Brian Chesky
Appearances
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The first five results are the only five results you need. If you're typing in Paris and you need a house, we have 150,000 homes. So suddenly this is a matching problem, not just a search relevancy problem where there's just one right answer. So it is a harder business than meets the eye. And that's just our core business.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That doesn't involve taking this business and expanding this model to new categories and verticals.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's a cat and mouse game. It is so challenging. For example, I'll give you an example of something we found. There was an entire industry of companies that emerged that we caught and we stopped them that were basically advertising that they can get your bad reviews taken down. And they basically knew how to call customer service and what to say to get your negative reviews taken down.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That became not only a fraudulent activity, it became an industry. There were entire companies built doing this. And now, of course, that's fraudulent. And so you have to stop that stuff. But The thing that makes Airbnb so difficult in this way and probably more difficult than, say, a video platform is its longer tail, right?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Like it's not like somebody – like on YouTube, people can be gaming things, but generally like a disproportionate number of views go to certain videos, right? It makes sense. In Airbnb, that's not possible. Only one person can stay at the house at a time or one family can stay at a time. So you really – it's a long tail, and it's in nearly every country.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So there's a lot of different schemes that can occur.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Yeah, I mean, basically, maybe to mildly oversimplify one of the entire trends that we're doing on Airbnb, we are basically managing more of the inventory and verifying more of the users at the simplest level. So if you think about, it's really important to understand the history of where Airbnb came from. The context of starting Airbnb was eBay and Craigslist.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
In fact, I think people should recall that I think when I started Airbnb with my two friends, eBay's market cap might even been higher than Amazon. It wasn't obvious Amazon was going to be the winner. It kind of really pulled away. But eBay was the marketplace. And Craigslist was how most people found housing. It was completely the Wild West. I mean, it pretty much still is today.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
There was really no management of inventory. And we thought... The internet is like an immune system. And what you should do is give community tools to moderate themselves. So flags, report suspicious behavior, but most importantly, a review system. And we built this really powerful review system where about two out of three people, after they book an Airbnb, leave a review.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And two out of three hosts leave a review. And we thought, oh, this is great. And... it turns out that that is necessary but not sufficient. And so over time, we've been in the business of managing more and more of the quality ourselves. So we're very, very hands-on on quality control. Most new services, we're actually vetting and even certifying ourselves.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so we think reviews are important, but we don't want to put the entire burden on the user base. And again, there's a lot of ways to game things. So you've got to be very, very hands-on. But the more things you verify... The more things you inspect, the more things you certify, the fewer areas to exploit a company there is.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I have a theory that I'll share. In our business, it's obvious what the customer wants. The customer wants more moderation. They just do. I never heard a customer say like, you are controlling the inventory too much. You are removing too many bad listings. You are penalizing hosts that are making me unhappy. they actually call and say the opposite. Like, how dare you?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They get very upset and personal when a home doesn't work out, even if it's not our home. We're just the platform. So we are consistently held responsible by the customer for the content on our platform. And so the customer is expecting this, number one. Number two, the economic incentives are very, very clear.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
This is not like an advertising platform where the product and the business model are pretty separate from an aligned interest standpoint. They're completely connected. So you can start to see a bad Airbnb, people then don't rebook on Airbnb, they don't come back. So it's a really clear economic incentive. And the last thing is Airbnbs are just not that politicized.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Like people just want to have good vacations. And so you don't have the like kind of myriad of political issues and baggage. I think when it comes to platforms like Twitter or X, YouTube, Instagram, TikTok. It's not clear what the customer is asking for. I think in the one hand, customers, you know, users want veracity of information.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But the other hand, I think they're very skeptical of the hand that platforms are putting on the product, and they're not in our case. But I do think that we're going to look back in history and And the platforms in the future that are gonna be most successful are gonna be the ones that have the greatest truth and veracity of information.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And veracity of information starts with, are these people real? Are they not real? I remember emailing Elon when he first acquired Twitter. And I gave unsolicited advice, which was that you should verify 100% of the users on Twitter. They decided not to do that. And I didn't even really have a conversation. They did almost the opposite, actually. But I would have done that.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And I would have done that. And then maybe you do. Yeah, I would have verified 100% of the users. I still think a platform that verifies every single person, it's a really, really good idea. And that's what we do right now.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Now, there might be reasons not to verify, like you just want to, I don't know, maybe people are nervous about verification if they can't be whistleblowers on platforms. But again, a lot of the reason people don't want moderation is they distrust moderation.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
the companies and they believe the companies are politically motivated and they're putting their thumb on the scale politically for free speech this becomes like an attack vector for politics i think before you moderate content you should moderate people you should moderate not should they be kicked off the site or on the site but just are these real people are they who they say they are and are they allowed to use pseudonyms or not i think in the speech context there's a
