorrible, that's terrible." but, not unlike you'd read something horrible happened in your city, and you're like "okay, that's really sad." and so then we put our phone away. about 30 minutes later,
my phone starts buzzing again. there is a massacre in a theater. and 80, 100 people, well,actually, we didn't know it was a massacre at the time. 100 people taken hostage in a theater, another location. and my phone buzzes again. there's a suicide bombingoutside of a stadium. oh my god.
suddenly my phone buzzes again. at this point, what had happened was, we had 645 employees that weregoing to dinners and events throughout the city of paris, and 5,000 hosts from 110 countries that were throughout the city. and at this moment, there were seven coordinated attacks happening within a one hour period,
in random places all over the city, particularly in the areas that all of our employees were at. and all of our hosts were at. and the thing that was so scary was, the places they picked weregatherings of many people and many countries where all of our -- that's who our people were. and they also picked random places
to create the psychologythat these attacks could happen anywhere. so at this point, fearstruck over the dinner. we realized we're under attack. there could be another five or 10 attacks, and it could be anywhere. i got, i started finding out there were employees that were, some of our employees were at a restaurant
that were next to the bataclan theater where the massacre waswhere 89 people died. and one of my employees, someone i'm very close to, was sitting in a restaurant,looking out the window, when he saw all thesepeople running by them for their life. and they're screaming. the look of when somebody'srunning for their life
and they just witnesseda series of murders, i can only imagine what that feels like. and so, people -- and then, and suddenly people were, in restaurants, they shut the lights, they closed the metal gates, they're hiding under tables. we had a whole team at the stadium. and the stadium, they had a stampede.
and people were running outof stands at the stadium. so this was not somethingi've ever had to deal with. so what do you do? so i'm at this party, we have a head of security whowas in a different building. he creates a remote command center. i literally create a commandcenter in a walk in shower, because we're in a two bedroomapartment with 50 people, i had nowhere else to go.
i mean there was a giant shower and it was actually,frankly good acoustics, 'cause it was just stone, so if you were just sitting there -- and i couldn't hear anywhere else, so i close the door, we create this commandcenter with our phones and we pull up our laptops,we still have signal, we're told we might loseinternet at any moment.
and we're basically goingthrough the first step is account for everybody. so we create a list ofall the 645 employees and we start calling and emailing. we go down the list and wehave this remote command center accounting for everyone. then we gotta figure out what's the next thing we do. we gotta work with the local government,
'cause some people aregonna be sleeping outside and we can provide housing. so we worked with the local city and the federal government of france and try to provide housing. and we get our hosts, 300 of them, to open their homes, very spontaneous, for anyone that needs housing. and then we gotta figure out,
well what are we gonnado about this conference? 'cause we had to cancel the next morning and account for people anddeal with their families and everyone's reaching out, so it was something that, it was one of most insane ordeals. we had to fly all the people back. make sure, that, you know, we provide the employees support for them.
and i've never had, in my life, to deal with anything quite like this. we were in the center of this huge crisis, and as remarkable as it was for that time, it's not remarkable inthe arc of a start up. in other words, that was very specific, but that physical eventis kind of a metaphor of so many things you do. and this was just physical safety.
i've never had to dealwith something quite life and death like this before, but so much of that remind -- when i was going through that last week, i'm like, "oh my god, this reminds me "of the first four years of airbnb." and i don't mean, i justmean the way my body felt. heart constantly pounding, not knowing how we'd get through the day,
constantly firefighting, i hope i'm selling youon starting a company, by the way. for the right people, it's a rush, but it is this constant thing. and the other thing that that, the last thing i'll say is, it was at that moment that i, reminded me of the responsibility i have.
