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Invest Like the Best with Patrick O'Shaughnessy
Brian Chesky - AI Founder Mode - [Invest Like the Best, EP.471]
01:15:23
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- [00:00]
Podcast Host
Most software companies try to maximize your time on their app to juice engagement. Ramp does the exact opposite. Ramp understands that no one wants to spend hours chasing receipts, reviewing expense reports and checking for policy violations, so they built their tools to give that time back, using AI to automate 85% of expense reviews with 99% accuracy. And since Ramp saves companies 5%, it's no wonder that Shopify runs on Ramp, Stripe runs on Ramp, and my business does too. To see what happens when you eliminate the busy work, check out ramp.com invest Felix Byrogo is a personal finance agent that turns a single prompt into finished client ready work using your firm's own templates, context and standards. Send Felix an email like Take these comments and turn them for me or update my tracker with the context of these emails. Or run the ability to pay math on this buyer and Felix sends back finished PowerPoint decks, Excel models and sourced research. Felix works the way your team already does, delivering work quickly and accurately around the clock. Learn more at Rogo AI Felix, OpenAI Cursor, Anthropic Perplexity and Vercel all have something in common. They all use work os and here's why. To achieve enterprise adoption at scale, you have to deliver on core capabilities like SSO, skim, RBAC and audit logs. That's where WorkOS comes in. Instead of spending months building these mission critical capabilities yourself, you can just use WorkOS APIs to gain all of them on day zero. That's why so many of the top AI teams you hear about already run on WorkOS. WorkOS is the fastest way to become enterprise ready and stay focused on what matters most, your product. Visit workos.com to get started. Hello and welcome everyone. I'm Patrick O' Shaughnessy and this is Invest. Like the Best, this show is an open ended exploration of markets, ideas, stories and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts@colossus.com Patrick O' Shaughnessy is
- [02:02]
Patrick O'Shaughnessy
the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit Psum vc
- [02:28]
Brian Chesky
My
- [02:28]
Podcast Host
guest Today is Brian Chesky, the co founder and CEO of Airbnb. Our conversation traces the path from his early training as an industrial designer at RISD through the pandemic moment that forced him into founder mode. He explains what he calls AI founder mode and why it will demand even more attention to the details. He walks through his 11 star exercise, which I've used personally many times over the years, which is his way of imagining the most absurd version of a customer experience as a path to product market fit. We talk about why founders are rarely good early CEOs and what changed him when he stopped chasing adulation and started making things for the love of making them. Please enjoy this great conversation with Brian Chesky.
- [03:05]
Brian Chesky
Before we hit go here, we were
- [03:06]
Interviewer
talking about industrial design, which you studied at risd. And I have this weird affinity for the history of this topic. Just because Raymond Loewy, one of the famous industrial designers, helped me a lot in my career indirectly. I'd love to hear you just riff on the influence that guys like him had in your early studies and why you studied that in the first place. Such an interesting background.
- [03:25]
Brian Chesky
I was an artist growing up, but I didn't know what to do with my life. And I went to the Rhode Island School of Design. And at risd, when you're a freshman, you have to pick a major. I'm 17 years old and I'm like, okay, in three months I decide what I'm gonna do the rest of my life in. And I remember the department head for industrial design came. I never even heard the term industrial design, I don't know what it was. And they said industrial design is designed of everything from a toothbrush to a spaceship and everything in between. I immediately said, that's what I want to do with my life, because I was thinking of maybe being an architect or something like that. So I started learning about industrial design and I learned about trails from Ray Eames, Raymond Lowy. Raymond Lowy, probably the most important industrial designer of the 20th century, designed so many incredible products. This first designer, Air Force One, he designed a lot of beautiful consumer products, he designed a lot of cars, and he had a profound impact, I think, on society. And as I was studying the history of industrial design, it was so incredible because industrial design field is a deeply technical field. The thing about architecture is fairly technical, but it's a more known boundary. Like there's buildings and there's commercial, there's residential, there's retail, there's only so much variation. It's a multi thousand year old field industrial Design for the most part really started with Josiah Wedgwood. It was like it's really the mass industrial product. So industrial design is really new from the industrial revolution. And it used to be analog things. The first industrial design was chairs and tabletop dishes and bowls. But as technology grows, suddenly industrial design becomes cars and airplanes. And now you have microwaves and refrigerators and you have all these things in the 20th century, radios. And then eventually becomes like medical equipment, like ventilators and then you know, with computers, I mean a lot of people, the most famous design probably in the world is the iph. And the vastness of industrial design is unbelievable. The intimate relationship you have with the product is incredible. I remember in, I grew up in the 1980s, I love video games. I played with a Game Boy, a Game Gear, Super Nintendo or remember Nike in the 80s and 90s, those sneakers there were the Reebok pumps. Like these products captured kids imaginations and they had a very intimate relationship with you. They really had a sense of personality. And computers in particular was something I was really, really interested in. And then of course you get to the golden age of Apple. Starting prob in 1998 with the iMac and into Jony I've who is my hero so into risd. And when I was at risd, Apple was the golden age of industrial design. They really educated the public about design. Once they're educated, they couldn't unseat great products. And that captured my imagination. What I loved about industrial design was a, it was very technical. You work with mechanical engineers, you work with electrical engineers, baby. Here's the thing about industrial design. It's almost different than any other design. This is also true of fashion design. A design is only successful if it sells. So if we design an office building, architects can win awards in their office building and it can never get leased. You can design a house, but no one looks at well what was the retail value of the house. So the awards are detached from the commercial success. If you design a product and no one buys it, it's considered a failure. And so because the commercial success matters, you have to think about marketing, manufacturing, distribution, solving problems. It's not just about winning awards, it's about being viable to a customer. The other thing is it's very much a problem solving field. It's got so many different boundaries and it's very much about empathy, about user journeys more than I think any other design field. I think industrial design always seemed like it was the kind of field where you put yourself in the shoes of the User. You design these user journeys. And I think they really teach industrial design through user journeys. There's a very specific type of field and I think that really prepared me for designing. Just to give you one example, one of the projects I designed when I graduated RISD was a child's ventilator. And so instead of just thinking about a child's breathing machine, instead of just thinking about the design of the ventilator, one of the projects I had to do was imagine being the child in a hospital. And so I had to imagine being a child. That's hard to do, but you're six years old, imagine you're being six and you're scared and you're looking up at a breathing machine. And imagine the parents, the parents go in and the parents are like, is my child going to be okay? If this breathing machine seems like ominous and like it's keeping you alive, the parents are going to freak out, like, what's wrong with my child? The other thing is, I learned that one of the interesting things that happened was the nurse technicians, the really technical nurses. It's a weird thing. They had no problem that these things were complicated. But the hospital wanted a breathing machine that was so simple that everyone can learn how to use it. Except the nurse technicians had pride that only they knew how to use it. So you had to, like, weigh the stakeholders. How do you design something from the vantage point of a child? Consider how would it imbues to the parents? How could it be uniform, universally useful for everyone without threatening people's jobs? You see, there's so many dimensions that just, I think, really prepared me for this field. There's no product managers in industrial design. You are the pm. There's industrial designers and there's engineers and there's program managers. So industrial designer is the product manager. So a design product is one function.
- [08:27]
Interviewer
Do you think the world's going to go that way? Now, you're obviously famous for helping usher in this founder mode idea that was kind of pre opus 4.6 or whatever. There's like another layer to that.
- [08:37]
Brian Chesky
Now.
- [08:37]
Interviewer
I'm curious what we would call it, but it seems like for the first time, again, someone even like you running a very large company with lots of people can disintermediate lots of the steps between idea and outcome. And this design stuff may be even more applicable than ever. What is the new mode like? Because everyone's trying to figure out, how do I run a company in this era? So how would you describe the new capabilities and the mode through the lens
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Brian Chesky
of this, you know, founder mode was something that Paul Graham coined, but based on experience I had, I think people are basically born good founders. Or said differently. It's innate. You don't to learn how to be a good founder. It's like you jump in the pool, you learn how to swim. No one is born a good CEO. And the job of CEO is completely counterintuitive. And almost all of your intuition about what to do is wrong. And so the problem is, we founders never were really prepared to be great CEOs. We founders were taught to learn by doing. And that's great for a founder. It's not good. As a CEO, you do not want to learn on the job how to be CEO. In other words, trial and error is bad for a CEO. You know why trial and error is really bad? Because you hire somebody, they build an empire, they leave, and now you get to unwind their empire. And it takes like four years. So you've wasted years. So actually, learning how to be CEO is something you should learn. And so I learned the hard way. And I basically learned that what happened was founders were over delegating their companies to these professional managers. I'm not disparaging them, but they were detaching themselves and they were being managed rather than managing the company. And it was really about not apologizing about how you run them in the company, being in the details. That was founder mode.