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I love how you think because it's good to take logical steps towards their conclusion and ask, where do you draw the line? I think we want to have almost all the benefits of a hotel while retaining the benefits of Airbnb. So let's just break them down. The benefits of an Airbnb is every room and every home is different. There's no skew. You go to a hotel.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I mean, hotels are such commodities that you never see the room you're booking. You don't even know the floor you're booking. You book a hotel room, you don't know the even floor you're on, let alone what view you have. And by the way, it doesn't really matter because they're kind of all the same. Or at least the hotel kind of trains you not to care. That is the definition of commodity.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's such a commodity, you don't even have any choice. You just choose the hotel. You barely choose the room. Maybe you choose the tier of the room. But... So we want every space to be unique. We want every space to be one of a kind. We want our experience to be as personal as possible. Yes, there are more professional managers today than there were 10 years ago.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But generally speaking, still 90% of our hosts are regular people. We want to feel like when you step into an Airbnb or you travel to a city, you're living like a local. So those are the things we want to retain. And we really want it to be their home. We don't want to create an Airbnb aesthetic, right? I've been asked like, hey, why don't you guys do a deal with Ikea and this and that?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And it's like, well, actually, that's not really what people want. They don't really want a standardization of design. They really want to feel like they're in Paris. They feel like they're in Paris. They don't feel like the same as they're in Kansas City or somewhere else. But hotels, they start to feel more similar, especially chain hotels.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But what we do want to do is match the hotel service at least as much as we can. And so there isn't a front desk, but can we create a essentially like remote front desk? Can we have more 24-7 support? Can we use AI to basically level the playing field of front desk where AI can be like immediate? It can be multilingual. It can adjudicate.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I mean, AI at least can be a front line that can better adjudicate disputes between guests. No, it's better than a real person. Because what it can do is you can train it on the corpus of like 100 policies. And then it can look at the last 100,000 times somebody complained about this. And what was the most likely resolution that led to satisfaction for both parties?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And you can actually train a model to spit out the right answer. And they can either directly spit out the answer as a front line through the app to the guest and host. Or if you do want to talk to a person, it can Help the customer service person.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So I think we want to manage Airbnbs more and more and more before they become ours, because then not even that it would be a bad business model, but I think it would like start to cut into the ethos of feeling like you're living like a local and being truly authentic.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Yeah, I mean, the step beyond this we haven't gone to is you have to apply to list an Airbnb. We have certain quality criteria. And if you don't meet that quality criteria, then you can't list an Airbnb. that's probably where we're going within our new verticals. Our new verticals, we're going to be launching starting next year.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
We're going to basically, you know, Amazon had this moment where they were just selling books. And then in like the late 90s, they decided to just, you know, go just outside books. What's adjacent to books back in the 90s? DVDs and CD players, right, CDs. And then they went further and further and further. So we're going to have the Amazon moment.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
For the new verticals and categories we're launching, I believe we're going to have a reply to list model where you have to apply. And so we're starting to have an opinion on quality. That is going to be the next step and probably the final step. The step beyond that is actually owned and operated.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And we don't own or operate anything except for these promotional listings that people might know of, which are basically called icons. So we built like a 40-foot tall Polly Pocket clamshell. Yes, we own and operate that, but that's really marketing. And it generates a lot of views. We're not ridden the business of owning and operating anything.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think that what we're going to probably have in the future are more standardized quality tiers. And so there's going to be a standard to list on Airbnb. And then there's probably going to be like maybe, depending upon the vertical, different levels of certification or quality. And the quality could be based on their expertise in the real world.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Or it could be based on what customers are saying in Airbnb. For example, we have this tag, this designation called Guest Favorite. It's 2 million of the best homes in Airbnb based on ratings, reviews, and customer service tickets. So I think we're going to do more and more of that. But yeah, that's probably where we're going to go.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's all going to play over the next 24 months.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think it's a little bit different because you don't have the consolidation of inventory in the same way, right? Like let's take YouTube. Mr. B's video can get one or 200 million views. You can't have an Airbnb, a single Airbnb be that popular. So the entire marketplace is significantly more long tail. We're in 100,000 cities. Not one city represents even 1% of our business in Airbnb.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So I think generally there has been this move towards a little more consolidation of inventory via professional property managers, but it's not been that much. Again, for the last four years alone, 90% of our hosts are individuals. That number has remained pretty much unchanged.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think many of the new products and features we're launching are going to enable more and more people to allow more and more long-tail inventory onto the platform. That's generally where we're pushing. Does it benefit Airbnb to have less consolidated inventory on the platform? It probably does because they're less likely to cross list.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But that would be a bummer if we did that and it was misaligned with a customer. But it turns out that there's a chart I've put out before. It literally shows the number of properties you manage in your five-star rating. And quite literally, it is a perfect curve downward slope. The highest rated Airbnb hosts manage one property. The second highest are managed two, down to 1,000.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And it literally goes, and there is not one single deviation from one to 1,000. Wow. It's crazy. Now, it doesn't mean, therefore, all people managing 1,000 properties are bad. It just means that most people haven't figured out how to industrialize hospitality. And it's just, oh, here, let me give you one other argument for why regular people can sometimes work economically really well.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
If I'm a dedicated rental, I need to basically build a profit margin because I'm a business. So I have rent and I need to be very careful about any cost I incur. So if we're in a house, I might have like four books, but maybe I won't have 20 books because like book five through 20 is additional cost I'm putting onto my Airbnb.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so I might have six coffee mugs, but I'm not gonna have 10 coffee mugs. I might not have a KitchenAid mixer. These are all costs I have to bear. If it's your real house, you might have all the stuff anyway because you live there. And so you don't need to charge a daily rate that has a profit margin because this was unsold inventory that you weren't monetizing and now you're monetizing it.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So it's another one of the economic dynamics where non-professionals sometimes have an economic advantage over professionals. This is just one example. In other words, their homes are equipped and the fixed cost is an investment they've already incurred. So this might be another way of saying it.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I cannot wait. I love these conversations. And the thing I appreciate is the depth that you go into.