--:-- Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Cara Swisher, and today we're sharing a special episode of Decoder with Nilay Patel from our friends over at The Verge. Nilay, The Verge's co-founder and editor-in-chief, interviews CEOs, policymakers, and tech leaders asking them critical questions. In this episode, Nilay interviews Airbnb CEO Brian Chesky about how they're navigating the pandemic, handling the backlash towards big tech, and how they're maturing from their rise as a tech company who showed up to cities without permission and fought with regulators. Take a listen to the episode and follow Decoder with Neelay Patel wherever you find your podcasts. New episodes come out every Tuesday.
--:-- Nilay Patel: Hello and welcome to Decoder. I'm Neelay Patel, Editor-in-Chief of The Verge, and Decoder is my show about big ideas and other problems. Today I'm talking to Airbnb CEO Brian Chesky, and I have to tell you, this conversation was really surprising. Brian prides himself on thinking very differently than other CEOs, and his answer to the decoder questions about how he structures and manages his company were almost always the opposite of what I'm used to hearing on the show. Airbnb is pretty much a single team focused on a single product, and it all rolls up to Brian. That's very different from most other big companies, which usually have lots of divisions and overlapping lines of authority.
--:-- Nilay Patel: But Airbnb wasn't always like this. In fact, this new structure came about as a result of the pandemic when the travel business tanked overnight. Brian talked through how he decided to change what Airbnb was doing, how he redesigned the company to support that, and how he plans to grow from here. We also talked about design and why Brian has Johnny Ive's new firm Love From on retainer. Did you know Johnny Ive helped refine Airbnb's logo? I did not.
--:-- Nilay Patel: We also talked about the fundamental weirdness of being a marketplace company. Airbnb is a travel company that doesn't own any property. I wanted to know who Brian thinks his customers are, how he manages his suppliers, and how he thinks about the future of travel. Since the pandemic, Airbnb has seen a huge uptick in longer stays and lots of weeknight travel, which means that people who can work from home are actually choosing to work from anywhere. Brian thinks that's a permanent shift and it has big implications for how Airbnb works in various communities.
--:-- Nilay Patel: And Airbnb's relationship to those communities is changing as tourism changes. Airbnb used to be the poster child for a tech company that showed up without permission and fought with regulators. But as the company has grown and the pandemic has changed things, it's entered what is hopefully a more mature phase. For example, it just came to a deal with New York City after 10 years of fighting. I asked Brian about that and about what it's like to run a public company now. The transition from scrappy design startup to public company engaged with regulators is a big one.
--:-- Nilay Patel: Of course, I also had to ask about cryptocurrency and the metaverse. I mean, what do you think we're doing here? Does Brian think we're all going to be visiting virtual NFT museums on vacations in the future? You're going to have to listen and find out. Okay, Brian Chesky, CEO of Airbnb. Here we go.
--:-- Nilay Patel: Brian Chesky, you're the co-founder and CEO of Airbnb. Welcome to Decoder.
--:-- Brian Chesky: Thank you very much for having me today.
--:-- Nilay Patel: I'm excited to talk to you. There is a litany of things we could talk about. It's almost a year since Airbnb went public. You've made some product announcements. We should talk about all those. There's a pandemic going on. I don't know if you've heard about that. I'm very curious how that's affected the business. But actually, I do want to start there. Airbnb is sort of a paradigmatic company, marketplace, internet company, right? Uber is a taxi company that doesn't own cars. Airbnb is a travel company that doesn't own hotels. What has that been like during the pandemic? How have you changed the business? How have you had to react to that?
--:-- Brian Chesky: It's kind of interesting to take you back to right before the pandemic to kind of take you on a journey of what that's been like. I remember coming back from the holidays after 2019, early 2020, thinking like probably most people in the world that my life was going to go a certain direction, not knowing two months later that everything would be turned upside down. We have a China business. In late January, we noticed our China business dropped by 80% in a matter of weeks. I'd never seen anything drop by more than 5%. So this was precipitous. I remember saying seemingly innocently at the time, "Wow, if this spread outside of China, this would be very bad." Not realizing within a few weeks it would go to Europe, and then of course to the United States. By March, our business started dropping precipitously, and we lost 80% of our business in eight weeks.
--:-- Brian Chesky: Losing 80% of your business in eight weeks when you're the size of us is like driving a Mack truck, an 18-wheeler, at 80 miles an hour and slamming on the brakes. You just can't change direction that quickly without really dramatic things happening. There was a lot of panic around me, certainly in the public. There were a lot of predictions of our seemingly imminent demise. There were people asking, "Will Airbnb exist? Can Brian Chesky save Airbnb?" These are verbatim headlines from last April. A lot of people thought that we would be more impacted than hotels and other companies. Maybe the reason why is because they just assumed what arrived recently would go away earlier. We weren't around for 100 years, so how could we be the thing that endures for the next hundred years? I understand that line of thinking. But something totally different transpired. If you cut forward, by the end of the year, we suddenly went public and we were stronger than we were before the pandemic.
--:-- Nilay Patel: So how did that happen? How do you even explain that?
--:-- Brian Chesky: The way I would explain that is that we had an adaptable business model. Because we didn't have to pour concrete, we had millions of homes. We had nearly every type of space, from small bedrooms and apartments to yurts, to tree houses, to villas and entire homes in nearly every community in the world. We're in 220 countries and regions. That's every country in the world but North Korea, Iran, South Sudan, and Crimea, in 100,000 towns and cities at every price point from $20 or $30 a night to thousands of dollars a night for any length of time. You can only stay in a hotel for usually up to a week. It gets precipitously expensive for most people, but you can literally live in Airbnbs for months at a time. Quite a few people are doing that. For every type of traveler, we have solo travelers, we have families. Because we didn't have to hold inventory, we didn't have to pour concrete, we had a distributed network. We were a community. Communities are inherently adaptable and resilient, almost like mother nature. It just adapts. So we were able to adapt to the changing patterns of travel better than probably any company in history. I think that kind of spoke to what happened. The only other thing I would say is that travel is completely changing. I think we're living in a revolution in travel. We can talk about this in a little bit, but I think that also explained part of our success.
--:-- Nilay Patel: So that adaptability, right? You don't have to pour concrete. You don't hold a lot of inventory. I think of Airbnb as a software product. Is that what you think the core product is, is marketplace software?
--:-- Brian Chesky: I think that's a part of our product. We're not a software company the way Microsoft is software, where they literally sell the software and there's nothing but the software. But we are first and foremost a software company. We build the software. But what is our product? I wouldn't say like Google and Facebook, our product is our software. I would say our product is the thing you pay for. The thing you're paying for is the home. It's the experience, it's the community. Our application is kind of the gateway to that thing in the real world. So we are definitely software first. We're very much a software company, but we're more than software because you're buying something more than just a digital product.
--:-- Nilay Patel: This is kind of a way of asking, do you think of yourself as a tech company? There's a lot of ways to define what a tech company is. You brought up Microsoft and Google. They have zero marginal cost scale, right? The next Google search page does not cost Google anything to make because the software can just generate that stuff and they have entire business models around that. Do you think of your margin and your growth the same way that a software company like Google would think of it? Do you think of tech enabling your product in other ways? How would you define tech company in a way that includes Airbnb?