- [10:12]
Interviewer
Was there a moment that that, like, clicked for you that you had to change the mode?
- [10:16]
Brian Chesky
Yes. The pandemic. Two things happen, actually. Speaking of Jony, Ivan, Apple, and another person named Hiroki here, I spent the 2000 and tens riding a rocket ship. Airbnb, Uber, a few of us, we went on these crazy rocket ships that, like, you know, open, anthropic are doing now. It was awesome. It was amazing. But by the end of the last decade, around 2019, I remember waking up one day, it was like, completely unrecognizable. The company I was running, I had like 7,000 employees. I didn't know what anyone was doing. I felt like I was in a car without a steering wheel, and I just could not turn the company. I was like, turn left and the company would go right. And actually, not only did I feel like I was not in control, I don't think anyone felt like they were in control. It was just a free for all thousands of decisions being made for me, me, overly deferring, not listening to my intuition. And I got to this point where I remember having this dream, and I told my co Founders. I had a dream in late 2019 where I felt like I left the company for 10 years and I come back and I was like, somebody had been running the company for 10 years and they like turned it into this like giant political bureaucracy. And I didn't even recognize the company. And then I realized, oh my God, it was me the whole time. And so it was my fault. Like I had actually enabled all this to happen. And then I started talking to people and they all had the same experience. And all these founders felt like we were all made to feel crazy because we had this instinct. So around the same time as the pandemic, I hired a guy named Hiroki asai. He was from Apple, and he told me about how Steve Jobs ran Apple and Steve Jobs, when he came back to Apple in 1997, in July of 1997, there were nine days from bankruptcy. And he basically just like went into founder mode, what you call founder mode. He got into the details of every little detail and I wanted to do that. But initially the company braced against it. It was almost like it repelled against it. And then the pandemic happened and we lost 80% of our business in eight weeks. We were in total crisis mode at that moment. I went from peacetime to wartime. And then I just totally took control of the entire company. And I just never let go over time. Basically what I did is I reviewed every single thing for two, three years. I worked like 100 hours a week, reviewed every little detail of the company. My vision wasn't to do this forever. My vision wasn't to micromanage forever. My vision was, before I empower people, I need to know what's going on. This notion that great leadership is hiring great people and trust them to know what to do. Well, how do you know they're great if you're not auditing what they're doing and you actually want to start hands on, under control, and give ground grudgingly, everyone does the opposite. They let go, they hire someone, they go in the wrong direction. And by the way, that's bad for the leader. You're not training them. So to bring it back to your question, that's founder mode. We need AI Founder mode. AI founder mode is going to be even more intense than founder mode.
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Interviewer
What are the principles that you're thinking about as you go into it?
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Brian Chesky
I think AI Founder mode. You're even in significantly more details because you have almost everything on demand. The mechanism of founder mode was I had a lot of meetings because that was the only way I gained information. So I probably did 35 hours of meetings, which is very similar to the way Steve ran Apple. I wouldn't do one on ones, I'd only do group meetings. I'd do a recurring thing where I review every single thing in the company, either on a weekly basis, bi week, in person, live in person, group meeting. And I'd have the full chain of command. A lot of companies you have to get your boss to prove it and your boss's boss to approve and your boss's boss's boss to approve it. I'd have the full chain of command in the room and anyone can give their opinion. I would make all the final decisions. I would not speak first, I usually speak last and I usually agree with the team. But 10% of time I disagree. But I'd ratify every decision. It was a very clear chain of command. But this is a meeting based culture. I think in AI, I think we're going to move away from meeting based to asynchronous and we're fairly remote. And so I think that will benefit us. I think you're going to have a lot fewer layers of management. You know, I think there was an old famous saying, the Catholic church has been going on for 2000 years only have four layers of management. Why do every other company have like seven, eight, nine layers of management? I know there's this general idea, like as a thought experiment, what if I could theoretically manage all 7,000 people flat? I don't think that's a good idea. I think that's an extreme. But I do think going to a few layers of management would make a lot of sense. I'm in the middle of trying to think about how to redesign the company. I think every single person in this company's job will change. I don't know how. I've not wanted to make any rash changes. What I'm amazingly doing now is trying to get people to adopt AI tools. And I want to see how everyone's job changes in the world of AI tooling. And then I want to basically embark on like a fundamental redesign. I don't think people managers will have any value in the future. When I think people managers, people that only manage people, I think everyone's going to have to be a hybrid people, manager or manager. I see.
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Interviewer
Meaning they have to have contact with reality in some sense. A thing a customer end up seeing or touching.
- [14:54]
Brian Chesky
Yes. An engineer will call, they have to be technical. In other words, every engineer needs a code. Even the managers need to code whatever the version of that is for your field, you need to code. So if you're a lawyer, you're just not managing people. You have to actually read the case law and you have to get involved and that makes sense, right? You can't just be these managers where you're kind of people's therapists and you're just doing meetings, you're doing one on ones. Like people who have lots of recurring one on ones are not going to survive because what they're doing is like that. Oh, you come with me with whatever your problem is, I'm here to help you like a mentor or professor. That kind of leadership style is not going to work. You need to have context. And I think a lot of people will survive this age of AI. The two types of people that will not survive the age of AI are two types of people, pure people, managers who think it's all about just leadership. No, it's about content and leadership. I hear about design leaders that like the heads of design, they don't actually manage the design. Jony, I've manages the design, he designs and he leads people. A design leader who only manages the people, that's crazy to me. The way Frank Lloyd managed his design team is through the work. I say you manage people through the work. You don't manage the people, you manage the work. Otherwise what are you doing? I mean, yeah, like maybe a couple times a year you should have like a check in, have a heart to heart, ask them about their family, build relationships. You should do that. You should have relationships. That's not a day to day thing. You're not their therapist, you're managing people through the work. So two types of people will not make the shift to AI are pure people, managers and people that are rigid and don't want to change and evolve. As long as you're like got a growth mindset, I think the tools are going to be very easy. There's an economic setup for the tools to be so easy, everyone can figure them out. So I don't think the AI tools are going to be complicated right now. There's a lot of command line. I think claudebot and Cowork are not the most intuitive to an average person, but I think economic incentives will be for this to become incredibly intuitive. And I think AI is really an enterprise thing right now. If you take out ChatGPT and people screwing around image generation, it's pretty much just an enterprise phenomenon. I'm on the board of Y Combinator. 175 companies, last batch, 159 were enterprise. There are no consumer companies because there's no consumer companies. The incentive to make the interfaces really simple is not there because it's their job to figure out the interface. The next wave of AI is going to be consumer AI. Consumer AI is going to be the big prize. Can you think of a consumer AI company? Maybe OpenAI? But most of their energy is now going to Codex, Google, yeah, with Gemini, but most of it's still going to search. They don't want to cannibalize your business. So I think that's where it's all going to go. And I'm trying to start thinking about AI as a consumer play and how do we make tools so simple that everyone here can figure out how to use them?
- [17:35]
Podcast Host
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- [18:42]
Interviewer
so few have tackled consumer so many of the biggest companies in history are consumer companies. You built one of the great consumer companies of the last generation of companies. What advice would you give to people that do want to build consumer businesses using this technology? Like if the next batch of YC startups were to invert because of your advice, what would you tell them? How would you guide them? So curious why you think there aren't more.