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I don't think so. Let me put it this way. It's not like I suddenly am running the company different than a year ago. It's just that now it has a label, and I think it just makes sense to everyone. Let me give a little bit of background on that talk.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Yeah, yeah. And the Figma conference was kind of like maybe a quarter of what I said. So let me just go. I'll do like the short version because I know we have limited time. But let me just give a little background. As you know, over the last four years, like from 2009 to 2019, I ran Airbnb the way most tech companies run their companies. I didn't know how to run it.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so I hired people from Google and Amazon and Microsoft and different companies. And they brought their processes with them. And we kind of reverted towards the way everyone runs their company. So, you know, we basically, I remember at like a thousand employees, we were kind of a matrix organization, like almost all matrix organizations. It was hard to get work done.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Basically, like I'll give you an example. There was like a creative marketing department that would have to create graphics for different teams. And then we kept hiring teams that I kept hiring sub teams that kept asking more and more for the graphics, right? The graphics team, it was called the creative group.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And at some point, the creative group was like a deli and they had these like lines out the window and they just kind of threw their hands up. If you needed anything done, like let's say you're a team and you needed a button designed or like a graphic for a button designed, it would be like a three month waiting list because they were inundated.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So then the team said, well, give us our own resources. Give me a dedicated creative person. And this could also be true for technology, for finance, for a legal team, like any function. And this is when you start to divisionalize the company. Quite literally, you're subdividing it. And this is where the general management structure comes from. It makes a lot of sense why this happens.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The problem with that, though, is that once you subdivide the company, the company starts rolling in different directions. Now you have even more bureaucracy because the groups don't want to work together because they're incentivized to work on different things. And they might not be totally compatible anymore. Now 10 teams can have 10 different tech stacks. They don't actually fit together.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
A local decision that might make sense for your team might not make sense for the company, right? So this is a thing. The next thing is that these general managers are incentivized typically in output goals that you don't usually run on P&Ls. They run on like impact, growth. So they have to advocate for as many resources as possible. This is what we call politics. You're advocating for yourself.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so suddenly groups like, they start going in many different directions. And because the company's going in many different directions, oversight becomes more difficult. When oversight gets more difficult, now there's this sense there's less accountability. You have people that are crappy and there's no consequence. So that makes people feel like it doesn't matter. This sets in complacency.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And this is, I think, what ends up happening at big companies. The big thing that I said about founder mode, and this is something I've said for four years, is it's not about... Paul Graham coined it founder mode. I think it's a good name. I think it's very catchy. I could not have made something as viral as Paul Graham. But there is a downside to the name. The downside name is now it's viewed.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
First of all, people don't know founder mode is they think it means swagger. I remember a tweet said, like, I'm going founder mode in this burrito. I don't know what that means. I think people think it means the founder swagger, I don't give a fuck, I'm going in, I'm kicking ass. That's kind of what it turned into. And only founders have that. And that wasn't the message.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
If I could summarize founder mode in a couple sentences... It's being in the details. It's that great leadership is presence, not absence. It's about a leader being in the details. And if you as a leader aren't in the details, guess what? Your leaders aren't in the details and their leaders aren't in the details.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And one day you're going to wake up and you have 50-year-olds managing 40-year-olds, managing 30-year-olds, managing people two years out of college, doing all the work with no oversight. And you have these four unnecessary layers. You have no experts in the company. So the antidote to this is to try to be as functional as possible. We are a functional organization.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Functional just means expertise-based, not general management-based. And so I'm the only non-functional person in the company. All functions roll up to me. I generally think the CEO should be the chief product officer of the company. And here's the heuristic. The most important thing a company does is make a product. If the CEO is not the expert in the product, then what? Why are they the CEO?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Said differently, I should not be the CEO of SpaceX because I couldn't be the chief product officer because I do not understand rocketry. So maybe I'm a good CEO, but I can't be the chief product officer. There may be some exceptions, but I generally think that's the case. And then your leaders shouldn't just be, quote, managers. And I put managers in quotes. They should be in the details.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
If we were a military, like a battalion, the cavalry general should know how to ride a horse. Like, it's crazy that they don't. And leaders shouldn't be fungible. So it's really about being in the details. Now, here's the problem with the narrative being in the details. There's a term for it, and it's a pejorative. It's called micromanager. And everyone's afraid to be accused to be a micromanager.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So I had this thought because founder mode, a lot of it came from me studying Steve Jobs. Basically for 10 years, I was at wit's end. It wasn't my first instinct to copy Steve Jobs' leadership style. It was kind of a last resort. And I didn't copy everything, but I copied a lot of how he organized the company and ran the company.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
A few weeks ago, I had dinner with his son, Reed Jobs, and I remember asking him what Steve Jobs' opinion of micromanagement was. And he said he had such an interesting perspective. He said Steve Jobs was in the details. He would skip level, many levels to be in the details, which is something that like somebody who goes to HBS would like never do.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
He said he never felt like he was micromanaging because he was partnering with people on the details. And I asked like Johnny Ive and people like Hiroki who worked for Steve. And I said, do you feel like Steve Jobs micromanaged you? And they said, no, he didn't. I don't know. Maybe I'm a micromanager. Maybe I'm not.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think the distinction is I remember one time an executive on my team said, is this your decision or is this my decision? And I remember saying, it should never be either. And that's founder mode. It should never be either. It's never your decision. It's never my decision. We're in it together. If you're co-founders, whose decision is it? It's your decision together.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's the same thing hierarchically with the org chart. So that's really what it means. It means great leadership is presence, not absence. It's in the details. And what a lot of founders do is they let go of the product. And they abdicate responsibility. And they, you know, the CEO of the company should set, like Frank Slootman wrote a book called Amp It Up.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
