Brian Chesky - AI Founder Mode - [Invest Like the Best, EP.471]

0:02 Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at Colossus.com. Chick O'Shaughnessy is the CEO of Passive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of positive some. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc.

0:51 Mm. My guest today is Brian Chesky, the co-founder and CEO of Airbnb. Our conversation traces the path from his early training as an industrial designer at RISD through the pandemic moment that forced him into founder mode. He explains what he calls AI founder mode and why it will demand even more attention to the details. He walks through his eleven star exercise, which I've used personally many times over the years, which is his way of imagining the most absurd version of a customer experience as a path to product market fit.

1:18 We talk about why founders are rarely good early CEOs and what changed him when he stopped chasing adulation and started making things for the love of making them. Please enjoy this great conversation with Brian Chesky. Before we hit go here, we were talking about industrial design, which you studied at RISD. And I have this weird affinity for the history of this topic just because Raymond Lowy, one of the famous industrial designers, helped me a lot in my career indirectly. I'd love to hear you just riff on the influence that guys like him had in your early studies and why you studied that in the first place. Such an interesting background.

1:51 I was an artist growing up and I didn't know what to do with my life and I went to the Rhode Island School Design and at Riz D when you're a freshman you had to pick A major. I'm seventeen years old and I'm like, Okay, in three months I decide what I'm gonna do the rest of my life. Yeah, I remember

2:04 the department head for industrial design came. I never even heard the term industrial design, I don't know what it was. And they said industrial design design of everything from a toothbrush to a spaceship and everything in between. I immediately said that's what I want to do in my life'cause I was thinking of maybe being an architect or something like that. So I start learning about industrial design and I learned about Charles Ray Eames.

2:23 Raymond Lowy. Raymond Lowy, probably the most important industrial designer of the twentieth century. designed so many incredible products. This first designer Air Force One he designed A lot of beautiful consumer products. He designed a lot of cars and he had a profound impact, I think, on society. And as I was studying the history of Medustal Zine It was so incredible because industrial design field.

2:44 is a deeply technical field. The thing about architecture is fairly technical, but it's a more known boundary. Like there's buildings and there's commercial, there's residential, there's retail, there's only so much variation. It's a multi-thousand year old field. In the design for the most part. really started with Josiah Wedgewood. It was like it's really the mass industrial product. So industrial design is really new from the industrial revolution. And it used to be analog things. The first industrial design was chairs and tabletop dishes and bowls. But as technology grows, suddenly industrial design becomes

3:14 Cars and airplanes, and now you have microwaves and refrigerators, and you have all these things that twentieth century radios. And then eventually it becomes like medical equipment, like ventilators. And then you know, with computers, I mean, a lot of people, the most infamous national design primary in the world is the iPhone. And the vastness of industrial design is unbelievable. the intimate relationship you have with a product. is incredible. I remember that grew up in the nineteen eighties.

3:39 I love video games. I played with a Game Boy, a Game Gear, Super Nintendo. Or remember Nike in the eighties and nineties, those sneakers. The rebock pumps like These products captured kids' imaginations and they had a very intimate relationship with you. They really had a sense of personality. And computers in particular were something I was really, really interested in. And then of course to get to the golden age of Apple, starting probably in nineteen ninety eight with the iMac. And

4:05 And to Johnny Ive, who is my hero. So into Rizti And when I was at Riz D Apple was the golden age of industrial design. They really educated the public about design. once they're educated, they couldn't see great products. And that captured my imagination.

4:21 What I loved about industrial design was A was very technical. You work with mechanical engineers, you work electrical engineers. B Here's the thing about no design. It's almost different than any other design. This is also true of fashion design. A design's only successful if it sells. So if we design a office building

4:37 Architect can win awards in their office building and it can never get leased. You design a house. But no one looks at well what was the retail value of the house. So the wards are detached from the commercial success. If you don't have a product and no one buys it. It's considered a failure.

4:52 And so because the commercial sex matters. You have to think about marketing. Manufacturing, distribution, solving problems. It's not just about winning a war. It's about being viable to a customer. It's very much a problem solving field. It's got so many different boundaries.

5:08 And it's very much about empathy. About user journeys more than I think any other design field, I think industrial design always seemed like it was the kind of field where you put yourself in the shoes of the user. You design these user journeys. And I think they really teach us design through user journey for this very specific type of field. А най дали препари.

5:28 designing I just give you one example. One of the projects I designed Right. Graduate RC was a child's ventilator. And so instead of just thinking about a child's breathing machine, instead of just thinking about the design of the ventilator, one of the projects I had to do was imagine being the child in a hospital. And so I imagine being a child that's hard to do, but you're six years old, imagine being six and you're scared and you're looking up at a breathing machine.

5:52 And imagine the parents. The parents go in. And the parents are like, is my child gonna be okay? If this breathing machine seems like ominous and like it's keeping you alive, the parents are gonna freak out. Like what's wrong with my child? The other thing is I learned that

6:06 one of the interesting things that happened was the nurse technicians the really technical nurses It's a weird thing. They had no problem that these things were complicated. But the hospital wanted a breathing machine that was so simple that everyone can learn how to use it. Except the nurse technicians had pride that only they knew how to use it. So you had to like weigh the stakeholders. How do you design something for the vantage point of a child? Consider how would it imbues to the parents, how could it be universally

6:32 Useful for everyone. Without threatening people's jobs. І сіли со мной дименщина. There's no product managers in industrial design. You are the PM.

6:44 There's industrial designers and there's engineers. And as program managers. So designer is the product manager. So a design product is one function. Do you think the world's gonna go that way now? You're obviously famous for helping usher in this founder mode idea.

6:57 That was kind of pre-Opus four point six or whatever. There's like another layer to that now. I'm curious what we would call it. But it seems like For the first time again. Someone even like you running a very large company with lots of people. Can disintermediate lots of the steps between idea and outcome.

7:14 And this design stuff may be even more applicable than ever. What is the new mode like? Because everyone's trying to figure out how do I run a company in this era. So how would you describe the new capabilities and the mode through the lens of of this? You know, founder mode was something That

7:29 Paul Graham coin, but based on experience I had. I think people are basically born good founders. Or said differently, it's innate. You don't have to learn how to be a good founder. It's like you jump in the pool and you learn how to swim. No one is born a good CEO. And the job of CO is completely counterintuitive. And almost all of your intuition about what to do is wrong.

7:48 And so the problem is we founders never were really prepared to be great CEOs. We founders We're taught to learn by doing. And that's great for a founder. It's not good as a CEO. You do not want to learn on the job how to be CEO. In other words, trial and error is bad for CEO. You know why trial and error is really bad? Because you hire somebody, they build an empire, they leave, and now you get to unwind their empire.

8:11 And it takes like four years. So you've wasted years. So actually learning how to be CEO is something you should learn. And so I learned the hard way, and I basically learned that what happened was. Found were overdelegating their companies to these professional managers. I'm not disparaging them, but they were detaching themselves. And they were being managed rather than managing the company. And it was really about not apologizing about how you run around the company, being in the details. That was founder mode. Was there a moment that that like clicked for you that you had to change the mode? Yes.

8:42 The pandemic. Two things happen. Actually, speaking of Johnny Ivan, Apple. And another person named Heroki here. I spent the 2010s riding a rocket ship, Airbnb Uber, a few of us, we went on these crazy rocket ships that like OpenAI Anthropic are doing now. It was awesome. It was amazing. But by the end of the last decade, around 2019.

9:01 I remember waking up one day and it was like completely unrecognizable the company I was running. I had like seven thousand employees. I didn't know what anyone was doing. I felt like I was in a car without a steering wheel and I just could not turn the company. I was like, turn left and the company would go right. And actually Not only did I feel like I was not in control, I don't think anyone felt like they were controlled. It was just a free for all. Thousands of decisions being made.

9:23 For me. Me overly differing, not listening to my intuition. And I got to this point where I remember having this dream And I told my co founders I had a dream in late two thousand nine where I felt like I left the company for ten years. And I come back.

9:37 And I was like, somebody had been running a company for ten years and they like turned it into this like giant political bureaucracy and I didn't even recognize the company. And then I realized, oh my God, it was me the whole time. And so it was my fault. Like I had actually enabled all this to happen. And then I started talking to people, and they all had the same experience. And all these founders felt like We were all made to feel crazy. Because we had this instinct.