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Brian Chesky
Here are the three or four reasons I think it's happening. Number one, I think a lot of people when ChatGPT came out were afraid. They're afraid ChatGPT was going to kill their Business And I think a lot of investors didn't want to invest in something where they thought ChatGPT was going to kill it. Number two, the business model is tricky. There is no yet consumer business model for AI that I've seen. For example ChatGPT, there's three ways it can monetize subscriptions. Unfortunately they're probably going to hit a local maximum percentage of users subscribing because Claude and Gemini are giving away for free ads. Again, they're hitting a local maximum because Claude Gemini are not going to do ads. And then E commerce, they shut down the third party apps and the inference costs are expensive enough that they're burning a lot of money. And so I think the first thing is you need to have a business model around consumer AI. You can't just be in the business of information because people are not trained to pay for information. The second problem is distribution is mature. Now again, top three apps in App Store are AI. So it does prove to be something revolutionary. You'll find your way to the top. The third thing is while I think Silicon Valley, we like to describe ourselves as rebels. I think maybe it's a little bit like the always on nature of Twitter. I think it's very trend based and vibe based. I think there's a sense that everyone kind of does what everyone kind of does that makes sense. I think the trend is enterprise. The other thing is with Y Combinator we tell entrepreneurs get other YC startups to be your first users. It's a really great distribution strategy, right? Like the way we got our first users is you do things that don't scale. Now what happened was that has taken the logical extension that everyone just keeps making enterprise companies. Maybe finally the reason people aren't doing consumer companies is they're just harder, they're more hits driven, the prize is bigger but the risk is higher. It's more all or nothing. You can pick a narrow vertical, build a good medium to large size business. It's pretty straightforward. You can get other YC companies to adopt it and you can grow into larger and larger enterprise. It is much more his driven business. You have to be good at a lot more things. You generally have to be better at design, marketing, culture, press. It's not purely technology and sales, which is what I'd say enterprise is like you make a product, it can be a technology based product. Oftentimes in enterprise the person using the product, not person buying the product. And so sales becomes really important. But you can start sales really small smart companies. It's really hard to figure out, how do you start small consumer? Who do you start with on the street? So I think these are the reasons why. But it might also just be that everyone's doing enterprise, because everyone's doing enterprise and it's a trend. My prediction is that we're living in the age of enterprise AI, and I think in the next 12 to 24 months, you're going to see the beginning of a consumer AI renaissance. Almost every app on my home screen has not changed fundamentally since AI, including Airbnb. I think that's going to change in two years.
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Interviewer
On your most recent earning call, you referenced this thing, Project Hawaii, I think it was called, which is the on the ground direct application of the soon to be defined founder AI mode or whatever. Maybe just describe what that is and how you, as an incumbent consumer company, are trying to make yourself into one of these AI companies and sort of like, what's possible with a project like this?
- [22:04]
Brian Chesky
This is such a great story. So I had this conundrum. We had like 7,000 people. We were down to 5,000. I wanted to, like, basically take the magic of the founding of the company, the early stages. We were in this little apartment working together, and I wanted to work with like a team of 10 people, and I wanted to, like, have that team work in one problem. And so we ended up focusing on one problem. We said, let's put a team together to focus on improving the guest experience. Improving conversion rate. Conversion rate is basically search to book. The conversion rate of people typing in a location and dates and booking. And there's a funnel, and you can basically measure the funnel and you can do a B test. But more than a B testing, I wanted to do something where the North Star was, let's make the experience better and increase conversion. We're going to start with a better user experience. And so we put together a team, 10 or 12 people, designers, engineers, product people, data scientists. It was mostly just a pure software team. And we treated it like a little startup. And we said, we're going to just focus. We're going to do a system of crawl, walk, run, then fly, crawl, fix the bugs, fix the problems of conversion. Right? Just the easy things. Once you build a little bit more confidence, walk, start to develop features, really start to reframe the journey, then run, rethink the entire flow, big features, fly, like completely VM of yourself. And everything's going to be measured, everything's going to be operationalized. The team's results were phenomenal. They ended up delivering the equivalent of I think in year one, two, $300 million in kind of revenue for the company. The following year was like 4 or $500 million. Now we're at a run rate of like over 600 basis points. 600 basis points of 13, $14 billion. You get this sense of a lever that is, it was just one team. I mean, it grew into dozens and dozens of people, maybe 50 or 60 people. But it was this really lean team. We took that team, we said, what if we apply it to the next problem? Pricing? Totally different team, same model, then another model, then another model. And I really tried to work with a team. And initially I would meet with them every week, and then it became every other week and then every month. And my general philosophy is start really hands on and let go over time. I'm not a golfer, but like, I took a couple golf lessons. Here's an analogy for management. If you learn golf, you want to learn with a golf instructor before you build any habits. Because if you learn on your own, you're going to like have a weird swing. And then when you get a golf instructor, they got to change your muscle memory. So the golf instructor's got to watch you swing like thousands of times. Eventually, they don't need to see you let go over time. What most founders do is the opposite. They bring these people in, they let them figure it out, and then they intervene later. But they already have the wrong muscle memory. So I decided I'm going to be totally hands on. I'm going to do everything with the team, teach them everything I know and let go, then do it the next team. And then I had teams learn from other teams. Then when we launched Services Experiences, we basically found this other way of innovating. So here's a riddle, or it was a riddle to me. Airbnb, we had this core business that was really successful. It did nearly $100 billion a year in gross sales. For every thousand dollars spent in the world, $1 was spent on an Airbnb. Except we had the problem of we're like a one hit wonder. And for 18 years, I couldn't get a second hit out. And I kept wondering, like, why is this not working? And the answer is, like, too obvious. It was staring us in the face. But we kept having the burden of trying to scale these businesses at a global scale from the beginning. When we started Airbnb, we started one city, New York City. We had 100 users. I was in Y. Commentor Paul Graham goes, where are your users? I'm like, they're In New York we have like, not many, but they're in New York. He goes, you're in Mountain View. Users in New York, what are you doing here? We went door to door meeting users. The basic philosophy is make the problem as small as possible. Get to product, market, fit, then scale. So we launched Service Experiences last year and it didn't work right away. And I'm like, oh, shit. We launched service experiences 100 cities. And I went back and I thought to myself, wait a second, Airbnb launched in New York, Uber launched in San Francisco. Doordash launched like Palo Alto. Let's make the problem small and just perfect a city. And so we started doing this with new businesses. We basically go to any new business. We're going to do one to ten, to many. We'll pilot in one market. Any idea? If we get the market to work, we'll go to 10. If we get to 10, it works. We'll industrialize. Took us 16 years to get to our second and third business. We started getting those two working. Now we have like 10 to 20 pilots. Eventually we'll have 50 to 70 new verticals. This is like the Hawaii system. It's basically taking this giant company, making it a really small, elite team. It's like the Navy seals. I work with the teams really leanly. Make the problem as small as possible. I think that's a key thing. Make the problem as small as possible, dominate a niche. Peter Thiel used to say this. He was one of our first investors. He said it's better to have a monopoly of a tiny market than a small share of a big market. This is counterintuitive. Every investor wants to go into big markets. I don't like big markets. Big markets have a lot of competition. Go into a small market and make
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Interviewer
it big is the reason for both of these things, the idea that it works in Toronto, but not at 100 city scale. And the reason a 10 person team can outperform 100 person team is the shared reason. Some sort of better contact with reality and somehow reality starts getting distorted as you get bigger or something.
- [27:20]
Brian Chesky
This comes back to the most important piece of advice I ever got. The first ay commentator Paul Graham said, It's better to have 100 people love you than a million people sort of like you. And that came from Paul Buchheit. Paul Bukite was a partner, Y Combinator. He created Gmail. The old famous story was he created Gmail and it took him two years and they said you can't ship until 100 people inside of Google love it. And actually took two years to get 100 people to actually like the product. Once a hundred people like something, 100 million people like it, it's like the sample size is enough. The problem is you try to make something a million people like, you can't talk to a million people. And so you end up with this shallow swimming pool. It's like you're trying to heat up an ocean, and the ocean just. It takes too long to heat up and you can't tell. Instead of heating up an ocean, heat up a bathtub. Make the problem as small as possible, and you're close to the customer. In fact, if you only are focused on one city or even a subset of city, you can talk to every person. You can put all these resources on a tiny problem, and I guarantee, you take a ton of resources, you put on a tiny problem. The smaller the problem, the more you'll change the numbers, the trajectory, and that will teach you lessons. In other words, you do things that don't scale, then you scale. And the scaling is industrialization. But product market fit is a distinct problem from industrialization. So you want to basically make the problem as small as possible, understand the user, put yourself in their shoes, blow their mind, do things you've never thought before, do them by hand, make them unscalable. Don't worry how much it costs, just prove the model. It's like R and D. This is a lot like industrial design. This is what we call prototyping. Before you manufacture something, you prototype and you make prototype after prototype after prototype until you make something that you love for yourself or someone loves. So, yes, the smaller the problem, the more there's fewer abstraction layers. You're actually on the ground, you're talking to people. That's how you prove it. Hawaii to these pilots. It's all the same thing, by the way. Same thing. AI, you're removing abstraction layers. You're making the problem as small as possible, and you're going directly to the source. I think that's a principle that all these things have in common.
