Interview With Airbnb CEO Brian Chesky | Fortune

welcome Brian Julie and thank you everyone for having me today so it's great to see you I've been doing a lot of talking about you so just actually talk with you because I'm sort of on a book tour now but first off where are you staying most critically I am staying in Airbnb in Harlem on I think it's near 125th Street it's with these two hosts Matt and Gina they are interior designers and so it's like it's a brownstone you walk up and actually it's really cool because they travel a lot themselves and they try to pick up something every place they travel and they bring it back and so they've got like these saddles from they went horseback riding so it's a really cool experience and of course they're moms here are my girlfriend's here so we got to cook food last night in the house great so glad yeah and sometimes we do these things in hotels but here we're not yeah it's often that you and I have conversations at a banquet room in a hotel is how I usually gets interviewed in hotel yeah so it goes so there's so much I want to talk to you that absolutely um but before we do that I think a lot of people in the room I certainly am very gently with your story but I think a lot of people may not be familiar with just your your the story of your origin so I just want to briefly touch on how you came up with this idea the sort of the origin story kind of share that with us a little bit yeah probably the probably begins of my mom I guess I guess all origin stories start with your mom so you know growing up I grew up in Albany New York so I actually think of myself more as a New Yorker was for 18 19 years and my parents are both social workers growing up and you know my mom I remember my mom giving me advice when I grew up she said you know Brian your father and I we chose a job because we loved it but we didn't really get paid a lot so you should choose a job with money and so like it was very obvious it's so like we're looking at like what jobs pay a lot of money and so one day I told my mom like you know I think I'm going I'm going to go to the Rhode Island School design I'm going to become an artist at which point she said you somehow managed to pick the only job in the world that pays less than a social worker you'll get paid nothing and I said I'll make an income I'll get a job I promise she said well I do want you to promise me that you get a job at that job has health insurance one day and so this was the kind of beginning of my endeavor I went to risky and was totally different because at RISD everyone was making stuff they were like they embraced entrepreneurship and I graduate RISD I get this job to health insurance I'm living in LA but one of my best friends are risky with the sky the name Joe Gebbia and Joe Gabby and I were like these kind of entrepreneurial people on campus and like we both started sports teams at resort school that's the hardest marketing job in the world get an artist to come to a sports game and Joe lives in San Francisco at this point this is by 2007 and he's trying to get me to come to San Francisco I think Brian come to San Francisco we're going to start a company together we're gonna start a company together and I'm like having this job in LA and I remember at one point my life was like I was in a car and the roads probably looked exactly like the road behind me and that kind of terrified me and I wanted to take a detour so I had this moment I'm sure all of us have these moments in our life where we make a change and everything changes after that I quit my job and I put everything I have a old Honda Civic I put everything I owned and the back seat and the trunk of old Honda Civic including a rolled-up foam mattress I have a thousand dollars a bank and I called Joe and I said I'm coming to San Francisco and you know it turns out that Joe said well the rent is $1,150 so I actually can't pay rent it turns out that weekend this international sign conference is coming to san francisco all the hotels a hotel you go to the conference website all the hotels and the conference website are sold out as we had this idea we said well what if we just turned our house into a bed and breakfast for design conference unfortunately I'm having the bed but Joe had three air beds we pulled the air beds out of the closet we inflated three our beds we called it the air bed and breakfast yeah I love that noise um and yeah so that's how I started to air bed and breakfast calm so I guess the answer is no when I start every bite comment a guide B is the New York Stock Exchange and I'm hosting three people of 35 rooms and boss from the third girl from India a 45-year of 505 from Utah but what ended up happening with the end up becoming friends and we made enough money pay a rent at this point we say you know we're ordinary guys I bet you the thought or they're ordinary people like us who want to make some extra money be cool people I asked show I said well who's the best engineer you know just said well my old roommate natives and so three of us got together and we had a simple idea what if you can book someone's own the blue you could book a hotel anywhere in the world and that's how it started and cut to today where you have as story said I think it's more than 160 million guests arriving as you call it 2 million people stayed in their B&B on New Year's Eve alone that night and and you're worth thirty billion dollars or maybe it's 31 as of last week I read so I just I should have done this before but does everyone know what Airbnb is please raise your hand if you know what everybody is because there's