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- [00:01]
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Logan
This podcast is supported by.
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Tulsi
Google hi folks, Logan here and Tulsi.
- [00:45]
Logan
We're from the Google DeepMind team. We're releasing Gemini 2.5 Pro, our most intelligent model. It's now available for you to test out in Google AI Studio. It's been awesome to see what everyone's.
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Neal Patel
Been building from creating mini games from.
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Tulsi
A single prompt to debugging 50,000 lines of code.
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Ad Sponsor
We're excited to see what else you create.
- [01:03]
Logan
Try it out today on Google AI Studio by going to aistudio.google.com and let us know what you build. Support comes from ServiceNow. We're for people doing the fulfilling work they actually want to do. That's why this ad was written and read by a real person and not AI. You know what people don't want to do boring, busy work. Now, with AI agents built into the ServiceNow platform, you can automate millions of repetitive tasks in every corner of your business, it, HR and more so your people can focus on the work that they want to do. That's putting AI agents to work for people. It's your turn. Visit servicenow.com.
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Neal Patel
Hello and welcome to Decoder. I'm Neelai Patel, Editor in Chief of the Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with Airbnb co Founder and CEO Brian Chesky, who is only the second person to be on Decoder three times. The other is Meta CEO Mark Zuckerberg. It's rare company and what made this one particularly good is that Brian and I were together in our New York City studio for the first time. It's pretty easy to hear how much looser and more fun the conversation was because we were in the same room. Now, Brian made a lot of waves a couple months ago when he started talking about something called Founder Mode, or at least one well known investor Paul Graham wrote a blog post about Brian's approach to running Airbnb that gave it that name. Founder Mode has since become a little bit of a meme that means basically what anyone wants it to mean, and I was excited to have Brian back on the show to talk about it and what specifically he meant. After all, one of the reasons I love talking to Brian is because he spends so much time obsessing over company structure and decision making. Pure decoder bait. In fact, if you've listened to Brian's previous appearances on Decoder, you've already gotten a pretty good preview of Founder Mode because Brian radically restructured Airbnb after the pandemic to get away from its previous divisional structure and into a functional organization that all works from a single roadmap and allows him to have input on many more decisions. That's really what he's been Talking about with FinderMode, that good leaders need to be in the details. You'll hear him say that very clearly, and also express some disappointment in the idea that Founder Mode is about pure swagger or micromanagement. But leaders being in all the details and helping make all the decisions is not how most companies run. And of course we went back and forth on how much good leaders should delegate and trust their teams to make independent decisions. If you're a decoder fan, this is the good stuff. Brian and I really got into it. You'll hear him talk about a wide range of management styles, what they're good for, and why he still considers himself a student of Steve Jobs. Actually, Steve Jobs comes up a lot in this one, as does Jony I've whose new company Love from does design work for Airbnb? Don't worry, I asked about that too. On top of all that, we actually started the show by talking about some big Airbnb news. The company just launched something called the Co Host Network, which is a directory of experienced Airbnb hosts that can run listings for people who just want to make a little extra money renting out their homes without all the hassle. It's a big change, which effectively creates a new role on Airbnb's platform. And it gave me a great opportunity to talk to Brian about some of the authority issues surrounding Airbnb and what it's like to run a platform that has all of the same issues as any other platform like YouTube or TikTok, but which deals in literal physical housing. All of that in an hour, plus even more, there's assessments of Tim Cook and such an adela in here talking to Brian is a ride, but I think I held my own, and I think you'll really like this one. Okay. Brian Chesky, CEO of Airbnb. Here we go. Brian Chesky, you're the co founder and CEO of Airbnb. Welcome back to Decoder.
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Tulsi
Well, thank you for having me. Again.
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Neal Patel
You're only our second third time guest.
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Tulsi
Okay.
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Neal Patel
The other one is Mark Zuckerberg.
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Tulsi
Oh, wow. This is really good company.