- [29:20]
Interviewer
It's like we're playing this game of telephone. If we don't do it that way, and you just lose information.
- [29:24]
Brian Chesky
And this is why founders don't like running large companies. They end up in a game of telephone. They say something and then it goes down like five layers, and then it goes back up five layers, and they're in these, like, meetings, and the meetings become like system reviews. And literally, like the lowest point for me, when I was. When I was having meetings about meetings.
- [29:41]
Interviewer
You've gotten into this new mode, it's called founder mode, it's not called CEO mode. Do you think you're now a good CEO?
- [29:46]
Brian Chesky
I think I am. I think I was naturally a good founder. Although I would say I also got really lucky because I had two great co founders and damn, did I luck out on that. I think I was a very good early stage CEO and I think the moment I had to have an executive team, I really struggled to make the shift from a founder to CEO. I really struggled. And I think in the 2000 and tens, I do not think I was a great CEO. And I think we paid the price for my learning curve. And I think the pandemic was a rude awakening for me. I think I was conflict averse. By the way, somebody once said a pitcher never takes himself off the mound. As a manager, you gotta go take them off the mound. I didn't want to hurt people's feelings. I wanted them to take them off the mound. And the longer you leave a pitcher on the mound, the more homeruns they give up, the more upsetting they're getting and they're still going to be angry at you no matter when you take off the mound. So I don't think I was naturally a good CEO. And I remember up to the pandemic at one point, I wonder, I wonder if I'm just not meant to be a CEO. Maybe I'm not meant to do it. And then the pandemic happened. We had a near death experience and I said, well, screw all the rumination, like is do or die. And I feel like I learned how to do the job. There's really a few phases of CEO. Have an idea, get to product market fit. Product market fit to hypergrowth, hyper growth scale to become a real company. Real company as in profitable public. And I did all that. We have like 40% free cash flow margin. We're very profitable. We do $100 billion in sales. The last phase of a CEO is reinventing the company product extension. And the reason our stock has been flat is because we only do one thing and we've started to saturate a little bit of the core idea. So we've had to reinvent ourselves. We had to do product extension. So I still got to prove myself. And then there's another proof point. Can I navigate this transformation of AI? I think founder mode is going to be the only way to operate in the age of AI. If you're a giant professional CEO, I think you can operate in a founder mode. But if you're like risk averse, you want to be incremental. Those types of people are not going to survive the age of AI. So I think there was an old Albert Einstein quote. He said the best way to keep balance on a bicycle is to keep moving. You're going to have to keep moving. Founders are going to be really well primed or set up for this age of AI because we kind of have to redesign our whole company from scratch again.
- [31:58]
Interviewer
Was there anything else that Hiroki taught you? Because Steve was perhaps the literal ultimate example of everything you just said. Focused on the details in the weeds forever reinvention of the company.
- [32:09]
Brian Chesky
And before I say just to say who Hiroki is, everyone knows Jony, I've Hiroki is a bit of an unsung hero. I always heard about him. He was like this legendary mythical figure that was elusive. There's like almost no photos of him online, there's like no videos of him. He was never out in front. But he was Steve Jobs creative director. It was a function under marketing. He did the ads, he did the graphic design. He was really responsible for, you know, when he was like that black type with the gray font and like the product in front of white, that was really his aesthetic. He taught me two principles of Apple that I brought. One was simplicity. I think startups are like when you start a company because you have no money and you're so constrained, you are naturally simple. Lack of abundance creates natural constraints and so simplicity is thrust upon you and that is good for you. And then once you raise a bunch of money and hire a bunch of people, you go to a lot of directions, then you lose your sense of focus. How many startups can we think of today who have struggled from lack of focus? Probably name a few. So you start to lose your muscle for simplicity. Hiroki taught me simplicity and he taught me simplicity is not removing things. Simplicity is distilling something so fundamentally that you understand its essence. I know Steve used to say design is the fundamentals soul of a man made creation that reveals itself through subsequent layers. In other words, great design is about distilling something to its essence. It's kind of what Elon does with SpaceX where he talks about first principles. And first principles is kind of like a physics term, but it's also a design term. It's about understanding. If I'm going to reinvent this product, I have to understand the properties of glass. I have to understand everything about it to distill it to Its essence. So I got obsessed with simplicity. Simplicity of our products, simplicity of our organization, simplicity of everything. The other one was a sense of craft and details. How you do anything is how you do everything. And I said, everything must be perfect. It comes from. There's a book that a lot of people at Silicon Valley recommend. The score takes care of itself. Bill Walsh, the coach of the San Francisco 49ers. John Wooden, winning as coach in college basketball history, UCLA, same principal, first day, UCLA. So John Wooden won 10 NCAA champions over 12 years. First day, first hour. In his team, he spends an hour teaching you how to put your socks on. One hour. And he said, put your socks on this way.
- [34:26]
Interviewer
Hey, Mr. Miyagi. Yeah.
- [34:27]
Brian Chesky
One hour teaching you how to put your socks on. It's a metaphor. Everything was that rigorous. Bill Wall said the way you tuck your jersey into your pants was one of 10,000 details that depend on whether you won or not. Basically, don't focus on winning. Focus on getting all the inputs perfect, and you get everything perfect, then you will win. And you don't focus on the scorecard. We do focus on growth, but we kind of stopped focusing on growth. We started focusing on making everything perfect. And if everything is perfect and you don't grow, then you focus on the wrong input. But if you have the right inputs and you make them perfect, then you'll grow really fast. And so that's really what I learned from him. He really taught me, I think, Founder Mode, because I never met Steve, so I only knew through Hiroki. And I said, well, I love this. I'm an artist, I'm a designer. I could have more control of the product. I get to make everything perfect. The initial attempt at Founder mode created giant revolts. Everyone hated it because everyone thought I was micromanaging. And I learned something fundamental. Initially, everyone hated it. And by the end, everyone loved it. The people hated it, left. So maybe there's, like, selection bias. The people liked, it stayed. But even the people that thought they wanted autonomy and independence and empowerment, what they didn't realize was control and power is not zero sum. It's not like if I have all the power, you don't. There's a scenario where we're all powerless. And there's also a scenario where if I have power, I can therefore give you power. It's not zero sum. This is the problem people don't understand. If I have more power and control, I can give you more power, control, and I can hand it off to you. It's about the idea that the Car has a steering wheel and you turn it left and it actually goes left. I do think it's all about the company rowing in one direction. That's it.
- [36:05]
Interviewer
The thing that you've said historically that had the largest impact on me was this notion of the 11 star experience. The exercise of going from not a five star, but a six star and actually forcing yourself to write it. And I have this idea in mind because of this idea of simplicity and distillation. And it's a beautiful thing, right? It's ultimately empathetic with the customer. But why is that idea in practice so powerful? Like what, what happens as you go up the star count to 11 stars?
- [36:31]
Brian Chesky
So let me do like a one minute on what it is. Basically, when you book an Airbnb, most people leave a five star and if you leave a four star, it's a bad experience. Five star, everything went as planned. So it's called review compression. Similar to Uber, you always leave a five star and if you leave anything other than a five star, something really went wrong. But what if the driver was really amazing? You can only leave a five star. So I started imagining, what if we could give a six star when I did this exercise from six to like 10 or 11 stars. So a five star, let's say take one moment checking in the Airbnb five star check in is you get there and the host greets you or there's a door code and it works. In other words, nothing went wrong and you give a five star. Anything wrong, you give a four star or less. That's review compression. Like, what if you went above and beyond? So what would a six star look like? A six star would look like you basically get to the Airbnb and there's your favorite wine on the table and there's like fruit and there's snacks there and there's a handwritten car. Okay, that's better than just letting me in the house. So what's a seven star experience? Similar experience. There's like a limousine or something waiting for me at the airport. They know I like surfing, there's a surfboard waiting for me, and they're like showing me around the city. There's all this stuff. So what's an eight star experience? An eight star experience. I get to the airport, there's an elephant, I go on the elephant. I go on a parade in my honor. I'm like, wow, I feel really special. What's a nine star experience? I call it the Beatles check in. I get off the plane in like 1964. Beatles. There's 5,000 teenage girls screaming my name with cards, making me feel like I'm a pop star. I get to the front lawn of the Airbnb and there's a press conference in my name. So it's a ten star experience. Ten star experience. Elon Musk greets me and takes me to space. It's an exercise. It's an exercise in the absurd. You keep pushing to go so absurd to 10 stars that suddenly six or seven stars doesn't seem crazy at all. And the way to get to product market fit is to just create a six or seven star experience. But you can't create a six or seven star experience without going beyond, in other words, go beyond the edge of reality and work backwards. And so it's kind of a fun exercise. What would the craziest possible way to blow someone's mind? One person's mind, one customer. And maybe try that. And maybe you can't scale that because that's like an eight star experience, but you can probably scale a six star. And that difference between the five and six star is probably difference between you and a competitor. And if you can find a way to industrialize it and scale it, you might have proper market fit and something special.
