Brian Chesky, the co-founder and CEO of Airbnb, was previously on the show in 2021. Back then, Airbnb was betting big on long-term stays for remote work amid the pandemic, and Chesky had just restructured the company to a more functional organization, getting rid of the divisions it had before.
Now, the pandemic is ending, Airbnb has itself adopted a hybrid policy, Chesky’s back in the office several days a week, and they’re two years into that new structure. So that’s pure Decoder bait. I wanted to ask Chesky how that restructure is going. Has it really made the company more agile and cohesive like he hoped? Has the bet on working from anywhere paid off?
We also talked about Airbnb’s 2023 Summer release, which includes an Airbnb Rooms feature, encouraging its users to rent rooms in hosts’ homes. Brian said that feature is part of an effort to return the company back to its roots, and we talked a lot about why he feels that’s important. We also talked about Airbnb’s partnership with Jony Ive and the lessons he’s taken from Apple.
Okay, Brian Chesky, CEO of Airbnb. Here we go.
This transcript has been lightly edited for clarity.
Nilay Patel: Brian Chesky, you are the co-founder and CEO of Airbnb. Welcome back to Decoder.
Brian Chesky: Thank you for having me, Nilay.
The last time we spoke on the show, it was 2021. You had just restructured. I want to ask how that’s going, and then you have a bunch of news today about new features for Airbnb.
You tweeted that it’s your most extensive set of improvements ever. So quite a lot to talk about. The headline here is that you’re rebooting Airbnb rooms, which is renting single rooms as opposed to whole houses or apartments. Tell us what’s going on with the new update.
There’s really two big updates, so I’ll start with rooms, then I’ll go to the 50 upgrades. As people probably know, Airbnb actually started as a way to stay in a room in someone’s house. That was the original idea. And I remember when we came up with the idea, people thought the idea was crazy.
They said, “Strangers will never stay with other strangers.” But, of course, it worked. And from there, with Rooms, we expanded to entire homes, and that’s now what most people know us as. So if you stay at Airbnb, you’re probably staying in an entire home. And for many years, I felt like we were starting to drift away from where we started ‘cause we started with people staying with each other.
And, you know, the original tagline of Airbnb, and this is like back in 2009, was “travel like a human,” and it was kind of funny that the human part kind of always meant something to people. The human part was kind of more important than the travel part.
A lot of successful founders get a little bit bored of their core business.
It was about a community. And you were meeting people and you saw people on the website. And I think what happens at a lot of companies is you kind of follow the market, you follow growth. And most people weren’t looking to stay with other people. They were looking to stay in entire homes. And I think another thing happened over the years, Nilay, and that is that a lot of founders who, especially those that have a pretty successful or a pretty big app, they kind of get a little bit bored of their core business.
I think I see this a lot, and I think this happened to us, and we started focusing on a lot of new offerings, a lot of new exciting things because you want to expand, and something comes maybe somewhat easy to you and you think you can now do everything. And over the years, I just kind of felt like we just really needed to get back to the roots of the company, back to our original founding ethos of sharing.
And I really thought about this a number of years ago, in 2019, but then, of course, the pandemic occurred. And the last thing somebody wanted to do is stay in a room with somebody else and have to put a mask on. So we really couldn’t do it for a while. But exiting the pandemic, it became really clear that I think people really would want this idea more than ever.
And there’s really two reasons. The first is actually just affordability. It’s pretty obvious that if you stay in a room, you’re not paying for the whole home. You get access to lots of the home. And the average price per night for a room on Airbnb is just $67 a night. And you know, we’ve been getting a lot of feedback from people and complaints that Airbnbs are expensive, and well, they’re not all expensive, especially these, if you’re willing to stay with people.
And the second is I think that the pandemic has left a lot of people isolated. And I think there’s a lot of people who want to take a trip, they want to go to another city. And I think this has been one of the best ways to experience a new city like a local. So let’s say you’re going to go to Mexico City or Tokyo.
This is a great way because you get to like stay in someone’s home. They can show you around. If there’s any issue, they’re on premise with you, and you get really a local insider’s view of the city. But there was a problem, and the problem was as we asked people, “Why aren’t you doing this?”
A lot of people said, “Well, I just kind of feel uncomfortable.” And we’re like, “Why?” “Well, I don’t wanna stay with a person. I don’t know who this person is.” So we thought, well, what if we could help you virtually get to know the person before you book? And I also noticed something over the years, like when we started Airbnb, the people, the profile, and the listing were kind of equal importance.
And over the years, the profile got smaller, the listing got bigger, then the profile kinda went down the page, and pretty soon, you could barely see it. And it became just a site of listings. And the community, I think, started getting a little bit watered down, and I thought, “We need to bring this back.” So we created this thing called the Host Passport.
It’s basically just our version of a more updated profile on the internet. And it helps you get to know the host before you book. So now we have a million listings. By the way, one of those listings… I like to dog food the product. You know, I lived in Airbnbs the first half of the year. I was hopping from home to home after I saw you. So second half of last year, I decided to host. I was going to put a second home on Airbnb, but I don’t have a second home. I only have one home. And I thought, “My God, I’m not going to be traveling very much. So the only way to host is to have them in my house with me.”
And so I kind of went through the experience that many hosts probably go through, “Oh my God, wait, I’m going to have a guest in my house.” And then I’m like, “Okay, well what kind of verifications are we doing?” You start to really put yourself in the shoes of the customer, and suddenly, it’s not just what are people asking for — it’s what you want.
And this really helped me realize that actually this original idea could be a lot bigger. It doesn’t have to be a niche, but we just have to invest in it. So we did. Basically what we launched today is Airbnb Rooms. It’s an all-new take on the original Airbnb. There’s a million rooms around the world.
Average price, $67 a night. The practical idea is people just need to save money. This is a really cheap way to travel. The bigger idea is I really want everybody to become more of a travel community than just a way to book a home.
You and I are talking on a day where the Fed’s going to raise rates again, and inflation is still out of control, especially in travel and dining and leisure. And when you talk about affordability, it seems like, boy, young people don’t have as much money as they did before, and costs of travel are going up.
Here’s a much more affordable product. Is it on some level just that simple?
It’s pretty much that simple. I think it’s pretty much that. I mean, there’s really two ideas. The most important thing is just, right now, affordability. You know, we’ve been getting a lot of feedback over the year, over the last couple years about affordability since I’ve been that last on your show.