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Neal Patel
And you are in the studio with me. If your people are listening, we're together.
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Tulsi
Which is amazing the first time I've been in the studio with you. So thank you for having me here.
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Neal Patel
Yeah. Actually, the last time you were on, it was such a good conversation. We were both in New York and I. My brain reinterpreted it as we were together because it was a good conversation.
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Tulsi
Oh, yeah. That's a sign of a good conversation.
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Neal Patel
But we were right. Remote.
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Tulsi
We were remote in the same city.
- [05:24]
Neal Patel
Yeah. And it was. But you're here today. It's great. There's a lot to talk about. Airbnb just had its winter release, which a bunch of features we should talk about. I'm actually very curious about how you were thinking about hosting and professionalizing hosting and what that means for a platform. And then if you're a decoder listener, you got to know. I'm going to talk to Brian about founder mode.
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Tulsi
Yeah.
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Neal Patel
The thesis of our show is basically right up the Venn diagram of Decoder and founder mode, and what those ideas are are basically a circle. And then I just want to talk about Airbnb generally, how the company's going, and you've made some org chart changes of your own. Let's start with the news. The winter release, the last time you were on, you actually talked about staggering Airbnb's releases on one timeline for the whole company. So you get summer release, the winter release. What's the big news in the winter release?
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Tulsi
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. And frankly, you know, 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, you know, 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. And it's a very compelling amount of money you can make, 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. 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, or they go on Google and they type in like Airbnb, like property management company. And they find this third party property management company. And there's a, there's many, many companies that can manage your Airbnb. The challenge we've noticed is the average 5 star rating for third party property managers on Airbnb is about a 4.62. It is significantly below the median range review score. So we thought, well, what if we basically put together a whole collection of almost like Airbnb certified host 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 the best host in Airbnb. They want to expand, but they don't have a home. And these would be, you know, people that only manage a few properties. So they're not going to be managing you in a hundred 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 to 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 10,000 of them today in 10 countries, including of course here in the United States. So if anyone's listening, and they 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. 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 pay them? They take a cut on your bookings and. And you decide that cut or you negotiate together and they give. And it can be based on whatever service you want. 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 renting the homes they live in, rather than, you know, 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, you know, as, you know, twice a year we want to make these big upgrades. We can talk a little bit more maybe, if you want to go into later. Like why we do these. Because it's a different way. Right. 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. 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. 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 me. The final thing I'll just say is these 70 upgrades are 70 out of 430 upgrades that we've made over the last two years. So this system of launching, I think, has really accelerated product development at Airbnb.
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Neal Patel
Yeah, I want to come back to the product development cycle. You all do do it very differently, but I want to stay on the co host for one second that is professionalizing a huge portion of Airbnb. I know some professional hosts who management companies who do other properties. You know, their point of view is you gotta find us. We'll market to people who own properties and then we'll put you on every platform. You're gonna do all of the discovery of finding a co host and then the negotiate a cut and then handling the splits on your platform.
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Tulsi
Yes.
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Neal Patel
And is that to just bring a more professional class of management companies directly into Airbnb?
- [11:06]
Tulsi
No, actually, let, 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, 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. And this is basically just a little more of an industrial hospitality experience. Someone might argue it's a little more like a hotel. Yep, 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. 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. And so people want a local feel as compared to Amazon or delivery or other types of businesses where, you know, scale makes the service better and 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. 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 a one caveat. If anyone's listening and they work at or a third party property manager, we love the ones guests love. 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. 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 and Airbnb are exclusive, and those properties are exclusive to Airbnb.
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Neal Patel
One of the reasons I always like talking to you is that Airbnb has all of the challenges of a Internet video platform. It's a platform suppliers and audiences, but then you're managing this very physical thing that seems very challenging to get through.