He basically said to turn a company around, the CEO just needs to set the pace of the company. You set the vision. But more important than the vision, I think you set the pace. You set the standards. And that's what founder mode is really about. And by the way, you don't need to be a founder to do that. You can apply founder mode to government.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
You can apply founder mode to a nonprofit, to a volunteer organization, to being a sports coach. It just means leadership is presence in the details. And it's not about being so-called autocratic because you're not telling the experts what to do, but you know what they're doing and you're working through and you're challenging them. And you should do this because let's say you have 10 experts.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They might disagree. Finance says this is the best outcome. That may conflict with legal, which might conflict with product marketing, which represents the customer, which might conflict with engineering, which is the schedule. So you have to weigh all these tradeoffs. That's why you have to be in the details.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So that's a little bit of a – maybe one other thing before we wrap up is – Oh, we're far from wrapping up. Oh, yeah, yeah, yeah. One tidbit I'd like to say about hiring, just a thought. One of the most important things I do is I have an executive team. You could think of them as like C-level or SVPs. There's about like seven of them.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And then I have probably the next level are VPs, and there's maybe like 30 of them or 40 of them. I don't really know how many there are. Something I do that's different than almost every other CEO in the Valley, but I think Jensen Huang basically does this, Steve Jobs did this, Walt Disney did this, and Elon Musk did this, is I treat all the VPs as direct reports.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Jensen got rid of the executive team. He just has 40 directs. That's a little unwieldy for me. I've gone through that thought experiment of just having the VPs, and it's like I can't track everything. But all VPs do a report. They report to me and to their executive. And I am the co-hiring manager.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So instead of me hiring an executive like a CFO, and the CFO hires their people, I am the co-hiring manager. I do the kickoff. I'm the second interview. And ultimately, I decide the final compensation for all the top people in the company, not the managers. The managers give recommendations, and I basically make the final decision.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
This is just a very practical version of founder mode of being in the details. You don't just hire and manage your executives. You skip level and manage as many people as possible in a dual reporting relationship.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
One thing about functional, and then I'll answer that question, is this. I don't think all companies should be functional, but I think they should be as functional as they can get away with. That's the rule. Ben Horowitz had this saying, give ground grudgingly. You should give ground grudgingly. All startups start as functional organizations.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Steve Jobs said, I want to be the world's largest startup, but he wants to still operate like a startup. And so I think you should give ground grudgingly. And so that's the general philosophy. I just want to say one thing about being a functional organization. There is one very specific downside. The downside of a functional organization is you cannot do disparate things.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But here's something I want to dispel. It's not true you can't do as many things. It's not true it's a slower-run organization. We've actually increased product development by being a functional organization, but we're like one flywheel, and we can't create three other flywheels that are disparate. So
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
You know, the only reason I believe a company should divisionalize is so that they could do truly disparate things that have disparate functional expertise. So like if we had like a jet engine business, like that's a different functional expertise. So now let's go to the business organization. At most companies, there is no function called business. Maybe we can also say call it revenue.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Business, revenue, commercial. There's different names. Chief commercial officer, chief business officer, chief revenue officer. They all kind of mean the same thing. And the reason most companies don't have this is because they have general managers. And the general managers play that role. The general managers are ostensibly both the mini-CEO. And they own the business.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Well, thank you for having me again.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And they usually partner with a finance person. So somewhere between the general manager and the finance person, or maybe a data scientist, they're the business function. And we found that the problem with that is none of them are really experts in, quote, business. When I mean business, I mean kind of revenue.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The business model, the market size, you know, what are the kind of dynamics of this market, you know, like co-hosts. Like, what should we charge? Should this be a free service? Do we take a commission? You know, how does this compare to the third-party property management services? Which countries do we roll out? What are the economics by country? Is it a standard rate?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Like, there's just a lot of detailed questions one's meant to answer. So we... decided to create a chief business organization. It has three functions. One is supply. Supply was always a function of Airbnb, but it was kind of conflated with international and general managers. So we said... No, no. There are experts in getting supply of homes, experiences, and other things.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Then we have a business function. The business function is quite literally the counterpart, the business counterpart to product marketing. So if product marketing is basically nouveau product management, product marketing is basically product management minus program management plus some outbound marketing. And it's fewer people. That's all it is. And it's outbound, inbound in one role.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Oh, wow. This is really good company.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They are really thinking about what the customer wants, what the experience should be like, but they're not in spreadsheets. They're not business model people. So they have a counterpart called the business function. And so with co-host network, for example, we had a business person looking at the business model for co-host.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