'cause you know, i'm conscious of the responsibility i have. we have a couple thousand employees, we have tens of millionsof community members, but at that moment, you are so much more conscious. your responsibility is truly real. and people's lives, i mean, in some cases, they, maybe, do depend on you
or at least theirlivelyhood depends on you. and that was a huge andhumbling realization that i had. - so, can we go a little long? - 'cause i know we're at time, - sorry that was actually a long story. - no, i wanna make sure, that was a reallyimportant story to get to, for all kinds of obvious reasons, but i wanna get througha few questions as well.
start here. - [audience member] could you talk more about learning how to learn? like was it reading books, was it self-reflection? - yeah, so... - [audience member] canyou repeat the question? - it's, talk more aboutlearning how to learn. i'm certainly not anexpert on how to learn.
i think people here at stanford are going to teach you alot more about how to learn. but i'll give you just one tip. i think there's a lot of tips, i'll give you maybe one. if i told you i want you to learn about a topic and you got a week to do it. so, let's say i want you to learn about the basics of ui designand you got a week,
what would you do? you would -- and i want you to really learn it. i want you to learneverything that's important. i want you to become like an expert or at least a temporary expert such that you could know the basics, and know the most important things. you would probably readlike a ton of books,
talk to a ton of peopleand interview people, and go through thisfairly exhaustive process just to learn about ui design. and so what if i toldyou that in that week, i also actually want youto learn about the basics of front end development, i want you to learn aboutthe basics of accounting so you can have balanced books and i want you to also understand
how to incorporate a company. now how do you do that? 'cause you start adding the hours, you don't have hours. so what you learn is, you can't learn everything about a topic so you have to be verygood at short circuiting to learn from the definitivesource about the topic. the skill becomes,
you hope that you go the right source. 'cause if you go to the wrong source, you learn the wrong things, but you also find that ifyou read the right source, you don't have to read any other sources. and, about management, somebody gave me the book,"high output management" and it turns out i never hadto read 10 management books, i just had to read that one book.
- that was keith. - that was keith rabois, that's right. and it's about andygrove, founder of intel and if you read that book on management, you kind of know about management. and, you know, paul graham probably was a versionof that for y combinator. and so, what i've had to learn how to do is seek out the experts.
and, it's kind of the equivalent of like, reading and writings of intelligent people rather-- if you want to learn about the news, read about somebody who's deeply informed than watching a political talk show for four hours. 'cause you're gonnaleave kind of confused, and you won't have any deeper context.
so, i've found that going to the source, and reed was a source for me. i wanted to learn about trust and safety, i went to george tenet,the director of cia, and that was fairly like- former director. - former director, sorry. and that was kind of over the top, but it was helpful. and the cool thing is,
the more successful you get, the more you have access to them. but even before you get really successful, you can certainly read about the best. and i also learned from biographies, but i think going to the source. there's a lot of other tips, but that's just one tip i would give. and then you gotta be shameless.
because i've found thatmost people will help you if you ask a question. and the biggest reason people don't help is because people don't get asked. and, we're here to shareinformation and knowledge. you gotta be willing to have the courage to ask people and seek out knowledge. and i was shameless at asking questions, like, over and over again,
to the point where itwas probably annoying, but i didn't care. i was so shameless,(laughter) i didn't care if i annoyed you. 'cause, i'm like, "i need to learn this." - yeah, exactly. - [audience member] could youtalk about the pre-history you had with your founders, and how you sort of selected them
and knew that they werethe right fit for you? - yeah, i kinda got really lucky. if i wrote a book abouthow to start a company, i think the one part iwouldn't be helpful with is how to pick co-founders,'cause i got really lucky, that part kinda fell in my lap. i went to risd with joe and i was friends withhim for seven years. it's now 15.