9:58 So around the same time as the pandemic, I hired a guy named Haroki Asai, he was from Apple, and he told me about how Steve Jobs ran Apple. And Steve Jobs, when he came back to Apple in nineteen ninety seven, in July of nineteen ninety seven, there were nine days from bankruptcy. And he basically just like went into founder mode. You call founder mode. He got into the details of every little detail. And I want to do that, but initially the company braced against it. It was almost like it repelled against it. And then the pandemic happened.

10:26 And we lost eighty percent of our business in eight weeks. We were in total crisis mode. At that moment, I went from peacetime to war time. And then I just totally took control of the entire company. And I just never let go. Over time, basically what I did is I reviewed every single thing for two, three years. I worked like a hundred hours a week, reviewed every little detail of the company. My vision wasn't do this forever. My vision wasn't to micromanage for ever. My vision was

10:50 Before I empower people, I need to know what's going on. This notion that great leadership is hiring great people and trust them to know what to do. Well, how do you know they're great if you're not auditing what they're doing? And you actually want to start hands on under control and give ground grudgingly. Everyone does the opposite, they let go. They hire someone, they go in the wrong direction.

11:08 And by the way, that's bad for the leader. You're not training them. So to bring it back to your question, that's founder mode. We need AI founder mode. AI founder mode is going to be even more intense than founder mode. What are the principles that you're thinking about as you go into it? I think AI founder mode you're even in significantly more details. Because

11:26 You have almost everything on demand. The mechanism of founder mode was I had a lot of meetings. because that was the only way I gained information. So I probably do it thirty five hours of meetings, which is very similar to the way Steve ran Apple. I wouldn't do one on ones. I'd only do group meetings. I do a recurring thing where I review

11:42 every single thing in the company, either on a weekly basis, by week, monthly or live in person. Live in person, group meeting, and I'd have a full chain of command. A lot of companies you have to like get your boss to prove it and your boss's boss to prove it and your boss's boss's boss to prove it. I don't have the full chain of command in the room. And anyone can give their opinion. I would make all the final decisions. I would not speak first, I usually speak last. And I usually agree with the team, but ten percent of the time I

12:06 disagree, but I'd ratify every decision. It was a very clear chain of command, but this was a meeting based culture. I think an AI And they were gonna move away from meeting based to asynchronous. And we're fairly remote and so I think that will benefit us. I think have a lot fewer layers of management. You know, I think there was an old famous saying the Catholic Church has been going on for two thousand years and only have four layers of management.

12:27 Why do every other company have like seven, eight, nine layers of management? I know there's this like general idea, like as a thought experiment, what if I could theoretically manage all seven thousand people flat? I don't think that's a good idea. I think that's an extreme, but I do think going to a few layers of management would make a lot of sense. I'm in the middle of trying to think about how to redesign the company. I think every single person this company's job will change. I don't know how.

12:51 I've not wanted to make any rash changes. What I'm basically doing now is trying to get people to adopt AI tools. And I wanna see how everyone's job changes in the world of AI tooling. And then I wanna basically embark on like a fundamental redesign. I don't think people managers will have any value in the future.

13:08 When I need people to manage people that only manage people. I think everyone's gonna have to be a hybrid people manager or manager I see. Meaning they have to have contact with reality in some sense. They have to be a thing a customer end up seeing or touching. In other words, every engineer needs a code. Even the managers need to code. whatever the version of that is for your field, you need a code. So if you're a lawyer, you're just not managing people, you have to actually

13:31 Read the case law and you have to get involved. And that makes sense, right? You can't just be these managers where you're kind of people's therapists and you're just doing meetings, you're doing one on ones, like People who have lots of recurring one on ones are not gonna survive. Because what they're doing is like That oh you come with me with whatever problem is I'm here to help you, like a mentor or professor.

13:49 That kind of leadership style is not gonna work. You need to have context, and I think. I think a lot of people will survive this age of AI. The two types of people that will not survive the age of AI are two types of people. Pure people managers. Who think it's all about just leadership. No, it's about content. And leadership.

14:06 I hear about design leaders that like the heads of design they don't actually manage the design. Johnny I manages the design. He designs. And he leads people. A design leader who only managed the people, that's crazy to me. The way Frank Lloyd managed his design team is through the work.

14:23 I say you manage people through the work. You don't manage the people, you manage the work. Otherwise, what are you doing? I mean yeah, like maybe A couple times a year you should have like a check in. have a heart to heart, ask them about their family, build relationships. You should do that. You should have relationships. That's not a day to day thing.

14:38 You're not their therapist. You're managing people through the work. So the two types of people will not make the shift to AI are pure people managers and people that are rigid and don't want to change and evolve. As long as you're like got a growth mindset. I think the tools are gonna be very easy. There's an economic setup to for the tools to be so easy, everyone can figure them out.

14:56 So I don't think the AI tools are gonna be complicated. Right now there's a lot of command line. I think Claud and Cowork are not the most intuitive to an average person. But I think economic incentives will be for this to become incredibly Intuitive. And I think

15:11 AI is really an enterprise thing right now. If you take out ChatGBT, then people screwing around the image generation, it's pretty much just an enterprise phenomenon. I'm on the board of Women Air. Hundred and seventy five comes last batch. Hundred and fifty nine were enterprise.

15:23 There are no consumer companies. Because there's no consumer companies. The incentive to make the interfaces really simple is not there. Because it's their job to figure out the interface. the next wave of AI is gonna be consumer AI. Consumer AI is going to be the big prize.

15:39 Can you think of a consumer AI company? Yeah, maybe open AI, but most of their energy is now going to codex. Google, yeah, with Gemini, but most of it's still going to search. They don't want to cannibalize your business. So I think that's where it's all gonna go. And I'm trying to start thinking about AI as a consumer play. And how do we make tools so simple that everyone here can figure out how to use them?

15:59 It's surprising that so few have tackled consumer so many of the biggest companies in history are consumer companies. You built one of the great consumer companies of the last generation of companies. What advice would you give to people that do want to build consumer businesses using this technology, like if the next batch of Licey startups were to invert because of your advice, what would you tell them? How would you guide them? So curious why you think there are more. Here are the three or four reasons I think it's happening.

16:23 Number one, I think a lot of people when Chat Chibi Day came out were afraid. They're afraid Chat GPT was gonna kill their business. And I think a lot of investors didn't want to invest in something where they thought GPT was gonna kill it. Number two, the business model's tricky. There is no yet consumer business model for AI that I've I've seen. For example.

16:41 ChatGPT, there's three ways it can monetize. Subscriptions. Unfortunately, they're probably gonna hit a local maximum percentage of users subscribing because Claude and Gemini are given away for free. Adds again. They're hitting a local maximum because Claude Gemini are not gonna do ads. And then E commerce, they shut down the third party apps.

16:59 And the inference cost are expensive enough that They're burning a lot of money. And so I think the first thing is need to have a business mind around consumer AI. You can't just be in the business of information. 'Cause people are not trained to pay for information. The second problem is distribution is mature.

17:14 Now again, top three app Snaps tour are AI, so it does prove to be something revolutionary. You'll find your way to the top. The third thing is While I think Silicon Valley, we like to describe ourselves as rebels.

17:26 I think and maybe it's a little bit like the always on nature of Twitter. I think it's very trend based and vibe based. I think there's a sense that everyone kinda does what everyone kinda does. That makes sense. I think the trend is enterprise. The other thing is with why Combinator we tell entrepreneurs get other YC startups to be your first users. It's a really great distribution strategy, right? Like the way we got our first users is you do things that don't scale.

17:49 Now what happened was that has taken the logical extension that everyone just keeps making enterprise companies. Maybe finally the reason people are into a consumer company is that they're just harder. They're more hits driven. The prize is bigger, but the risk is higher. It's more all or nothing. You can pick a narrow vertical. build a good medium to large size business. It's pretty straightforward. You can get other YC companies to adopt it and you can grow into larger and larger enterprise. It is much more history of the business.

18:13 You have to be good a lot more things. You generally have to get better at design. marketing culture Press. It's not purely technology and sales, which is what I say enterprises, like you make a product, it can be a technology based product.

