Airbnb CEO Brian Chesky on early rejection, customer focus & AI’s future in hospitality | E1735

Name: Airbnb CEO Brian Chesky on early rejection, customer focus & AI’s future in hospitality | E1735
Uploaded: 2023-05-04T16:33:45.000Z
Duration: 2 h 18 min 24 s

Introduction

In this section, the speaker introduces the topic of discussion and talks about his experience with raising funds for Airbnb.

Raising Funds for Airbnb

The speaker was trying to raise $150,000 at a $1.5 million post-money valuation.

Many investors did not reply to the email, and some rejected the idea outright.

One investor said they loved everything but the idea.

Sponsorship Messages

This section contains sponsorship messages from Lemon.io, Miro, and Adam Broker.

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Miro

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Interview with Brian Chesky (CEO of Airbnb)

In this section, Jason interviews Brian Chesky, CEO of Airbnb. They discuss how Airbnb overcame initial resistance from investors and achieved massive consumer acceptance.

Introduction

Jason introduces Brian Chesky as CEO of Airbnb.

He mentions that he has been wanting to interview the founders of Airbnb for a long time.

Overcoming Resistance

Jason asks Brian how he overcame resistance from investors and achieved massive consumer acceptance.

Brian talks about the initial rejection they faced when trying to raise funds for Airbnb.

He mentions that many people didn't believe in the idea, and some even said it was crazy.

Founding Story

Brian talks about the founding story of Airbnb.

He mentions that they came up with the idea in 2007 for a design conference in San Francisco.

They initially tried to raise $150,000 at a $1.5 million post-money valuation but faced a lot of rejection from investors.

Conclusion

In this section, the speaker concludes the interview with Brian Chesky and thanks him for his time.

Wrapping Up

Jason thanks Brian Chesky for joining him on the show.

He mentions that Airbnb is one of the great companies of all time and congratulates him on their recent success.

The Early Days of Airbnb

In this section, the speaker talks about the early days of Airbnb and how they faced rejection from investors due to having too many designers on their founding team.

Rejection from Investors

The founders faced rejection from investors who thought that having two designers on their founding team was not adding value.

The speaker believed that being a designer was part of the secret sauce for their company as it was not just a pure technology problem.

People said that no investor would invest in their company because strangers never stay with other strangers.

Air Bed and Breakfast

After providing housing for the Democratic and Republican national conventions, they realized that renting out air beds wasn't working. They decided to pivot to breakfast and created collectible breakfast cereal boxes called "Obama O's" and "Captain McCain's Maverick Crunch".

They funded the company with tens of thousands of dollars of credit card debt but used the cereal boxes to get out of debt.

Applying to Y Combinator

Joe and the speaker were brainstorming what to do when Justin Khan suggested applying to Y Combinator.

Despite already launching, they applied after Paul Graham extended the deadline until midnight.

Applying to Y Combinator

In this section, the speaker talks about how they applied to Y Combinator and prepared for their interview.

Preparing for the Interview

The speaker and their team were warned that the interview would be short and intense.

They rehearsed extensively, knowing that they had to know every answer.

They were advised to know their numbers inside and out.

The Interview

The interview was exactly as expected, with Paul Graham, Jessica Livingston, Trevor Blackwell, and Robert Morris all asking questions at the same time.

The first question asked by Paul Graham was whether people were actually doing what they proposed.

When asked what was wrong with them, the interview went downhill from there.

Midway through the interview, Paul Graham suggested that they create a payments company or an online bank instead of pursuing their idea.

Joe saved the day by offering Paul Graham a box of Obama O's cereal which led to them telling him how they sold it by mailing it to reporters who put them on their desks.

This story convinced Paul Graham to fund Airbnb.

Surviving Nuclear Winter

In this section, the speaker talks about how Airbnb survived tough times in its early days.

An Untouchable Company

At first, Airbnb was seen as an "untouchable" company that no one wanted to invest in.

However, Jessica Livingston saw potential in them because she thought of them as "cockroaches" who could survive anything.

Funding from Sequoia

Three months after getting product-market fit, Airbnb got funded by Sequoia Capital.