--:-- Brian Chesky: There are many definitions of a tech company, but I think the primary definition of a technology company is it has two characteristics. It's seemingly infinitely scalable. If you have to pour concrete, there's only so much concrete in the world. It's very expensive. It leads to a lot of capital allocations, but also requires a lot of permits. It requires decades to do that. So the first characteristic of a tech company is it's seemingly infinitely scalable. The second is what you said: it's got low marginal cost. I think Windows 95 was the closest thing the world's ever seen to basically close to zero marginal cost. All it was was a CD in a box. Maybe Google's practically zero marginal cost. All they're paying for is servers to host the data.
--:-- Brian Chesky: I would say Airbnb's pretty low marginal cost. To give you an example, if you look at our financials, our gross margins are approaching 50%. If you look at what our margins were a couple of years ago, they're in the mid-thirties. We did over a billion dollars in EBITDA in the third quarter alone at our size, even though we're built to be profitable at a much larger scale. In that way, I think we are a tech company because when an investor values a company, they're just looking for how big can it be and how profitable can it be? Those require two characteristics: infinite scale and low or zero marginal costs.
--:-- Brian Chesky: That being said, we're not obviously a tech company like Intel or NVIDIA. I think about it as layers of the stack. You've got the micro components, which is NVIDIA, Intel. Then you've got the companies making devices like Apple. Then you've got the operating systems, Apple, Android. Then you've got the application layer. I think we are the application layer, but I think there's even a layer almost above the application layer, which is we're also online-offline, which you mentioned with Uber as well. We have this offline world that Facebook, Google, and other applications don't have to deal with. For example, we have to collect or remit money, tens of billions of dollars, in nearly every country in the world. We have money transmission licenses in most countries. So we have major financial regulation responsibility. We have millions of people a night. Some nights we had more people staying in an Airbnb than the population of Los Angeles. We had to keep them safe. We've had to make government agreements with thousands of jurisdictions around the world and collect or remit $3.4 billion in hotel tax. We have to exist on every application. Uber needs a mobile app. We need a mobile app, a desktop app, an iPad app. I could go down the list of things.
--:-- Brian Chesky: We just launched AirCover, which is a million dollars of damage protection for every home on Airbnb for free. If 1 million homes a night are occupied and each home has a million dollars of protection, that's a trillion dollars of protection that we're working with providing with insurance partners every single night. There are a lot of things that go beyond the application. You open your iPhone, you tick the stock app. That's a very two-dimensional experience. Airbnb is truly an application that has a three-dimensional experience, which is the real world. That creates quite a lot of complexity. The good thing about Airbnb, though, is because we're a community, it's inherently scalable. That's why investors clearly like it. It feels like a tech company because it is.
--:-- Nilay Patel: So you brought up a lot of things that I have follow-up questions on. I want to start with the simplest one. Almost every other tech company exec that comes on the show, I have to ask about the chip shortage. And everyone says, "Yep, it's a problem." Is the chip shortage a problem for Airbnb? I'm guessing no, I'm just curious.
--:-- Nilay Patel: You're the first one. There's something interesting there, right? You're deeply connected to the physical world, but you've kind of abstracted the phone and the hardware component away. So that's interesting. The second one is you brought up currency transactions. I was not expecting to ask you about cryptocurrency, but I'm curious, is Airbnb thinking about cryptocurrency?
--:-- Brian Chesky: We're definitely looking into it. Absolutely. I think that just like I believe there's a revolution in travel, there's clearly a revolution happening. Crypto feels like a revolution to me. So we are absolutely looking into it. I think crypto is like the other side of trust. I think Airbnb and crypto both have interesting relationships with trust. I think the original white paper on Bitcoin said that Bitcoin does not require trust because there's essentially a public ledger. Airbnb approached trust in a kind of similar way, but not exactly the same way. The reviews are the equivalent of a public trust ledger, essentially. That's essentially what it is.
--:-- Brian Chesky: The founder of Coinbase was an early employee of ours, and we've been following this space for quite a long time. One thing I can add to the crypto dialogue is that I remember lots of technologies. There's an excitement and hysteria around technology. The key is going to be once it becomes very broadly applicable to regular people and regular people understand beyond the initial excitement of technology how it can apply to and improve their lives. So I'm really excited about certain applications that regular people could use to just live a better daily life.
--:-- Nilay Patel: But you're not thinking of accepting payment in Bitcoin to avoid currency exchanges and the float that you must have?
--:-- Brian Chesky: This is not something that we have in the near-term plans. It's certainly something that we should be looking at. I think everyone that's handling a lot of money should be looking at this. Holding a lot of any coin, you have a lot of volatility. One of the accounting challenges is that if you make a gain, you don't get to realize those gains. But if you have a loss, you have to account for those losses. So there are a bunch of things you have to think about if you're going to hold a lot of currency.
--:-- Nilay Patel: So here's my other buzzword question. You mentioned online, offline, and how Airbnb kind of mediates the two. You and I are speaking in the context of every other tech company in the world just saying the word "metaverse" and hoping something good happens. I don't know what they're going to do. Is that something that you have to think about? Like, how am I going to enable digital experiences that cross over into the real world experiences that we are currently selling?
--:-- Brian Chesky: Let me answer that question in a kind of broad sense of the word. When Mark Zuckerberg announced the metaverse, I think an abstraction that he said was the internet, I think he's saying will be three-dimensional rather than two-dimensional. He had a very specific vision of what that would look like. I do believe that the internet will get more three-dimensional, more immersive. There's no question. The question number one is, will it replace real life or just replace more two-dimensional screen time? I think, and I hope, that a more three-dimensional internet will replace a two-dimensional internet, not replace real life. I think that would be a real unfortunate outcome because then we will recreate the movie WALL-E, where everyone's on screens and they're disconnected from the real world. I don't think that's any technologist's vision that I'm aware of, that we never exist in the physical world.
--:-- Brian Chesky: I think these digital experiences are gateways. We do have online experiences. They're not a giant part of our business, but they are a gateway. There are ways for people from their home for $10, typically $20, to try Airbnb, connect with a host without having to get on a plane and stay in someone's home in another country. It's a lower commitment. But generally, I like to either ride a trend or ride the opposite of a trend. The opposites of trends are always as powerful, essentially counter-trends. To zoom out, we're living in a digital revolution. That digital revolution clearly started decades ago. I think the pandemic accelerated the adoption of lots of digitization. If you look at all the companies that did really well, they're digital companies that are digitizing the physical world. So the mall became Amazon, money is becoming crypto, hotels are becoming Airbnbs. I think digital is benefiting.
--:-- Brian Chesky: I think there's a major risk to the digital revolution. The risk is that we are also living in one of the loneliest periods in human history. It's an incredibly isolating time. When you take physical communities and you atomize them, digitize them, they're not always as nourishing as the physical world. No one's ever changed someone else's mind in a YouTube comment section. When people that are different from one another interact online, they tend to argue and repel each other often and divide further. There's something about the lack of empathy of sitting face to face. The best way to change someone's mind about someone else that I ever encountered is to walk in their shoes, to literally walk in their shoes, to stay in their home, go in their community. When you do that, it's pretty hard to hate up close. You're going to start to realize that those people that I said were "the other," they're actually just like me.