18:26 Oftentimes in enterprise, the person using the product is not person buying the product. And so sales becomes really important. But you can start sales really small with smart in companies. It's really hard to figure out how do you start small consumer. Who do you start with on the street? So I think these are the reasons why, but it might also just be that everyone's doing enterprise because everyone's doing enterprise. And it's a trend.

18:44 My prediction is that we're living in the age of enterprise AI. And I think in the next twelve to twenty four months. You're gonna see the beginning of a consumer AI renaissance. Almost every app on my home screen has not changed fundamentally since AI.

18:59 including Airbnb. I think that's gonna change in two years. On your most recent earning call, you referenced this thing, Project Hawaii, I think it was called, which is like the on the ground direct application of the soon to be defined founder AI mode or whatever. Maybe just describe what that is and how you as an incumbent consumer company are trying to make yourself into one of these AI companies and and sort of like what's possible with a project like this. This is such a great story. So

19:24 I had this conundrum. We had like Seven thousand people. We were down to five thousand. I wanted to like basically take the magic of the founding

19:33 of the company, the early stages. We were in this little apartment working together. And I wanted to work with like a team of ten people and I wanted to like have that team work in one problem. And so we ended up Focusing on one problem. We said, let's split a team together to focus on improving the guest experience, improving conversion, right? Conversion rate's basically search to book, the conversion rate of people typing in a location and dates in booking. And there's a funnel.

19:57 And you can basically measure the funnel and you can do A B test. But more than E B testing, I wanted to do something where the the North Star was let's make the experience better. and increase conversion. We're gonna start with a better user experience. And so we put together a team. ten or twelve people, designers, engineers, product people, data scientists. It's mostly just a pure software team.

20:17 And we treated it like a little startup. And we said we're gonna just focus. We're gonna do a system of crawl, walk, run. Then fly. Crawl. Fix the bugs, fix the problems of converse, right? Just the easy things.

20:29 Once you build a little bit more confidence. Walk. Start to develop features, really start to refrain. Then run. Rethink the entire flow. Big features.

20:40 fly like Completely. VMware yourself. And everything's gonna be measured. Everything's gonna be Operationalize.

20:47 The team's results were phenomenal. They ended up delivering the equivalent of, I think in year one, two three hundred million dollars in kernel revenue for the company. The following year was like four or five hundred million dollars. Now we're at a run rate of like over six hundred basis points, six hundred basis points of thirteen, fourteen billion dollars. You get the sense of how much of a lever that is. It was just one team. I mean it maybe it grew into dozens and dozens of people, maybe fifty or sixty people. But it was this really lean team.

21:12 We took that team, we said. What we apply to the next problem, pricing. Totally different team. Same model. Then another model. Then another model. And I really tried to work with a team, and initially I would meet with them every week.

21:24 And then it became every other week, and then every month. And my general philosophy is start really hands on. And let go over time. I'm not a golfer, but like I took a couple of golf lessons. Here's an analogy from management.

21:35 If you learn golf. You want to learn with a golf instructor. Before you build any habits. 'Cause if you learn on your own, you're gonna like have a weird swing. And then when you go to golf instructor, they gotta change your muscle memory.

21:47 So the golf instruction's gotta watch you swing like thousands of times. Евенчу they don't need to see you or you let go over time. What most founders do is the opposite. They bring these people in, they let them figure it out. And then they intervene later, but they already have the wrong muscle memory. So I decided I'm to be totally hands-on do everything with the team.

22:05 Teach them everything I know. and let go. Then do it the next team. And then I had teams learn from other teams. Then When we launched Services Experiences, we basically found this other way of innovating. So here's a riddle, or it was riddled to me. Airbnb we had this core business that was really successful.

22:24 It did nearly a hundred billion dollars a year in gross sales. For every thousand dollars spent in the world, one dollar was spent on an Airbnb. Except we had the problem of we're like a one hit wonder. And for eighteen years I couldn't get a second hit out. And I kept wondering like why is this not working?

22:40 And the answer is like too obvious. It was staring us in the face, but We kept having the burden of trying to scale these businesses at a global scale from the beginning. When we start Airbnb. We started one city, New York City. We had a hundred users. I was in Y Cometer. Paul Graham goes, Where are your users? I'm like they're in New York. We have like not many, but they're New York.

23:00 He goes. You're in Mountain View, you're in York, what are you doing here? We went door to door meeting users. The basic philosophy is make the problem as small as possible. Get to product market fit then scale. So we launched service experiences last year.

23:13 And it didn't work right away. And I'm like, oh shit and we launched Service Spirit's a hundred cities. And I went back and I thought to myself, Wait a second, air be launched in New York. Uber launched in San Francisco. Door to Ash launched like Palo Alto.

23:26 Let's Make the problem small and just perfect a city. And so we started doing this with new businesses. We basically that any new business we're gonna do one to ten to many. We'll pilot in one market any idea. If we get the market to work, we'll go to ten.

23:39 You get a ten of works, we'll industrialize. Took us Sixteen years to get to our second and third business. We started getting those two working. Now we have like ten to twenty pilots. Eventually we'll have fifty to seventy new verticals. This is like the Hawaii system. It's basically taking this giant company

23:55 Making it a really small elite team. It's like the Navy SEALs. I work with the teams really leanly. Make the promise small as possible. I think that's a key thing. Make the prom as small as possible.

24:06 Dominiche. Peter Thiel used to say this. He was one of our first ambassadors. He said it's better to have a monopoly of a tiny market than a small share of a big market. This is counterintuitive. Every investor wants to go into big markets. I don't like big markets. Big markets have a lot of competition. Go into a small market and make it big.

24:23 Is the reason for both of these things, the idea that it works in Toronto, but not at a hundred city scale, and the reason a ten person team can outperform a hundred person team. Is the shared reason some sort of like better contact with reality and like somehow reality starts getting distorted as you get bigger or something. This comes back to the most important piece of advice I ever got. The first AY commented, Paul Graham said

24:44 It's better to have a hundred people love you than a million people sort of like you. And that came from Paul Bukite. Paul Bouquet was a partner, why combinator? He created Gmail. The s old famous story was he created Gmail and it took him two years and they said you can't ship until a hundred people inside of Google loved it.

25:00 And it actually took two years to get a hundred people to actually like the product. Once a hundred people like something, a hundred million people like it. It's like the sample size is enough. The problem is if you try to make something a million people like, you can't talk to a million people. And so you end up with this shallow swimming pool. It's like you're trying to heat up an ocean. And the ocean just

25:16 It takes too long to heat up and you can't tell. Instead of heating up an ocean, heat up a bathtub. Make the promise small as possible. And you're close to the customer. In fact, if you only are focused on one city or even a subset of city, you can talk to every person. You can put all these resources on a tiny problem, and I guarantee you take a ton of resources you put on a tiny problem, the smaller the problem, the more you'll change the numbers, the trajectory.

25:38 And that will teach you lessons. In there's you do things that don't scale. Then you scale. And the scaling is industrialization. But product market fit.

25:47 is a distinct problem from industrialization. So you want to basically make the promise small as possible. understand the user, put yourself in their shoes, blow their mind, do s things you've never thought before. Do them by hand. Make them unscalable.

26:00 Don't worry how much it costs. Just prove the model. It's like R D. This is a like industrial design. is what we call prototyping. Before you manufacture something, you prototype, and you make prototype after prototype after prototype. And until you make something that you love for yourself or someone loves.

26:16 So yes, the smaller the problem, the more there's fewer abstraction layers. You're actually on the ground. You're talking to people. That's how you prove it. White to these pylets.

26:27 It's all the same thing, by the way, same thing AI. You're removing abstraction layers, you're making the problem as small as possible. You're going directly to the source. I think that's a principle that all these things have in common. It's like we're playing this game of telephone if we don't do it that way.

26:41 And you just lose information. And this is why founders don't like running large companies. They end up in a game of telephone. They say something and then it goes down like five layers and then it goes back up five layers. And then these like meetings and the meetings become like system reviews and literally like The lowest point for me when I was when I was having meetings about meetings.

26:59 You've gotten into this new mode. It's called founder mode. It's not called CEO mode. Do you think you're now a good CEO? I think I am. I think I was naturally a good founder. Although I would say I also got really lucky. Because I had two great co founders and a damn that I luck out on that.