Getting funding from Sequoia meant something because there wasn't much capital available at that time.

It was a real seal of approval and meant that Airbnb was a legit company.

Sequoia's investment in Airbnb was prestigious and anointed them as a company to watch.

Focusing on Early Adopters

In this section, the speakers discuss the importance of focusing on early adopters and how they can help get a startup off the ground.

Importance of Early Adopters

The key to success is not appealing to everyone but finding a group of people who will get value from your product.

Focus on early adopters as they are the ones who will help get the flywheel going.

Airbnb's success was due to focusing on early adopters rather than trying to appeal to everyone.

Finding Engineers for Your Startup

Startups often struggle with finding engineers for their team.

Lemon.io provides startups with over 1,000 vetted and experienced engineers at competitive rates.

Only one percent of candidates who apply get into Lemon.io.

CEO's Role in Product Development

In this section, the speakers discuss how Airbnb's CEO spends his time and stays focused on product development despite being a public company.

CEO's Focus Areas

Airbnb's CEO spends almost all his time on product, marketing, and hiring.

Marketing is tied closely with product development at Airbnb.

The entire company is organized by function: Engineering Group, Product Marketing Group, Design Group.

Integrating Software and Hardware Development

In this section, Brian Chesky talks about the challenges of scaling software development in a company and how he integrated software and hardware development practices to overcome these challenges.

Challenges of Scaling Software Development

Democratizing data and decentralizing decision-making works well for small teams but becomes chaotic as the company grows.

Lack of accountability leads to politics and bureaucracy.

Airbnb lost 80% of its business during the pandemic, which forced Chesky to rethink his approach.

Integration of Software and Hardware Development

Chesky hired a guy named Hiroki Asai from Apple who was instrumental in changing how he ran the company.

He decided to be more hands-on, involved in every single detail, and do very few things that he could personally focus on.

He implemented a single roadmap for all projects with imposed deadlines that initially created resistance but eventually led to a culture of quality.

The company shipped 340 upgrades and innovations in the last three years by being qualitative and quantitatively driven.

Prioritizing Customer Problems Over Growth

In this section, Brian Chesky talks about why chasing growth is not enough for solving customer problems.

Chasing Growth vs. Solving Customer Problems

Over-reliance on A/B testing can lead to choosing B without understanding why it worked better than A.

Qualitative and quantitative data should drive experimentation.

Chesky spends most of his time reviewing work and hiring people instead of focusing on corporate matters.

Company Culture

In this section, the speaker talks about the company culture at Hey and how it is different from other companies.

Navy Seals of Companies

The company tries to be like the Navy Seals - small, lean, elite group.

It is a very intense place to work and not for everyone.

The speaker tries to talk people out of joining rather than talking them into it.

Shared Consciousness

The top 30-40 people in the company are connected as one shared consciousness.

Decision making is done by a group of people in constant conversation.

Living with Strategy

Instead of doing strategy reviews, they do something called "living with the strategy."

They talk about it every week until they resolve it.

This way of working is trial and error but has been successful for them.

Prioritization and Marketing

In this section, the speaker talks about prioritization and marketing at Hey.

Simple Marketing

They only do a few campaigns and transcreate instead of doing local campaigns.

They try to be incredibly simple in their communication.

If you can't explain something simply, you don't understand it.

Too Many Divisions

Years ago, they had 10 divisions with 10 marketing departments which made things incoherent.

Today they have one marketing department that markets only a few things a year.

Customer Velocity

Customers can only handle so many new features at a certain velocity.

If you give them too many things, they won't remember any of them.

Naming Your Startup

In this section, the speaker discusses the struggle of picking a great name for a startup and takes the audience through a thought experiment to figure out a name for their startup.

Tips for Naming Your Startup

Struggle with picking a great name in the early days of their startup.

Use Miro to help with brainstorming and decision-making.

Cohesiveness in Big Companies

In this section, the speaker talks about how big companies like Google struggle with cohesiveness when too many people are working on too many different projects.

Challenges Faced by Big Companies

Too many people working on too many different projects leads to lack of cohesiveness.

Consumers are confused about which product to use or buy.