--:-- Brian Chesky: In society, we're spending a lot of energy, both good and bad, talking about how different and unique every one of us are. But we're forgetting that we're 99.9% the same. I think that's a major risk to the world. There's this really exciting digital revolution. It makes everything more ubiquitous, cheaper, freely accessible, but it also is a major risk. One of the things that I'm thinking about is that at the largest level, what I'm most focused on in the long term is this notion of human connection and this risk of the world being isolated, lonely, and divided. If Airbnb has a reason to exist, a contribution to make in this world, there are many, but if I can only pick one, it's the ability for us to bring people together in the physical world from cultures all over the world. I think that will always be relevant so long as people are relevant in this world.
--:-- Nilay Patel: I buy that, but let me push you on it a little bit. One of the big trends that you've talked about, you had some tweets about it the other day, people can work from anywhere now, right? Working from home is really just working online. So yeah, you can just... actually, my boss, the VP of The Verge, Helen Havlack, I never know where she is. Every time I see her on a Zoom, she's just in a different state. It's been a very entertaining year of talking to her. But the people who are doing that sort of "I can work from anywhere, I'm going to try all 50 states," they're not necessarily plugging into communities, right? You're not selling a Republican to go experience the heart of blue New York City. You're not selling a Democrat to go move to a red state for a while and check it out. How do you connect the product of Airbnb, which is you can spend time in someone else's house, to the actual communities those houses are located in?
--:-- Brian Chesky: That's a great question. I think that there is no doubt more to do. I do think that one of the great benefits of Airbnb is there's a host. Behind every home is a host. You can't stay at a home without a host. What a great host on Airbnb does is they bring you into the community. This is beyond the people actually living with hosts where they're inherently plugged into the community. Let's say I get an entire home. Our very best hosts create guidebooks. Millions of them create guidebooks. They connect you to a local community. Sometimes they'll even, if you're going to be there for a long time, introduce you to the local coffee shop or the neighbors. So I think that ultimately, first and foremost, it's the job of a great host to bring you into the community and assimilate you.
--:-- Brian Chesky: The other thing I'll say is this is something that I'm very interested in: how do we continue to connect people to communities? Because there is an unmistakable trend that people are more flexible. We are truly living in a revolution in travel where more and more people are going to be flexible. They're not going to be tethered to an office like your boss, or you're not tethered to an office. You're obviously in upstate New York. This is the world that we're going to be designing for. I think we're going to have a generation of people that are going to be less tethered to the office, more nomadic. 20% of our business by nights booked are for stays over a month or longer. The most important two criteria to connect to a community is to stay longer in the community and have people that can connect to that local community. If we can encourage longer stays and if we can encourage hosts to be the connectors of the guests to the communities, those are probably two of the biggest things we can do to make sure we're enriching the communities. People go places. They're not just transient. They're not just invisible shadow members of the community. They actually are physically there. This is one of the big opportunities for Airbnb. It's also one of the big challenges that we're going to be focused on in the years to come.
--:-- Nilay Patel: You mentioned hosts in the center of the Airbnb experience. Who do you think your customer is on the platform? Is it the guests who are booking stays? Is it the hosts?
--:-- Brian Chesky: We're very clear about this. We have five stakeholders: guests, hosts, employees, shareholders, and obviously the communities we operate in. Some could call it just society writ large. Our hosts are not our customers, and we're very clear about that. Our hosts are our partners. Our guests are our customers. They come to Airbnb for a bunch of reasons. The number one reason a guest uses us is typically they want to live like a local. The number two reason is they want to save money. The third reason is they want to have a real close proximity to something. So they're the customers, and our hosts are our partners.
--:-- Brian Chesky: The interesting thing about having a partner is they have a customer-like relationship. We do things for them, but we also have to do things in partnership with them. We have to preview things to them. For example, we announced yesterday verified Wi-Fi speeds. We can't do that without the host actually using the tool. We have to make a promise to the guests that we have this feature, but we have to educate the host. They have to be bought into it. If we make a promise to the guests and the hosts don't want to offer it, then everyone is kind of out of luck. What we had to do to deepen our connection to our host community is we created a host advisory board. We created a host endowment, kind of like a college endowment. It's worth more than a billion dollars. We do listening tours, talking to hosts every single day. Our hosts are our partners, not our customers, but they have customer-like attributes where we have to continue to deliver stuff and they have to be happy.
--:-- Nilay Patel: To just abstract that out to more basic vocabulary, the hosts are your suppliers and your customers are the demand, right? They're the ones who come to you and you mediate the demand between multiple sources.
--:-- Brian Chesky: Sorry, just one thing about suppliers. I think that's technically true, but when people hear the word "supplier," I think what they often think of is suppliers have channels and they have many channels. The thing that's unique about our supplier relationship where the word "supplier" can throw people off is that 90% of our hosts are individuals. Most would not have supplied their inventory had it not been for Airbnb. Very few cross-list. The supplier relationship with Airbnb is different than the supplier relationship on Amazon. But you are true. They are technically supply and demand. These are obviously basic laws of economics.
--:-- Nilay Patel: Yeah, that's my question here. You have a relationship with these hosts, many of whom are individuals. There are other channels. You do have competitors like VRBO and others. Do you think that hosts over time will begin to experience competition? The platforms themselves will compete for hosts. There's only so many houses in America. At some point, you're going to run out of inventory. It doesn't seem like you're interested in pouring concrete yourself. So at what point does the dynamic, does the leverage shift back to the supplier?
--:-- Brian Chesky: The supplier hosts have a lot of leverage. I don't think they're listing on Airbnb per se because we have the leverage. I think they're listing on Airbnb because we have the demand, we have the tools, we provide what they want. Let me give you a couple of stats. We have fewer hosts as a percentage of our inventory today that is cross-listed on competitors' websites than before the pandemic began. Our inventory is getting more exclusive over time, not less exclusive. Why is this? Yes, we have competition like everyone does. Hosts have choices. But when hosts look at the choices out there, they see that only one platform is custom built for them. Only Airbnb gives, for example, a million dollars of damage protection, million dollars liability protection, income loss protection. That's just one of the things we offer. I could go down the list of many of the custom tools that we have built just for hosts.
--:-- Brian Chesky: We provide the vast majority of demand for hosts. If you host on Airbnb, you can host people from 220 countries. Most of our competitors are regional competitors that only have demand in certain locations. Our brand is a noun and a verb used all over the world. We are synonymous with this category. We've created this category, at least we've modernized this category. It was offline for the most part before Airbnb. We've really created this category at least at scale. We're the innovators. We've innovated 150 upgrades and innovations this year alone over Zoom in the midst of a pandemic. I think we're just getting started.
--:-- Brian Chesky: To answer your question, I try to get out of bed every day knowing that our customers have choices, our hosts have choices, our employees have a lot of other places to work, and our shareholders have a lot of other stocks to buy. We've got to always have the humility of knowing that every single day we have to prove ourselves. We have to be better than the day before. But I will say that if you look at what we've done in the last 18 months, to lose 80% of our business, to restructure the company, to ride this rebound, to go public in a pandemic and then make 150 upgrades and improvements, hopefully if anyone's evaluating our work in the last 10 years and especially the last 18 months, I hope they feel really good about the trajectory. But that's partly because we wake up every day knowing these facts and we have to prove ourselves every day.
--:-- Nilay Patel: You've mentioned several times you're not interested in pouring concrete, but you obviously need supply. We're talking just about a week after Zillow had to lay off a few thousand people, 25% of the company, because they actually tried to get into the homes business. They were trying to buy and sell homes using some algorithmically derived pricing structure. I'm just curious for your thoughts on that. Why do you think they charged into that market and why do you think it failed so badly?