27:13 I think it was a very good early stage CEO. And I think the moment I had like an executive team, I really struggled to make the shift from a founder to CEO. I really struggled. And I think in the two thousand tens I do not think I was a great CEO. And I think we paid the price for my learning curve.

27:31 And I think the pandemic was a rude awakening for me. I think I was conflict averse. By the way. Somebody once said a pitcher never takes himself off the mound. As a manager, you gotta go take them off the mound. I didn't want to hurt people's feelings. I want to take them off the mound. And the longer you leave a pitcher on the mound, the more home runs they give up, like the more upsetting they're getting and they're still gonna be angry at you no matter when you take off the mound.

27:53 So I don't think I was naturally a good CEO. And I remember up to the pandemic At one point I wonder I wonder if I'm just not meant to be a CEO. They were not meant to do it. And then the pandemic happened, we had a near death experience and I said, Well, screw all the rumination, like It's do or die.

28:07 And I feel like I learned how to do the job. There's really a few phases of CEO. Have an idea, get to product market fit. Product market fit. to hypergrowth.

28:16 Hyper growth scale to become a real company. Real company as in profitable public. And I did all that. We have like forty percent free cash flow margin. We're very profitable. We do a hundred billion dollars in sales.

28:27 The last phase of a CEO's reinventing the company. Product extension. And the reason our stock has been flat is because we only do one thing and we've started to saturate a little bit of the core idea. So we've had to reinvent ourselves. We had to do product extension. So I still gotta prove myself. And then there's another proof point, can I navigate this transformation of AI? I think founder mode is gonna be the only way to operate in the age of AI.

28:52 If you're a giant professional CEO, I think you can operate in a founder mode, but if you're like risk averse, you want to be incremental. those types of people are not gonna survive the age of AI. So I think there was an old Albert Einstein quote, he said the best way to keep her balance on a bicycle is to keep moving. You're gonna have to keep moving. founders are gonna be really well Primed or set up.

29:12 for this age of AI because we kinda have to redesign our whole company from scratch again. Was there anything else that Hiroki taught you? Because Steve was perhaps the literal ultimate example of everything you just said. Focused on the details in the weeds for ever reinvention of the company. And before I say just to say who Roki is, everyone knows Johnny I've

29:31 Hiroki is a bit of an unsung hero. I always heard about him. He was like this legendary mythical figure that like was elusive. There's like almost no photos of him online, there's like no videos of him. He was never out in front. But he was Steve Jobs creative tractor. It was um function under marketing. He did the ads, he did the graph design.

29:49 He was really responsible for the you know, when he was like that black type with the grey font and like the product in front of white. That was really his aesthetic. He taught me Two principles of Apple. That

30:00 I brought one with simplicity. I think startups are like When you start a company because you have no money and you're so constrained, you're naturally simple. Lack of abundance creates natural constraints. So simplicity is thrust upon you. And that is good for you.

30:15 And then once you raise a bunch of money and hire a bunch of people, you go a lot of directions, then you lose your sense of focus. How many startups can we think of today? Who have struggled from lack of focus. Probably name a few. So you start to lose your muscle for simplicity. Haruki taught me simplicity. And he taught me simplicity is not removing things.

30:33 Simplicity is distilling something so fundamentally. That you understand its essence. I know Steve just say design is the fundamental soul of a man made creation that reveals itself through subsequent layers. In other words, great design. Is about distilling something to its essence. It's kinda what Elon does with SpaceX, where he talks about first principles.

30:53 And first principles is kind of like a physics term, but it's also a design term. It's about understanding if I'm gonna reinvent this product. I have to understand the properties of glass. I have to understand like everything about it to distill it to its essence. So I got obsessed with simplicity. Simplicity of our product, simplicity of our organization, simplicity of everything.

31:11 The other one was a sense of craft and details. How you do anything is how you do everything. And I said everything must be perfect. It comes from There's a book that a lot of people at Silicon Valley recommend. The score takes care of itself.

31:23 Bill Wals, the coach of the San Francisco Forty Niners. John Wooden. winning as coach in college basketball history, UCLA. Same principle. First AU CLA, so John Wooden won ten NCAA champions over twelve years.

31:37 First day. First hour in his team, he spends an hour teaching how to put your socks on. One hour and he said, Put your socks on this way. Mr Miyagi One hour teaching you how to put your socks on. It's a metaphor. Everything was that rigorous.

31:51 Билл се довею тук ірзі інтує панц. was one of ten thousand details that depend on whether you want or not. Basically, don't focus on winning. Focus on getting all the inputs perfect and you get everything perfect, then you will win. and you don't focus on the scorecard.

32:07 We do focus on growth, but we kinda stop focusing on growth. We started focusing on making everything perfect. And if everything is perfect and you don't grow, then you focus on the wrong input. But if you have the right inputs and you make them perfect. then you'll grow really fast. And so that's really what I learned from him. He really taught me, I think, founder mode.

32:25 'Cause I never met Steve. So I only knew through Heroki and I said, Well I love this. I'm an artist, I'm a designer, I could have more control of the product, I could make everything perfect. The initial attempt at founder mode. created giant revolts.

32:37 Everyone hated it. Because everyone thought I was micromanaging. And I learned something funnel. Initially everyone hated it. And by the end.

32:46 Everyone loved it. The people hated it left, so maybe there's like selection bias. The people liked it stayed. But Even the people that thought they wanted autonomy and independence and empowerment. What they didn't realize was control and power is not zero sum.

32:59 It's not like if I have all the power, you don't. There's a scenario where we're all powerless. And there's also an area where if I have power, I can therefore give you power. It's not zero sum. This is the problem people don't understand. If I have more power and control, I can give you more power control and I can hand it off to you. It's about the idea that the car has a steering wheel and you turn it left and it actually goes left.

33:19 I do think it's all about the company rowing in one direction. That's it. The thing that you said historically that had the largest impact on me was this notion of the eleven star experience, the exercise of going from not a five star but a six star and a stuff and actually forcing yourself to write it. And I have this idea in mind because of this idea of simplicity and distillation. And it's a beautiful thing, right? It's ultimately empathetic with the customer.

33:42 But why is that idea in practice so powerful? Like what what happens as you go up the star count? So let me do like a one minute on what it is. Basically when you book an Airbnb, most people leave a five star. And if you leave a four star, it's a bad experience. Five star, everything went as planned. So it's called review compression, similar to Uber. You always leave a five star, and if you leave anything other than a five star, something really went wrong. But what if the driver was really amazing? You can only leave a five star.

34:08 So I started imagining what if we could give a six star. And I did this exercise from six to like ten or eleven stars. So a five star let's say take one moment checking in the Airbnb. Five star check in is you get there and the host greets you. Or there's a Dora code and it works. In other words, nothing went wrong. You give a five star.

34:25 Anything wrong, you give a four star less. That's review compression. Like what if you went above and beyond? So what would a six star look like? A six star would look like you basically get to the Airbnb and there's your favorite wine on the table and there's like fruit and there's snacks there and there's a handwritten card. Okay, that's better than just letting me in the house. So what's a seven star experience? Seven star experience, there's like a limousine or something waiting for me at the airport. They know I like surfing, there's a surf board waiting for me and they're like showing me around the city and all the stuff. So

34:52 What's an eight star experience. En eight star experience. I get to the airport. There's an elephant. I go on the elephant, I go on a parade in my honor. I'm like, wow, I feel really special. What's a nine star experience? I call it the Beatles check-in. I get off the plane and like 1964 Beatles. There's five thousand teenage girls screaming my name with cards making me feel like I'm a pop star.

35:13 I get to the front lawn of the Airbnb. And there's a press conference in my name. So it's a ten star experience. Ten star experience. Elon Musk greets me and takes me to space. It's an exercise. It's an exercise in the absurd.

35:23 You keep pushing. To go so absurd. To ten stars. That suddenly six or seven stars doesn't seem crazy at all. And the way to get to product market fit.

35:33 is to just create a six or seven star experience. But you can't create a six or seven star experience without going beyond. In words, go beyond the edge of reality. And work backwards. And so it's kind of a fun exercise.

35:45 Вот the craziest possible way to blow someone's mind one person's mind, one customer. And maybe try that. And maybe can't scale that. 'Cause that's like an eight star experience. But you can probably scale a six star. And that difference between the five and six stars probably difference between you and a competitor.