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Tulsi
It's Airbnb. Here's a. Here's the thing people don't realize Airbnb is a harder business to run than it appears, because the reason, like 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 easy business is because at a subscale, it's. It is an easy business. 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 it be 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. 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, like, I remember we had. I think it was Douglione from Sequoia Capital. This is like 10 years ago, he comes to my office and he said, you have like the hardest business of any of the Sequoia portfolio companies to run. And he said, like, you know, first of all, you have to have a mobile app. You need a website. You know, 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 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. We're handling a lot of money through the platform. You know, 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 like issues that can occur. You have to deal with some of the hardest customer service challenge you can imagine. Somebody checks in at 11pm In Paris, they're from Tokyo, they don't speak French and the host isn't responsive and they have to call customer service. So, you know, 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. 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 has got a more pedestrian search problem. 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? 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 that doesn't involve taking this business and expanding this model to new categories and verticals.
- [16:57]
Neal Patel
One of the reasons I like the frame of it's a platform when I chat with you is I can just come up with ways that I would game any other platform and ask them how you would solve those problems. So how would I game TikTok or how would I gain YouTube or how do bad actors use those platforms? And it seems like you have a lot of those same challenges.
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Tulsi
It's a cat and mouse game. It is so challenging. For example, we. 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 like, knew how to like, call customer service and what to say to get your like, negative reviews taken down. 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 it's a longer tail. Right. Like, it's not like, like somebody, like on YouTube, people can be gaming things, but generally like a disproportionate number of views go to certain videos. Right. 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. So there's a lot of different schemes that can occur.
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Neal Patel
The reason I brought that up in the context of co host network is it seems like professionalizing or certifying that class of user on Airbnb goes a long way, 100% towards ending some of the gamification that occurs in the platform.
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Tulsi
Yeah, I mean, basically, maybe to like, mildly oversimplify the entire, like 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 like the simplest level. So if you think about, like, it's really important to understand the history of where we came from. The context of Starting Airbnb was eBay and Craigslist. 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. There's nothing. 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 statistics, 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 and 2 out of 3 host 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.
- [19:59]
Neal Patel
And.
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Tulsi
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 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 kind of areas to exploit a company there is.
- [20:19]
Neal Patel
We need to take a quick break. We'll be right back.
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Tulsi
Foreign.
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Logan
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- [21:41]
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- [24:12]
Neal Patel
We're back with Airbnb CEO Brian Chesky discussing how the similarities and differences between a product like Airbnb and other big social platforms influence the moderation tools and design decisions that go into it. All right, let me put that right next to the platforms. And forgive me, but we're however many days away from the election and the thing I see of all of the major social networks right now is they're doing less moderation. Yes, they are less interested in verifying things are true or false or even that people are real people and not AI like you just see it all over the place. They've taken their hands off Airbnb's platform. You're saying we're doing more? Yes, we're certifying more things. When you sign up and you want to rent the room in your house while you're gone on vacation, here's a list of approved co hosts. Here's experiences we're designing with professional designers. Why the difference? Why is it all the other platforms are letting go and you're grabbing on tighter.
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Tulsi
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. Like, 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? Like, they get very upset and personal when a home doesn't work out. Even if 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. This is not like an advertising platform where the like product in 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 Airbnb's are just not that politicized. You know, 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, 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 the platforms in the future that are going to be most successful are going to be the ones that have the greatest truth and veracity of information. And veracity 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.
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Neal Patel
Almost the opposite, actually.
- [27:08]
Tulsi
But I would have done that and I would have done that and then, you know, maybe. Maybe you do. Yeah, I would have verified 100% of the users. I still think a platform that verifies every single person is. It's a really, really good idea. And that's what we do right now. Yeah, 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 and like. And. But again, a lot of the reason people don't want moderation is they distrust 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?
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Neal Patel
I think in the speech context, there's quite a long history of debate about anonymity. We can set that aside in the context of Airbnb. But it's interesting how the platforms, as expressed in atoms for you and bits for them, result in very different incentives.
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Tulsi
Totally.