Probably the number one complaint at Airbnb is affordability. Prices have gone up quite considerably on Airbnb and many sites in the last three years since the beginning of the pandemic. Number two, if you look at it, cost of transportation is up massively. And people aren’t making a lot more money, and so you can imagine they have less money to play with. Also, Nilay, I think one of the other challenges founders have is when you build the product, you usually build it for yourself.
You know, when we were in Y Combinator, Paul Graham said, “Make something that people want. Make something for yourself.” And the problem is once you get really successful, you stop becoming the customer. And I mean, I can’t make products just for 41-year-old tech founders. That’s not a really big market. So I’ve gotta make sure I remember the 26-year-old me that didn’t have a lot of money when I started the company.
And the 26-year-old me is not going to be booking one of these really large homes. The 26-year-old me is going to be probably staying in a room in someone’s house as cheaply as possible. And by the way, I wouldn’t be weirded out by that. And I might even like that because again, it’s a really cool way to meet people and get a local view of the city.
So that’s, that’s really what we’re trying to do. And hopefully, people realize these are now significantly more affordable than hotels.
So you said you had a million rooms listed as of today, which is when the launch is. How much are you expecting that supply to go up? Are you going to initiate new people to come list rooms in their houses?
Are you expecting people to shift from whole houses to rooms? How do you think that’s going to go?
I would love that. I mean, you know, obviously, in the near term, the average daily rate is lower, so that would pull down our ADR and they are technically less profitable, but I think they’re ultimately good for the world and they would actually bring in a lot more young people. For Airbnb, it’s good long-term, and I think it’s very strategic.
Alongside this, we have a pretty cool brand marketing campaign. We’re one of the few tech companies that still seem to do brand marketing.
I absolutely want to talk to you about that.
Yeah, let’s do that. We’re like a two-sided marketplace, right?
“You already have an Airbnb. Just put it up.”
So we have guests and we have hosts. And one challenge is you have only so many marketing dollars. Do you spend them getting demand, or do you spend them getting supply? Or do you cut it half and half and spend half on demand, half on supply? The best answer is if you can create one marketing message that speaks to both audiences, then, of course, your ROI is higher because in one communication, you’re recruiting supply and demand. And so that’s what we try to do with these ads. We try to speak to both sides. So we’re promoting rooms to stay in, but we’re hoping people get the thought, “Oh yeah, well I guess I have a room in my house.” And we also did a little bit of a cool little marketing campaign called “Airbnb It.” If you have a room, you have an Airbnb. We’re basically saying, “You already have an Airbnb. Just put it up.” And so, yeah, we’ve been getting a lot of traction. I don’t think that rooms will ever be the majority of our business. That’s probably not right, but I would really hope that this becomes a major new growth driver for the company.
And it’s kind of cool, it’s kind of like when Volkswagen reissued the Beetle in the late ’90s or Apple came out with the iMac and, you know, there’s something about going back to the roots that I think is important for us and kind of for our soul, the soul of the company.
I want to come back to the marketing conversation because I’m very interested in that piece of it. It seems like we’re undergoing a pretty big set of platform shifts on the internet at large, and I feel like your view on that is going to be really interesting. But I just wanna stay on Rooms and sort of the core business for one more second here.
The last time we spoke, it was just sort of like mid-pandemic. You were very high on remote work and extended stays and work from home being forever. Here’s the quote, “We’re going to have a generation of people that are going to be less tethered to the office, more nomadic. Twenty percent of our business by night’s booked are stays over a month or longer.
We’re building, we’re enriching communities by having people stay. So guests aren’t just transient.”
This is the opposite of that, right? This is now 26-year-olds with not a lot of money bopping in and out of rooms and sort of forming communities by meeting their hosts. Is that still your focus? I mean, work from home seems to be over in some ways.
Lots of companies are bringing their people back to the office. The idea that, you know, people are going to be in a different house every time you see them on a Zoom call has somewhat faded. Is that still part of the bet for Airbnb? Or are you shifting to this other model?
Yeah. Let me tell you how I think it’s going to play out. And of course, we’re just all in the business of predicting the future, and the problem is it doesn’t always age well. I think that, like, pure work from home or pure remote is ending.
I generally think the future is flexibility. Here’s the calculation every CEO has to make: are you more productive having people physically in an office together and then constraining who you hire to a 30-mile or a 60-mile commuting radius to the office?
Or by allowing your team to be able to hire people from anywhere? And the truth is, it probably depends on the role. A lot of our software engineers or accountants, certain types of lawyers, we probably don’t need them physically in the office with everyone else. There’s certain creative functions or people on certain teams that we probably do want together physically quite a lot.
And then the question is, “Do we need them together 50 weeks a year?” And the answer for us is no. We actually go in spurts. We do these product releases, so we kind of need people together months at a time, and they can choose to live here, but if they want to go away for a couple months, if people want to go away for the summer, that’s possible.
I think we’re going to start to live in a much more nuanced world where the companies aren’t going to have all the people in the office. They’re going to decide that some roles are most effective being on a small team in the office, but a giant sea of desks probably isn’t the most effective thing, and many roles will be much more effective when allowing flexibility so you can have a global talent pool.
I think there’s going to be a post-pandemic equilibrium that we haven’t seen yet that’s going to play out over the coming years.
I want to just focus on that for one second.
No one knew what was going to happen in 2021. And the predictions that we would all work from home forever were everywhere. It was easy to buy into. You were betting the business on that in some meaningful way, right? You’re like, “Look, people are going to be traveling. They’re going to all be remote.”
Well, it’s still happening.
It’s still happening. Is it still a bet of that scale or have you changed that?
No, no. It’s still a bet of that scale. And by the way, last April, we put out our policy and said Airbnb employees can live and work anywhere. But I said, “I do not think the future is remote. I think the future is flexible.” And I said, “We want to combine the best of Zoom with the best of being together.” We don’t want to recreate this world of Wall-E where everyone’s just staring at screens all day and no one has any interaction in the physical world.
And so we decided to design this in-between state where we’re going to gather people at least a week per quarter. Some teams are going to be together much more frequently. Let me give you an example. So today, one of the other things we did is we announced 50 upgrades based on feedback from our community.
So I’ve also been getting a lot of feedback on Twitter and social media and millions of customers support calls, and I always wondered, like, imagine if a cable company CEO, like, actually got in the details of their customer service or, or as a CEO of a public company, just went down and just mobilized the entire company to go through every single thing people are complaining about and trying to knock them out one by one.