We had a product marketing person that's understanding what's the product, how are we gonna market this, why do people actually want this? Those two people have to go together. One reports to Hiroki, it's product marketing, it's more creative. One reports to Dave Stevenson, the former CFO, now Chief Business Officer, and they're really the two parts of the continuum. Then you have a supply person.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The supply person then, based on the business organization, the business model, and the product marketing brief, has to now go get supply. Then they work with International, the third group in the chief business officer at Weirach, to then take that playbook and bring it to all the different countries.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The first time I've been in the studio with you. So thank you for having me here.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And then, of course, the product marketing has their own three-legged stool with design and engineering. But different from other companies where product really directs design – and I don't like that, and I caused a bit of a storm – at a Figma conference. Basically, it got taken a lot of context, and it said I fired all the product managers.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And what actually happened was I got rid of the classic product management function. I reassigned the most senior product managers to be product marketers, and I reclassified most of the other product managers as program managers. By the way, most product managers in Silicon Valley aren't actually product managers.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They're glorified program managers, but they're not even experts at program management. That's all they're doing. They're making sure the thing ships. That's program management. That's not product management. So this is what we're doing. It's a very, very simple organization, and it's just a continuum of us being functional.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Yeah, like I think it's really important to not be dogmatic and say functional is better than the divisional, and I think it really depends on industries. Yeah. I think in tech companies, functional is generally better because you can leverage shared technologies and everyone can row together and you would get economies of scale. And I don't know if in your business you're doing that.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
But there again, the major downs. OK, here's the here are the two things I said. One, there's really two. There's two benefits to divisional. The first benefit is you can do disparate things. We talked about that, right? So if I want to – I'm just thinking of like an absurd thing. We want to create a podcasting division.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Oh, yeah. That's a sign of a good conversation. But we were remote. We were remote in the same city.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Like it would be really hard for the people designing the app, the marketers like advertising homes to think about podcasting. And now we want to create like a TV series. That's like really, really disparate. So we would struggle to do super disparate things. Yeah. The second downside to a functional organization is it takes longer to start.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Because if you want to just get something going, you need to get everyone organized. But everyone organized has a multi-year roadmap. So they need to now make room on the roadmap. So disparate things that you can start quickly A divisional structure is better. Those to me are the primary advantages of a divisional structure.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
There's a theoretical third advantage, which is you can hire so-called entrepreneurial type people that don't fit into a functional organization. But that one I kind of don't agree with. That's a bit of a rabbit hole. So I won't go there unless you want to ask about it.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That being said, once you get rowing, think about a bunch of us in like a crew, like a boat, whatever you call those, you know, crew boat, and we're rowing together. If there's 10 people in 10 boats, they can get going faster and they can go in different directions. But the 10-person boat is going to row faster than 10 one-person boats.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so once you get going, the function organization, what I basically tell people is it's harder to get something on the roadmap, right? But if it gets on the roadmap, we put the weight of the company behind it. Now, I like that constraint. I like the constraint of anyone can't just do anything because now we're focused. Now we're prioritized. Now we only do things that are differentiated.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And the governor is we only do as many things as I can focus on. That's what I do. And that's what Steve Jobs did at Apple. And that's what Walt Disney did at Disney. And that's what Elon Musk does at Tesla. You only do as many things as a CEO can focus on and manage. Now, this presumes a CEO is competent, intelligent, present. They understand the business.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
This doesn't work if you come from management consulting and you're a general manager and you don't really know the domain. That wouldn't work as well.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Yeah. I have a lot to say in response to that. Exactly. Maybe Elon is a bit of a red herring because there's all the surface level things about him that are very idiosyncratic. And I'm certainly not going to endorse everything he does because I do a lot of things differently. But I think the commonality of him, Jensen, Steve Jobs... And Zuck kind of ebbs and flows. And I know Zuck very well.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And I think he would say I was a big inspiration for his year of efficiency because I talked about what we did at Airbnb. But I think those people, they're pretty close to functional and they're pretty in the details. And they set the pace for the company and they generally really know what's going on at their companies.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It means like a lot of swagger for better or worse. And I don't think that's really what it means.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I totally, totally disagree with that. I think I've heard Jeff Bezos say that certainly more recently. He said, my job is to make as few high quality decisions as possible. And I could not disagree more with that. And so let's start by saying, it's not like I'm right and Jeff Bezos is wrong. By the way, when I say it, I'm also saying what Steve Jobs would have said. Was Steve Jobs right?
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Was Jeff Bezos right? The truth is there's multiple ways to do something. I'm strongly advocating for this way. By the way, Funny enough, I've talked to many people that were early members of Amazon, and that's not how Jeff Bezos ran it early on. So here's the key thing. I believe you need to hire smart people. The paradox is I believe most smart people want you involved.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They want your partnership. They don't want you to tell them what to do. But there's this assumption that like control is zero sum. Either I have the power or you have the power. And I think that's the flaw. There's a scenario where all of us are powerless. It's called most Fortune 500 companies. And there's a scenario where I have more power and therefore you have more power.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's not like zero sum and I've wrestled control. I found that the most talented people like my involvement as long as the involvement is constructive and involvement isn't telling them what to do. And involvement is pushing them. It's like, well, what about this? What about that? Steve Jobs went to Johnny Ives Design Studio every day. He wasn't telling Johnny Ive what to do.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
He was like discussing things and they were debating and brainstorming and it was partnership. And I think this is a really, really important framework. But let me give you one more.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So somebody might ask, wait, you're in all the details. How can you be in all details forever? That seems like it's not going to scale and someday you're going to get tired. And the answer is they're right. Here's what most people do. They hire smart people. They give them operating freedom. They have no idea if they're good or not because they're not engaged enough.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And then over time, they start getting signals that the person isn't good. And then they wrestle back control. And once they get involved, but they haven't been involved for months or years, suddenly the executive loses their confidence because they're only involved because they're not doing well. And that's the beginning of the end. And then you basically replace them.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