--:-- Brian Chesky: I want to preface this answer by saying that I did not follow what they did very closely. One of our first investors after Y Combinator was a guy named Keith Rabois. He is the co-founder of Opendoor. I believe Opendoor's core business was the thing that Zillow was trying to do. I know Eric Wu, I think he's the CEO of Opendoor. I know Rich Barton a little bit. He's the CEO of Zillow. I think he's incredibly talented.
--:-- I don't know exactly when it went down. I'm guessing that when a company moves beyond its core business, it has to be very careful. Like we tried to get into flights and transportation. We thought, we have a ubiquitous brand. We have so much traffic. Why don't we just add flights? The problem is it's really important for a company to understand what its capabilities are, not just what its assets are. You see the difference? Our asset is a brand and traffic, but do we have a capability to actually fill seats on an airplane? That's a whole different muscle that has nothing to do with filling people in homes.
--:-- I don't know if Zillow made this mistake or not, but a mistake commonly people do is they confuse their assets with their capabilities. Do you know how to do something? Amazon went from retail to AWS. That was not actually a crazy transition because retail was just giant fulfillment centers, which are basically massive efficiency machines, which are very similar to server farms. The fulfillment center server farms of AWS were not that different. They were in the efficiency and speed business. When Apple put out the iPad and the iPhone, they were really the same computer platform built on OS X as the computer.
--:-- I think it's really important that when you do line extensions, you either stay within your area of capability, or you acknowledge we don't have this capability. We better build this capability and be expert before we go big into it. Maybe that is a clue of what happened there. Be very careful extending beyond your core capabilities, even if you have the brand, the traffic, and the assets.
--:-- Nilay Patel: I'm assuming that you were not interested in buying homes and owning a lot of inventory before and you're less interested now?
--:-- Brian Chesky: Yes. I think that's a safe assumption. I can say that if I ever were to get into something like that, a lesson I've learned is that we must become an expert in something. You have to be humble. There's also this risk of the second album problem. Your first app, your first album was successful. You don't really know why it was successful. You kind of forgot all the hard work and all the struggling. So you think we're successful, we can now do everything.
--:-- I remember a teacher at my college said to me once, Brian, you can do anything you want in your life, just not all at the same time. I think a lot of tech CEOs experience a little bit of this hubris of thinking because you can do one thing, you can do everything. Maybe you can do a lot of things, but certainly not at the same time. You always have to have a beginner's mindset and learn from the very beginning. As long as you stay curious, stay a beginner, try to tackle really one hard problem at a time and really understand what your capabilities are, then you might be able to stay on track.
--:-- Nilay Patel: We're going to take a break, but when we come back, I'm going to talk to Brian about the structure of Airbnb and how he manages that structure.
--:-- Nilay Patel: We're back. Let's talk about the structure of the company. I think of these as the decoder questions because I ask everybody. You mentioned you had to restructure the company. You made a bunch of changes when the revenue went away, and then you ended up going public all inside of a year. How was the company structured, and how is it structured now?
--:-- Brian Chesky: This is a very fun topic for me because I've studied a lot of organizational structures. Airbnb started like all companies start. They start as functional organizations. You have a marketing leader and a design leader and a product leader, engineer leader, finance, HR. Then the Andy Grove law of large organizations, organizations eventually become matrices. Very few companies, when they grow, stay functional. I believe the only large functional organization in the world is Apple. Even Apple is only quasi-functional because they have a whole services group now, which is a little bit quasi-divisional. But Apple is a functional org and they're an anomaly. If you take the 4 to 500, every other one is a conglomerate or divisional.
--:-- We were creeping towards divisional. Before the pandemic, we were divisional and we had subdivisions. We had 10 divisions. We had a homes division, which had core host, pro host, business travel, lux, plus. We had China. Then we had experiences. Then we had transportation. Then we had content. We had a few other things. We had about 10 or 11 divisions. We were really scattered. In hindsight, we were not so focused. Of course, you don't know until after, right? Kind of like those movies where you think your life is great and then the plot of the movie, something happens. The whole point of the movie is you realize your life wasn't as great as you thought and you grew from the experience. That's kind of what it was for us.
--:-- We lose 80% of our business. I had to stare into the abyss. I never thought the company wouldn't exist, but a lot of other people did. I had to stare into making some hard decisions. We had to lay off 25% of our employees. It was the hardest professional decision I ever had to make. We lost about 40% of the people because we also lost about 10% of people that were contractors. When you do a layoff, a whole bunch of people after tend to resign because they're like, okay, well, there's not a lot of opportunities. We lost like almost half of our company.
--:-- We had to shutter most of those divisions. We only kept the core. We kept homes, we kept experiences. We put under one group we called host. The radical thing that we did is we went back to a functional organization. I studied a number of other companies that were in crisis. The most dramatic crisis I had encountered was Apple in 1997. They were 90 days from bankruptcy. They were a divisional structure. Steve comes back. He shutters most of the divisions. The other thing Steve did is he went back to a functional org. I went to a functional org as well, primarily out of necessity to the cost to integrate.
--:-- Something remarkable happened. When I got to a functional org, suddenly I took the very best people and I put them on one problem. Not only do we save money, we started growing faster. The theory of a functional org is that it's supposed to be slower. The whole point of divisional structure, you're supposed to deputize all these lieutenants to be able to make faster decisions. You're supposed to be able to do many more things. A functional structure is, in theory, a way to slow things down, do fewer things. I found just the opposite.
--:-- When I became a functional org, suddenly the entire company was on one roadmap. We all had the same exact priorities. There were fewer meetings. Decision-making was faster. Quality was better. I now do design reviews and marketing reviews every week. The main thing I do now is we keep a two-year roadmap. We're constantly talking about the things we're going to ship.
--:-- Most companies in Silicon Valley, as far as I can tell, are basically divisional or product group areas. They're decentralized. They democratize data. All these people can kind of experiment their way towards various optimizations. To me, there's a limited way of working that way. The limit is that let's use an analogy of a car. If I was designing a car and one team was iterating the tires, well, now it has to fit the wheel. But the wheel team is bigger. Then suddenly I now need to create a new car body. But that makes the car heavier. So you need a bigger battery. But a bigger battery means a new factory. And now the finance team... You see these products are all integrated at the end of the day anyway, and a customer sees one product. They see one app. They don't see 50 little teams.
--:-- What I learned is the functional organization. I am totally functional now. The only group that is not functional is we have a hosting organization. Otherwise, we're run pretty simply. We're a functional org with a multi-year roadmap. Every single thing in engineering ships on the single roadmap. It keeps priorities really simple. I probably do 15 hours a week of design and marketing reviews. I try to make sure I can constantly unblock people.
--:-- It's inherently, I think, a very creative organization. I went to the Rhode Island School of Design and there's not a lot of companies our size run by designers and creatives. The primary thing a creative company wants is to run off a calendar first and foremost, metrics secondary. Most companies run off metrics and the calendar is secondary. The way you do work is you have deadlines. So we work off of a calendar. We have two launches a year. One of them was yesterday. We actually developed software a little bit like hardware.
--:-- I think one of the challenges of software was it was supposed to be much better than hardware because there was ubiquitous data. When you ship hardware, you don't know how people are using your product. Software, everything's trackable. There's ubiquitous data. You can ship continuously every minute of every day. But I think the problem with software is the lack of constraints means that sometimes the software becomes a free-for-all and you open an app a year later and it looks no different than the year before because it's not a cohesive story.