We haven’t fixed everything. We’re honestly kind of just getting started, but we did 50 major improvements and fixes today. And the way we did it is we actually created a blueprint of the entire experience. So I think of our company as kind of like a design-driven company in some ways, and we basically created a storyboard of the guest journeys and the host journey.
Then we took all 150 product screens on our app and our website, all 72 user policies, some of which are as many as a hundred pages long. Every interaction with customer service. We actually blueprinted everything. Then we analyzed millions of phone calls, thousands of social media posts. We talked to guests and hosts around the world, and we prioritized all the top complaints, and we tried to work them down the list one by one.
One of the things that became clear is a lot of people are still wanting to be flexible when they travel, and Nilay, what I would also say is, especially over summer… So even people that want to return to the office… I guarantee you that many of these CEOs who are calling people back to the office in New York City are going away to the Hamptons for the summer or going to Europe in August. I still think that’s happening. So you still have incremental flexibility. That’s way more than the old world before Zoom. This interview would not happen on Zoom before the pandemic.
I never did Zoom interviews before the pandemic. And so I think that that is still the case. Still about one-fifth of our business is monthly stays. It’s still one of our fastest-growing segments. I don’t think we’re going to be purely remote. I think it’s going to be much more of a flexible thing now that borders are reopening.
A lot of young people are realizing they could go to another country for a month at a time or a few weeks at a time. When I was in my 20s, I never imagined living in another country for a month. But now that’s actually feasible. And so not everyone’s going to be able to do that. But I actually do think you’re going to have a generation of people that are going to be much more mobile, that are going to potentially choose, at different points of their lives, to live in different parts of the world.
And I think that as long as we figure out the time zone matter, this is now feasible. Now, people may prefer them being in the office, but remember, this is the worst technology will ever be. Bandwidth will increase, screen resolution will increase, video conferencing technology will improve. And so this becomes more and more feasible.
And so what we did is because we’re still seeing so much growth in monthly stays, we basically made a bunch of improvements there. We designed this cool little monthly dial to train people. It’s like an iPod clock wheel that you can [simulate staying] from a month to a year. And then we’re lowering fees.
You can now pay by bank account on Airbnb rather than credit card processing, which saves you a bunch of money. So we’re still betting on this, but I think it’s a much more nuanced thing than either it’s all remote or remote’s bad. I think it’s something much more nuanced than that.
You have a lot of decisions to make. You’re obviously very thoughtful about how you make decisions and how you see the company going. How do you make decisions? What’s your framework?
Can I answer that question with a story? So, in 2011, I had my first crisis. We had our first crisis. A woman named EJ was a host in San Francisco. And one day, someone came, and they trashed her apartment. And I went on, and I wrote a letter. I published it on TechCrunch and I said, “We’ve resolved the issue.”
And then, of course, EJ said, “No, you didn’t resolve the issue.” And I was misinformed, and this crisis brewed. And then basically what happened was within days, every time I tried to communicate something, I kind of seemed to keep making it worse. And then I hired these crisis communications professionals, and I had these outside counsels, and they were giving me what seemed like good counsel.
They basically said, “Be careful about admitting fault. Be careful about this. Don’t say that. Do this, do that.” And every time I got advice and every time I tried to manage to an outcome, I seemed to make the situation worse because I think what people really wanted was authenticity. They really wanted me to, you know, just speak from the heart.
And at some point there was — this is in 2011—we were one of the first hashtags. There was #ransackgate and #ripAirbnb. I mean, people literally thought we weren’t going to recover from this because they thought we had no solution.
And at this point, I came to a conclusion that the most important decision I’m going to make would be based on principles, not on outcomes. In other words, I was going to make principle decisions, not business decisions. And the principle decision is: if I can’t figure out the outcome, how do I want to be remembered?
And I said, “Well, I don’t know how this is going to play out. Whatever I’m going to do is probably going to make the situation worse. But I’m just going to say wholeheartedly, ‘I’m sorry.’ I’m going to tell the story, and I’m going to do something crazy. I’m going to do more than what is expected of me.”
What was expected was we make it right for customers. So we ended up with this $50,000 guarantee. It started as a $5,000 guarantee. Marc Andreessen came by my office at midnight. He had just funded the company, and he said, “Add a zero.” And then suddenly we said we would provide $50,000 protection retroactively to everyone on the platform.
And it actually was one of the biggest moments in the company. And ever since then, I came to the conclusion that I’m going to try to make principle decisions, not business decisions. And then this led to another development, which is first principle thinking, which I’m sure you’re aware of. I think a lot of us think by analogy, but if you can understand the first principles of something, then you can really make a decision.
“In January and February 2020, I noticed our business fell off a cliff. And within eight weeks, we lost 80 percent of our business.”
So I’ve been applying this ever since. And it all came back to us during the pandemic because, in January and February 2020, I noticed our business fell off a cliff. And within eight weeks, we lost 80 percent of our business. And on March 15th, the Ides of March, we called an emergency board meeting.
It was a Sunday, I’ll never forget it. And in this board meeting, I wrote out a series of principles about how to manage the crisis. And the first principle I set is we’re going to act decisively. The second is we’re going to preserve cash. The third is we’re going to act with shareholders in mind. And the fourth is we’re going to win the next travel season.
And I had even more detailed principles, and I said to the board, “I’m going to have to make like a thousand decisions a week, and so I can’t run every decision by you. So instead, let’s agree on the principles, and I’ll use those principles to make these decisions.” And I think a lot of people really struggle in a crisis or in times when they’re moving quickly because they don’t have data or the data’s changing.
But if you have a deep understanding of something, that’s better. My issue with A-B experimentation, for example, is that a lot of times, when people choose A or B, they don’t know why B worked. So let’s say, “Oh B works.” Well, why did B work? Because if you don’t know why B works, then you can never change it because you don’t actually have any intellectual property developed around B.
So experimentation’s fine if you know why the experiment worked and if it reinforced your understanding. So I try to make decisions based on first principles. And those first principles are based on whatever we believe in, and what we believe in might be right, might be wrong in the eyes of others, but that’s how we do it.
And you know, it really comes down to listening to people. I try to have qualitative and quantitative information, art and science. I try to balance being in the lab with being in the field. And I try to be as close as I can to decisions as possible. I try to get emotionally invested. A lot of people say if you do a layoff or fire people, don’t get emotionally invested.