36:00 And if you can find a way to industrialize it and scale it. you might have product market fit and something special. One of the things that I think about when you give the absurd examples at the high end of the range is this feeling that I've experienced with AI that my imagination had almost atrophied. that by using these tools, I realized how hard it was like, oh, I can make anything. And I sit down like I have no fucking idea what to make. Yes.

36:20 And that as I started making little things, like all of a sudden my imagination got Rebooted? And it feels like this exercise is like an imagination exercise. It is. One of the sayings is great writing is great thinking. But

36:33 I find that I don't know about you. Some people have ideas. And they think of the ideas and they wrong down. Sometimes I figure out the ideas through the act of writing.

36:43 The act of writing is the act of coming up ideas. The act of designing is the act of coming up with ideas. It's really hard to just sit in a room and abstractly think of ideas. You need to like Do something. And so I think what was happening was

36:56 We didn't have in meet enough tools express ourselves. I think a lot of the tools were very passive tools. I think increasingly we were spending more and more time on a sit back experience like social media. What I like about AI is I think AI shifts our attention from consumption. to creation.

37:13 Social media a lot of us spend our time on in The only type of creation is giving your opinion, but you're mostly consuming. What I love about AI is It's not about opinions, it's about Test my hypothesis from making. I love what's happening right now.

37:27 Suddenly all of us have a paintbrush and a canvas to make stuff. I think that AI is going to lead to a renaissance in creativity. And I was an artist growing up. I was pretty good artist. So I had the ability to express ideas. Here's an analogy. You ever meet a person

37:42 I could probably think of musicians like Prince, you name name a musician that probably in words couldn't express themselves like you know, but then through music, there's like this dimension you never knew. An artist they seem really reserved, but their art is like really emotional. So мені of us have. This creativity inside of us.

38:01 But we don't have the craftsmanship or tools to express it. And suddenly what AI is gonna do is gonna give us the ability to express it. we're gonna realize there were a lot more creative people than we thought. Cause we typically think of creative people as people that know how to express their creativity. It turns out what if everyone can express it.

38:18 Pablo Picasso once said all children are born artists, their problems remain artists as one grows up. Every child's creative. If every child's creative, that means every adult could be creative. I think that every human that's planet is creative. You ask the average person you're creative. About one in two says they're not.

38:33 That's my experience. That's not true. It's just that They haven't exercised the muscle. А найт the magic of AI is what's in our head can manifest.

38:42 But also, as you said. we can develop new ideas in our head because it's a relationship. We maybe have a small idea, we try something, give us another idea. And you go on this journey. A lot of people call founders visionaries.

38:54 We're more expeditionaries. We're on these expeditions. We only call it visions later. We're really just one foot in front of the other. Can you talk about the difference between

39:03 The act of creation in pursuit of You said people pleasing earlier, achievement. notches on the belt. versus just for the raw pure joy of it, which seems to be more The way the mode you're in now.

39:15 I think when I started I mean B. I don't think we're totally trying to be successful and I like to joke that if I was trying to make money I would have come up with a better idea than airbed and breakfast. I truly did it for the love and the fun. And somewhere along the way I got really successful.

39:29 And that almost became a curse. because the success became a scorecard and then I want to get even more successful. It stopped being intrinsic and it started being a version of status and people pleasing. It took me a little while. To realize what I was doing.

39:43 What I really wanted was love. I think that I learned growing up as a child. The way to get love is to be special. The way to be special to do special things. And if I do special things I get praise and I feel love.

39:55 I think that translated into if I'm really successful. I will get adulation. And if I adulation, I'll feel that feeling that I'm always seeking. And I but I can do this consciously. I'm not like saying this. It took me many years to realize this is what I was doing.

40:10 By the way, Agulation's kinda like seeking status. So many people seek status. Anyone's on social media and posting all the time is probably someone seeking status. There's something wrong with it. But the problem is that's not where great products sh in great companies come from. See adulation is like a cup with a hole at the bottom.

40:26 And you keep filling it in. Thinging is love, except it just keeps coming out the bottom. And at some point You have to confront Who am I doing this for?

40:35 Am I doing it for other people? For them to briefly love me and commend me to then move on. And I the way that's a drug. And it's a drug that it's like real drugs. You need a greater hit to get the high and eventually it stops working and eventually you reach a peak.

40:49 And it gets really meaningless and empty. And that happened to me. And at some point Around the pandemic. We go public.

40:57 We have a hundred billion dollar valuation. It's like one of the best days of my life. And the next day I wake up. I like put on sweatpants or go on a Zoom meeting. It was like it never happened.

41:06 And it became like the saddest day of my life'cause I realized, okay, what now? I got adulation. And I don't feel any different. And that made me like reevaluate like what I'm doing this for. I had to like just come to terms with I wanna do things for pure intrinsic reasons.

41:21 And so I had to basically Detach myself from people's approval. From status. From worrying about like how hot Airbnb is or how successful I am, which I never gave a shit about when we started. you know, you start getting accolades and you want more of them. And you gotta like let go of that'cause this is a losing game.

41:37 And I just really started focusing on being heads down. Do the work. Like he used to do. Like when you're a kid. There was light.

41:44 Just make stuff. Make it for yourself. Та крій бук Рик Рубен і се артест. is an artist when they make it for themselves. And they don't try to make something successful.

41:53 I stopped trying to be successful. And I just went back to the basics. I realize like A person doesn't know you will never love you. That's okay.

42:01 The people love you and the people that know you. And the most important person To love you as yourself. And we should love is the thing you're doing. So this became like a whole thing. It became about doing it'cause you love it.

42:11 Putting your heart and soul in it. It's like the score takes care of itself. It goes back to that. Don't try to be successful. Try to do something wonderful. That you love for yourself. Maybe you'll be successful, maybe you don't.

42:23 But don't focus on who you want to be. Focus on what you want to do. That was a vice president once told me. He said if I focus on who I want to be. I focus on being president of the United States and I wasn't, my life would have been a failure. But I focus on what I want to do. I want to help people, I'm be a community organizer. Then I don't need to be president.

42:39 And so I think so many entrepreneurs focus on what they wanna be. I wanna be a giant tech founder, I wanna run a billion dollar company, I wanna do this, I want to do that. Instead of focusing on what do I want to make. And then suddenly there's no way to fail if you're making what you love. It's an incredible set of ideas. I'm curious what most fell away in your life in this recent period as a result of this shift in mindset. Like what do you do less of that you used to do a lot of When you stop chasing adulation.

43:02 Mostly ruminating. You ruminate less. Yeah. Just like worry about people's opinions of me. By the way. Somebody kept saying, like, there's something mildly narcissistic about like worrying about everyone's opinions as if they're all thinking about you.

43:15 The reality is like even people watching this, like I'm gonna be self-conscious, except for a moment they're gonna think about me, but then they're gonna be mostly thinking about themselves and that's okay. And all of us are thinking everyone's thinking about us and they're thinking about themselves. Or the people in their life. Don't think about some guy on a podcast except for like maybe an hour. And then it's over. Letting go of what people think about you.

43:36 Because that's a prison. Suddenly you're making things For approval. And then you lose your courage. That's the main thing. It's just like the mental energy.

43:46 But I really try to do things that are meaningful. Meaningful things are really two buckets. It's making and spending time with people I care about. That's just those are two things. There are two very different ideas I'm curious for you to react to. The first was a things by Warren Buffett, who said you want to buy as an investor. businesses that a ham sandwich could run,'cause eventually one will. Not to pick on anyone, but think about like the car payment processors like Visa or MasterCard, like just extremely elegant business models. Actually a network effect businesses like Airbnb Airbnb tend to be in this category.

44:14 And then you've got this this opposite end of the spectrum, which is One of my favorite investors, early stage investors, said he tells every founder that they should think about the company as a platform or a vehicle for their own personal growth. And that their ability to grow will set the ceiling for the company. This is sort of like opposite.

44:31 Ideas. And we've been talking a lot more about leadership in this like second bucket. I'm curious how you think about whether or not you care. If eventually a ham sandwich ran Airbnb, like the business model would be so perfected that it wouldn't matter.