- [38:47]
Interviewer
One of the things that I think about when you give the absurd examples at the high end of the range is this feeling that I've experienced with AI that my imagination had almost atrophied. That by using these tools I realized
- [38:57]
Brian Chesky
how hard it was.
- [38:58]
Interviewer
Like, oh, I can make anything. And I sit down like I have no idea what to make.
- [39:02]
Brian Chesky
Yes.
- [39:02]
Interviewer
And that as I started making little things, like all of a sudden my imagination got rebooted and it feels like this exercise is like an imagination exercise.
- [39:10]
Brian Chesky
It is like one of the sayings is great writing is great thinking. But I find that I don't know about you. Some people have ideas and they think of ideas and they write them down. Sometimes I figure out the ideas through the act of writing. The act of writing is the act of coming up ideas. The act of designing is the act of coming up with ideas. It's really hard to just sit in a room and abstractly think of ideas. You need to like do something. And so I think what was happening was we didn't have enough tools to express ourselves. I think a lot of the tools were very passive tools. I think increasingly we were spending more and more time on a sit back experience like social media. What I like about AI is I think AI shifts our attention from consumption to creation. Social media A lot of us spend our time on. And the only type of creation is giving your opinion, but you're mostly consuming. What I love about AI is it's not about opinions. It's about testing the hypothesis for making. I love what's happening right now. Suddenly all of us have a paintbrush and a canvas to make stuff. I think that AI is going to lead to a renaissance in creativity. And I was an artist growing up. I was pretty good artist. So I had the ability to expl Express ideas. Here's an analogy. You ever meet a person, you could probably think of musicians like Prince. You name a musician that probably in words couldn't express themselves, but then through music, there's this dimension. You never knew an artist. They seem really reserved, but their art is really emotional. So many of us have this creativity inside of us, but we don't have the craftsmanship or tools to express it. And suddenly what AI is going to do is going to give us the ability to express it. We're going to realize there are a lot more creative people than we thought. Because we typically think of creative people as people that know how to express their creativity. It turns out, what if everyone can express it? Pablo Picasso once said, all children are born artists. Their problems remain artists as one grows up. Every child's creative. If every child's creative, that means every adult could be creative. I think that every human on this planet is creative. You ask the average person, you're creative now one in two says they're not. That's my experience. That's not true. It's just that they haven't exercised the muscle. And I think that the magic of AI is what's in our head can manifest. But also, as you said, we can develop new ideas in our head because it's a relationship. We maybe have a small idea, we try something, gives another idea, and you go on this journey. A lot of people call founders visionaries. We're more expeditionaries. We're on these expeditions. We only call it visions later. We're really just one foot in front of the other.
- [41:43]
Interviewer
Can you talk about the difference between the act of creation in pursuit of. You said people pleasing earlier achievement notches on the belt versus just for the raw, pure joy of it, which seems to be more the mode you're in now.
- [41:57]
Brian Chesky
I think when I started Airbnb, I don't think we were totally trying to be successful. And I like to joke that if I was trying to make money, I would have come up with a better idea than airbed and breakfast I truly did it for the love and the fun. And somewhere along the way, I got really successful. And that almost became a curse, because success became a scorecard. And then I wanted to get even more successful. It stopped being intrinsic, and it started being a version of status and people pleasing. It took me a little while to realize what I was doing. What I really wanted was love. I think that I learned growing up as a child the way to get love is to be special. And the way to be special is to do special things. And if I do special things, I get praised and I feel love. I think that translated into, if I'm really successful, I will get adulation. And if I get adulation, I'll feel that feeling that I'm always seeking. And I didn't do this consciously. I'm not, like, saying this. It took me many years to realize this is what I was doing. By the way, adulation is kind of like seeking status. So many people seek status. Anyone's on social media and posting all the time is probably somewhat seeking status. There's nothing wrong with it. But the problem is that's not where great products and great companies come from. See, adulation is like a cup with the hole at the bottom. And you keep filling it in, thinking it's love, except it just keeps coming out the bottom. And at some point, you have to confront, who am I doing this for? Am I doing it for other people? For them to briefly love me and commend me to then move on? And either way, that's a drug. And it's a drug that, like, real drugs, you need a greater hit to get the high, and eventually it stops working. And eventually you reach a peak and. And it gets really meaningless and empty. And that happened to me. And at some point around the pandemic, we go public, we have $100 billion valuation. It's like, one of the best days of my life. And the next day I wake up, I, like, put on sweatpants, I go on a zoom meeting. It was like it never happened. And it became, like, the saddest day of my life because I realized, okay, what now? I got this adulation, and I don't feel any different. And that made me, like, reevaluate, like, what I'm doing this for. I had to, like, just come to terms with, I want to do things for pure intrinsic reasons. And so I had to basically detach myself from people's approval, from status, from worrying about, like, how hot airbnb is or how successful I am, which I never gave a shit about when we started, you know, you start getting accolades and you want more of them and you got to like let go of that because this is a losing game. And I just really started focusing on being heads down, do the work like you used to do. Like when you were a kid, there was light. Just make stuff, make it for yourself. That great book, Rick Rubin, he says an artist is an artist when they make it for themselves and they don't try to make something successful. And I stopped trying to be successful and I just went back to the basics and I realized like a person who doesn't know you will never love you. That's okay. The people who love you, only people that know you. And the most important person to love you is yourself. And what you should love is the thing you're doing. So this became like a whole thing. It became about doing it because you love it, putting your heart and soul in it. It's like the score takes care of itself. It goes back to that. Don't try to be successful. Try to do something wonderful that you love for yourself. Maybe you'll be successful, maybe you don't. But don't focus on who you want to be. Focus on what you want to do. That was advice. President Obama once told me. He said, if I focus on who I wanted to be, I focus on being president of the United States. And I wasn't. My life would have been a failure. But I focus on what I wanted to do. I want to help people, I want to be a community organizer. Then I don't need to be president. And so I think so many entrepreneurs focus on what they want to be. I want to be a giant tech founder, I want to run a billion dollar company, I want to do this, I want to do that, instead of focusing on what do I want to make. And then suddenly there's no way to fail if you're making what you love.
- [45:31]
Interviewer
It's an incredible set of ideas. I'm curious what most fell away in your life in this recent period as a result of this shift in mindset. What do you do less of that. You used to do a lot of when you stopped chasing adulation, mostly ruminating. You ruminate less.
- [45:46]
Brian Chesky
Yeah, just like worrying about people's opinions of me. By the way, somebody kept saying, like, there's something mildly narcissistic about, like worrying about everyone's opinions, as if they're all thinking about you. The reality is like, even people watching this, like, I'm going to be self conscious, except for a moment, they're going to think about me, but then they're going to be mostly thinking about themselves and that's okay. And all of us are thinking. Everyone's thinking about us and they're thinking about themselves or the people in their life. They're not thinking about some guy on a podcast, except for like maybe an hour and then it's over. Letting go of what people think about you, because that's a prison. Suddenly you're making things for approval and then you lose your courage. That's the main thing. It's just like the mental energy. But I really try to do things that are meaningful. Meaningful things are really two buckets. It's making and spending time with people I care about. Those are two things.