I say that’s exactly what you want. You want to understand deeply all the costs. And then if you can still make the decision, then you know you’ve made the right decision. So I generally say be principled, be as close to the decision-making as possible, and get as emotionally invested in something as you can. And then explain your thinking. The exercise of having to explain your thinking clarifies your thinking. A lot of people, they feel something, but they can’t explain their thinking. It’s a good indication that their thinking is still cloudy.
So that’s kind of how we do it. It’s first-principle oriented. It’s clear, it’s hopefully compassionate. We get as close to the decision, and as connected to emotions, as possible. It’s the head and the heart.
The last time you were on, we talked a lot about the structure of the company.
You said that when the pandemic hit, the business had cratered 80 percent. A good quote you said, that I think about all time, is, “I stared into the abyss.” And then you restructured the company. You had a functional startup structure. Then you’d gone into a divisional structure, and you said, “You know what?
I’m pulling this back into a functional structure. We have one division. I’m going to run it all. I’m going to make sure I see everything.” You’re talking about going through customer service complaints now. Are you still in that structure? Has it worked?
Yeah. I mean, we are still in that structure. We decided, let’s go back to being a functional organization. And I actually drew inspiration from Apple around the same time that the pandemic hit is when I started talking to Jony Ive.
We brought him on board a little later. I also hired somebody who changed the trajectory of the company named Hiroki Asai. He was the creative director at Apple, and they really kind of brought me along on this methodology Steve Jobs had. Steve Jobs came back to Apple in 1997.
They were like 90 days from bankruptcy or maybe even fewer. And it was divisionalized. I think it had something like 80 products. And he did two things. He cut most of the products, and he went back to a functional organization, and that’s what we did.
And the other thing we did, which seemed crazy at the time, and it’s now totally intuitive, is we put the entire company on one road map. So for most tech companies, every executive has their own swim lanes. We said, “You have no swim lanes. Everyone works on everything together. Your only swim lane is your function.
We’re going to all collaborate.” I said, “I’m not going to push decision-making down. I’m going to pull decision-making in.” I’m the chief editor. I’m like an orchestra conductor, and I have to understand enough about each instrument to make sure it creates one sound. The other thing I said is, “We’re going to connect product and marketing together.”
Product at a company are like chefs, marketing are like waiters, and they never allow the waiters in the kitchen, or they get yelled at. And I thought, well, what if you actually have them collaborate on product? What if marketing, you know, challenges engineering and engineering inspires marketing? They could actually be connected.
And I think you can tell the health of the organization by how connected engineering and marketing are. And so we did this. We then started doing release cycles, which meant instead of doing this agile, bottoms-up AB testing, shipping continuously every minute of every day… Now we do some of that still. We said 70–80 percent of our product release is going to be done like hardware.
We’re going to ship stuff twice a year. And the reason we’re going to do that is we’re going to embrace constraints. When you ship stuff at the same time, everyone’s on a deadline. Then I meet with every single team every week, every two weeks, or every four weeks. I’m working and editing the work. I’m making sure it all fits together.
It ladders up to a cohesive product story. And then we have this function called product marketing. It’s actually outbound marketing plus product management in one role.
This is very much like Apple, by the way. Apple has product marketing at scale.
Yes, and we took that from them because they’re really good at talking about the product.
We don’t have senior product managers at Airbnb. If you’re a senior product manager, you also have to do outbound marketing. You’re not allowed to decouple the roles. We have no pure product marketers who don’t do product management.
We don’t allow that. And their job is to keep the entire company stitched together and make sure we understand the story we’re telling, who the product’s for, and make sure everything we deliver ships to that product. So we now do two releases a year. The reason we’re talking is because we just did our summer release for May, and what we found is this: when I told people, Nilay, about this development process, the first thing everyone said is, “This is going to be horrible. No one’s going to wanna work together. It’s going to stifle innovation. It’s going to be too top-down. You’re not going to have as many ideas. It’s going to be a bottleneck,” et cetera. “I can tell you all the reasons this is a bad idea.” What we found is we ship way faster. We have now shipped 340 upgrades. We shipped over 53 upgrades today.
It creates a drumbeat for the organization, a rhythm. There is very little bureaucracy. Now we do say no to more things. There are some downsides, like you can’t do as many divergent things because everything is cohesive and integrated. But anything on the road map ships. Almost never do we greenlight something and it doesn’t happen.
So the answer to your question is we’ve been able to ship significantly faster and the paradox is that people are actually happier. As I created more constraints, as the culture got a little more top-down, as it was more integrated… Everyone, if they could have, 99 percent of people would’ve voted against this idea [at the beginning] because it doesn’t intuitively sound like something fun to work in. Almost everyone, at least people still here, seem to be happier. Now, maybe there’s a bias of the people who like it decided to stay, and the people who don’t like it decided to leave. There might be that, too. I want to acknowledge that.
But ultimately I do think the company’s much more productive, and it actually bears out financially. When we were doing this bottoms-up free for all approach, which is kind of my pejorative for it, we were basically losing $250 million in EBITDA a year. We were not profitable. Growth was slowing, cost was rising.
Last year, we did $3.5 billion in free cash flow and actually I believe, Nilay — this might be true now — for every dollar we earn, I think we earn more free cash flow than Apple, Google, or Microsoft. More than 40 percent of revenue becomes free cash flow. Now we’re not nearly the size of them.
That’s not the point. But the point is it’s extremely efficient. It helps to be a marketplace that’s capital-light, but it also helps to have one marketing department. It helps to not have a lot of waste. It helps to have one rhythm of the organization.
So two things. One, you seem to have more conviction on this than ever. I went back and listened to our previous conversation. It’s not that you ever have a lack of conviction. You’re always very confident, but you were at the beginning of this process and you would allow, in that conversation, that you were going to tweak as you go.
Now it seems like you have religion, like this is how you are going to run this company.
Yes. That is 100 percent the case.
And then two, one of the things that strikes me about this is you’re saying, “Okay, we’re not going to have bottom-up ideas.” You said you’re referring to that as pejorative, but as you are more remote, one thing that I have found is that the fragility of ideas is more at risk than ever, right? It’s harder to have a new idea when you’re not around each other all the time. And you’re saying you’re going to be hybrid, and everything’s going to flow up to you. And that does seem at odds with what you’re saying about how fast you’re able to innovate, right? How are you managing that tension?