44:45 In the Warren Buffett sense. And just like in general how you think about If that's true that your ceiling is the company's ceiling as its leader. I think they're both true. Let me try to square those with one example.

44:56 I agree with both sentiments. Okay. Here's an example. Walt Disney. People watching, I want them to try to name a Paramount Pictures film. I want you to name a Warner Brothers film. Maybe you'll think of like Batman. I want you to name a Universal Pictures film.

45:10 I want you to name something from the MGM library. Pretty hard, right? But you can name a lot of Disney films. And probably Pixar in a golden age. There's a big difference to us two.

45:20 One is that Disney was very founder led. And that Disney was all about a personal expression of one man. The irony is the longer a company is run by founders in a founder mode. The more I think it can let go and anyone can run it.

45:36 I think Disney Not to take away from the CEO of Disney. to do S new guy Josh is really great. I've met him, he's great, and I think they've had a lot of good CEOs. But I generally think they're the CO Disney has the bases loaded. You've got this incredible theme park that like people are gonna visit no matter how well it's run. Like it's like a city that

45:54 As many people visit Disneyland every year is like San Francisco. It's crazy. They've got this incredible IP. It's not that it's an easy job, but like Walt left so much. I remember I was speaking to the former CFO Disney once, this is like 10 years ago, and he said, Disney hasn't really done anything new since Walt died. Walt died in nineteen sixty six. Since nineteen sixty six, you still make feature in the anime films, TV, and magic kingdoms. And of course, yeah, they do new things, but fundamentally that's the same playbook.

46:20 So I do think that that's an example where The founder reinventing the company in their expression. Крит суча резерво. of IP.

46:31 He died fifty years ago. Fifty years later Walt Disney spirit seems very Omnipresent whereas Louis B. Maier, I don't know if most people can tell you which studio he was. See I'm saying there's a huge difference.

46:44 So I generally think this is a paradox. The ham sandwich. You have a business so good, you can run it'cause sooner or later they will. The best businesses are ones that founders run and they reinvent and they create so much equity and such a great moat. That then when they hand it off. they won't during growth after them.

47:01 I think Apple's is very similar. They've not had to invent new products for the most part. They're still running the iPhone. I mean, what a gift Steve left them. they were a few hundred billion dollar company when he died, they're like a multi trillion dollar company now. I think the one caveat is I think tech companies are different. Warren Buffett generally didn't invest in tech companies with the exception of Apple. Coca Cola was a big investment of his or like C's candy.

47:25 These are things that don't get disrupted. I think technology is a synonym for change. If we're in the change industry, you kind of need to be more in founder mode, more time. But I think that's how I square it. The company is The upper bound of the founder's potential. The longer you're in founder mode, the more It will endure. I remember one founder told me

47:43 I want this community last a hundred years. So therefore I can't be in all the details. And so therefore I need to empower people. And I remember saying If you want something to be around for 100 years, you want to control it as long as possible and keep it in founder mode as long as possible. Like Disney. I think that's counterintuitive. And I think people say, Oh, but like the company's gonna get very

48:02 Dependent on you. Well yeah, but the alternative is you're gonna have so institutionalized. This Magic. That it can endure after you.

48:11 Edwin Land, the founder of Polaroid, was very famous for using Ansel Adams as his ultimate tester of his equipment. And so he cared about the most important, maybe best photographer of all time, what he thought of his device comes to mind when you talk about Disney because I have this visual of Walt just like continuing to drill down to some sort of bedrock or something. And that like that's the mission that you're on as a founder is like bedrock.

48:35 What is that for you from this point forward? Like as you keep drilling. What do you think you're still after? Where is there still room for your ceiling to raise so that the businesses can? A few things come to mind. When people think of Eric Me if you're closed your eyes and say I want you to think of a picture of Earme probably think of a house. We're a noun and a verb like Queen X, which is amazing and not amazing. It's amazing in that, like, we're kind of the category leader.

48:59 It's also tough because when you're Kleenex you want to sell shampoo, they're like, Wait a second, I'm not putting Kleenex on my head. It's a double edged sword our brand. The bedrock for me is How do I change the atomic unit of Airbnb from a home to a person? I do not want Airbnb to be about homes.

49:15 I want it to be about people. And I want the people to be atomic unit. And every you get a home. You need experience, you can get a service, eventually a flight. I want imagine like a person in the center with a ring. With like fifty things around. These are the things you can get. That is the thing. The bedrock of Airbnb is gonna be

49:34 Identity. profile the person's preferences. I want to develop The most authenticated identity on the internet. Proof of personhood is gonna be really, really important in the age of AI, artificial. I want to develop the most robust

49:46 profile on the internet. I mean they used to be Facebook, they've kind of abandoned that strategy. I want to build one of the richest preference libraries. Of you as a person. Because that would be useful to have. I wanna build a social graph.

49:58 But in the real world. And I wanna eventually have a membership program where you get all these different benefits. So the bedrock is the person. I want to basically figure out how we can launch like Amazon. Amazon went from books to like a hundred things.

50:12 I don't want us to just have homes. I want us to have A hundred things. So we need to develop this industrialized machine of understanding. What are the like atomic units or the primitives? That

50:22 Are consistent across All these different businesses. And then the last one. is AI. We have a bit of the innovators' dilemma.

50:30 Plus or minus$100 billion goes through our app. I have all these visions to totally change it. But you're a public company, you know, and you're like giving guidance and the difference between missing and hitting earnings is Not just being public company. People's livelihood depends on Airbnb.

50:45 If we mess a something, somebody could go from like making a living, not making a living. So you gotta be very careful. That is not an environment. For mass innovation. when you're being really careful.

50:55 So I'm also exploring Little sandboxes. like almost like a separate app, like what is a radically radically different Airbnbs. What's after Airbnb? Air B and C

51:06 What's that? What's the next think about. So those are the three things I'm thinking about. Number one, how do we take the atomic unit from a home to a person? Number two, how do we basically industrialize what everybody offers to do like fifty things, not three things? And then how do we Disrupt our cells.

51:23 before someone else does with AI without screwing over our investors and our hosts who depend on us. And so those are the kind of things I'm doing. Maybe the last thing I'm thinking just as a CEO. Is I think I've reached a certain level of mastery.

51:38 I've reached the mastery of like Product market fit. Hypergrowth profitability. I'm beginning level four. level four is reinvent yourself product extension.

51:47 I think there's something potentially even beyond that in the age of AI, which is like one of my strengths is all my experience and that's also my weakness now. Like I'm forty four. I'm not old. But I'm not young. I'm not AI native in the same way a twenty two year old is. H's a bad example. When I started me аз твої файси.

52:04 And We were competing against Expedia and they were on like Outlook and we use Google Docs, and we were like iPhone. It all seems anachronistic now, but back then. That was innovative and we were on the coolest new tools and we just move faster. And so also just staying young. Pablo Picasso, another quote, he said, The older you get, the stronger the wing gets, and it's always in your face. You gotta stay light on your feet, you gotta stay young.

52:28 You gotta keep reinventing yourself, you gotta have curiosity. And so I don't want to become like this old school person in the groove. I gotta reinvent myself. One of the things that as I've been building stuff myself Really for the first time. Like I'm I'm not an engineer. I used to build stuff but I'd tell people and I would come the feedback loop was like

52:45 Painfully slow and lossy. Now it's like Five to fifteen minutes and pretty high fidelity. And soon it'll be five seconds and perfect fidelity. I always love Brad Victor's idea of wanting the input and the output being as linked as possible. And We're getting to that stage.

52:59 The anxiety I have having this experience. is that it feels like just nothing will last. Historically there's been these ways to have enduring Motes, people would always call them. You have two hundred million people that you know a lot about already. You've got

53:13 hundreds of millions of reviews, that lots of information on places, like you have these embedded things that I can't just get that from you. But it just seems as I build this stuff like oh, it's gonna be really hard to have something enduring and lasting. Do you share that? Anxiety. How does that make you feel that as the frictions fall?

53:30 It also feels like the pot of gold at the end of the rainbow is like disappearing into the distance or something. Here's an analogy. Take a fashion like Hermes, I think the most valuable single fashion brand in the world. the Birkin bag and the Kelly bag. It's like they have a new product every like decade or something. Like these are like multi decade old things and they appreciate and they resell And then you've got like Zara fast fashion.