Managing bureaucracy and dysfunction can be overwhelming.

Airbnb's Business Lines

In this section, the speaker talks about Airbnb's business lines and future plans.

Airbnb's Business Lines

Two main business lines: stays and experiences.

80% of stays are short-term while 20% are long-term stays defined by longer than 30 days.

Experiences were paused due to the pandemic but will be rebooted soon.

Future Plans for Airbnb

Have some big ideas coming that will expand beyond travel and their core service.

Created a blueprint of every single thing people are complaining about to improve their core service.

AI will be used to help with customer service and policy adjudication.

Reviving the Core Idea of Airbnb

In this section, the speaker talks about the importance of reviving the core idea of Airbnb before moving on to new things. They also discuss how they prioritize user complaints and issues.

Importance of Reviving Core Idea

The original idea of people staying with each other in their homes was the core idea of Airbnb.

The speaker compares it to iconic products like Volkswagen's Beetle or Nike's running shoes or Apple's iMac.

The team needs to reinvest in this core idea before doing new stuff.

Prioritizing User Complaints

It is challenging to know which complaints are necessary and which ones are just annoying.

Inputs include customer service calls, social media posts, listening sessions with guests and hosts, and user behavior data.

Issues can be bucketed into 100-200 types based on inputs.

Severity and frequency are analyzed for each issue.

Relationships between issues are identified (e.g., hosts complaining about pricing being confusing).

A group deeply understands the issue and prioritizes them based on severity, frequency, relationships, etc.

Analyzing User Behavior Data

In this section, the speaker discusses how analyzing user behavior data helps identify issues that need to be addressed.

Inputs for Analyzing User Behavior Data

Inputs include social media posts, customer service calls, listening sessions with guests and hosts, and user behavior data.

Bucketing Issues Based on Inputs

Issues can be bucketed into 100-200 types based on inputs.

Analyzing Severity and Frequency

Severity refers to how serious an issue is (e.g., safety concerns).

Frequency refers to how often an issue occurs (e.g., refund requests).

Identifying Relationships Between Issues

Relationships between issues are identified (e.g., hosts complaining about pricing being confusing).

Addressing one issue can help alleviate another.

Prioritizing User Complaints: Art vs. Science

In this section, the speaker discusses how prioritizing user complaints is both an art and a science.

Analyzing User Behavior Data as a Science

Inputs include social media posts, customer service calls, listening sessions with guests and hosts, and user behavior data.

Issues can be bucketed into 100-200 types based on inputs.

Severity and frequency are analyzed for each issue.

Relationships between issues are identified (e.g., hosts complaining about pricing being confusing).

Prioritizing User Complaints as an Art

A group deeply understands the issue and prioritizes them based on severity, frequency, relationships, etc.

Picking which issues to address is an art form that cannot be purely algorithmic.

Prioritization and Constraints

In this section, the speaker discusses how they prioritize projects and the importance of constraints in decision-making.

Prioritization Process

The speaker personally decides on the final prioritization for every project that a customer will see.

They only make a call if they are informed, which means their team understands the details.

The prioritization is updated twice a year during a roadmap review where top product people in the company weigh in on the roadmap.

Program Management vs. Product Management

The company separates product management from program management.

Program managers keep everything on track and do rigorous reporting every week about project progress.

This integration allows for knowing individual engineer performance on a week-to-week basis.

Importance of Constraints

Creative people want constraints to help with decision-making.

Silicon Valley entrepreneurs may not have had enough constraints in the past decade, leading to poor decision-making.

Constraints are critical for making hard decisions such as dealing with underperforming employees or unsuccessful products.

Early Stage Startups

In this section, the speaker talks about working with early-stage startups and how they operate differently than established companies.

Working with Early Stage Startups

The speaker's investment firm works with pre-series A startups that have raised only a few hundred thousand dollars or less.

These startups often lack insurance and other resources that established companies have.

Differences from Established Companies

Early-stage startups must make hard decisions due to limited resources, such as fixing or sunsetting unsuccessful products instead of hiring more people.

Having fewer resources can be an advantage because it forces startups to focus on what really matters.