--:-- The way we run it, it's totally integrated. It's a little more like hardware. We do these releases. We do continuous integration, AV experimentation between, but I try to take the best of hardware and software. Marketing and engineering are totally integrated. Most software companies, marketers are like waiters. They can't go in the kitchen. The chefs yell at them. We try to just take a different approach. That's how we do it. Totally integrated, totally functional, pretty creative. A lot of people think this is a slower way to run a company that will stifle innovation. Our experience this year, certainly since the pandemic, has been just the opposite. 150 upgrades doing it this way.
--:-- Nilay Patel: How big is Airbnb now?
--:-- Brian Chesky: We have 4,800 employees and we have a captive call center of 1,200 people. It depends on how you want to count it, but it's around 5,000.
--:-- Nilay Patel: More specifically, how many people report to you?
--:-- Brian Chesky: I think I have nine, eight or nine. I have finance, legal, we're between HR leaders. I have an operations person, a marketing and design person — it's the same person. I have a hosting organization leader, a technology leader, comms and policy. That's seven. Then I have two co-founders, Joe and Nate. That would be nine. It's a good exercise. Sometimes I can't remember who my direct reports are, so I appreciate that you can do it.
--:-- Nilay Patel: One of the things about The Verge is we are effectively a functional organization inside of a larger matrix company, but we ship one product. We ship stories on a website over and over again. We ship some videos on video players. We should podcast, I guess. Even inside of my own little org, I have editors. One of the ways you keep great people is you give them autonomy. You say you are the — there's a set of decisions you can make and there's a set of goals you can achieve. We're just not going to micromanage you. How do you balance that? How do you bring people in? At some point with every big tech company, and you described a divisional organization, a Google or a Facebook is full of very powerful executives who desire autonomy. To retain them, they have to get more and more autonomy. How do you balance that trade-off?
--:-- Brian Chesky: I wonder when people listen to this podcast, if they're going to hear a bunch of unconventional views that I have. I'm going to give you another one because I'm realizing I'm continually going against the grain. I don't really believe in that principle. I don't believe that the way to empower people is to give them autonomy. I tried that for 10 years. I kept trying to give people more and more autonomy. What happened was control is not zero sum. There's a way where everyone can be autonomous and no one can be empowered. In an autonomous organization, you're only as good as the number of resources you have and the collaboration you have from other teams. A team could be autonomous, but if they can't get on the payments roadmap, they can't ship anything.
--:-- What I decided is we are not going to have autonomous leaders. We're going to be totally integrated and no one's going to succeed at Airbnb without collaborating with other people. There's this age-old idea that great leadership is hiring people and just giving them operating room and empowering them. I'm going to use the word pejoratively — empowering them to do their jobs. I don't think that is good leadership at all.
--:-- I think leadership, number one, you have to audit the details. If I'm a CEO, my board empowers me, but they still audit me. I have an audit meeting. I'd be like, my God, I audit. How do you know your team is doing a good job if you're not auditing them? If the board audits you, you should audit their job. That is to me the first expectation of a leader.
--:-- But more importantly, I think there's another side of the coin than micromanaging, because I don't think anyone wants to be micromanaged. I think of myself as partnering with my executives. I think of it as a creative organization where they're not autonomous. They're in conversation with me. I don't push decision-making down the organization. I pull decision-making in. I try to pull as many decisions into me as possible, like an orchestra conductor. I try to not have all the ideas, not make all decisions, but be in a constant conversation with my executive team about the decisions.
--:-- What I found is that my executives have mostly felt more empowered than when they were more autonomous because they're not as much an island and now they have the resources of the entire company behind them. There are certain personalities that want to do their own thing, that want to be CEOs, that don't want to be an integrated collaborative organization. That's fine and Airbnb in a functional org might not be for them. But the notion that this way of working doesn't empower people and doesn't allow them to do as much is not true because control is not zero sum. There's a scenario where everyone can have more control. There's also a scenario where everyone can be more powerless. I think that's a very important thing to distinguish.
--:-- Nilay Patel: You mentioned your design background, but we've also talked about things like cryptocurrency depreciation risk. CEOs can basically pick a job. You can either be a financial engineering wizard. You can be a product person. You can focus on what color the logo is all day and night. Where's your split? Where do you spend most of your time or where do you want to spend most of your time?
--:-- Brian Chesky: That's a great question. Because we're more functional and more integrated, the first thing I'd say is I don't have per se two or three focus areas. I'm pretty connected to every part of the company. If we're launching a new product, I see myself as maybe the orchestra conductor. I'm not a specialist, but I have to understand every instrument and every part of the sound and how it all works.
--:-- The areas that I'm particularly focused on are product design, kind of like what you classically call design. If I had a job at a large corporation and it was functional, I would probably be either a designer, a marketer, or a product marketer. I spend a lot of time on design. I spend a lot of time on product marketing, product marketing, product management — I use those terms interchangeably — and marketing communication. That's probably my big area. I spend quite a lot of time on people, talent, hiring. That would be probably the other area. Then maybe the third bucket is just telling the Airbnb story. When I say tell the Airbnb story, I don't mean the same old story over and over again. It's a continuous story that evolves every single minute of every single day.
--:-- I'm probably a little more hands-on and a little more involved in more things than the average CEO because of the way I've chosen to run a company. When things are functional, they all kind of roll up to you. But I do focus more on product design culture.
--:-- Nilay Patel: When you're working out the mechanics of taking payments in 200 plus countries, what kinds of decisions there have to come to you and what kind of decisions do you let be delegated away?
--:-- Brian Chesky: The areas that I'm less involved in — if you think about a technology stack, from the application layer to the atomic components or the processor chips, the same thing is true in a company. I'm kind of more in the top half of the layer. The financial accounting, I'm not very involved in. The technology infrastructure and the data warehouse, I'm not as involved in. The hardcore underlying payments infrastructure, I'm not as involved in. I would consider that like below the operating system of the company. That's the microprocessor, the graphics card. That's the very bottom of the stack.
--:-- I'm involved in payments at the consumer and host level. What do we want to be able to offer in which countries and what are the benefits? I don't micromanage. I trust the team understands the trade-offs and can deliver. I'm pretty involved in trying to understand what new benefits we want to be able to deliver to guests and hosts from a payment standpoint. But payments is highly, highly technical. I try to not go too far into the stack.
--:-- Nilay Patel: Airbnb rolled out a new logo several years ago. I can imagine you spent a lot of time in the weeds on that logo.
--:-- Brian Chesky: Absolutely. There's a lot of fun facts about that logo. I spent a lot of time on that logo. We had this great firm called Design Stew that designed it. The fun fact about that logo was the last person to pen that logo was actually Jony Ive, who now works with me. He actually was the one that refined that identity. I spent a lot of time thinking about branding, design.
--:-- Nilay, the one thing I want to say about design — one of my favorite designers or architects is Frank Lloyd Wright. I like to reference architecture because when I say design, most people think that I'm referring to the color of a button or the logo. In other words, the way something looks. When you think of architecture, most people think that architecture is more than just how a building looks. It's how a building works. That's the kind of world I come from. I was an industrial designer. I think design is not just how something looks. It's how something fundamentally works.