53:53 And I feel like We all want to make these things then endure, but we're living in like hyper fast fashion of software. If you look at software from ten years ago, no matter how great it was at the time, it looks really old and dated. You look at hardware from ten years ago, it looks pretty decent. You look into your design, it looks

54:11 Pretty good. Or better. Or better. You look at buildings. after a certain period of time they've got this patina and they're wonderful you go to Paris and old endurers. Environments and physical Worlds.

54:22 I've got Huge endurance. Hardware and physical things have medium endurance. Software Is extremely ephemeral.

54:30 Opinions are Like that. But some ideas permeate. This is something I'm wrestling with myself because I wanna make things that endure.

54:39 I don't know how I've reconciled it, except to say this. I obsessed over our app, the Airbnb's app, its design, its interface. And yet no matter how great it is, ten years from now, I'm gonna look at it and think it looks like crap. 'Cause I look at the interface from ten years ago and think it looks like crap, no matter how good it was. Did it software never looks good, even if it was good back then. So then you gotta ask like what endures?

54:58 I do think there are things that endure. Airing B the community endures. I started realizing The software won't endure. In the network effect.

55:06 Well decently endure, but the ideas of Airbnb. It's principles, its mission. The organization. The company. The brand.

55:14 The identity. The logo, the voice, the community, what it stands for, those things will endure. Most important the community, I realized at some point I told the company, We're not building an app, we're not building a service, we're building a community. That's the only thing that will last.

55:28 I don't think there will be apps in the future. I think they'll be agents. So like if we're attached to apps, I don't think there will be apps. So we better like let go of that. So many of the themes that we've talked about is This steady progress and learning through time applied in service of others.

55:43 What did bodybuilding when you were young teach you about steady progress over time? Weirdly, bodybuilding taught me so much that I could apply to Silicon Valley. Tommy Two important principles. My dad was really into ice hockey.

55:55 wanting me to be an ice hockey player. Unfortunately I was very skinny. I hit puberty really late. And I went to a sports academy for hockey. When I was thirteen I thought could be a really good hockey player, but by the time I was fourteen I didn't hit puberty'til I was like fifteen or sixteen.

56:08 And that's a death sentence. in hockey because suddenly I went from like First or second line to third or fourth line and I went from thinking on be a division one athlete to division three athlete. I'm like, Okay, it's not really gonna work out for me.

56:20 And so I started weightlifting. I was hundred and thirty five pounds and I told my friends I'm gonna be like one of the top out of both the country by the time I'm nineteen. And they thought it was like out of my mind. I ended up by nineteen competing at the national level, I

56:32 I can be the teenage nationals. The first lesson I learned from bodybuilding was if you can change your body you can change your life. It was actually the most fundamental thing to change, like Everyone wants to change things around them, but what if you change you first, physically?

56:46 And I even think like If you could start somewhere a lot of people say like change your thoughts, I would change your body first. Change your physical biology. If you can change your body, you can change your life. It was the ultimate expression of empowerment. Okay, now I change my body. What else can I change? It's a metaphor for eventually you can design the world around you. I can change your body, I can change my environment. eventually I can change the world. It's like you just go inside out.

57:08 But the other thing it taught me. Which might be even more helpful. Is that you can't get in shape in one day. And if you go to the gym and work out for like twenty hours, you're not gonna get in better shape. In fact, you're gonna overtrain. And the way you get stronger is an adaptation from progressive overload that you basically

57:23 You stress the body. the body doesn't get stronger during exercise, it actually breaks the muscles down and it's an adaptive response, like an immune system, it gets stronger. Just keep doing it. The basic idea is that you can't get in the shape in one day and it's about one percent better every single day. And if you compound one percent a day.

57:41 You can actually have massive gains. And so it's really about discipline. And it's also very analytical. Bodybuilding's this wonderful thing where it's judged, it's a subjective sport. That you judge visually.

57:52 But you measure it scientifically. You weigh your food, you have to put yourself on the right caloric deficit. You have to write down your training, you have to write down your weights. It's like extremely analytical. They taught me to be very analytical, metrics driven, and that it's really about discipline consistency. And I think that's important because I think a lot of founders just give up too early. It's about discipline.

58:12 And it's about if you train for a month and you take a month off, you're starting over. And that's the key. You never quit, you just keep going. One of the nice things about it is the visual feedback. Like you just judge visually. You can literally see it. You can look in the mirror, other people can look at you and say you've been working out. probably some of the skills that you would want to apply the same progressive overload thing to as a leader.

58:32 How do you figure out the objective function? Like how do you apply that same thing to something else that other people can't see? I start trying to focus on like how good of a company is and I take it to like projects. So I'll give you one example of a project I focus on. One is I want to build the best team possible. So twice a year we do this like giant thing we call roadmap review and there's the top hundred people in the room and I see the quality of the people in the room. And we did one in the last two days.

58:55 And then one of my most important jobs the most important job I do at Airbnb is hiring. That's a whole separate topic. And the visual feedback is every twice a year I get the top hundred people in the room and I can see the quality of the people in the conversation. So in other words, there's many metrics that you use and I obsess over it. Maybe it's the app and I just look at the design of the app.

59:14 Maybe it's like how well the company operates and look at decision making. So I try to break the problem down to something that's observable. That I can observe either measure a data. or even subjectively look at and observe. So I o it's always about breaking the problem down to something that's observable and measurable. By the way, just on this because this is a really important point. Basically

59:32 As a leader you can choose if you want to spend time hiring or managing. One or the other. The better the people, the less they need to be managed. The more time you spend on recruiting, the less time you have to spend on management. It's one to one.

59:44 I remember when I was starting Airbnb. Sam Ollman, who Obviously everyone knows now it's open AI. I was like one of the first Sequoia Funded companies. before me were two people

59:54 that had ever been funded by Sequoia from my commentary Drew Houston from Dropbox, but the first one was Sam Alman is a company called Looped. It was like a Way to see your friends on a phone before the iPhone. I remember him telling me I was like twenty seven or twenty eight, Sequoia just funded us.

1:00:09 Six hundred thousand dollars to three million dollar post money valuation, highest valuation wide commentator. Now the average valuation is thirty million. And he said, You're gonna spend fifty percent of your time on hiring. I never did, by the way. It was my death blow, not spending more time on hiring. The less time I spent on hiring, the more time I spent managing. And I started learning

1:00:26 My number one job was hiring. Every day I wake up. the first person I call is my recruiter. I think people should think about their first employee being a recruiter. Not an engineer.

1:00:35 they are the most important person because they are the ones that like get you every other person. When a company is as good as his people. And the difference between like the good companies, the great companies are the people. And I think AI kinda makes that clear now that like what's all about the people. But I obsess. I obsess over recruiting.

1:00:52 I spend hours a day. And I don't recruit executives, I recruit Two, three layers deep. Here's how you hire good people. Do not do searches. Generally.

1:01:01 What you want to do is build pipelines. So here's the mistake people make when they hire. They do I need to hire a blank. So do a search, they hire a search firm, and the search firm scans they give you like fifty profiles. You like Call it down to ten people.

1:01:15 You contact ten and you pick the best one you hire. And a year later you realize like they're good or bad. And if they're bad, uh oh, they've already hired their own team. That is the wrong way to do it. So the best way to do it is pipeline recruiting. you're constantly recruiting, you're constantly meeting people.

1:01:29 So this is what you do. Try to map out all the best people in the valley. So let's say I need to hire really good engineers. I don't do searches. I just informationally meet the best engineers in the world. Every meeting, the job is to get the next meeting.

1:01:42 meet someone else. So if I were to meet you and I'd say, Hey, who's the best people you know? Can you introduce me to two or three people? So what you're doing is you're constantly meeting people. in advances searches. And you're just building your pipeline. You just need to know lots of talent.

1:01:54 And all but's referral based. The two ways to find out if people are good. I mean, one way is you're just good at assessing talent. But the two best ways to start with the results work back is the people. So a lot of people say like I want like a really good marketer, I'm gonna go to Nike, they do really good marketing. No jet. Find an an ad you like.