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Neal Patel
And the part where you're taking more and more control of the experience because you think that's perfectly aligned with the customer, at some point, do you just end up with a front desk? Are you just running the hotel like that? That's the farthest end of that journey, it seems like.
- [28:34]
Tulsi
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 room while remaining, 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. 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, they don't. You don't. 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. It's such a commodity. You don't even have any choice. You just choose the hotel. You barely choose the room. Maybe 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, 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? 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're. 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're. They start to feel more similar, especially chain hotels. 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? The front desk, where I can be, like, immediate, it can be multilingual, it can adjudicate. I mean, I at least can be a front line that can better adjudicate disputes between guest notes 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 hundred thousand times somebody complained about this and what was the most likely resolution that led to satisfaction for both parties. 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 guests and host, or if you do want to talk to a person, it can help the customer service person. So I think we want to manage Airbnb 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.
- [31:20]
Neal Patel
Yeah. Where's the last step of that? Is it just owning the property? Is it taking the book?
- [31:24]
Tulsi
Yeah, I mean. I mean, the step beyond this we haven't gone to is you have to apply the list. In Airbnb, we have certain quality criteria, and if you don't meet that quality criteria, then you can't list Airbnb. That's probably where we're going within our new verticals. Our new verticals. We're going to be launching, starting next year, 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 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 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 poly 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.
- [32:30]
Neal Patel
This idea that you'll have some set of people who will apply. I just keep coming back to the history of various platforms. YouTube for a while had these things called MCNs. They were like big companies, multi channel networks and they would buy a bunch of popular YouTube channels and they wanted to be like preferred suppliers to YouTube. And YouTube basically decided this was too big of a risk. They didn't want anyone to have that level of control over YouTube. So they basically killed all the MCNs. This is a lot. There's books about it now that you can go read. Do you ever foresee yourself as having that kind of supplier on the Airbnb platform? This is a hosting provider that provides this kind of experience at this level that we can trust to build something out with. And they're going to own and operate the, the actual property.
- [33:14]
Tulsi
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 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. 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.
- [33:48]
Neal Patel
To go, yeah, I'm interested to see how that plays out. Because on the.
- [33:51]
Tulsi
It's all going to play over the next 24 months.
- [33:53]
Neal Patel
I'll give you another really dumb example. Like, Buzzfeed designed its entire business on being the best at Facebook. And one day Facebook was like, well, we can. We don't need you. An army of teenagers will just make Instagram for us every day.
- [34:06]
Tulsi
Yeah.
- [34:06]
Neal Patel
And now buzzfeed is whatever business it is.
- [34:08]
Tulsi
Yeah.
- [34:08]
Neal Patel
And you can see how whatever your tier is called, the A tier in Nashville, someone's like, we're just going to dominate the A tier in Nashville and Airbnb will have to deal with us. Is that a eventuality you've thought about?
- [34:20]
Tulsi
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. Beast video can get 1 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. 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. 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. But, you know, that would be a bummer if we did that and it was misaligned with the customer. But it turns out that, like, 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 managed two, down to a thousand. And it literally goes. And there is not one single deviation from one to a thousand.
- [35:47]
Neal Patel
Wow.
- [35:48]
Tulsi
It's crazy. Now, it doesn't mean, therefore all people managing thousands of properties are bad. It just means that most people haven't figured out how to industrialize hospitality. And there's, it's just. Oh, here, let me give you one other argument for why regular people can sometimes work economically. Really well, 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. And so I might have six coffee mugs, but I'm gonna have 10 coffee mugs. I might not have a KitchenAid mixer. These are all cost 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. 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's.
- [37:03]
Neal Patel
Yeah, that's really interesting. Well, I'm very interested to see how co host plays out when your fourth time, we'll check in on I Cannot Wait.
- [37:09]
Tulsi
I love these conversations. And the thing I appreciate is the depth that you go into.
- [37:13]
Neal Patel
Well, get ready because it's coming.
- [37:15]
Tulsi
Let's do it.