but i was friends with him for seven years before i started the company with him and he was kind of likea best friend of mine or one of my best friends. and then my other co-founder, nate. he kind of, i didn't know him, and so, that was a littlemore of a happenstance. so, it was kind of luck, and i had an intuitionhe was a great engineer,
and i could tell by the things he built he was pretty extraordinary, but there was a element ofluck involved with nate. so, i'm not the best, i did not go through the struggle of havin' to find co-founders, so i can't tell you a longjourney about how you do it. i can say a few things though. the first thing i would say is,
you should -- a few thing about co-founders. number one, i think thementality should be, your co-founders shouldbe better than you. if they're not better than you, you should at leastfeel like they're equal. and i see a lot of peoplewho find co-founders who they kinda consciouslyknow aren't their equals, and they're not really co-founders,
they become proxy earlyemployees that can't scale. and when they can't scale, they get super disenfranchised and they're not useful andthey're not able to contribute. and i think sometimes peopledo it 'cause they're lazy or out of insecurity, they don't want an equal in the company 'cause it might be a power struggle. i think you should tryto find people you admire
that are better thanyou, that challenge you. the mentality is, ifthey're better than you, then you will rise to the occasion and become better 'causeyou're around them. and the other thing is, you have to have people thatyou deeply trust and like. you're gonna be around thesepeople for 12 hours a day, 14 hours a day, 16 hours a day. if you're kind of annoyedby them after 4 hours,
you're gonna be annoyedby them after month seven, 24/7. you're gonna really notbe able to stand them. so you need people that you like, that you trust, and that you admire. and ideally you have along history with them. i had a long history with one of the two, but i think nate, who i didn'thave a long history with, proves you don't have tohave been friends with them
for seven years for it to work. and i generally find complimentary skills rather than overlapping skills works. now, joe and i appear to bethe same people on paper, at least our origins, but we ended up having, frankly, very different personalitiesand skills, as it turned out. and, nate is totally ouropposite in many ways. - the woman.
- so i was wondering, at the beginning, you were a designer. how did you make the switch to go to entrepreneurial? just like, what's the mentality change? also, like, you mentionedon the tough times, how do you convince yourself, this is a good idea to be working on it. when do you keep going?
when do you stop? - should you repeat the-- - yeah, always summarize it and then. - so, how did i switchfrom becoming a designer to entrepreneur andthen during tough times, why'd i keep going, right? switching from designer to entrepreneur. it's really like how doyou switch from anything to becoming an entrepreneur.
i was always kind of, in hindsight, it turns out, i alwayswas an entrepreneur, i just never knew it existed. meaning i was always creating things and starting things althoughthey weren't always businesses, they were usually projectsor films with my friends or things growing up, i created clubs. and so, i think the best wayto become an entrepreneur is just to become an entrepreneur.
like i don't know how else to say it. in other words, just start. and just creating things. create things for people. the best preperationfor creating a company is to create a company. if you can't create acompany, create a club. or create a product, or create something. and i found that throughout my history,
all the things i created, whether it was my clubhockey team at college or this thing i designed or a project with my friends for fun. and usually it was outside of school and it was always slightly mischievous, like, you know, like just slightly. kind of fun or a prank or something. i think that's the best thing.
so i think that other than thefact that it is good to learn in these classes, the thing that's even more useful than being here right now is to leave this thing and tostart something immediately. and not learn how to start it, just start it. 'cause you will trustyourself and you'll learn. so that was what i did.
at risd though, the school teaches you to start things, 'cause you constantly have -- they give you some impossible challenge. like, okay go, figure it out, go. and i think just having that, it's almost like becoming impulsive. you have to kind of learn tobe impulsive in some ways, 'cause just to start and plunge in
is kind of an impulsive thing. i think the second question is, why do we keep goingduring the tough times. which is another way of saying, why did you have convictionand resilience, right? 'cause you need to haveresilience and conviction to keep going. the thing about start-ups, of course, i keep quotingthings that steve jobs said,
'cause he's one of the peoplei've learned a lot from, from afar, of course. so there's a lesson, study people you admire. but he said, "you have to be passionate "about things you do "because there are gonnabe days where it's so hard, "it's easy to stop believing in it." so if you don't have thisreservoir of deep passion
for what you're doing, you'll kind of lose faithand stop believing in it, when it gets really hard. and i had this deepconviction it would work. and many people say, "well why'd you have this conviction. "why'd you believe air bedand breakfast would work?" and it was that very firstweekend we hosted three people and i saw how my life changed.