First of all, the organization’s decision-making and product generation is not bottom-up, but this is a very important thing: the ideas don’t all come from leadership. We do believe the best ideas come from anywhere and ideas do flow up the organization, but ideas travel up the organization, but decision-making comes top down, not bottoms up.
And I think that that is a very important nuance. But we’re very, very integrated. Basically the way, I think about the company is there’s like 30 or 40 people, and the goal is to create one shared brain, one shared consciousness where 30 or 40 of us can be totally connected. If the top 30 or 40 people can be totally connected in one shared consciousness, then what happens is each concentric circle of seniority develops their own collaborative shared consciousness all the way down the organization, and this is really, really important.
Now with regards to remote work, again, just to clarify something, we’re not purely remote, like we have really nice offices, and many people come to the office every day. We just don’t mandate people come to the office every day. Thousands of people. Again, also, another thing, we are designing this really cool creative studio in our office in San Francisco at 88 Brannan Street.
I have, you know, many of my most important people come to that office multiple days a week, sometimes every single day a week. And so there is a core team. I go to the office not every day of every week. Probably, every other week, I go in multiple days a week. And many of my team members are there.
So again, it really depends by team, but like a lot of the product people, a lot of the creative generation, a lot of the core leadership of engineering, we are physically together, but we do not mandate downstream. Thousands of dependencies are also in physical proximity. The other thing is we travel together.
Like I’m here in New York, and a couple dozen people came with me, and we talk about the office as the laboratory, and we talk about going into the field. So we try to travel together and a lot of teams travel together, and we have these group experiences together, which I find very immersive.
We also do this thing called a road map review. Twice a year, we gather all the top leaders in the company, or many of the top people in the company that are working on the road map, like 75, 80 people. And we spend days together just going through every single thing. So, but the answer, maybe the final answer to your question is this: the more organized you are, the more you can, the more flexible you can be with employees. So I always wondered, why do you need people in the office to know if they’re working? If you have everyone on a road map and you track everything every single week, then you don’t need people to be in an office to know they’re getting work done.
The value of being in the office might be human connection. The value of the office might be that if we live our lives in front of a screen, we’re going to be very lonely. The value might be that it’s hard to trust people when you never have face-to-face interaction. And the other problem with Zoom is you can’t have side, hallway conversations.
You know, you can’t have one-on-one conversations. It’s all a little bit too organized and ad hoc. So what I do, just to give you a little bit more color on how I run the company, we have a really robust program management function at Airbnb. Most companies don’t. In fact, I think I saw a tweet from Paul Graham the other day where somebody said, “Describe what a product manager does.”
And he says, “They’re the people who track everything that people are supposed to do.” And I replied, “No, that’s program management. That’s not product management.” But I realize that a lot of people conflate product management with program management. Again, this is maybe something that’s inspired by Apple.
We have a very robust program management function that organizes everything. That’s not the role of product management. The role of product management is to work with program management, but their job is to make sure we know what we’re shipping, why we’re shipping it, and that we actually deliver it.
Program management is the people that keep the schedule, not product management. And because we have a robust program management, what ends up happening is I get a report every Sunday. Most people get metrics reports. I get program management reports. Every single project that I’m tracking, a couple dozen projects, have a color code of green, yellow, red, orange, or lime green.
It tells me a color code of like who’s on track, who’s off track. Then I review the schedule. I have a schedule where I’ll either review the work with the teams, with the key leadership every week, every two weeks, every month, every quarter. And this rhythm keeps us really, really on track.
And then we can see all the dependencies and everything moves toward these very public launch dates so nothing can ship. That program management, I think, allows us to allow physical proximity because honestly, the thing that allows you to know what people are doing is the tracking of the work through program management.
So that’s how we’ve been able to solve it. And then people worry well, if you’re remote, you’re going to be complacent. I’m like, if you want people to work faster, there’s two mechanisms to get people to work faster. One, you review the work on a cadence. Two, you have public deadlines. If you give a crazy deadline and then you review the work leading up to the deadline, that allows you to modulate the amount of intensity that people have.
That’s the best intensity, rather than saying, “Stay in the office until 10PM.” That doesn’t really do much in my mind.
The thing that I find to be the most challenging is the conditions to take a small weird idea from just a thought to a product or a thing that is happening.
That’s a good point.
You just need people around to buffer it, to support it. And I find that personally very difficult to do when I’m remote and incredibly easy to do when I’m in person.
And that, to me, seems like the reason that people are returning to offices more than anything. It’s the reason, for example, our team likes being around each other. We can spiral each other into something bigger very quickly.
I totally agree, and I don’t think most people will find that they need a hundred percent of their workforce together 50 weeks a year to do that. I think that, you know, if you’re a small team, maybe there’s no difference. If you’re like us, you’re thousands of people, you’re going to probably find that you need key people together at key moments.
And so when we get into what I call production, I actually think we’re much more productive remote. I think being in the office, when your head’s down in production, we’re actually, we’re less productive. So right now, for example, Nilay, we have a release coming next May.
Obviously today, we launched this release. We’re working on stuff for next May. For the lead-up to this today, we were more effective being remote or heads-down. Just, we’re in production. But for next May, all that idea generation, it’s much more constructive for us to be physically together.
I want to ask you just about the broader picture in tech. I think you’re a pretty expansive thinker about these things. We are in a season of major change. The big tech companies are all doing layoffs. Interest rates are high. The startup ecosystem… Silicon Valley Bank… shaky. People are cutting products that haven’t hit scale, even if they seem promising. Where are you landing in all of this right now?
Yeah, I think this moment feels to me a little like when I came to Silicon Valley in 2007, 2008. In 2008, we were entering a recession, so a lot of tech companies were contracting. In 2008, we also had this supernova of a few tech trends converging. The internet was going international in 2008, so you could just ride the internet and a lot of countries were coming online.
I think AI is, to make an understatement, certainly as profound as the 2008 shift to mobile.
The iPhone had just launched. The app store came out, I think, in 2008. And so suddenly, mobile computing became a major platform shift. And then cloud computing meant that the cost to start a company went down and suddenly you didn’t need to build your own servers. I think AI is, to make an understatement, certainly as profound as that shift.