- [37:15]
Neal Patel
So I said, I think the Founder Mode conversation and the decoder questions are just a pure overlap.
- [37:21]
Tulsi
Yes.
- [37:22]
Neal Patel
The last time you were on the show, you described reorgang Airbnb. You restructured the company. You went on to this roadmap where you ship twice a year in big deliveries. And you said, I got rid of all of these middle managers.
- [37:35]
Tulsi
Yes.
- [37:35]
Neal Patel
And I'm the product manager. And everyone rolls up to me and I thought, oh, this is cheap.
- [37:38]
Tulsi
Product Officer.
- [37:39]
Neal Patel
Chief Product Officer. And I thought, this is great. Like, this is what I want out of a decoder conversation. And then like a year passes and you give a talk. And I was like, I've seen that talk before. That's the. We don't have PMs. Right. Like, let the designers. I've heard this from Brian before. And then Paul Graham goes and writes a blog post called Founder Mode.
- [37:56]
Tulsi
Yeah.
- [37:57]
Neal Patel
And everyone is reacting to it.
- [37:58]
Tulsi
Yeah.
- [37:59]
Neal Patel
Is there something meaningfully different than the way you have structured Airbnb and Founder Mode? Is there. Am I missing something? Has something changed in that?
- [38:08]
Tulsi
I don't think so. I don't think so. I think that, 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, let me give a little bit of background on that talk.
- [38:23]
Neal Patel
Yeah.
- [38:23]
Tulsi
Okay. So you gave the first version of.
- [38:26]
Neal Patel
This talk at a FIGMA conference.
- [38:28]
Tulsi
Yeah, yeah. And the FIGMA conference was kind of like maybe a quarter of what I said. So let me just, let me just go. I'll do like the, 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, 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. 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. Like the graphics team, it was a called the creative group. 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 were 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. 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. 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. The problem with that, though, is that once you subdivide the company, the company starts roaming 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. 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 an 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. And so suddenly groups like, you know, 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 sensors 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 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. 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 on this burrito. I don't know what that means. You know like I think people think it means like the founder swagger. I don't give a fuck, I'm going in, I'm kicking ass. That that's kind of what it turned into. And only founders have that. And that wasn't the message. If I could summarize founder mode in like 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 going to the details and their leaders aren't going to details. And one day you're going to wake up and you have 50 manager, 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 and 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. Functional just means expertise based, not general management base. 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. Like the most important thing a company does is make a product. If the CEO is not the expert in the product, then why are they the CEO? I another 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. 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. 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. A few weeks ago, I had dinner with his son, R.E. 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. He said he never felt like he was micromanaging because he was partnering with people on the details. And I asked, like Johnny, I've. And people like Hiroki who worked for Steve. And I said, do you feel like Steve Jobs micromanage you? And they said, no, he didn't. I don't know, maybe I'm a micromanager, maybe I'm not. 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. 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. He basically said, to turn a company around, this CEO just needs to set the pace of the company. You set the vision you set. But more important than the vision, I think you set the pace, you set the standards, and, 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, you can buy founder mode to a nonprofit, to a volunteer organization, to being a sports coach. It just means the 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, like, they might disagree, right? Like 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 engineering, which is the schedule. So you have to weigh all these trade offs. That's why you have to be in the details. So that's a little bit of a. That's maybe one other thing before we wrap up is.
- [45:47]
Neal Patel
Oh, we're far from wrapping up.
- [45:48]
Tulsi
Yeah. Oh, yeah, yeah, yeah. One tidbit I'd like to say about hiring. Just, just like, 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 SVP's. There's about like seven of them. And then I have, you know, 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, you know, 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 Shrek reports, 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 just, it's like I can't track everything. But all VPs dual report. They report to me and to their executive and I am the co hiring manager. 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. 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.
- [47:15]
Neal Patel
We have to take another quick break. We'll be right back.
- [47:18]
Tulsi
Foreign.