and i saw how otherpeople's lives changed. they literally changed. one person moved. the other person deciedto go on a different path 'cause of the designers he met. and i thought, with joe, if people could experience what i'd experienced that first weekend, this would be an idea thatspread around the world.
and i really believed that. now i couldn't get peopleto actually give it a shot, but i believed that wasa marketing challenge and that we would get them to try it. because we discovered something. and one of the things paul graham says is, "what insight do you havethat no one else has?" in other words, what issomething that you've discovered? often, a discovery doesn'thappen in a laboratory.
a discovery is something that you hacked to solve a problem for yourself, and you accidentallydiscovered it's really cool, and if only other people knew about it. and my unique insight or discovery was staying with otherpeople in their homes was deeply rewarding and saved money. it would be awesome and otherpeople would want to do it. and it was clearlynon-intuitive, not obvious.
which is a good thing. 'cause when you tell people, they're like, "that will never work." that means people won'tcopy you for a couple years. - ah, here. - [audience member] yeah,just to follow up on that, you talked about the deep conviction. how do you, you saidthat you were distracted by the roommate thing you were working on
after you started. so how did you get back to the air-- - really good question,really good question! - and repeat the question. - oh, sorry. so you say conviction's important, but you started air bed and breakfast, then you did a roommatething and then you went back. what was that journey like?
you know, it's kind of funny. i think conviction happens over time. it happens through repetition of talking about it and thinking about it and working it out with people. so kinda here's how it happened. we started this websiteand i had some conviction that this would work. the weekend we started it,
i had conviction it wouldwork around the country. air beds for conferences. i was always a generation ahead. i was never three generations ahead. i didn't think years out, but i always thought the next year out. and i could always see the next step. i couldn't see three steps forward. and so, i believed in the next step.
so that first weekend, i believed this wouldwork around the country. but, joe and i convincedourselves out of the idea because we were so enamoredby the story of facebook and all these other companies, we thought, they're huge. i can see the next step, but i can't see people allover the world doing this. and i can't see becoming a company
where millions of people would use, and i wanna have a companymillions of people use. and millions of people need roommates, but millions of people, when they travel, don't stay in homes. and so that was kind of where i went to. so, it wasn't as much i lost conviction as much as, i had the wrong mental model to decide what to persue.
but i deeply believed in this idea. we did the roommate site and it was like, okay, someone's done it and i don't know if i'mpassionate about it. and i went home for christmas and i found myself talking about it, and the funny thing is, the more i talked aboutit, the more excited i got. and the more i talked about it,
i'm a fairly extroverted person, so extroverted people theykind of figure things out by talking it out. and i'd talk about it and as i'd talk the idea out, i'd keep adding things, even though i hadn't built it yet. as if i had. and then we could do this and that
and you'd brainstorm. and the conviction happensthrough repetition, and investigating and going deeper and exploring and thinking about it. and it just kinda built from there. and then it came through moreand more physical experiences of doing it, staying, and the more you have real experiences, the more you build thatreservoir of conviction.
and the one thing people don'ttalk about leadership is, leaders are people other people follow. they're not necessarilypeople that are bosses. a leader is somebody other people follow. and a key core reasonwhy somebody follows you is conviction. in other words, a leaderhas to have conviction. and if i'm like, "i think theway you go home is that way," like, like, maybe.
if i say, "the way we go home is that way. "i know it's that way." people will probably go that way, 'cause you are so certain. now, you gotta try not to be wrong, but conviction is incrediblyimportant for leadership. and for me, building thereservoir of conviction was through real life experiencesand talking it through and getting to know the problem.