--:-- I think of design thinking as something that can be applied to every part of the company. I do care about the aesthetics of things, the story of things. But more than just the aesthetics, I care about how the things work, how they assemble. Our S1 — I wrote 14,000 words of the S1 myself, not because I want to micromanage and write everything, but because I wanted to create an archetype or a Bible of clear first principle thinking of who we were.
--:-- I try to be very hands-on in key moments to make sure everything is really organized and designed. I also intend to let go over time. What I'm trying to do is teach a certain level of design thinking, simplicity, excellence of every detail. Hopefully over time, the organization learns it and they can take it on and they build that muscle themselves.
--:-- Nilay Patel: Next month, it'll be a year since Airbnb is a public company. You've talked a lot about how you think about running the company, how it's organized. How has being a public company CEO changed how you operate Airbnb?
--:-- Brian Chesky: It hasn't changed too much. The reason why is that a lot of people told me running a public company is really hard. I don't want to diminish how hard it is, but I got to tell you, running a large private company feels harder. When you're large and private, you have to run like a public company. We had a board, we had an audit committee, we had public market investors. They were marking us to market every quarter, but it was actually worse than being a public company because our financials kept leaking, but they leaked without our terms. We couldn't even talk about our financials. People were drawing wrong conclusions. When you're big and you're private, I think there's an assumption that you're kind of hiding something. There's this never-ending appetite to try to gather more and more information about the company.
--:-- The moment our S-1 was published and we put all the information out, I think the trust in the company increased because it was inherently more institutional transparency. The other thing that changed is we already had Fidelity. We already had T. Rowe Price. We already had Morgan Stanley. We had a lot of institutional investors already in the stock. The big change when we went public is suddenly the people could buy the stock. The day we went public, I think 600,000 people tried to buy our stock. That's probably one of the primary reasons our stock price popped.
--:-- The answer to your question is it hasn't changed very much because I was running the company like a public company before. I think it certainly institutionalized a little more discipline, a little more rhythm. But the pandemic and staring into the abyss institutionalized even more discipline. For anyone that says that running a public company is hard, I'd say, yeah, it's hard. What's harder is running a travel company in the middle of a pandemic. That was significantly harder.
--:-- Nilay Patel: Fair enough. You brought up Jony Ive. This was the first question I wanted to ask you. Jony and his partners just made public LoveFrom, their new design agency. LoveFrom announced that it was going to be working with Airbnb. What is that partnership like? What is Jony Ive doing at Airbnb? What do you expect to develop and release?
--:-- Brian Chesky: It's been an incredible partnership. Let me preface all this by saying we don't have the same level of secrecy that Apple does, but we're not going to open source the design process to the world to have them follow along. I'm excited to surprise people with what we're doing together, but I'll try to give you something.
--:-- Most people know Jony Ive as an industrial designer, meaning most people know Jony Ive is making physical things made out of aluminum and glass. But I'm an industrial designer. I never got very far. I'm not Jony Ive. I got about two years experience and then I moved on. I wasn't a very good industrial designer. But it's notable that I'm probably one of the only designers running a tech company as large as ours. I'm a designer, but I wasn't a graphic designer. I was an industrial designer. I think had I been a graphic designer, I may not have had as many skills to run a tech company as an industrial designer. I don't want to disparage graphic design. It's amazing. But industrial design is a very end-to-end way of thinking.
--:-- Industrial design — and I'm speaking about Jony now — if an architect designs a building and the building doesn't get leased, that's not really the architect's fault. They're not really worried. If a designer designs a product and it doesn't sell, it's kind of on the designer. You didn't do a good job. So suddenly, an industrial designer has to worry about cost, manufacturing, marketing, strategy. You have to put yourself in the shoes of the user and understand how they're going to use it.
--:-- To answer your question, he and I are working together on really thinking through the entire Airbnb design, the entire ecosystem, the system of trust, the reviews, the profiles, the payments, how the whole thing works together. Jony also designed software. He actually ran all software design for the last six, seven years at Apple. We are looking at designing some updated paradigm, some updated system of trust. Maybe that's the extent of what I should probably talk about with our partnership. But I do think that people will be pretty excited about some of the things we're going to be shipping together.
--:-- Nilay Patel: Does that relationship sit over the top of your design organization? Is it next to you? Are they embedded in your design organization?
--:-- Brian Chesky: It's integrated. I would say we have four creative groups at Airbnb. Three are inside, one's outside. We have our design department. Most companies have a design department. We have two incredible VPs of design. They report to Hiroki, who was actually the creative director at Apple and reported to Steve Jobs. That's one group. We basically have our own version of our own mini Wieden+Kennedy inside of Airbnb. We don't use agencies very often. That's our own group.
--:-- Then we have Jony's group. Jony's group is not solely dedicated to Airbnb. They have some other clients, but we're one of their primary clients. They do software design and they do a lot of system thinking. They collaborate with that core design team. Then we have another creative group that's really iterating the offline experience. I hired the former head of Disney Imagineering, Bruce Vaughn, who led the design of California Adventure, the redesign of California Adventure. He worked on Star Wars Land. We have these different groups. To answer your question, Jony sits outside of Airbnb and he collaborates with the other three groups that I just mentioned.
--:-- Nilay Patel: When should we expect to see the outcome of some of Jony's work?
--:-- Brian Chesky: Certainly by 2023. You might see some stuff earlier, but we're thinking some pretty big stuff. We'll have to see. Certainly by 2023 and there might be some stuff next year.
--:-- Nilay Patel: All right. We'll have you back when that happens with Jony. I think it'd be a fun conversation. We're going to take another quick break, but when we come back, Brian and I talk about regulation. He's got some interesting ideas on what to do with people or governments that don't like you. Stick around.
--:-- Nilay Patel: We're back with Brian Chesky. There's another group of people who are very interested in how things work and how experiences go, and that's the folks who run cities. Airbnb was a very classic move fast, don't worry about the regulators company for a long time. Now you're a big company, you have a lot of inventory, travel is changing, people are going to places for longer periods of time to work. That is changing cities in real and meaningful ways. Our producer Creighton noted to me that the last time he was in Rome, some of the neighborhoods he was in were just all tourists. It was all people in Airbnbs and very few locals.
--:-- Brian Chesky: Was this recently or like before the pandemic?
--:-- Nilay Patel: Creighton tells me that was 2016. So maybe things have changed now, but I've certainly seen that in New York City. Airbnb has changed various neighborhoods in that town. Now where I live in upstate New York, I know a lot of people who are just buying housing stock here and renting it to tourists. How do you see that dynamic playing out as you grow the platform, as more people are resigning or committing to a more nomadic life? What is the push and pull between cities and where people live and how you manage the regulatory relationship?
--:-- Brian Chesky: Such a good question. If I may, can you indulge me in just taking you on my journey for a few minutes because it's kind of a fascinating story. When we started Airbnb, I think we were very host-centric, very guest-centric, but I don't think we were fully cognizant of another stakeholder, which is the communities we operated in. One of the challenges that we had — I wanted to step back for a second. When I came to Silicon Valley, the word technology, and this is 2007, okay?
--:-- Brian Chesky: So I came to Silicon Valley October 2007. At that time, Twitter was a way to say you're drinking a milkshake. YouTube was cat videos and Facebook was a way to like keep in touch with your college friends. In other words, technology was seemingly innocent. The iPhone had just come out. We didn't know the effects of the mobile revolution yet. And so the word technology might as well have been a dictionary definition for the word good. I think we thought the way as well. And so therefore, if what you're doing is good, if you grow, you're making the world, quote unquote, a better place.