still some times with that okay anyone ever stayed in their views did anyone's kids staying there baby I usually get one before we get on to other stuff there's one thing that really surprised we have a whole story that you don't often hear about is how hard it was for you guys once you decided to this was going to be your idea to get it off the ground right people fled and ran away from this idea people thought this was crazy we were trying to in summer of 2008 I a I meet a guy named Michael Seibel and Michael Seibel says there's these people called angels and they'll give you money and the first thing I thought is I can't believe this guy believes an angel that's how naive I was and he introduced us to about 20 angel investors and a couple venture capitalists but at that point we were trying to raise 150 thousand dollars at a 1.5 million dollar valuation so we already tried this million with an M yeah so 10% of company and 20 probably got 20 introductions about 10 to 12 or 13 probably didn't meet us you've probably met a half dozen people people mostly ran away from the LPO everyone ran away from idea no one funded us I guess three three reasons or two reasons the first reason was Joe and I or designers and the far as they were concerned designers didn't start company it's like look like a tech founder which i think is ridiculous because I don't think you should ever hire some because they look like something else like you want a new thing well maybe they look different but everyone was looking for either at the Zuckerberg Harvard computer drop out of Harvard or didn't drop out of a ph.d program at Stanford well you weren't going to be the next Google or Facebook and the point was well liked the previous tech company founders didn't drop out of Stanford so it was a little absurd but the bigger issue was people asked well first of all how many air beds are there in the world in fact when we were trying to do our first investor deck we had to create a total adjustable market and so the first thing we thought is well how many air bed cells are there and this is before we actually realized like because one day somebody said like I want to rent my whole I want my bedroom and I said well all you to do is get a mattress inflated and put on your mattress and I thought at some point we should open the model up but but the bigger problem was a simple idea people did not think strangers would stay with other strangers they thought it was crazy in fact I number written about this but a one person told me he said Brian I said yes I said he said I hope that's not the only idea working on and at some point in late 2008 one of the investors told us because the financial crisis hit and he goes listen that financial crisis is create is hit the stock market's cratering I can't even invest in good companies the young gonna invest in air beds and so that kind of hit home so we ended up not raising money and we ended up providing how like we say we did the visa rounds the joke Joe says which is basically we got their nose binders who put baseball cards in we did put credit cards in them so we probably each of us Rach I guess I think I racked up like $25,000 of credit card debt so we just you know until they stopped getting was credit cards and then late 2008 we provide housing for the Democratic National Convention in Denver and then we didn't make a lot of money with air beds so we thought well we can't sell money with air beds where air bed and breakfast let's go into the breakfast business so we took a weird detour and we ended up making collectible breakfast cereal Barack Obama themed breakfast cereal for the Democratic National Convention we took Cheerios we called it Obama of the breakfast of change and we had a John McCain scene scene serial captain McCain a maverick and every bite and we basically handmade like cereal box in our living room in 2008 made $30,000 selling collectible breakfast cereal and this is actually how he funded the company at late 2008 my mom asked are you a cereal company now in the people I know how to answer her no because technically we were actually that's where we made multi revenue and so at some point I'm like well cereal seems like a good business for now but I want to have a cereal company and so you know that was those were kind of the dark times so what's the lesson in there for other entrepreneurs well I think there's two things I mean first of all I you know a lot of entrepreneurs meet me and they say I need to have investors I need to raise capital and I think like we were the first round we raised was $20,000 of capital like that was the first round we eventually raised I think that startups today are over capitalized I mean easy for me to say now but like things get expensive with scale but you don't need millions of dollars to start an idea and actually we almost have a rule that you unless you have fixed cost like you're in the hardware you have fixed costs ideally you don't need any capital to create a prototype ideally your co-founders all with sweat equity can create the product themselves but there's a bigger lesson there which is this I think we just didn't quit and I think a lot of people who try to do what we did or try to do other things they quit they stopped short and a lot of people ask well why didn't you quit and the reason we didn't quit is if you start a company very simply you have to know something no one else knows about your business otherwise why are you doing it and why doesn't already exist so the big question is what do you know that no one else knows about your business you need to have a unique