- [47:28]
Neal Patel
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Tulsi
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Neal Patel
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Tulsi
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Neal Patel
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Tulsi
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Tulsi
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Tulsi
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- [49:30]
Neal Patel
We're back with Airbnb CEO Brian Chesky talking about Founder Mode, what its origins are inside Airbnb and how the phrase has helped clarify some of Brian's big thinking on management philosophy. So I think the branding of Founder Mode has offered you some narrative clarity. It's very clear from the last time we had a very similar kind of conversation. If I did pull all of that back into what are we really describing here in the sort of decoder framework, I would say what you are describing is fundamentally be a functional organization, not a divisional organization. And that was the big change that you made the last time you were on the show. You've since made other changes.
- [50:12]
Tulsi
Right.
- [50:13]
Neal Patel
You just created this new role in the C suite, Chief Business Officer. You promoted your CFO into that role. Walk me through that.
- [50:21]
Tulsi
Right?
- [50:21]
Neal Patel
You're obviously evolving how you're thinking of the company and the roles within the company inside of this framework. How'd you make that decision?
- [50:28]
Tulsi
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. 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 functional organization is you cannot do disparate things. Yeah, 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 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, you know, business revenue, Commercial. Commercial. There's different names. The 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 place play that role. The general managers are ostensibly both the like mini CEO and they own the business 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, the business model, the market size, you know, what are the kind of dynamics of this market, you know, like co host, 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? Like there's just a lot of detailed questions one's meant to answer. So we decided to create a chief business organization. Organization. It has three functions. One is supply. Supply was always a function 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 are me. 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. 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 we had a product marketing person that's understanding what's the product, how are we going to market this? Like 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, 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 WARG to then take that playbook and bring it to all the different countries. 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 I said I fired all the product managers. And what actually happened was I got rid of the classic product management function. I reassigned the most senior product manager 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, 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.
- [55:06]
Neal Patel
It's funny that you say all this. If you ask my CEO, he will tell you that I scream that we should be divisional all the time. Yeah, because I think tech journalism is different than, I don't know, video game journalism is different than sports, is different than New York magazine. But at the end of the day we all make one kind of thing and there's reasons to have central teams and there's reasons to share costs. Do you ever find yourself thinking, okay, if I was in the other kind of organization, something else would be faster, that there would be another kind of. I would make this trade off but there would be a benefit to being in the more divisional.
- [55:38]
Tulsi
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. 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, but there again the major downs. Okay, 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. 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. The second downside to a functional organization is it takes longer to start 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. There's a theoretical third advantage which is you can hire you know, so called entrepreneurial type people that don't fit into a functional organization. But I, that one I kind of don't agree with that. That's a bit of a rabbit hole. So I won't go there unless you want to ask about it. That being said, once you get rowing it think about a bunch of us in like a, like a crew, like a boat, whatever you call those, you know, crew boat and we're rowing together. If we, 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. And so once you get going the function, organization, what I basically tell people is I'm is it's harder to get something on the roadmap, 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 prioritizing. Now we only do things that are differentiated 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, present, they understand the business. This doesn't work if you like come from Management consulting. And you're now like, you know, you're. You're a general manager and you don't really know the domain. Like that wouldn't work as well.
- [58:22]
Neal Patel
I feel like I have a. Like you're setting aside one topic. I'm just setting aside Elon.
- [58:26]
Tulsi
Yeah. I have a lot to say. Exactly. Elon. Maybe. 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, like, you know, endorse everything he does, because I do a lot of things differently. But I think the, the commonality of him, Jensen, Steve Jobs, and Zuck kind of ebbs and flows, I don't think. And I know Zuck very well, and I think he would say I was a big inspiration for his year of efficiency because I talked about, we did 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.
- [59:08]
Neal Patel
I want to talk about micromanagement real quick, and then I want to end with decisions, which is the other big decoder question that I always like talking to you about. You mentioned that it's toxic. People don't like it. You mentioned that founder mode as a brand means people are just acting like jerks to their companies. It's very.