- the other nuance, by the way, on a lot of these companies is, they make markets. so it wasn't like, "well,how many people were staying in homes before?" far fewer. how many people were pickingblack care services before? how many people, just, other things -- and part of that making of markets
is part of what you haveto have the conviction for. - yeah, just one nuance of that which was, that was what happened. we fell into the venture capital trap, or the like so calledtrap of, well is it-- - that's the dumb venture capital trap. - the dumb, sorry.(laughter) he's a venture capitalist. (laughter)sorry.
the dumb vc trap. they call it the idiot vc, which is, there's no marketfor this, and you're right, as reed says, almost all great companiescreated the market. and so, a lot of peoplesay they invest in markets. and i think you shouldinvest first and foremost, in product and founders. you can invest in markets if you think,
"as long as our market'stravel or accommodations," but our market was not, in fact, sequoia who isnotorious for invest-- or not notorious, but famousfor investing in markets. they really struggled sizing our market, but they actually, to their credit, discovered this was a big market. and, as long as theylooked at the right things "well, there's 1/2 atrillion dollars a year
"spent on accommodationsevery year, short term. "two trillion dollarsa year spent on travel "and 40 billion spent on vacation rentals. "so we do think, based on,we like these founders, "and we like the product. "we think there will be a market." and so, you have to be able to foreshadow emerging markets ratherthan existing markets. - last question in the back.
- [audience member] what'sdifficult for you right now? - oh,- what's difficult for you, - jesus christ.right now? - the problem is that'sa very long answer. - um...(laughter) answering that question,that would be the-- - yeah, yeah answering that question is extremely difficult right now. you may have stumped meon the last question.
let's see. okay, i'll tell you one thing. so this is, i think this is in your book, you talk about it as transitioning from city to nation or village to city. - which is one of thethings you have to do. so, i've gone throughall different phases. we're at the phase now wherethe company is working, the core business is working well.
the product we had, the idea we had, is now scaling, it's working well, we've hired an executive team, i have a full executive team. they're managing it. i could presumably go away for a month or two months, and the company would basically run fine. basically, right?
i mean there's things thatwould start to degrade, but the core product will be fine. the company, more so than the product needs day to day management, but the company, the product's fine. so, there's a couple things. the first, probably the twobiggest things i'm focusing on, the first one is scaling theculture for the new size. a lot of the cultural norms
and kind of things we institutionalize was for a company that was 500 people. we're now over 2,000 people and i wanna make surethat this still feels like a fast growing start up. it's still product oriented. it's still everyone is mission driven. so that means a lot ofthe methods and behaviors in the day to day has to change.
the other thing though,probably even bigger, is, most companies that are really, really big have more than one product. apple has the mac, butthey have the iphone, the ipod, the ipad, the watch and very few companieshave a single product. i mean you guys have multiplesources of revenue, right? you don't have one source of revenue. almost no company in theworld has a single product.
i mean, google is maybea notable exception as having many products, but kind of one product thatgenerates most of the revenue. and so, that's the challenge for me now. the core products can continue to grow, but there's opportunitiesto start other products. and part of me is like, 'well, i know how to start a product." i started one.
but how do you start aproduct or a new business inside off an existingbusiness that's successful? it's, i thought it wasjust like the first time. it turns out, starting a new business inside of an existing, successful business is so different than starting a business, because you have all thesethings that are helpful. like, you can pull people internally, you have unlimited funding,
but you have all these thingsthat you never thought. like, sometimes people inside the company inadvertently try to stop it. and they don't do it on purpose, but you try to pull thebest people on the team, they're like, "no, we can't have it." or why are we focusing here, we need to fix this. so that's a huge thing thati'm focusing on right now,
is trying to create a new business inside of the company and you're basically, you're shifting from asingle product company to a dual product company. that's a pretty big shift. and so that's something thati'm thinking a lot about now. and i think all enduringcompanies have to do that. because if you're a technology company,
you can't presume your original invention, your original product, isthe thing that you're selling many many years from now. - so let's thank brian for joining. (applause) - thank you guys.
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