Most of the important people that I talk to about AI — and I’ll just qualify this by saying I’ve had a pretty long-standing relationship with Sam Altman. He’s one of my close friends. I talk to him all the time. And I know James Manyika at Google and people like that. Everyone says that this is at least as profound a shift as the internet.
And some people say it’s maybe as big as things like the Industrial Revolution. I think we can assume it’s somewhere between the internet and Industrial Revolution as a platform shift. Well, just imagine how big that is. It means that we’re probably going to go through… Like imagine the last hundred years of change in this world — so go back to 1923 until today — we’re probably going to go through that amount of human history and change in the next 20 or 30 years, not in the next hundred years, because obviously change is accelerating. And by the way, that’s both exciting and mildly concerning or terrifying because we went through multiple world wars, there were depressions, there were a lot of revolutions, and so we’re going to have to be very, very careful. But just we’re staying on tech for a second. This is a major platform shift, and I think that’s what I described this as. So we’re kind of entering a mature zone where without AI, it seemed like the winners won.
It was really hard to have a new mobile app and get it noticed in the store, and it didn’t really seem like there were a lot of new players and things were becoming a little… there was a little more stasis. And I also think that 10 years of low interest rates led to something that we had to learn the hard way.
I think that there’s always a saying, “Raise as much money as you can, hire as many people as possible.” And of course, you’re probably familiar with this book, I think it’s The Mythical Man-Month, which says that the best way to slow a team down is to add more people to the team. I found that the same way.
We were like a giant Navy, and I said, instead of being the Navy, we’re going to be the Navy Seals. We’re going to be much more lean, we’re going to be elite, we’re going to move a lot faster. And I think a lot of tech companies have realized they have way too many employees doing way too many things. And I think having people on a single road map, having significantly fewer employees, you know — honestly, I’ll say this — like not having so many new grads.
Not how many, so many people out of school. Some people, but not so many people that you can’t actually train them. ‘Cause even when you have too many first-time managers. It’s a free for all. So I think we were at the end of a natural period where there was too much capital. There were too many people probably in companies doing too many things at a platform that was maturing.
I’ve seen three basic vectors for Airbnb. Just to step back, I think that, like… think about it as a stack. We talked last time about a stack. There’s like an AI stack. The bottom of the AI stack is what you might call base models. And there’s like three to five base models. So Google has, like, maybe a couple of ‘em. OpenAI has one.
Anthropic has one. Microsoft Research kind of has one, though they seem to be mostly tied to OpenAI at this point. So those are the base models. Think of it like a highway. Those are infrastructure companies. They’re building the highway. We’re not going to be building base models ‘cause we’re not going to be building infrastructure.
The layer on top of that is now tuning the models. Tuning the models is going to be really important. If you and I go to ChatGPT and we ask it a question, we’re probably going to get something like the same answer. And that would be because ChatGPT doesn’t know your preferences and doesn’t know my preferences.
And for many queries getting the same answer is great. But what if you ask, like, “Hey, where should I go on vacation?” Or like, “Who’s a good person to, like, date?” Well, depends. Who are you? What do you want in your life? And so I think that there needs to be a personalization layer on top of AI, and that’s going to come from the data you have and the permission you get from customers.
Now, I think our vision is eventually one day, we’re going to be one of the most personalized AI layers on the internet.
We’re going to design, hopefully, some of the leading AI interfaces. We’re going to basically try to deeply understand you, learn about you, care about you, and be able to understand your preferences.
Do you think that interface is chat? I’m not a hundred percent certain that that interface always looks like chat.
It’s definitely not. No way, not even close. And I, by the way, have this… I’ve had this conversation with Sam Altman quite extensively. I’m going to give you an analogy. Do you remember when Steve Jobs launched the iPhone, that presentation? He said the problem with the current so-called smartphones is the bottom half, all the keyboards that the interface doesn’t change.
Yeah, if you have a calculator, I want… if I have a camera, I want a different interface than a calculator. Well, basically every task wants a different interface. That is true of AI, that a text-based interface where I type text and I get texts back is great for certain things. It is not great for say, like, picking out an outfit or, like, buying clothing, right?
You want a more visual interface. And so I think that we’re going to have to have more multimodal interfaces that combine photo, video, voice, all different things. It’s almost like Minority Report, where you’re like pulling and pushing. And I think that, like, text is actually a very low-bandwidth form of communication, right?
And so sometimes giving something a picture and getting a picture back might be more intuitive or pushing and pulling. So I think that the answer is text is great for some things. And I think that, like, something more visual is great for others.
Let me just ask you about the flip side of this: you run a user-generated content platform in the end, right?
People who own homes put up listings. Every user-generated content platform executive I know is fearing the tsunami of garbage AI content. How are you going to push back on that?
Oh my God, you just hit on a giant thing. I think everyone was fearing that the machines were going to come to destroy us. Before they destroy us, what they’re actually going to do is mimic us, and we’re not going to know who they are and who we are. And that is actually the more near term risk of AI. You know already, you know, you saw that iconic viral photo of the Pope, and I think I thought that was a real photo at first and maybe, maybe now you know…
I wanted it to be real.
“I worry that technology may accelerate faster than our eye can adapt to what is real and not real.”
Exactly. And that’s today’s technology. So what will the photo generation look like in two or three years? Now it’s possible that, just like 20 years ago when you saw special effects in a movie, you thought they were real and now you have a more keen eye and old special effects look fake, our eyes might become more keen to artificial content, but I worry that technology may accelerate faster than our eye can adapt to what is real and not real. And that’s just photos. Now somebody can sound like an AI. They can voice clone…
Right, but let me just put that into practice for you. I want to list a house, and my house doesn’t look so cool. And I ask an AI to stage better photos of my house.
Yes. It could totally recreate fake photos. So the point I’m getting at is authenticity of information and verification of information is now a whole new problem that we have to re-solve on the internet. So I think that we need to develop new technology to reauthenticate photos, to reauthenticate people’s identity, reauthenticate people’s information.
So one of the things I would like… Airbnb, we created this thing called the Host Passport that comes with Airbnb Rooms, but that’s a gateway to this bigger idea we have. We want to eventually be able to create basically identities for people, which almost are like a digital passport that you can use potentially on-platform or even off-platform. That’s only possible if people trust the company. They trust that we’ve actually authenticated the person, and eventually, that authentication might require things like biometrics because you are going to need some offline input to be able to authenticate and this is some of the stuff we’re looking at.
You’re looking at biometric authentication of your hosts?