insight and we had a very simple unique insight it was totally by happenstance in other words we randomly rented her home one weekend and so our unique insight was it's actually not weird for stranger to stay of those strangers and you can make a bunch of money and the people who travel there can save money have an amazing experience if people could just experience what we experienced that one weekend this would be an idea that would spread on the world and again maybe thousands of people one day would use Airbnb and that was our you insight and so that was kind of on our star and so we just kept thinking to that first week and that's why we kept going so you've spread very fast very far and wide but that's sort of when the you know hasn't been easy because as soon as you started to get a sizable sighs you know all the opposition started come out and we became disrupter then you became disruptors but you which I was growing up and that wasn't a good thing I was always in principle okay you don't like that word but it is you are sort of exhibit a of disruption that if you talk about a little later but you know your end user likes you that's very clear but many other stakeholders have not and and that's because if I the core business of renting out a home for short term violates local laws in many markets and you've work to turn those over in many many places but there are some markets that just won't budge and New York is one of them this has been a big source of opposition for you so talk about that a little bit why has there been so much pushback and what's the endgame yeah so maybe to back up for a second when I went to RISD and we design products before I got to RISD good design was if somebody used the product liked it and then I got too risky suddenly there was this thing called green design sustainability and the idea was it can't just be your product people like your product it has to be good for the world and so we call these externalities so it's good I'm not just guessing hope when we started Airbnb we didn't have a million people doing this so I did not consider landlords I didn't consider cities I was it would have been it was so bigger than what our idea was our idea was just to bring two people together it grew so fast and I came from the school thought like Craigslist that the communities and immune system and that people would get written from the site by the review system and I think a few years in it became very clear that we had to be much more mindful of how we designed the platform and we hired some great people one of the people we hired early on who had a huge influence me with Linda Johnson she's our chief business affairs and legal officer and she's a lawyer by training and she told me something very simple see growing up I felt like if people didn't like you you kind of stay away from them because like you're going to get in the fight and that's really bad and she said if you have to meet with people you have to meet with cities and even if they don't like you if they hear your story and you hear their story we can come to resolution you have to partner with cities we decided that we would have a principle that we would partner with cities now it didn't go totally smoothly and I wish it was much easier here in New York City but we started meeting cities city by city over the period of time what we've been able to accomplish I'll say this and I'll get to New York in a second is we now have agreements with 200 cities in the world we collect during the hotel tax we have typically regulatory schemes those regulatory schemes often involve a registration and they have some you know like I just came from London London has their own scheme where if you rent your entire home it's limited to 90 days so you don't take housing off the market you can rent bedrooms and every city's got a different process in New York City I think there were a number of things going on I think the first thing is that we were slow to be here I think we didn't get our story out early so it was a bit of misinformation about who our company was but I also think there's some substantive problems there was a phenomenon that occurred where landlords decided you can make a lot of money by taking units off the market and just renting them on a short-term basis and though I think the scope of was overstayed in our platform this was a real problem and people were doing this and I would consider to be a very bad negative externality so we were a little behind in this and we've had to play catch-up and so in New York City we've done a number of things we've made clear we want to pay collect and remit hotel tax like we do in San Francisco and Chicago and all these cities around the world we want to live a host to one home so just to home you rent and I think the basic premise we want is if a city is in a housing constraint san francisco's and housing constraint New York City's and housing constraints we want people to rent the homes they live in not take off units off the market and so right now we've San Francisco instituted cap they figured after X number of days you probably don't live there and so we work with those caps and this is how we've decided to use it the last thing is landlords I know there's some major landlords in this room and I know not all of them love to have this activity in their building and so we've instituting and the proximate student a like friendly neighbor landlord program where landlords can sign up and we can allow them to get information about who's in their building using it they can get they can even get a revenue share of the income