--:-- Brian Chesky: I think more than a decade later, I think we've all acknowledged that that was a very limited way of thinking. And actually, we have significantly greater responsibility to society than we as technology companies probably thought we did in the mid-2000s. There's no way to build a platform, hundreds of millions of people will be on your platform, and only good things happen. That's not even possible. And so the first step is to acknowledge that reality, to acknowledge that good and bad things happen on platforms when you empower people because people are allowed to make their own decisions.
--:-- Brian Chesky: I unfortunately, or fortunately, actually, I should say, got a lesson in this probably earlier than other tech companies. You see, most tech companies don't get scrutiny until they're big. Like, I don't think Amazon ever got scrutiny until they were big. I don't remember them getting scrutiny when they were small. Airbnb we got scrutiny when we were small because Airbnb meant the internet moving into your neighborhood. And so in 2010 when I was working at a three apartment, it was the first time that we had major challenges with regulators in the city of New York. And that really got embedded. I didn't know what to do with cities. I thought when people don't like you, you should avoid them. That was the way I lived my life.
--:-- Brian Chesky: And I hired a woman, my first executive. Her name's Belinda Johnson. She's now on my board. And she told me a different lesson. She said, "When people don't like you, you should meet them." And I said, "Why would I meet people who don't like me?" And she said, "Because you'll learn from them. You can educate them. You'll understand their issues. And you'll leave the meeting better off than you started." She said, "It's hard to hate people up close." And so that's what we started doing.
--:-- Brian Chesky: And I think that we chose a slightly different path than some of the tech companies that we're compared to. And I don't want to say we're perfect. We did have challenges with cities. But I will say this. Even before the pandemic, we had agreements with more than 1,000 jurisdictions. We've collected and remitted $3.4 billion of hotel tax. I think we're soon to be the largest collector of hotel tax in the world. And I hope that most cities say that we are good partners. We're in 100,000 cities. Most of them aren't complaining.
--:-- Brian Chesky: That being said, I want to acknowledge something. If I could have done Airbnb all over again, I would have designed Airbnb with more stakeholders in mind, including communities. I was 26. I didn't really understand some of the things I understand today. And I think that when you're behind, it takes a while to catch up. What the pandemic did was it was a reset relationship with our cities.
--:-- Brian Chesky: So let's take Rome, for example. Rome, there were a lot of people going to Rome before the pandemic. Suddenly business travel gets cut off, borders close, international tourists stop traveling. And we lost 30 to 35 years of international cross-border tourism in a single year of equivalent growth. We went back to like the early 80s or late 70s from international tourism. Suddenly, cities that were experiencing over tourism were starting to experience under tourism. You can look at what was happening with Greece. You can look at what was happening with Italy. And some people liked it, but there were some pretty big economic challenges.
--:-- Brian Chesky: So suddenly, cities started reaching out to us saying, "Hey, can you help us with this problem?" And we had a bit of a reset with these cities. So we said, "Yes, of course." We launched this tool called the City Portal, which allows a one-stop shop for cities to get data about Airbnb, make sure hosts are complying with registrations. So we're working really hard to be able to do that kind of stuff. We have partnerships with over a hundred destination marketing organizations.
--:-- Brian Chesky: And I think the big trend now is that many cities are seeing Airbnb as more of an inevitable solution to their challenges. But I want to say that we're not perfect. I don't think any tech CEO should ever come on this program and say they're inherently making the world a better place. We have to acknowledge that there's unintended consequences to the products we're making and that we have to institutionalize our intentions to serve multiple stakeholders. So I work really hard with our team to try to make sure we're having positive impacts on communities. We'll make hard decisions when we have to.
--:-- Brian Chesky: And fundamentally, I think our relationship with cities is going to change because we're going to live in a world where people aren't as tethered to one location. To me, the holy grail solution, Nilay, if I could just put it out, are two ideas. Number one, I don't think there is such a thing inherently as too much tourism in the world. Over tourism is too many people going to too few places at the exact same time, right? That's bad. So what we should do instead is redistribute people over more days of the week, more times of the year in more cities. That's why on Airbnb, with this big button, "I'm flexible," what we're trying to do is point demand to where we have supply and not overwhelm any one city. That's been used 500 million times.
--:-- Brian Chesky: My vision of travel is suddenly cities that want tourism get it and cities that don't want tourism don't get it. And we are able to work with cities to point demand to places that want it. The second thing is when people do travel on Airbnb, one of the big focuses, and you brought this up early in the conversation, is I want them to feel not like shadow members of the community, but actual members of the community. And that is where I'm really focused on with our product roadmap, integrating people to the community, being good neighbors, being good partners. And if there's ever a problem, you can call our B&B. We have a neighborhood hotline. We've banned party houses. We're trying to just be very, very aggressive with these things. So this is kind of where we are with cities. I think it's going to be a very long journey. And hopefully each year cities feel a little better about us than the year before.
--:-- Nilay Patel: Do you think, for example, New York City, you mentioned from the beginning has been sort of a challenge there. Only just recently did Airbnb come to an agreement with the city in the middle of COVID. Do you think the pandemic changed the dynamic of negotiating with these big cities?
--:-- Brian Chesky: A hundred percent changed the situation with cities all over the world. Yes. And I think, again, the reason why is because when cities used to reach out to us, it was because they had a concern. After the pandemic, cities actually reached out to us for help. I'm not saying every city did, but the whole nature of the relationship changed. And the other thing is I tried to be proactive. At the depth of the pandemic, when cities were hurting, I tried to deputize as many people on my team to reach out to cities saying, "We're here to help. We want to be a solution. We want you to know that we think we've learned from our challenges and tell us how we can be better partners."
--:-- Brian Chesky: So I saw the pandemic as kind of like a giant reset button with many cities around the world. And I said, you know, the time to reestablish relationship with some of these cities is kind of before we need something from them and maybe when they need something from us. And so I do think the relationships are a lot better with cities all over the world. And again, I also think travel is being redistributed and that is also helping as well.
--:-- Nilay Patel: I want to end there, but you mentioned Johnny and his work on reviews and comments. You mentioned community. I seem to ask every tech CEO about content moderation and policies. You regulate the Airbnb community. There are people you don't want to have staying in the properties that you have hosts for. How do you think about that problem? Because that problem touches every app where lots of people are using it for all kinds of reasons. Do you have a big moderation function? Do you have a big review function? Is that something you spend a lot of time thinking about? Is that a product solution? How does that work?
--:-- Brian Chesky: Yeah, I think that probably before other companies were thinking about this, we were thinking about this. I had the, I think, a different point of view many years ago before 2011. I took the Pierre Omidyar, he's the founder of eBay, Craig Newmark, founder of Craigslist, view that the internet's like an immune system. And if you just give people the tools, they'll moderate themselves. I learned the hard way early on that that is a very limited way of thinking about the internet because in 2011, a woman's home was trashed. I said, "Well, the host can leave a bad review on the guest." People on the internet, they did not think that was the right answer. And I got an initial kind of outrage on Twitter. This is 2011. And I said, "This is a wake up call. We need to take much more responsibility. We can't just think of the internet as an immune system because no one wants to be the experiment. No one wants to be the test subject."