- [59:23]
Tulsi
It means like a lot of swagger, for better or worse. And I, I don't think that's really what it means.
- [59:28]
Neal Patel
And I, and I actually think it is mostly for worse. I don't think it is for better in most cases. You're obviously outlining a very deep level of, like, management thinking. You've thought of these companies a lot. You thought about your own company a lot. You thought about these trade offs a lot.
- [59:42]
Tulsi
Yeah.
- [59:43]
Neal Patel
The general sense that you should be in the details. You should not just hire smart people and let them do whatever they want. I talked to a lot of CEOs in the show and they're like, my secret is that I hire smart people and I let them do whatever they want.
- [59:55]
Tulsi
Yeah.
- [59:55]
Neal Patel
I ask a lot of CEOs, how do you make decisions? And I would say one of the most common answers we get is it would be best if I wasn't making so many decisions. If my team was empowered and all I was doing was breaking the hardest ties or making the biggest, riskiest investment decisions.
- [60:12]
Tulsi
Yeah.
- [60:12]
Neal Patel
So they weren't feeling that pressure.
- [60:13]
Tulsi
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? 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. They want your partnership. They don't want you to tell them what to do. But there's this assumption that like control a 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. It's not like zero sum and I've wrestled control. I found that the most talented people like my involvement. As long as evolvement's 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 Jony I've's design studio every day. He wasn't telling Jony I've what to do. 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.
- [61:53]
Neal Patel
Yeah.
- [61:54]
Tulsi
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, 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. 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, then you basically replace them. This is 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. 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 structure got involved, I would have had a really screwed up swing and would take even more work to like retrain my swing. So the golf instructor said, I'm going to 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. 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. Two years ago or three years ago, when we did press releases, we 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 in 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. 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, that's not what he did in 1999. So that's kind of my philosophy.
- [64:19]
Neal Patel
Let's talk about decisions. Actually, this is the other day Carter question you've been on several times I've asked you how you make decisions. Several times I went back and looked, and the one that struck me was the last time you're On I said, how do you make decisions? You said, let me tell you a long story. And it was about various Airbnb controversies. Ready to make big decisions. And you said, really? I'm going to have to make so many decisions that I went to all my team and I said, here are our principles. Trust me to use these principles, and this is how I'm going to make decisions. Is that still the framework that everyone just agrees on, the core principles?
- [64:49]
Tulsi
Pretty much. I mean, yeah. What I basically said is, like, you want to make principal decisions, not business decisions. Principal 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. So that's essentially what I do. And, you know, it's kind of interesting because, like, 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. Maybe, maybe the most important thing is they hire people and they assemble the right team. But. 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 which you're making decisions. And so, yes, if you have clear principles. I mean, what I did is I went to my board and I said, I'm gonna 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 gonna make all the decisions. And if something stands out, I will elevate you. I will retroactively show you all decisions I made. 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. It's like a car chase. It's like, you know, should you turn left or right? Well, most importantly, to turn quickly. And so that's what I did. As far as just to go back to this, like the golf swing analogy. 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, he'll like, just agree with me and then I'll make the final decision. Most my final decisions are just agreeing. 90% of time I'm agreeing with the team says, and 10% of time I'm disagreeing. And if I disagree, I always try to say why. And I try to like, 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. 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 meeting to make a lot of fast decisions. But then when you're in a meeting, I'm not like in a meeting reviewing Coast Network with like a series of four principles. I'm just intuitively making a decision. 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.
- [67:52]
Neal Patel
Yeah. Does the company know the principles that you use to make decisions? Is that published? Is that a thing that you talk about?