and it's in they get a peace of mind knowing like the rent checks probably in a calm and we're trying to get much more tight around people understand the rules regulations of their city and their building and to skit I think get a bit more hands-on and so you have to do these like kind of counterintuitive things and it's what Jeff Bezos did this is a Steve Jobs did this is what Walt Disney did I mean what was he bet me entire company on Disneyland it seems obvious today and he took the very best animators in the studio was really angry so one of the things that's interesting to me about this move for you is that your first product the way that Airbnb would create it and became viral and became huge was almost by accident I don't have to say what I didn't think was going to work and lo and behold it was transformative yes and so now you have kind of the opposite of that where you spent the past few years sort of developing this product in in the Airbnb lab and now released it onto the marketplace this is what we made for you so how is that better or worse or just different I say different unclear if it's better or worse I think there was a element of luck involved with the founding of the company I mean I'm we're lucky that we chose home first and not like if we chose chips or experiences first it wouldn't have worked because you need demand and people aren't searching for experiences they're searching for places to stay so it was better as an add-on to start the major thing is that you launch you get a lot of user feedback so I don't think it I think both are fine like Amazon Apple they all were very intentional about their second third fourth product everyone's first product was totally by accident for the most part so that I don't find that being defining factor I think the key is do you put the best people on it or really talented people does the CEO spend more of their energy on the new stuff not the mature stuff which i think is important and are you constantly testing and the other thing is a lot of one of the reason companies fail is a great story of why did like California Adventure not succeed in Disney for Disney so Disneyland expertise we had this thing called California venture it's actually now doing pretty well but initially was a huge failure and the reason was a huge failure was there was like 50 executives who went to an off-site and they were basically trying to figure out what a new park so look like they basically violated most laws of how to build a great product they realize well actually we make a lot more money on food and beverage than rides so we're going to have way more restaurants we're going to serve alcohol so parents can drink we're going to do a California theme park in California even though most people visit from California so it was basically created in a business plan it was actually amazing physically my only problem funeral want it and so then they had to basically redo the park with a multi-billion dollar renovation a lot of products fail because they start as business plans and the problem is the only thing that really matters that people want it and your customers do not care that you're successful sacrament they do not want you to be too successful because they want to know that they got the value and so I think the key thing is are you making something that people want and if you're starting it because it's a good revenue generator like well your customer doesn't care about that and so might be great business but not if no one uses it we're almost out of time I just have one more question I talked about your future and in in the book and say that your 10-year goal is to be the first online travel company to reach a hundred billion dollars in market value is that right no I mean I I think a market cap goal is not a great goal I think I think a different goal would be this you know we've completely changed we've given we've created a whole new category of how to stay and so now we've had 160 million people from every country of the world but North Korea Iran Syria Cuba in Syria stops today and the Kamiya so 191 countries are now living together and it's 2 million people over New Year's and pretty soon that will be every night so that's what we've already done I want to in the next 10 years get to this place where we can sell end to end trips that we can have hundreds and millions of people every year booking end to end experiences we are the home might be a minority of what we're doing we've completely changed what to do ten years from now is Friday night Saturday night you like what's fun to do around here weather did you live in or to you're traveling you'd look to Airbnb we've created tens of millions of entrepreneurs that are creating experiences a whole new part of the economy which is experience based economy and then we've all - gone - aviation and started to redefine how we fly because what if flying was the best part of travel not the worst part of travel so we call all this like magical trips basically trips that are just amazing memorable end to end experiences and this is what we want to be doing the next 10 years all right well it sounds like we're going to be booking our slice on Airbnb or something like that we'll wait to see but Ryan thank you so much for being here today you so much [Applause]

Channel: Fortune Magazine

Views: 152,997

Rating: 4.9044118 out of 5

Keywords: Journalism Franchise, Fortune, business, wall street, finance, airbnb, brian chesky, gloabaliztion, uber, airbnb ceo, airbnb ceo brian chesky

Id: GFMeuSIhIYg

Length: 20min 31sec (1231 seconds)

Published: Tue Mar 14 2017