And guests eventually. And I mean to scale that is very, very difficult. But eventually, I do think that you’re going to need to have probably some biometric authentication mapped to a real physical identity to know that was definitively that person.
So one of my very favorite philosophical questions asked here at The Verge is: what is a photo? Our phones are processing more photos than ever, and Samsung phones will just concoct a photo of the Moon. You have a very particular problem when it comes to “what is a photo?” I take a photo of my living room. A standard real estate photo is HDR’d to hell and back. Now, often, it has no bearing on reality, but that’s what people expect. Then I ask Midjourney to concoct a picture of a mid-century modern living room, and I put that on Airbnb. That seems like it would just be against the rules. Where’s the line? There has to be a boundary where you’re saying this is acceptable and this isn’t.
Well, the one good thing about our platform is that after people book an Airbnb, they’re asked to leave a review. And one of the really peculiar phenomena of Airbnb is most people do. Seventy percent of people, after they leave a reservation, leave a review.
And on Amazon or the app store, it’s much, much lower. It’s probably, I’m going to guess, single digits. So we generally ask about accuracy. How accurate was the description of this listing? How accurate were the photos? And so, I don’t know, possibly, Nilay, how to say where that line is.
Clearly increasing the saturation of the photo, changing the exposure to put it in its best light seems kind of reasonable. But making it feel like the room is much larger than it is with a wide-angle lens, and you get there and it’s small, is misrepresenting. So I kind of would leave it up to the community.
There’s going to be really subjective things where even if we could know where the line is, how would we ever enforce it if we don’t go and physically inspect the property? And so, therefore, what we need to do is put it back on the community. And I think in this context, we’re probably going to use the subjective measures of accuracy.
People are going to rank the accuracy, the representation, and then low-accuracy listings are going to get down-ranked and probably crossover. But you’re probably asking a question we haven’t reckoned with yet. Where exactly is that line between mildly embellishing to make something look great and actual misrepresentation?
I don’t know the answer to that.
One of the things that it seems will change first and fastest is search.
Search is the architecture of the internet in basically every way you can think of. Most pages are designed to be indexed by search engines. Most people start at search in big ways. You actually bet against search a while ago, right?
You moved to brand marketing, which you talked about a little bit ago, and you went away from search and performance-based marketing. You’ve been saying, “Look, search isn’t where our business is,” for a long time. But as search breaks apart even more, and Google just starts answering the questions with AI or people use Bing instead of Google, which seems far-fetched, but Microsoft is very hopeful that happens.
Do you see that changing the architecture of the internet? Do you see that changing your business?
I think search is a tool, and you need a hammer for some problems, you need a screwdriver for other problems, you need a spatula for [others]. You need different tools for different problems, right? I think we’ve been overly reliant on search for too many problems on the internet.
The problem with search is it’s basically a fill-in-the-blank question, right? So you have to know what you’re looking for to search for it. You have to type something in. And I think for many problems, that’s good. But with travel, for example, that’s not a good solution because, for example, Airbnb’s in 100,000 cities. How do you know what to search for if you’ve never even heard about it in the first place?
And so now you have to use language like, “Well, I’m looking for something with da, da, da,” and maybe you weren’t even looking for it. Maybe you actually want to be inspired. You actually want to have more of a browse-based functionality. So I do think search is useful if you know what you’re looking for.
I hope the architecture of the internet does break apart from the interface standpoint and that different interfaces are created for different use cases. So, you know, I think that if I want to get medical advice, that might be a different kind of interface, and maybe they can see me, and I can show them something and…
This is kind of an old idea, right? This is what you might call vertical search.
It feels like we’re in a moment for the internet where everything old is new again.
That’s probably true.
I am running around saying, “Homepages are important to media.” And you’re on the show saying, “Okay, we should go back to verticals for different categories instead of funneling everything through a few major platforms.”
Here’s one of the great things that AI does: think about it — 130 years ago, only probably a few people could use a camera, right? It was a highly technical thing. It was expensive. Most people take photos now.
Anyone in the world can basically use a camera. They’re ubiquitous, they’re on our phones. I kind of think software development’s going to be like that, that pretty soon, everyone will be able to develop software because software is just a language you have to learn. Now there’s always going to be development below the stack at the deeply technical level, but a lot of that front-end development is going to be replaced by natural language. As this happens, so many more people can develop software, and as so many more people can develop software, I think you’re going to see software in everything.
We’re going to have to create interface standards because we don’t want to ping-pong back and forth and just be totally confused. I don’t even think search is the right use case for every task. Sometimes it’s voice, sometimes it’s a conversation.
Ultimately, it would be great if interfaces understood you better, right? This is a problem with Airbnb. Every time you come back to Airbnb, we show you a whole bunch of categories. And if you’re a budget traveler, we show you lux.
And if you’re wealthy, we might show you Airbnb Rooms. We should know more about you. The way companies have tried to solve personalization is through data regression of clicks, right? So if I clicked on something in the past, then I’m going to show you that in the future. But that’s actually not a great way to understand somebody.
Like maybe I went on Amazon, I bought a bunch of alcohol, but I’m actually now a recovering alcoholic and I’m trying not to drink. And you don’t know that, and the mini bar has alcohol there because I order all the time, but I actually feel bad about it and I actually don’t want to drink.
And so I think companies developing a better understanding of you, having a sense of your personalized preferences, having that interface is going to be really important. And I actually think it allows many more people to participate in the economy because, in the past, the only people that could build software were engineers.
One of the big opportunities for a company like Airbnb in a world where you can develop any kind of software and you can personalize better is advertising. We’re seeing the big platform companies doing okay in their ad businesses, but the dollars are starting to move here and there.
You have talked about building an advertising business for Airbnb — sponsored listings, that sort of thing. I think you’ve said it’s an enormous opportunity. Where are you on the road map there? Do you see this as an opportunity because of the shift from platforms, or is this a sort of a standalone next obvious business?
It’s just like a very obvious opportunity that can align incentives for people that are really motivated to want to promote their listings. And it’s obviously an extremely high-margin business opportunity. I mean, I don’t know if I read the last Amazon earnings correctly, but did I hear that they have something like a $40 billion advertising business now and it’s almost pure margin?
But you have to categorize it because they’re just advertising their own listings. It’s very strange.
It’s very weird. So I mean, clearly, there’s hundreds of millions or even billions of dollars of potential revenue if we built a pay-for-promotion platform. I mean, there’s a variety of estimates of what that can generate.