- [67:57]
Tulsi
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. 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 off site called top hundred. And so he said his job was to only manage the top 100 people and they manage everyone else. 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 six, seven people. But I'm very engaged, and I pull them in and I create one shared consciousness. And so 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. 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. Now, not one on one, but like he was in every meeting with Steve. So that. Think about that. 35 hours a week, every single week. That's thousands of hours. So that's the equivalent. 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, be 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. You know, it requires collaboration. If you want to be a lone wolf or a cowboy, like, that's not going to work. But if you're willing to work with other people, you're actually pretty empowered in this way.
- [69:57]
Neal Patel
We got to wrap up, but I need to ask you one very important question.
- [69:59]
Tulsi
Okay.
- [70:00]
Neal Patel
I've been thinking about this entire time. You've mentioned Apple and Steve Jobs and Jony. I've a bunch of times. I know that Airbnb works closely with Love from which is Johnny I company. There's a New York Times article. I'm looking at it.
- [70:12]
Tulsi
Yep.
- [70:12]
Neal Patel
It says the clients pay love from as much as $200 million.
- [70:17]
Tulsi
That is absolutely not true.
- [70:18]
Neal Patel
You don't pay. You know you're not paying Johnny.
- [70:19]
Tulsi
No, we're not. No, I'm not going to say what you pay, but that is, like, so not true. And that's not even close to true.
- [70:23]
Neal Patel
Okay. And the other question I have is, you've talked about Apple a lot. They don't have Steve Jobs anymore. They don't have Johnny I've anymore. They have started a bunch of divisions to do all kinds of other things. Do you think that's sustainable for them?
- [70:34]
Tulsi
No.
- [70:35]
Neal Patel
You are one of the closest watchers of this company I can think of and I'm very curious what you think.
- [70:39]
Tulsi
Okay, I'll wrap up with my view on Apple. Yeah. 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. So it's only eight week window between resignation and 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 of things to say though. Number one, just because Tim added 2.7 trillion in market cap and steed out 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.
- [71:36]
Neal Patel
The iPhone.
- [71:37]
Tulsi
The iPhone, the most, probably the most, 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. Let's imagine Steve Jobs didn't die in 20, 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. 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 run. And he did that. But the technology industry, I mean, the word technology may as well be a synonym for the word change. 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 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. 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's live and every one said Steve, it wasn't Phil Schiller. Phil Schiller was a great SVP of product marketing, but he wasn't the Chief Product officer. 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. Who wants to put a young, not super mature person at the helm of a giant company managing. You know, 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 wunderkin, but they're a little immature and the companies don't want to take that risk. So they bias towards senior, grown up, functional experts. And typically that function is not the product. And I think that's a problem. Satya is more technical. I think that is afforded them more. But he mostly just got him back to Bill Gates primacy. So I think that Apple should go back to having a CEO that's the Chief Product Officer. I think they should reign the company in and simplify how they operate. But you know, that's just my opinion.
- [74:11]
Neal Patel
Would you do that job?
- [74:13]
Tulsi
I think Airbnb is the right job for me. They definitely need somebody who has hardware experience.
- [74:17]
Neal Patel
Fair enough. Brian, it is always a pleasure. We got to have you back sooner than a year.
- [74:21]
Tulsi
Thank you. I love this. All right, thank you, Neely.
- [74:26]
Neal Patel
I'd like to thank Brian Chesky for taking the time to join me on Decoder and thank you for listening. I hope you enjoyed it. Like to let us know what you thought about this episode or really anything else. Drop us like you can email us at decoder@the verge.com we really do read all the emails and I would like to say thank you to everyone who emailed us about the Intuit episode. You can also hit me up directly on threads at reckless 1280. And we have a TikTok. Check it out. It's at Decoder Pod. It's a lot of fun. If you like Decoder. Please share it with your friends and subscribe wherever you get your podcasts. Decoders are production, the Verge and part of the Vox Media Podcast network. Our producers are Kate Cox, Nick Stat. Our editor is Kelly Wright. Our supervising producer is Liam James. The Decoder music is by Breakmaster Cylinder. We'll see you next time.
- [75:07]
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