Importance of Insurance for Startups

In this section, the speaker emphasizes the importance of insurance for startups and recommends a broker that specializes in providing insurance for startups.

Importance of Insurance

Officers' insurance is crucial for startups.

The speaker recommends using a broker or business insurance company that specializes in providing insurance for startups.

The process is simple and involves filling out an application to receive four quotes for four lines of coverage in 15 minutes.

The broker provides unmatched service beyond just policy coverage.

Broker Recommendation

The recommended broker is In Broker, which offers a startup package with 10% off when using the code "twist."

In Broker makes it easy to obtain affordable and comprehensive insurance coverage.

Lack of Discipline due to Zero Interest Rate Policy

This section discusses how the zero interest rate policy led to a lack of discipline among businesses, causing them to avoid difficult decisions.

Lack of Discipline

The zero interest rate policy resulted in a lack of discipline among businesses.

Businesses avoided making difficult decisions such as deprecating unprofitable projects.

Uber's micro-mobility project was an example of an unprofitable project that was eventually deprecated.

Prioritizing Upgrades at Airbnb

This section covers how Airbnb prioritized upgrades and improvements based on customer feedback.

Top Priorities

Pricing transparency was the top priority due to rising prices making Airbnb less affordable over time.

Check-out chores were also prioritized since some tasks were unreasonable, such as stripping beds and putting sheets in laundry despite paying cleaning fees.

Monthly stays were identified as a growing part of their business, but there were problems with payment methods. An integration with Stripe allowed payments by bank transfer instead of credit card, saving customers money.

Other Upgrades

There were 53 upgrades made in total.

Airbnb expanded its definition beyond just travel and focused on improving pricing, chores, and monthly stays.

The company also implemented a dial for pricing discounts and promoted the best listings.

Running a Remote Company with Constraints

This section discusses how running a remote company requires thoughtful planning and constraints.

Remote Company Challenges

Running a remote company requires thoughtful planning due to constraints such as communication barriers.

Constraints can lead to more thoughtful decision-making processes.

Despite challenges, it is possible to run a successful remote company with careful planning.

Remote Work and Office Culture

In this section, the speaker discusses their company's approach to remote work and office culture. They explain that they are not a fully remote company but offer flexibility for employees to work from anywhere. The speaker also shares their thoughts on the future of office culture.

Balancing Remote Work and Office Culture

The speaker clarifies that their company is not a fully remote company, as they have offices open and welcome people back to the office.

The decision to allow employees to work remotely is based on the belief that it will not negatively impact productivity.

For some jobs, physical presence in an office may be necessary for creative collaboration, but for others, remote work is sufficient.

The company offers flexibility for teams to choose whether they want to come into the office or work remotely. Senior members of the team tend to be physically together more often.

Future of Office Culture

The speaker predicts that technology will continue to improve, making remote work more feasible and desirable for many people.

The pandemic has highlighted the need for a better balance between work and personal life. Americans may have been too reliant on working in an office environment.

Offering flexibility can help retain talented employees while avoiding issues such as burnout or resentment towards the company.

Managing Work and AI Opportunities in Travel

In this section, the speakers discuss how to manage work effectively and the opportunities for AI in travel.

Effective Work Management

Managers should prioritize assigning work, checking work, and tallying what everyone is doing.

A simple system of sharing daily accomplishments and blockers can improve communication and productivity.

Weekly reviews of accomplishments can help identify areas for improvement or outsourcing.

Opportunities for AI in Travel

Large language models are like highways that require tuning based on customer data.

Personalization is key to developing good tuned models for search problems and matching preferences.

Airbnb aims to be one of the best companies for AI personalization by changing their business model.

Exciting Developments in AI

Base models like GPT4 are becoming preeminent with Microsoft Research also having its own base model.

The tuning of these models will depend on sensibility and customer data.

Some problems are search problems while others involve personalization.

Building a Travel Community with AI

In this section, the speaker discusses their vision for Airbnb as a travel community and how they plan to use AI to personalize the user experience.

Personalizing User Experience

The speaker wants to learn about users' interests and preferences in order to personalize their experience.

They plan to focus on building personalized AI interfaces and tuning models for better recommendations.