Do you think that ruins the purity of the platform? The way that you talk about Airbnb, the experience of using it, there’s a pureness there.
There is a tradeoff between building an ad platform and the user experience, or there could be. And so I’ve been extremely cautious. I’ve been cautious about building an ad platform because I think, first of all, ad platforms can be a little bit like drugs. You start with, like, one milligram, then you increase it to two milligrams and five milligrams, and you never go backward in dosage.
You just keep going upwards in dosage. And you look at a lot of search platforms like Google, and like a year ago, like 10 years ago, there was one ad and then there’s two ads and there’s four ads. There’s four ads plus an ad module, and you don’t even really see organic results anymore. So I’ve been thinking a lot about like how do we build something that could be beneficial to the business that could align incentives, but it’s actually good for the user experience and doesn’t become a drug where you just continue to increase the dosage every year if you have more and more pressure from shareholders?
You’ve given me so much time. Last question. We’ve talked a lot about Apple and how inspired you are by Apple structures, by their organization, by their processes, by Steve Jobs.
You do have this long-standing deal now with Jony Ive and his agency LoveFrom. Have they shipped anything with you? What does that relationship look like? What has it accomplished for you?
In 2014, we were designing our new logo, what people know now as our logo, and I knew Jony Ive, and I sent it to him, and he basically talked to me about how you shouldn’t have flat lines, you should have this continuous curvature.
And so he and the team spent some time, and he redesigned the spleens of the curb. And so the actual logo that you see on Airbnb, the final mark, was designed by Jony Ive. I kept in touch with him, and then when I read that he left Apple, I said, “We gotta work together.” And we started talking a lot in the beginning of 2020.
Again, it happened perfectly coincidentally, with a period of time when I felt like we had a crisis, almost the size of Apple’s crisis in the late ’90s. And I turned to him, and obviously, he gave me a lot of great advice. He told me a couple things.
The first thing is we used to talk about our mission as belonging. And the problem with using the word belonging is I noticed that employees were confusing belonging with inclusion. And then they were conflating inclusion with the lack of discrimination. And then they said, “Well, our mission is to not discriminate.”
And I said, “Well, that’s a really low bar.” Of course, you shouldn’t discriminate, but when we say belonging, it has to be more than just inclusion. It has to actually be the proactive manifestation of meeting people, creating connections in friendships. And Jony Ive said, “Well, you need to reframe it. It’s not just about belonging, it’s about human connection and belonging.”
And that was, I think, a really big unlock. The next thing Jony Ive said is he created this book for me, a book of his ideas, and the book was called “Beyond Where and When,” and he basically said that Airbnb should shift from beyond where and when to who and what?
Who are you and what do you want in your life? And that was a part of the inspiration behind Airbnb categories, that we wanted people to come to Airbnb without a destination in mind and that we could categorize properties not just by location but by what makes them unique, and that really influenced Airbnb categories and some of the stuff we’re doing now.
The third thing is he really helped me think through the sense that Airbnb is a community. You know, this is really interesting. Most people think of Jony Ive as like somebody who deals with atoms, like aluminum and glass.
But actually he said that he spent 30 years building tools. And what he realizes now is that we don’t just need more tools — we need more connections. And I thought that was a really profound thing and. He really helped us think of ourselves — this is a subtle word shift, Nilay — but going from a marketplace to a community because in a marketplace, everything’s a transaction, and in a community, everything should not be a transaction.
Otherwise, those aren’t real relationships or real connections. And so he has helped me think about how to shift from a marketplace to a community. I think some of that inspiration is what led to Airbnb Rooms, what led to the creation of the host passport. But he and the team are heads-down with me working on stuff that’s going to ship next May and next November.
One of the things Jony and I talked about is we need permission to do new things. So I’ll just use a rewind. It’s the year 2005, maybe 2006, and everyone was hoping that Apple would come out with an iPhone. And in January 2007, Steve Jobs announced it.
Now the reason we all wanted Steve Jobs to come out with an iPhone in 2006 and 2007 was because most of us loved our iPods. None of us were asking Gateway computer to come out with a phone because we didn’t love Gateway’s laptops. And so basically I think we need to have permission to do new, innovative things.
And we have permission when people love the core thing. And I came to the conclusion that we needed to focus much more on our core service. People were still complaining about pricing, cleaning fees, all sorts of things about Airbnb. And again, it comes from this disease that happens to a lot of founders or this thing that happens where we fall out of love with our core business.
And, as I told you a couple years ago, when we almost lost our business, we stared into the abyss. There’s something about almost losing something that makes you fall back in love with it. And I think maybe that happened to our core business, and we said, “Before we go on to new things, before we do whatever we’re going to do, we’re going to get back to the core, back to the basics, and really just focus on making this product something that people love.”
And so for the last few years, that’s what we’ve tried to do. We’ve tried to basically fix as many things as possible. That’s why we created a blueprint, something that Jony and others helped inspire, which is to say, “Let’s be systematic about the complaints. Let’s be systematic by how we address the feedback, and let’s tell a story to the community about all the things we’re fixing.”
And my hope is that by the end of this year, we’ll have addressed to some extent every single thing people are complaining about. They really do love the service. It feels truly delightful.
So our vision for this company is the following: that Airbnb is a marriage of art and science, that we’re a truly creatively-led company. Our two core values are basically design creativity married with technologies and then this idea of community and connection. A company with this real humanistic feel that you come to Airbnb, we ask you a series of questions.
We learn about you. We understand who you are, what you want. We design these incredibly simple interfaces, and then our job as a host is we develop these really robust matching algorithms, and then we can match you to whatever you want.
And so if we can build this incredibly robust identity system, if we can have the most robust profiles, almost like a physical social network where we can connect people together in this community, if we can use AI to augment customer service, to deeply understand and resolve your issues within seconds, not just minutes or hours, and we can then build these incredibly simple interfaces where we match you to whatever you want in your life, that’s basically the idea of where we’re trying to go. And Jony Ive and his team, they’re working on things just in that area.
Alright, Brian. That was the most incredible bring it back to the beginning wrap-up answer I think I’ve ever heard on Decoder. Congratulations. You did it. You got all the way back to the top. You’ve given us so much time. Thank you so much for being on the show.
Thank you very much.
Decoder with Nilay Patel /
A podcast about big ideas and other problems.