This happens every freaking company. So there's an inverse. And I'll use an analogy. I'm not a golfer. I'm terrible at golf. I don't think I've ever even shot a hole. I'm terrible. But I did a couple golf lessons once. And I had a golf instructor. The golf instructor literally coached me on every single swing.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And thank God I had the golf instructor, because if I just went on the golf course on my own, and I swung a thousand times, by the time the golf instructor got involved, I would have had a really screwed up swing, and would take even more work to retrain my swing.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So the golf instructor said, I'm gonna watch your swing thousands of times, and eventually this is muscle memory, and I won't need to watch your swing over time. And that's my philosophy. My philosophy is you start in the details. You're involved in every single thing. You hire great people, and you're in all their details.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And over time, once they develop muscle memory and they prove that they understand the system, then you can gradually let go. Give you an example. Two years ago, I wanted to write perfect press releases. Not because I think anyone reads them, but because if you can't put your ideas down in a clear press release, then you don't have clear thinking. You don't know why you're doing something.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Two years ago or three years ago when we did press releases, we'd do as many as 70 revisions. And people said, this is completely crazy. Are we going to like 10 years from now do 70 revisions of the press release? And the answer is no. The most recent press release for the Coast Network, I probably reviewed like three times. But it was the repetition in the details that was how people learned.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Another thing is that's apprenticeship. You know, you learn. And even if you hire experts, they're not experts at your company. They're not experts at collaborating. They're not experts in your business. So it's about starting in the details and letting go. And by the way, that's what I think Jeff Bezos did, even though he said his job is to make only a few high quality decisions.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That's not what he did in 1999. So that's kind of my philosophy.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Two things. The first thing is we're introducing something that we call the co-host network. So what is this? Well, let's start and give some background. Airbnb, we're only as good as the number of homes we have. And the more homes we have, the more modulated the prices are on Airbnb. So we need to get a lot more homes.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Pretty much. I mean, what I basically said is like, you want to make principled decisions, not business decisions. Principled decisions are if I don't understand the outcome or if I can't predict it, how do I be remembered? What do I think is the right thing to do? And the right thing to do, that can sound very subjective, but actually you would have thousands of inputs.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So that's essentially what I do. And it's kind of interesting because it's kind of like somebody asking you, how do you do what you do? You might not even like consciously know how you do what you do. But what I'm doing is I'm basically making a decision. The reason it's the leadership so valuable is somebody once said the most important thing leaders do is make decisions. And it's probably true.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Maybe the most important thing is they hire people and they assemble the right team. But probably day to day, the most important thing they do is make decisions. And It's really important that people understand the criteria for what you're making decisions.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so, yes, if you have clear principles, I mean, what I did is I went to my board and I said, I'm going to have to make like a thousand decisions. I can't run every decision by you. So let's agree on the principles and the framework for which I make all the decisions. And then I'm going to make all the decisions. And if something stands out, I will elevate to you.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I will retroactively show you all the decisions I made and If there's something that's huge, bet the company and one-way door, I will tell you ahead of time. Otherwise, give me authority to make all these decisions. And that's what I did with the board. They really liked it because the key to a crisis is speed. And if I have to debate every decision, we're not moving quickly.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's like a car chase. It's like, you know, should you turn left or right? Well, most importantly, you should turn quickly. And so that's what I did. As far as just to go back to this, like the golf swing analogy,
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
what i do the way i run airbnb is i review all the work every week every two weeks every four weeks every eight weeks every 12 weeks you might ask like how do you do how do you have people do a report how do they like keep two people happy and the answer is we're all in the same meeting together and i usually have my direct talk first because if i talk you'll like just agree with me then i'll make the final decision most my final decisions are just agreeing 90 of time i'm agreeing what the team says
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And frankly, we have more than 8 million homes today, but we'd love millions more in addition to the organic homes coming to Airbnb. So we went out to a lot of prospective hosts and we asked them, we do this periodically, you know, why aren't you hosting? Number one, people first say, you know, they had no idea the amount of money they can make.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And 10% of the time, I'm disagreeing. And if I disagree, I always try to say why. And I try to go down, like, here's my thinking. And so challenge my first principles. So whenever I make a decision, I try to ask myself, like I did in this conversation, what are the first principles driving this decision? And don't challenge my decision. Challenge my first principle thinking.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
In other words, like, here's my answer. Check my math. And that's kind of what I do. So the principles are, I think, really, really important to get pre-authorization from a board. You need to make a lot of fast decisions. But then when you're in a meeting, I'm not like in a meeting review and co-host network with like a series of four principles. I'm just intuitively making a decision.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think we should do X. And here's why. And let me share with you my work, my thinking. What do you think? What about this did I get right or wrong? And so the most important thing is to debating the first principles, not the answer.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I mean, there's not a single list. I mean, there's like core values. There's like strategic differentiators, like the things that you put in your S1 so people like know what you stand for. So there's those general things. But actually, here's another way of saying it. I don't push decision-making down. I pull decision-making in. I think of the company as one shared consciousness.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I remember one time I called Ron Johnson. Ron Johnson worked for Steve Jobs. He ran Apple Retail. And I remember asking him how Steve Jobs ran Apple. And he said, even when Apple was like 20, 30, 40,000 people, he only ever thought of Apple as 100 employees. That's why he had this offsite called Top 100. And so he said his job was to only manage the top 100 people and they manage everyone else.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And he never thought about the whole company. And that's kind of what I do. And maybe it's even fewer people. It's like 60 or 70. So I don't manage all of Airbnb. I manage the top 67 people, but I'm very engaged and I pull them in and I create one shared consciousness. And so.