The speaker believes that text-based interfaces are not enough and wants more multimodal, visual interfaces.

They pulled the plug on an OpenAI plugin because they didn't like the interface.

Building a Travel Community

The speaker's long-term vision is for Airbnb to be a travel community with an ultimate AI concierge or host.

They want to understand users' needs and anticipate them like a thoughtful host would.

To achieve this vision, they need users' personal information and must marry art and science while understanding human psychology.

Improving Productivity

In the short term (within a year), the company plans to improve engineer productivity by 30% using tools like co-pilots.

This will allow them to add more people without adding communication tax.

The company encourages its employees to use these tools as much as possible.

The Future of Interfaces

In this section, the speaker discusses the importance of custom-designed interfaces for different tasks and how voice is best suited for commodities.

Custom-Designed Interfaces

Every task should have a distinct interface designed specifically for it.

Interface design should be custom-designed exactly for the channels of travel.

The future of commerce is more personalized with unique experiences.

Voice vs. Visual Interfaces

Voice is best suited for commodities where there are no inputs or visual discretion.

Immersive interfaces with words and images will be conversational bots that are not pure text but have lots of rich visuals.

Personalization and Authentication

Understanding users psychologically can help create personalized experiences.

AI can authenticate users through their Instagram accounts by analyzing their photos.

Authenticity is important in the age of artificial intelligence as machines become more human-like.

The Risks of Artificial Intelligence

In this section, the speaker discusses the risks associated with artificial intelligence becoming indistinguishable from humans.

Risk of Machines Becoming Human-Like

As machines become more human-like, it becomes harder to discern what is real and what's not real.

Authenticity is important in the age of artificial intelligence as people want whatever's real and authenticated.

The Future of AI and Personalization

In this section, the speakers discuss how AI can be used to create a personalized experience for users.

Creating Personal Profiles

The speakers discuss how they can build a personal profile for users using AI.

They mention that it is difficult to predict what will delight users, but AI can help match them with things they may like.

They give an example of a cafe in San Francisco that one person recommended to others, and it became popular through word of mouth. They believe that AI can find similar things that people will enjoy.

The Democratization of Programming

The speakers talk about how programming is becoming more accessible due to advancements in language models and natural language processing.

They compare it to the democratization of photography when cameras became easier to use. Similarly, anyone can become a programmer now without having specialized skills.

This could lead to an abundance of software and millions of new startups.

Embracing AI

The speakers encourage people to embrace AI rather than fight against it. They believe that banning AI would be like trying to ban electricity.

They give an example of the Writer's Guild seeking a ban on using AI in the writer's room. However, they argue that ingesting previous scripts and using AI for brainstorming could lead to better shows and jokes.

Overall, the speakers are optimistic about the future possibilities of AI and its potential for personalization and democratizing programming. They encourage people to embrace these changes rather than resist them.

AI as a Creative Tool

In this section, Joe Rogan and Jason Fried discuss their thoughts on AI as a creative tool. They talk about how AI can be used to enhance creativity and the importance of thinking of it as a tool rather than something to be feared.

AI as a Tool for Creativity

Computers are tools, and AI is no different. If we think of it as a tool, then it becomes a tool for creativity.

Chatbots like GPT can help with writing by summarizing text or giving ideas. It helps discover first principles in interesting ideas.

Using follow-up questions with chatbots can lead to more profound insights.

The potential for new jobs created by AI is unknown but could be significant.

Concerns About the Speed of Advancement

While there are concerns about the speed at which AI is advancing, from a creative standpoint, it's only something to worry about if you don't want to be part of it.

The cold start problem isn't solved yet, but using chatbots like GPT can still provide useful insights.

Conclusion

Both Joe Rogan and Jason Fried are optimistic about the potential benefits that AI can bring to society.

Insights on Architecting a Company and AI

In this section, the speaker shares insights on how to architect a company and the role of AI in it.

Key Points:

The speaker had notes about blocking and tackling, which are important for great conversations with CEOs.

Entrepreneurs should listen to this conversation as the speaker shares profound insights on how to architect a company and the role of AI in it.