- [46:37]
Interviewer
There are two very different ideas I'm curious for you to react to. The first was made famous by Warren Buffett who said, do you want to buy as an investor businesses that a ham sandwich could run? Because eventually one will not to pick on anyone. But think about like the card payment processors like Visa or MasterCard, like just extremely elegant business models, actually a network effect. Businesses like Airbnb tend to be in this category. And then you've got this, this opposite end of the spectrum, which is one of my favorite investors, early stage investor, said he tells every founder that they should think about the company as a platform or a vehicle for their own personal growth and that their ability to grow will set the ceiling for the company. This is sort of like opposite ideas. And we've been talking a lot more about leadership in this second bucket. I'm curious how you think about whether or not you care if eventually a ham sandwich ran Airbnb, the business model would be so perfected that it wouldn't matter in the Warren Buffett sense. And just in general how you think about if that's true, that your ceiling is the company's ceiling as its leader.
- [47:34]
Brian Chesky
I think they're both true. Let me try to square those with one example. I agree with both sentiments. Okay, here's an example. Walt Disney people watching. I want them to try to name a Paramount Pictures film. I want you to name a Warner Brothers film. Maybe you'll think of like Batman. I want you to name a Universal Pictures film. I want you to name something from the MGM library. Pretty hard, right? Bet you can name a lot of Disney films and probably Pixar during their golden age. There's a big difference in those two. One is that Disney was very founder led and that Disney was all about a personal expression of one man. The irony is the longer A company is run by founders in the founder mode. The more I think it can let go and anyone can run it. I think Disney. Not to take away from the CEO of Disney, the new guy, Josh is really great. I've met him, he's great. And I think they've had a lot of good CEOs. But I generally think the CEO of Disney has the bases loaded. You've got this incredible theme park that people are going to visit no matter how well it's run. It's a city that as many people visit Disneyland every year as San Francisco. It's crazy. They've got this incredible ip. It's not that it's an easy job, but like Walt left so much. I remember I was speaking to the former CFO at Disney once, this was like 10 years ago. And he said Disney hasn't really done anything new since Walt died. Walt died in 1966. Since 1966 we still make feature and make films, TV and Magic Kingdoms. And of course, yeah, they do new things, but fundamentally that's the same playbook. So I do think that that's an example where the founder reinventing the company and their expression created such a reservoir of IP of momentum. He died 50 years ago. Fifty years later, Walt Disney spirit seems very omnipresent. Whereas Louis B. Meyer, I don't know if most people can tell you which studio he was. See, I'm saying there's a huge difference. So I generally think this is a paradox. The ham sandwich. You have a business so good and you can run it because sooner or later they will. The best businesses are ones that founders run and they reinvent and they create so much equity and such a great moat that then when they hand it off, they will endure and grow after them. I think Apple is very similar. They've not had to invent new products. For the most part, they're still running the iPhone. I mean, what a gift Steve left them. They were a few hundred billion dollar company when he died. They're like a multi trillion dollar company now. I think the one caveat is I think tech companies are different. Warren Buffett generally didn't invest in tech companies with the exception of Apple. Coca Cola was a big investment of his. Or like See's Candy, these are things that don't get disrupted. I think technology is a synonym for change. If we're in the change industry, you kind of need to be more in founder mode, more time. But I think that's how I square it. The company is the upper bound of the founder's potential. The longer you're in founder mode, the more it will endure. I remember one founder told me, I want this company to last 100 years, so therefore I can't be in all the details. And so therefore I need to empower people. And I remember saying, if you want somebody to be around for 100 years, you want to control it as long as possible and keep it in founder mode as long as possible. Like Disney. I think that's counterintuitive and I think people say, oh, but like the company is going to get very dependent on you. Well, yeah, but the alternative is you're going to have so institutionalized this magic that it can't endure after you.
- [50:55]
Podcast Host
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- [52:03]
Interviewer
Edwin Land, the founder of Polaroid, was very famous for using Ansel Adams as his ultimate tester of his equipment. And so he cared about the most important, maybe best photographer of all time. What he thought of his device comes to mind when you talk about Disney, because I have this visual of Walt
- [52:20]
Podcast Host
dislike continuing to drill down to some
- [52:22]
Interviewer
sort of bedrock or something. And that like that's the mission that you're on as a founder is like bedrock. What is that for you from this point forward, as you keep drilling, what do you think you're still after? Where is there still room for your ceiling to raise so that the businesses
- [52:36]
Brian Chesky
can A few things come to mind when people think of Airbnb. If you close your eyes and say, I want you to think of a picture of Airbnb. You probably think of a house where a noun and a verb like Kleenex, which is amazing and not amazing. It's amazing in that we're kind of the category leader. It's also tough because when you're Kleenex, you want to sell shampoo. They're like, wait a second, I'm not putting Kleenex on my head. It's a double edged sword art brand. The bedrock for me is how do I change the atomic unit of Airbnb from a home to a person? I do not want Airbnb to be about homes. I want it to be about people. And I want the people to be atomic unit. And on Airbnb, you get a home you can experience, you can get a service, eventually a flight. I want imagine like a person in the center with a ring, with like 50 things around. These are the things you can get. That is the thing. The bedrock of Airbnb is going to be identity profile, the person's preferences. I want to develop the most authenticated identity on the Internet. Proof of personhood is going to be really, really important in the age of AI Artificial. I want to develop the most robust profile on the Internet. I mean, they used to be Facebook. They've kind of abandoned that strategy. I want to build one of the richest preference libraries of you as a person, because that would be useful to have. I want to build a social graph, but in the real world. And I want to eventually have a membership program where you get all these different benefits. So the bedrock is the person. I want to basically figure out how we can launch, like Amazon. Amazon went from books to like 100 things. I don't want us to just have homes. I want us to have a hundred things. So we need to develop this industrialized machine of understanding what are the like atomic units or the primitives that are consistent across all these different businesses. And then the last one is AI. We have a bit of the innovator's dilemma. Plus or minus $100 billion goes through our app. I have all these visions to totally change it. But you're a public company and you're giving guidance. And the difference between missing and hitting earnings is not just being public company. People's livelihood depends on Airbnb. If we mess with something, somebody could go from making a living, not making a living. So you got to be very careful. That is not an environment for mass innovation when you're being really careful. So I'm also exploring little sandboxes like almost like a separate app. Like, what is a radically, radically different Airbnbs? What's after Airbnb? Airbnc. What's that? What's the next think about? So those are the three things I'm thinking about. Number one, how do we take the atomic unit from a home to a person? Number two, how do we basically industrialize what Airbnb offers to do like 50 things, not three things. And then how do we disrupt ourselves before someone else does with AI without screwing over our investors and our hosts who depend on us? And so those are the kind of things I'm doing. Maybe the last thing I'm thinking, just as a CEO is I think I've reached a certain level of mastery. I've reached the mastery of like product market fit, hypergrowth, profitability. I'm beginning level four. Level four is reinvent your self product extension. I think there's something potentially even beyond that in the age of AI, which is like one of my strengths is all my experience. And that's also my weakness. Now I'm 44, I'm not old, but I'm not young. I'm not AI native in the same way a 22 year old is. Here's a bad example. When I started me, I was 25, 26 and we were competing against Expedia. They were on Outlook and we used Google Docs and we were iPhone. It all seems anachronistic now, but back then that was innovative and we were on the coolest new tools and we just moved faster. And so also just staying young. Pablo Picasso, another quote, he said, the older you get, the stronger the wind gets and it's always in your face. You gotta stay light on your feet, you gotta stay young. You gotta keep reinventing yourself. You gotta have curiosity. And so I don't want to become like this old school person in the groove. I gotta reinvent myself.
- [56:28]
Interviewer
One of the things that as I've been building stuff myself really for the first time, like I'm not an engineer, I used to build stuff, but I'd tell people and it would come. The feedback loop was like painfully slow and lossy. Now it's like five to 15 minutes and pretty high fidelity. And soon it'll be five seconds and perfect fidelity. I always love Brett Victor's idea of wanting the input and the output being as linked as possible. And we're getting to that stage. The anxiety I have having this experience is that it feels like just nothing will last. Historically, there's been these ways to have enduring moats people would always call them. You have 200 million people that you know a lot about already. You've got hundreds of millions of reviews that lots of information on places. You have these embedded things that I can't just get that from you. But it just seems as I build this stuff like, oh, it's going to be really hard to have something enduring and lasting. Do you share that anxiety? How does that make you feel? That as the frictions fall, it also feels like the pot of gold at the end of the rainbow is disappearing into the distance or something.