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I would say those people, if you were to interview every single one of my senior people, I don't think they would have like pithy word for word by verbatim like principles, but they wouldn't be able to describe exactly how I think because we're in so many meetings together.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I remember Scott Forstall one time, like right before he left Apple, I was at a group dinner with him and he said he used to spend 35 hours a week with Steve. Wow. Now, not one-on-one, but like he was in every meeting with Steve. So think about that, 35 hours a week, every single week, that's thousands of hours. So that's the equivalent.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I don't spend 35 hours a week with most people, but there are many people that spend 10 to 20 hours a week in a room with me. It's the same few dozen people. going through different meetings, creating one shared consciousness, being able to finish each other's sentences. And that's another version of founder mode. It's one shared consciousness. And so you can imagine that's not disempowering.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And it's a very compelling amount of money you can make. You can make tens of thousands of dollars with an asset you're already paying for. So we asked, well, why aren't you hosting? And the number one answer people gave us was they perceived it as being too much work. It's like, well, I have a job. I have kids. I have this. I have that.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It requires collaboration. If you want to be a lone wolf or a cowboy, that's not going to work. But if you're willing to work with other people, you're actually pretty empowered in this way.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That is absolutely not true.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
No, I'm not going to say what we pay, but that is so not true. That's not even close to true.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Okay. I'll wrap up with my view on Apple.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think Tim Cook has done an extraordinary job. I think he's done an extraordinary job, especially given the cards he's dealt. Right. What alternative was there? Right. Like Steve died. I don't know the circumstances, but I don't think, you know, I think it was a little bit like, you know, he resigns in August, dies in October, only eight weeks later.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So there's only eight week window between resignation and resignation. He's not even there. It's not like Bezos retired, but he's the executive chair. I think that Tim Cook basically took Apple from $300 million to whatever, $3 trillion, added more than 90% of the market cap, and it's done very, very well. He's a great operator. A couple things to say, though.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Number one, just because Tim added $2.7 trillion in market cap and Steed added $300 billion doesn't mean that Tim did most of the work because he inherited the most valuable product of all time. And there was just really continuing momentum.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
The iPhone. Probably the most successful product in the history of capitalism, right? I don't think that any other product has generated more profit. Maybe not more revenue, but more profit than the iPhone. The most successful company probably in the history of capitalism or at least certainly last 25 years. It's crazy when you think about it. Then ask yourself a couple other questions.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Let's imagine Steve Jobs didn't die in 2011. He died in 2005. right when the iPod video had just launched. Would they have come up with the iPhone? They might have. Would it have been the most successful consumer product of all time? Maybe not. I don't know who would have done it.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I don't know if I can come home, check in guests, or maybe I live in New York City here. And I have a summer home in Florida, but I can't be in Florida to check in the guests. So I need help hosting. And we thought to ourselves, okay, so now if somebody doesn't have the time, they either make one or two decisions. They don't host.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
My general philosophy is that Tim was an incredible period where what they really needed to do was maybe not invent a new product, but take the most successful product of all time and scale it and manufacture it and make it a completely ubiquitous product. And he did that. But the technology industry, I mean, the word technology may as well be a synonym for the word change.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
We're in the change industry. And it is very, very dangerous to not be constantly changing. And if you're a company that makes devices, the most important thing you need to do are make new tools, make new devices. I saw a Bloomberg report that said they're moving away from launches. They're moving more towards services. They're going more divisional.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think that whenever Tim – my unsolicited advice is whenever Tim decides to retire – The next CEO should also be the chief product officer. I asked people who was the chief product officer at Apple when Steve was live, and everyone said Steve. It wasn't Phil Schiller. Phil Schiller was a great SVP of product marketing, but he wasn't the chief product officer.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
That is a product company, and you really want to make sure long-term that a product person is driving the company. This goes to the very awkward thing that no one wants to talk about. Succession planning is hard because the people that are great product visionaries are typically young. They're young, they're less mature.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Who wants to put a young, not super mature person at the helm of a giant company managing... Founders are allowed to manage people older than them because they're the founders. But if you're not the founder, people just don't want to be managed by somebody younger than them who's maybe a virtuoso, a wunderkind, but they're a little immature. And the companies don't want to take that risk.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So they bias towards senior, grown-up founders functional experts, and typically that function is not the product. And I think that's a problem. Satya is more technical. I think that has afforded them more, but he mostly just got them back to Bill Gates' primacy. So I think that Apple should go back to having a CEO that's the chief product officer.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think they should rein the company in and simplify how they operate. But that's just my opinion.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
I think Airbnb is the right job for me. They definitely need somebody who has hardware experience.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Thank you. I love this. All right. Thank you, Nealey.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Or they go on Google, and they type in Airbnb property management company, and they find this third-party property management company. And there's many, many companies that can manage your Airbnb. The challenge we've noticed is the average five-star rating for third-party property managers on Airbnb is about a 4.62. It is significantly below the median range review score.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So we thought, well, what if we basically put together a whole collection of almost like Airbnb certified hosts that can manage your Airbnb for you? So we could basically create a marketplace where we match people with homes but don't have time with people. The best hosts in Airbnb don't want to expand, but they don't have a home.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And these would be people that only manage a few properties, so they're not going to be managing you and 100 other homes, maybe three, four, or five other homes. And so that is what we built. We built a network of co-hosts who will host your property with you and take care of your home and your guests. The average rating of a co-host is a 4.86. 73% are super hosts. And we have...