1:02:12 I figure out who made the ad. Start with the results. Work back to the people. Don't start the resume. The other thing to do. Is

1:02:20 Keep asking people to build your Rolodex. And so I'm constantly building a rolex. And the moment I find somebody that's really good, I ask them who all the best people they know are. And I basically build these little mafias. Every company's got like a little mafia of talent. So like Uber's got like an ops mafia.

1:02:36 Apple's got like a design mafia and then like build these little ecosystems and they tell you who the other good people are. And you're classly finding more people, more people. And what I do is I am the co hiring manager for the top two hundred people in the company.

1:02:49 This is very radical. a lot of CEOs think it's their job to hire their executive and their executive team hires their team. I think that is fatal. I mean theoretically yes. Theoretically. You should live in a world we have such good people they can all hire their own people.

1:03:03 most entrepreneurs, if they have ten execut be lucky if two or three are able to do that without any support or help. You know what you always want to be like marrying up. hurrying people to future. I sometimes used to say like My executes to hire people so good they would never work.

1:03:18 for them without my help. In other words, it should be like we're reaching. If you can hire them on my help, we're not reaching far enough. You want to like hire the very best person you can. So I'm constantly meeting people, constantly interviewing the first and last call I make every day is the recruiting team. Still.

1:03:34 I probably spend two, three hours a day on it. Every day, every year I spend more time on recruiting the less. By the way. In the two thousands I didn't. I thought it was all about like having a good idea having a recruiting machine.

1:03:46 Managing people. The great thing is I don't manage this much anymore. The more time you spend on recruiting, less time you spend on management'cause the really good people This is amazing. And if you have to manage people, then maybe you should think about

1:04:00 Like Upgrading the talent. You said before that founders are born, you think, and CEOs can be more shaped. For the most part. And maybe the caveat to that is just like maybe founders aren't born, but we spent our whole life tinkering and building But you can't simulate being a CEO.

1:04:14 I was gonna ask whether or not you think they're activated in some way, like maybe there's the raw material but then some event happens. Sean from Palantir would call this the Bruce Banner, you know, gamma rays thing or something. What have you learned about activating talent? I think the activation Is giving someone a challenge.

1:04:31 But the course I have fifty stories before that. of challenges I had. It's just Airbnb.

1:04:38 That story activated something on a scale I'd never done before, but it wasn't the first thing I made. I was making things my whole life. I think the way to activate somebody is to give'em a problem or opportunity.

1:04:51 And see if they can do it. I think the people that have a high level of Agency. are gonna do it. I don't know how to teach motivation.

1:04:59 I don't know if it can be taught by the way I don't know if you can teach I think you can motivate people. I don't think you can make a person who's not motivated motivated. But I think all entrepreneurs have the trait of their self motivated. And so it's really about giving him a challenge.

1:05:12 And then it's up to them to step in and and activate. Having plugged the leaky bucket of motivation of adulation, what what's your motivation now as you Attack this next chapter. Most of my heroes are artists. I'll pick four people.

1:05:26 Learn Da Vinci. Vincent Van Gogh. Walt Disney stів chs. There's many things they had in common, but what is some of the odd common

1:05:35 The last day of their life. Or the last week of their life. They were working. Lion da Vinci carried the Mona Lisa with him until he died. And he definitely didn't pay them on a lisa for adulation because he never showed it to anyone.

1:05:48 Vincent Van Gogh sold one painting his life. He died an obscure artist in the cornfield, maybe shot. Maybe not unclear what happened. But Did it'cause he loved it.

1:05:58 Walt Disney. last day of his life he was laying in hospital bed His brother Wool Roy was like rubbing his cold feet, dying of lung cancer. looking at the ceiling tiles, which were a grid, imagining Disney World.

1:06:11 Steve Jobs. Ruki said the last couple of weeks of his life he like showed him like marketing. Like he was still looking at products. No, some people can look at that in interpretations, Oh, that's sad. Like they weren't spending time with family, by the way. I'm sure m those that had families, I don't Vincent Van Gogh and Larry Divinity didn't have families, my understanding is

1:06:29 Steve and Walt spent time with their family at the end of their life. But I don't see that as a sad story they're working in the end. 'Cause I think they did what they loved. You know, the great artist in history did what they love. My motivation

1:06:41 Is the motivation an artist. my motivation is to create something great. That is my motivation. I would like to be successful. I want our shitless to get a return.

1:06:51 I would like employees to feel that they're at a great company. I would love to make a huge impact in the world. But mostly I just want to make something. I feel like I'm a designer more than I am a CEO, and I might be a forward one of the great biggest canvases of any designer in human history. 'Cause usually designers are just not given this many resources.

1:07:07 It's almost like a glitch in a system. It was almost like accidental. Some airbeds allowed me to crack this glitch and get all these resources I wasn't supposed to get. But I'm not letting go. And so my motivation is that of an artist. I just want to make incredible things. It's a beautiful Almost closing thought, given the tools now at our disposal, but everyone can do that if they want.

1:07:28 And we should encourage them to do so. All children are born artists. The problems remain one as you grow up. AI is the opportunity for all of us to become artists and scientists and creators. We don't have to be consumers anymore. We can be creators. True creators. And we hear the word creator, you think

1:07:42 social media performer. That's one way to create. You can perform. The problem is I think creator has been performance. Now creator can be create, make.

1:07:52 Everyone can make now. It's amazing. The last question I ask everyone's the same. What is the kindest thing that anyone's ever done for you? The biggest gift anyone's given me is believe in me. And I think the biggest gift you can give somebody or one of the biggest gifts is believe in you. A couple examples.

1:08:08 When I was sixteen years old. I transferred to public high school. I was really into art. I was a pretty good artist. I didn't know how good I was. And I had a teacher named Miss Williams.

1:08:17 She believed in me. I remember her telling my parents, he's gonna be a famous artist. I never became famous artists. But it gave me confidence that I was actually good at something. 'Cause it wasn't that good a hockey. I wish I was and I wish I could make my dad proud of ice hockey. I just didn't get very far.

1:08:32 And suddenly That belief set me on a path. That moment I said, I'm gonna go to art school. At that moment I realized. I can decide to be happy the rest of my life.

1:08:41 I came to Silicon Valley. I'm at Michael Sybel and the guys at Justin A T V and they believed in me. They were early Y C people. Paul Graham made an exception to

1:08:50 Let me in earlier while Commoner, he believed in me. I wasn't an engineer and he almost never finded non engineers. He thought the idea was not a good idea actually. He said people are actually doing this. I go, yes. He goes, What's wrong with them? But he believed in me.

1:09:02 My investors. They can go down the list of investors they believed to me. Joe and Nate. I had no business being a CEO. Joe. Somehow believed in me.

1:09:11 I wouldn't be here. If it wasn't for the generosity of people believing in me. In helping me. But I think the greatest gift I can give back in believing in others and help them. And not pull the ladder up behind me, but to like really show them.

1:09:25 Yeah, I had the great privilege to eventually join the giving pledge and You have to write a letter. I remember my letter was if you could ask my high school teachers who'd join the Giving Pledge, they wouldn't have guessed me.

1:09:35 The basic idea In my life philosophy. As we all have unknown potential. I think we have these stories. in our own head about what we're capable of.

1:09:44 To go back to John Wooden. Somebody once asked him, I think, like what's the secret to success? And he said, I only ask my players to do their very best. person goes, Oh wow, that seems weird. That sounds like what like a parent says to the kid who like loses all the time. Goes here's a catch. I saw potential in people they didn't see in themselves.

1:10:01 And that's my management philosophy. When I tell somebody It's not good enough. I'm not saying you're not good enough. I'm saying I see potential and you don't see yourself. That is the most motivating thing you can do to say I believe in you and I believe you can do even more.

1:10:14 And people will Climb a mountain for that type of thing. And maybe the way to end this whole conversation. It's the most important person ever that you can believe in is yourself. And I think a lot of us are entrepreneurs, we're driven by insecurity.

1:10:28 We're driven by some hole. Not all of us, but a lot of us. Something in our childhood, something lot of us were Not the coolest kids or whatever. There's something in us he wanted to prove and

1:10:38 And then you get really successful and you still have imposter syndrome and A lot of like the path to happiness and salvation is just the path of learning to believe in yourself. For me, I only believed myself long after other people believed in me. Now my gift is to try to give it to others. Beautiful place to close. Thanks, man. Thank you very much.

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