- [57:27]
Brian Chesky
Here's an analogy. Take a fashion brand like Hermes. I think the most valuable single fashion brand in the world, the Birkin bag and the Kelly bag. It's like they have a new product every decade or something. These are multi decade old things and they appreciate and they resale. And then you've got like Zara Fast fashion. And I feel like we all want to make these things that endure, but we're living in hyper fast fashion of software. If you look AT software from 10 years ago, no matter how great it was at the time, it looks really old and dated. You look AT hardware from 10 years ago, it looks pretty decent. You look at interior design, it looks pretty good or better or better. You look at buildings, after a certain period of time, they've got this patina and they're wonderful. You go to Paris and old indures, environments and physical worlds have got huge endurance. Hardware and physical things have medium endurance. Software is extremely ephemeral. Opinions are like that. But some ideas permeate. This is something I'm wrestling with myself because I want to make things that endure. I don't know how I've reconciled it, except to say this. I obsess over our app. Airbnb's app. It's designed its interface, and yet no matter how great it is, 10 years from now, I'm going to look at it and think it looks like crap. Because I look at the interface from 10 years ago and think it looks like crap. No matter how good it was gated software never looks good, even if it was good back then. So then you got to ask, what endures? I do think there are things that endure. Airbnb, the community endures. I started realizing the software won't endure and the network effect will decently endure. But the ideas of Airbnb, its principles, its mission, the organization, the company, the brand, the identity, the logo, the voice, the community, what it stands for, those things will endure. Most importantly, the community. I realized at some point, I told the company. We're not building an app, we're not building a service, we're building a community, because that's the only thing that will last. I don't think there will be apps in the future. I think there'll be agents. So if we're attached to apps, I don't think there will be apps. So we better let go of that.
- [59:27]
Interviewer
So many of the themes that we've talked about is this steady progress and learning through time applied in service of others. What did bodybuilding when you were young teach you about steady progress over time?
- [59:39]
Brian Chesky
Weirdly, bodybuilding taught me so much that I could apply to Silicon Valley. It taught me two important principles. My dad was really into ice hockey, wanted me to be an ice hockey player. Unfortunately, I was very skinny. I hit puberty really late, and I went to a sports academy for hockey when I was 13. I thought I could be a really good hockey player. But by the time I was 14, I didn't hit puberty till I was like 15 or 16. And that's a death sentence in hockey because suddenly I went from like first or second line to third or fourth line. And I went from thinking I'd be a Division 1 athlete, Division 3 athlete. I'm like, okay, it's not really going to work out for me. And so I started weightlifting. I was 135 pounds, and I told my friends, I'm going to be one of the top bodybuilders in the country by the time I'm 19. And they thought it was out of my mind. I ended up by 19, competing at the national level. I competed at teenage nationals. The first lesson I learned from bodybuilding was if you can change your body, you can change your life. It was actually the most fundamental thing to change. Everyone wants to change things around them. But what if you change you first physically? And I even think, like, if you could start somewhere, a lot of people say, like, change your thoughts, I would change your body first. Change your physical biology. You can change your body, you can change your life. It was the ultimate expression of empowerment. Okay, now I changed my body. What else can I change? It's a metaphor for eventually you can design the world around you. I can change your body, I can change my environment. Eventually I can change the world. It's like you just go inside out. But the other thing it taught me, which might be even more helpful, is that you can't get in shape in one day. And if you go to the gym and work out for like 20 hours, you're not Going to get in better shape. In fact, you're going to overtrain. And the way you get stronger is an adaptation from progressive overload that you basically, you stress the body. The body doesn't get stronger during exercise, actually breaks the muscles down. And it's adaptive response, like an immune system. It gets stronger, you just keep doing it. The basic idea is that you can't get into shape in one day. And it's about 1% better every single day. And if you compound 1% a day, you can actually have massive gains. And so it's really about discipline and it's also very analytical. Bodybuilding is this wonderful thing where it's judged. It's a subjective sport that you judge visually, but you measure it scientifically. You weigh your food, you have to put yourself in the right caloric deficit. You have to write down your training, you have to write down your weights. It's like extremely analytical. It taught me to be very analytical, metrics driven, and that it's really about discipline and consistency. And I think that's important because I think a lot of founders just give up too early. It's about discipline and it's about if you train for a month, you take a month off, you're starting over. And that's the key. You never quit, you just keep going.
- [62:10]
Interviewer
One of the nice things about it is the visual feedback. Like, you just judge visually. You can literally see it. You can look in the mirror, other people can look at you and say, you've been working out. Probably some of the skills that you would want to apply the same progressive overload thing to as a leader are very invisible. How do you figure out the objective function? Like, how do you apply that same thing to something else that other people can't see?
- [62:30]
Brian Chesky
I stopped trying to focus on how good of a company every is, and I take it to projects. So I'll give you one example of a project I focus on. One is I want to build the best team possible. So twice a year we do this giant thing we call roadmap review. And there's the top hundred people in the room. And I see the quality of people in the room. And we did one the last two days. And then one of my most important jobs, the most important job I do at Airbnb is hiring. That's a whole separate topic. And the visual feedback is, every twice a year, I get the top 100 people in the room. And I can see the quality of the people in the conversation. So, in other words, there's many metrics that you use and I obsess over. Maybe it's the app and I just look at the design of the app. Maybe it's like how well the company operates and I look at decision making. So I try to break the problem down to something that's observable, that I can observe, either measure with data or even subjectively look at and observe. So it's always about breaking the problem down to something that's observable and measurable. By the way, just on this, because this is a really important point. Basically, as a leader, you can choose if you want to spend time hiring or managing one or the other. The better the people, the less they need to be managed. The more time you spend on recruiting, the less time you have to spend on management. It's one to one. I remember when I was starting Airbnb, Sam Altman, who obviously everyone knows now is OpenAI, I was like one of the first Sequoia funded companies. Before me were two people that had ever been funded by Sequoia from Y Combinator, Drew Houston from Dropbox. But the first one was Sam Altman. It's a company called Looptop. It was like a way to see your friends on a phone before the iPhone. I remember him telling me, I was like 27 or 28. Sequoia just funded us $600,000, a $3 million post money valuation. Highest valuation wide Combinator. Now the average valuation is 30 million. And he said, you're going to spend 50% of your time on hiring. I never did, by the way. It was my death blow not spending more time on hiring. The less time I spent on hiring, the more time I spent managing. And I started learning my number one job was hiring. Every day I wake up, the first person I call is my recruiter. I think people should think about their first employee being a recruiter, not an engineer. They are the most important person because they are the ones that like, get you every other person. When a company is as good as its people and the difference between the good companies, the great companies, are the people. And I think AI kind of makes that clear now that what's all about the people. But I obsess. I obsess over recruiting. I spend hours a day and I don't recruit executives. I recruit two, three layers deep. Here's how you hire. Good people do not do searches. Generally what you want to do is build pipelines. So here's the mistake people make when they hire. They do. I need to hire a blank. So do a search. They hire a search firm and the search firm scans, they give you like 50 profiles. You like, call it down to 10 people. You contact 10 and you pick the best one you hire and a year later you realize like, they're good or bad. And if they're bad, oh, they've already hired their own team. That is the wrong way to do it. So the best way to do it is pipeline recruiting. You're constantly recruiting, you're constantly meeting people. So this is what you do, try to map out all the best people in the valley. So let's say I need to hire really good engineers. I don't do searches, I just informationally meet the best engineers in the world. Every meeting. The job is to get the next meeting, meet someone else. So if I were to meet you and I'd say, hey, who's the best people? You know, can you introduce me to two or three people? So what you're doing is you're constantly meeting people in advance of searches and you're just building your pipeline. You just need to know lots of talent. And all of it's referral based. The two ways to find out if people are good, I mean, one way is you're just good at assessing talent. But the two best ways is start with the results, work backwards to people. So a lot of people say, like, I want like a really good marketer. I'm going to go to Nike. They do really good marketing. No, don't do that. Find an ad you like and figure out who made the ad. Start with results, work back with people, don't start with the resume. The other thing to do is keep asking people to build your Rolodex. And so I'm constantly building a Rolodex and the moment I find somebody that's really good, I ask them who all the best people they know are. And I basically build these little mafias. Every company's got like a little mafia of talent. So like Uber's got like an ops mafia, Apple's got like a design mafia. And then like build these little ecosystems and they tell you who the other good people are and you're constantly finding more people, more people. And what I do is I am the co hiring manager for the top 200 people in the company. This is very radical. A lot of CEOs think it's their job to hire their executive and their executive team hires their team. I think that is fatal. I mean, theoretically, yes. Theoretically, you should live in a world we have such good people. They can all hire their own people. Most entrepreneurs, if they have 10 executives would be lucky if two or three are able to do that without any support or help. In other words, you always want to be like, marrying up, hiring people, the future. I sometimes used to say, like, my executives should hire people so good they would never work for them without my help. In other words, it should be like, we're reaching. If you can hire them on my help, we're not reaching far enough. You want to like, hire the very best person you can. So I'm constantly meeting people, constantly interviewing. The first and last call I make every day is the recruiting team. Still, I probably spend two, three hours a day on it every day. Every year I spend more time on recruiting the less. By the way, in the 2000s, I didn't. I thought it was all about like having a good idea, having a recruiting machine, managing people. The great thing is I don't manage this much anymore. The more time you spend on recruiting, the less time you spend on management because the really good people are self managing. This is amazing. And if you have to manage people, then maybe you should think about like upgrading the talent.