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
10,000 of them today in 10 countries, including, of course, here in the United States. So if anyone's listening and they'd like to make $20,000 a year with a house they already have and do very minimal work, you can go online. You'll go to the co-host network. We'll match you to the very best person for you. You'll have some choices.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
It's basically like 80 different factors to match you to the right co-host. Most importantly, where are you located? We want somebody near you. And then you negotiate the rate. So how do you how do you pay them? They take a cut on your bookings and you decide that cut or you negotiate together and they give and it can be based on whatever service you want.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
They can do all the hosting for you or they can do just some of it. So it's totally in your control. So, again, just to bring it all back. I think this is going to lock hundreds of thousands, potentially even millions of homes in Airbnb. And I think most importantly, this is going to lock more real people, regular people,
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
renting the homes they live in, rather than more furnished, dedicated rentals, which is what more likely a third-party property manager would likely do. So that's the main thing we announced. But of course, that's not it. Because as you know, twice a year, we want to make these big upgrades.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
We can talk a little bit more, maybe, if you want to go into later, why we do these, because it's a different way. We develop software a little more like a hardware company. where instead of just doing this continuous development every hour of every day, we do some of that. We try to have these big single moments where we bring a lot of upgrades together.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So we're also making more than 50 upgrades for guests. And the basic idea is to make Airbnb a more personalized experience. So for decades, if you went to a travel website, whether it's Expedia or this or that, you'd have the same exact search experience as someone else. It's not personalized to you. And we think travel should be more personalized.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So we have a whole bunch of features and upgrades that really personalize the search experience based on the past bookings you've done and what we know about your profile. So those are the basic things we've done, 70 upgrades. And maybe the final thing I'll just say, These 70 upgrades are 70 out of 430 upgrades that we've made over the last two years.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So this system of launching, I think, has really accelerated product development at Airbnb.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
No, actually, let me break this down. So there's a lot of third-party professional property management companies. If you're like a third-party company, you don't want to have a business with just managing five people and build your own website and build your own demand for five people for five properties. So you tend to need economies of scale. So you're going to be managing hundreds of properties.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
even thousands of properties. If you manage thousands of properties, now you have a whole bunch of employees. And then you probably have a company name and your employees probably wear a t-shirt with a company name on the t-shirt. This is basically just a little more of an industrial hospitality experience. Someone might argue it's a little more like a hotel.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
There can be pluses to that from a service standpoint, but a lot of people, the original ethos of Airbnb of like living like a local, this is a little bit different than that. So What this is, is number one, every single co-host is vetted by Airbnb. We go through everyone's profile. We only allow co-hosts to be people that have high ratings in Airbnb. So these are the very best hosts in Airbnb.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Additionally, we bias towards people that manage only a few properties. And the reason why is we noticed the more properties you manage, the lower the five-star rating a guest leaves after a certain scale. There are some property managers that are amazing and defy this. But generally speaking, hospitality is a difficult thing to industrialize.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And so people want a local feel as compared to Amazon or delivery or other types of businesses where scale makes the service better. In hospitality, scale often makes the service more challenging. And so I think this is maybe an alternative to the extremely professionalized third-party property managers. And in some ways, it kind of moves Airbnb a little more closely towards the roots.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And again, I think we're going to bias towards more regular people putting up their real homes rather than more dedicated rentals. So that's where we're going. Now, just one caveat, if anyone's listening and they – work at or a third party property manager, we love the ones guests love.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
So though the average rating across the board isn't as high, there are some unbelievable property managers and we love them. The last point I'll just make is it is true that property managers are more likely to, you know, you might call it cross list. They'll cross list their inventory in many different platforms.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And, you know, one of the core values of Airbnb is you come to Airbnb to find something you can't find anywhere else. If you can find it everywhere else, then we're just like another e-commerce platform, but not adding a lot of value. So the co-hosts in Airbnb are exclusive and those properties are exclusive to Airbnb.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Here's the thing people don't realize. Airbnb is a harder business to run than it appears because the reason – Apple does not appear to be an easy business because one device is like a miracle in your hand. OpenAI doesn't appear to be an easy business. But Airbnb does. And the reason Airbnb appears to be an easy business is because at a subscale, it is an easy business.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
If you wanted to just find a home in Croatia, you don't even need a website. You can just get a friend. You can get a house. The part that makes Airbnb hard – is 4 million people a night from nearly every country in the world, more countries than Coca-Cola operates, living together. That's the part that makes it hard, the scale.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And the scale is the only way you can actually do this profitably or very, very profitably as well. So that's the part that makes it really difficult. In other words, I remember we had, I think it was Doug Leone from Sequoia Capital. This is like 10 years ago. He comes to my office and he said, you have the hardest business ever. of any of the Sequoia portfolio companies to run.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And he said, first of all, you have to have a mobile app, but you need a website. This is when Uber only had a mobile app. So you need to be on every platform. You need to be in every country in the world. But you need supply and demand, and they're not in the same city. Uber could go one city at a time. They can get riders and drivers in one city. We had to get...
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
like supply everywhere and demand everywhere and perfectly match the corridors. It is highly regulated, as regulated as Uber, probably even more regulated in many ways. And the hotel commissions and the hotel trade councils are significantly more powerful than the taxi union. So there is a very, very difficult business.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
We're handling a lot of money through the platform, over $90 billion a year, which is the GDP of Croatia. We have to deal with physical safety and more types of physical safety than even ride sharing because of all the myriad things. Obviously, there's a lot of accidental issues that can occur. You have to deal with some of the hardest customer service challenges you can imagine.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
Somebody checks in at 11 p.m. in Paris. They're from Tokyo. They don't speak French, and the host isn't responsive, and they have to call customer service. Yeah. You start to really think about – you have to manage the quality of supply that you don't actually own or control. But you have to influence the quality, and you're competing with an alternative supply that has a front desk.
Decoder with Nilay Patel
Airbnb CEO Brian Chesky on what founder mode really means
And by the way, I could keep going on and on and on or search problem. People think that like Google's got one of the hardest search problems. Airbnb's got a more pedestrian search problem. And I'm not saying we have any type of search technology like Google, but here's the difference. When you type something in Google, when's the last time you needed to ever look at the third page of Google?