--:-- Brian Chesky: And so I think that what happened is we got significantly more hands on in 2011. In 2016, two other things happened. There was a hashtag trending that was extremely concerning to us. The hashtag was #AirbnbWhileBlack. And the trend was that black people in the United States were experiencing discrimination on the platform. They were trying to book homes and they were being discriminated against. Suddenly this was an existential crisis for Airbnb. So we started working with civil rights leaders and we got really hands-on with that. We created a community commitment. We said that to use Airbnb, you have to click a button. It's really an honor code saying that you're not going to discriminate against people based on race, religion, orientation. Over a million people refused to click that button. We removed them from the platform.
--:-- Brian Chesky: Then later, I think it was in 2016, I don't know if my dates are correct, we got notified that there was going to be a major rally with a lot of white nationalists in a town called Charlottesville, Virginia. And so we banned a number of people that we deemed to be white nationalists. This was a kind of one-off move. But since then, we've actually been fairly prescriptive about doing this. And so after the January 6th insurrection, we actually banned any reservations during the inauguration week in D.C. and still paid out hosts all their pending reservations. So all this is to say that we've been pretty hands-on for a decade and getting increasingly hands-on about what I guess you would deem content moderation. And the reason why is because when it's Airbnb, it's people's personal safety. So we could not screw around with this. And so we've been pretty hands-on. And I think the trend is continually getting more hands-on.
--:-- Nilay Patel: Does that team live in your policy shop? Does it live in your product organization? I ask because Facebook famously lives in its policy shop. I had Neal Mohan from YouTube. Their content regulation team lives under product, which is really fascinating.
--:-- Brian Chesky: Ours lives under trust and safety, which is where we think it belongs. We have a team called the User Knowledge Operations Team. It's part of trust and safety. The trust and safety team is the team that makes sure that people are safe, that they're using the product properly. And that trust and safety team, by the way, is a product and operations team. So it's got engineers, product managers, designers, and operations. I'd say it's like half product, half operations.
--:-- Nilay Patel: I feel like the conventional wisdom, even for Airbnb before the pandemic, was that all people wanted from travel was experiences. And you would curate some Instagram moment, and you would travel to a place and take the picture. And Airbnb was actually selling and curating experience. It was the buzzword of the whole industry. I feel like throughout this conversation, you've been telling me something else is happening, that travel is actually changing in some other deeply meaningful way. What do you think that is?
--:-- Brian Chesky: I think that we're living in a revolution in travel, and I'll explain why. I think for centuries, people were tethered to where they worked, whether it was the farm, then the factory, then the office. If you work on a farm or in a factory, you're still tethered. But for tens of millions of people in the United States and hundreds of millions of people around the world who work in an office, I think what the pandemic taught us is that you can get a lot of work done from home. And because of technologies like Zoom, I think we're going to live in a world with permanent flexibility.
--:-- Brian Chesky: The CEOs of Ford, PwC, Amazon, Procter & Gamble — these are not small companies — have all announced permanent flexible policies for a significant portion of their workforce. I don't think the majority of the world is going back to the office five days a week because CEOs have learned they can save money, they can hire a more diverse talent pool. And I think after compensation, flexibility is the most important benefit for employees. So I think that remote work is here to stay. And if remote work is here to stay, it means that if Zoom allows you to work from home, Airbnb allows you to work from any home.
--:-- Brian Chesky: So what this means is people now can travel anytime. They can travel anywhere. I don't mean everyone, but all the people that are untethered. And when they do travel, they can stay longer. What I think this is going to lead to is a newfound flexibility where people can not just travel in Airbnb, they can now live on Airbnb. 20% of our business and our fastest growing segment are for stays longer than a month. And so I think that we're not just in the business of traveling, we're now in the business of living. Traveling and living is part of Airbnb. And so that's why being part of the community is so important.
--:-- Brian Chesky: This is all before borders really reopen. Once borders reopen and people have flexibility, they won't just live anywhere around the country. You're going to see more and more people live around the world. And I think this is going to create a whole revolution in travel, probably the biggest change in travel since the invention of the internet, possibly the biggest change in travel since the invention of the airplane. It just totally changed the identity of what travel is.
--:-- Brian Chesky: That being said, Nilay, I do think experiences are really important. One challenge we've had is because of the pandemic, it's not been historically safe for strangers to gather and have experiences together. But the more we live on screens, the more I think we also want to live on a counter trend, which is — I don't think all of us want to recreate the movie *WALL-E* where we're basically just on these self-driving pods carrying the screens all day. I do think we also want to have real life experience in the real world. You can only watch so many shows on Netflix. Eventually you got to get out of the house. And I do think that if people don't get out of the house, you're going to have a pretty big mental health crisis and a lot of loneliness, a lot of isolation, a lot of division.
--:-- Brian Chesky: So I think the number one thing that we're thinking about is this changing way of traveling. Traveling is blending with living and now people can live anywhere. And the longer you're away from home, the more you want to be in a home on Airbnb. But I also am very excited about the experiential opportunities going forward. And I think in the coming years, you'll see some exciting stuff from us on that front as well.
--:-- Nilay Patel: Do you think that that is a trend that lasts forever? Is this a transient post-pandemic thing where everyone's going to run around and see people, and then we're all going to have kids and settle down?
--:-- Brian Chesky: Well, I mean, people with kids aren't going to be nomadic year-round because their kids have to go to school. And I do think that schooling will primarily still be in person. I'm not an expert in education, but that seems inevitable. In the United States, the average kid, I think, goes to school like 180 days a year. So that means 185 days a year, the kids aren't in school. Funny enough, in the United States, the fastest growing days of the week to travel for families are Mondays and Tuesdays. What that means is that when kids don't have to be in school or they have long holidays, parents are going away.
--:-- Brian Chesky: I think you're going to see even for families, more and more families going away for summers. If you can work remotely and your kids are out of school, you're going to see summer turn the world upside down because increasingly people aren't going to be around. If people don't have kids, those people are going to be, many of them, significantly more mobile. And you're going to see a whole generation of people being nomadic, maybe even at a kind of a global level.
--:-- Brian Chesky: Just to summarize, I don't think the world's going back to 2019 any more than the world's going back to 1950. The genie's out of the bottle. We can't undo technological progress. This moment at this conversation right now is the worst technology will ever be in our lifetime. The internet's going to be more ubiquitous, satellite internet speeds are going to go up, camera technology will improve, screen technology will improve. And so it's going to become more immersive. So I don't think this is a temporary thing. All you have to believe is Zoom is here to stay to believe that many of these trends are here to stay.
--:-- Nilay Patel: All right, Brian, that's a great place to end it. Thank you so much for coming on Decoder.
--:-- Brian Chesky: Thank you very much.
--:-- Nilay Patel: Thanks again to Brian Chesky for taking the time to talk today and thank you for listening to Decoder. I hope you enjoyed it. As always, I'd love to hear what you think of Decoder. You can email us at
[email protected] or hit me up directly. I'm at @Reckless on Twitter. If you like the show, please share it with your friends, subscribe wherever you get your podcasts. If you really like the show, hit us with that five-star review.
--:-- Nilay Patel: Decoder is a production of The Verge and part of the Vox Media Podcast Network. Today's episode was produced by Creighton DeSimone and Andrew Marino. Our research was done by Liz Lian. We were edited by Callie Wright. Our music is by Breakmaster Cylinder. We'll see you next time.