- [67:54]
Interviewer
You said before that founders are born, you think, and CEOs can be more
- [67:57]
Brian Chesky
shaped for the most part. And maybe the caveat to that is just like, maybe founders aren't born, but we spend our whole life tinkering and building. But you can't simulate being a CEO.
- [68:06]
Interviewer
I was going to ask whether or not you think they're activated in some way. Like maybe there's the raw material, but then some event happens. Sean from Palantir would call this the Bruce Banner gamma rays thing or something. What have you learned about activating talent?
- [68:19]
Brian Chesky
I think the activation is giving someone a challenge. Our founding stories that couldn't afford to pay rent. But of course, I have 50 stories before that of challenges I had. It's just Airbnb. That story activated something at a skill I'd never done before, but it wasn't the first thing I made. I was making things my whole life. I think the way to activate somebody is to give them a problem or opportunity and see if they can do it. I think the people that have a high level of agency are going to do it. I don't know how to teach motivation. I don't know if it can be taught. By the way, I don't know if you can teach. I think you can motivate people. I don't think you can make a person who's not motivated motivated. But I think entrepreneurs have the trait of their self motivated. And so it's really about Giving them a challenge, and then it's up to them to step in and activate.
- [69:07]
Interviewer
Having plugged the leaky bucket of motivation evaguation, what's your motivation now as you attack this next chapter?
- [69:14]
Brian Chesky
Most of my heroes are artists. I'll pick four people. Two I've mentioned repeatedly. Leonardo da Vinci, Vincent van Gogh, Walt Disney, Steve Jobs. There's many things they had in common, but what is something they all in common? The last day of their life or the last week of their life, they were working. Leonardo da Vinci carried the Mona Lisa with them until he died. And he definitely didn't pay the Mona Lisa for adulation because he never showed it to anyone. Vincent van Gogh sold one painting his life. He died an obscure artist in the cornfield. Maybe shot, maybe not. Unclear what happened, but did it because he loved it. Walt Disney, last day of his life. He was laying in a hospital bed. His brother Roy was like, rubbing his cold feet, dying of lung cancer, Looking the ceiling tiles, which were a grid, imagining Disney World. Steve Jobs. Hiroki said the last couple weeks of his life, he, like, showed him, like, marketing. Like, he was still looking at products. Now some people can look at that in interpretations. Oh, that's sad. Like, they weren't spending time with family, by the way. I'm sure those that had families, I don't. Vincent Van Gogh and Leonardo da Vinci didn't have families. My understanding is Steve and Walt spent time with their family at the end of their life, but I don't see that as a sad story. They're working in the end because I think they did what they loved. You know, the great artist in history did what they love. My motivation is the motivation of an artist. My motivation is to create something great. That is my motivation. I would like to be successful. I want our shareholders to get a return. I would like employees to feel that they're at a great company. I would love to make a huge impact in the world, but mostly I just want to make something. I feel like I'm a designer more than I am a CEO and I might be afforded one of the great biggest canvases of any designer in human history. Because usually designers are just not given this many resources. It's almost like a glitch in the system. It was almost like accidental. Some air beds allowed me to crack this glitch and get all these resources I wasn't supposed to get. But I'm not letting go. And so my motivation is that of an artist. I just want to make incredible things.
- [71:13]
Interviewer
It's a beautiful almost Closing thought, given the tools now at our disposal, that everyone can do that if they want, and we should encourage them to do so.
- [71:21]
Brian Chesky
All children are born artists. The problems remain one as you grow up, AI is the opportunity for all of us to become artists and scientists and creators. We don't have to be consumers anymore. We can be creators, true creators. And we hear the word creator. You think social media performer, that's one way to create. You can perform. The problem is, I think creator has meant performance. Now creator can be create, make, Everyone can make now. It's amazing.
- [71:46]
Interviewer
The last question I ask, everyone's the same. What is the kindest thing that anyone's ever done for you?
- [71:51]
Brian Chesky
The biggest gift anyone's given me is believe in me. And I think the biggest gift you can give somebody or one of the biggest gifts is believe in you. A couple examples. When I was 16 years old, I transferred to a public high school. I was really into art. I was a pretty good artist. I didn't know how good I was. And I had a teacher named Ms. Williams. She believed in me. I remember her telling my parents, he's going to be a famous artist. I never became a famous artist, but it gave me confidence that I was actually good at something because I wasn't that good at hockey. I wish I was and I wish I could make my dad proud of ice hockey. I just didn't get very far. And suddenly that belief set me on a path. That moment I said, I'm going to go to art school. And that moment I realized I can decide to be happy the rest of my life. I came to Silicon Valley, I met Michael Seibel and the guys at Justin Day tv and they believed in me. They were early YC people. Paul Graham made an exception to let me in early Y Combinator. He believed in me. I was an engineer and he almost never funded non engineers. He thought the idea was not a good idea, actually. He said, people are actually doing this. I go, yes. He goes, what's wrong with them? But he believed in me. My investors. I can go down the list of investors. They believed in me. Joe and Nate. I had no business being a CEO. Joe somehow believed in me. I wouldn't be here if it wasn't for the generosity of people believing in me, in helping me. But I think the greatest gift I can give back in believing in others and help them and not pull the ladder up behind me, but to like really show them. I had the great privilege to eventually join the Giving Pledge. And you have to write a letter I remember my letter was, if you could ask my high school teachers who would join the Giving Pledge, they wouldn't have guessed me. The basic idea in my life philosophy is we all have unknown potential. I think we have these stories in our own head about what we're capable of. To go back to John Wooden, somebody once asked him, I think, what's the secret to success? And he said, I only ask my players to do their very best. Person goes, oh, wow, that seems weird. That sounds like what, like a parent says the kid who like loses all the time goes, here's a catch. I saw potential in people they didn't see in themselves. And that's my management philosophy. When I tell somebody it's not good enough, I'm not saying you're not good enough. I'm saying I see potential and you don't see in yourself. That is the most motivating thing you can do to say, I believe in you and I believe you can do even more. And people will climb a mountain for that type of thing. And maybe the way to end this whole conversation is, is the most important person ever that you can believe in is yourself. And I think a lot of us that are entrepreneurs, we're driven by insecurity, we're driven by some hole. Not all of us, but a lot of us. Something in our childhood, something a lot of us were not the coolest kids or whatever. And there's something in us you wanted to prove. And then you get really successful and you still have imposter syndrome. And a lot of like the path to happiness and salvation is just the path of learning to believe in yourself. For me, I only believed myself long after other people believed in me. Now my gift is to try to give it to others.
- [74:45]
Interviewer
Beautiful place to close. Thanks man.
- [74:47]
Brian Chesky
Thank you very much.
- [74:49]
Podcast Host
If you enjoyed this episode, visit colossus.com, you'll find every episode of this podcast, complete with hand edited transcripts. You can also subscribe to Colossus, our quarterly print, digital and private audio publication featuring in depth profiles of the founders, investors and companies that we admire most. Learn more@colossus.com subscribe. You know how small advantages compound over time. That's true in investing and just as true in how you run your company. Your spending system is your capital allocation strategy. RAMP makes it smarter by default. Better data, better decisions, better economics over time. See how@ramp.com invest as your business grows, Vanta scales with you, automating compliance and giving you a single source of truth for security and risk. Learn more@vanta.com invest Every investment firm is unique and generic. AI doesn't understand your process.
- [75:57]
Brian Chesky
Rogo does.
- [75:58]
Podcast Host
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