Big Technology Podcast - Best of Big Technology: Airbnb CEO Brian Chesky

Episode Date: December 27, 2024

Brian Chesky is the CEO and co-founder of Airbnb. This week on Big Technology Podcast, we roll back the clock to our interview with Chesky in 2023, where he discussed cleaning fees, listening to customer feedback, and getting involved in the details of the product and user experience. This interview was one of the earliest moments Chesky shared his 'Founder Mode, philosophy, passionately talking about why he gets in the details, even as CEO. Please enjoy this holiday throwback. Alex and Ranjan will return to their regularly scheduled Friday show next week. --- Enjoying Big Technology Podcast? Please rate us five stars ⭐⭐⭐⭐⭐ in your podcast app of choice. For weekly updates on the show, sign up for the pod newsletter on LinkedIn: https://www.linkedin.com/newsletters/6901970121829801984/ Want a discount for Big Technology on Substack? Here’s 40% off for the first year: https://tinyurl.com/bigtechnology Questions? Feedback? Write to: [e-mail]

It's the holiday season, and to market, let's dial up one of our favorite interviews from Big Technology Past, a one-on-one with Airbnb CEO and co-founder Brian Chesky. We cover so much ground in this conversation, including cleaning fees, and Chesky's early thoughts of what will become his founder mode leadership philosophy. Since 62% of you found this show this year, according to Spotify, this interview will be new to many of you. And it's always a fun listen, even if you've heard it before. especially in this season of travel. So Ron John and I will be back next Friday to pick up where we left off. And now here's Brian Chesky, in person,

in our first ever best of Big Technology. LinkedIn Presents. Welcome to Big Technology Podcast, a show for cool-headed, nuanced conversation of the tech world and beyond. We are here in person with Airbnb CEO Brian Chesky for a conversation about the latest with Airbnb, tech in general, and plenty more on the sharing economy. Brian, welcome to the show.

Thank you for having me. Okay, I'm going to start with this. So on behalf of all Airbnb customers, and on behalf of everyone who would like to see Airbnb succeed as a counterweight to the hotel industry, and on behalf of everything that is good in the world, please do away with the cleaning fee. Should we talk about the cleaning fee? Yeah. Yeah.

So obviously, if I was a host, I probably would not charge a cleaning fee. And we thought about removing the cleaning fees just to give a little bit of background. You know, a home is different than a hotel. A hotel they're going to have cleaners in the building. They build, it's not like you don't pay a cleaning fee insofar as the cleaning fee is baked into the nightly rate. So what we want to do is move to an all-inclusive pricing where if hosts have a fixed cost, they can amortize that fixed cost. So, like, you know, sometimes they actually do need a cleaner to, like,

that they want to pay a living wage to. That needs to show up and they might live half hour out of town. They have to come clean the property for the next person. But we really want that rate to be baked in the nightly rate. So a year ago, last December, we created this toggle that you could turn on total price display. When you turn the total price display on, it is essentially the way hotels price where any of their fixed costs are amortized across their nightly rate.

And about a third of our guests turn on the price filter. The price toggle, the other thing we do is we rank now the very best value properties high. So if somebody has a property that is a kind of lower value, it's going to get downranked in search results. I think it's a bit of a process that we have four and a half million hosts all over the world. And I think one of our secret sauces, and part of the challenge of Airbnb is we got to try to make sure that we balance the needs of.

of, you know, four and a half million hosts with hundreds of millions of guests all over the world. But the most important thing is I hear people that you want a simple service. What you see is what you're going to get. The price is a fair price. You don't have owners checkout chores when you leave. And that Airbnb is always a better value than a hotel because Airbnb was always founded as an affordable alternative. And that's something that we're totally focused on. Right. I mean, I definitely understand that, like, you can. you can you're moving to show what the full prices and my question is like why even make it something where like you'll toggle between because you end up getting something where you start to

you start the search process so I'll talk to you about a search process I did today I was looking for a home to stay in an upstate New York and it seemed nice and the price was $21515 and then I go to the checkout page and it's it's a $150 cleaning fee a $51 Airbnb service fee $18 of tax the total $4.34.78. So what I end up, you know, I start and I'm interested, and I have this moment of discovery and excitement to book the property. And by the time I get to that checkout page, I now see that the fees are going to actually be double that night that I was going to stay there. And I feel like that's just a common path for a lot of Airbnb customers. Now, look, I have to give you some credit. It is really, really hard to manage a two-sided marketplace in the hospitality

industry, probably the hardest job in tech. But it just seems to me that everybody would be better served hosts as well if this was less of a surprise and more of baked in at the front. Yeah, let's talk about that. So this is a primarily U.S. phenomenon. In the Europe, for example, prices are regulated and you have to show the total price up front. We would wish, we would love if they actually regulated pricing in the United States. But here's the problem. When people come to Airbnb. If we only show up-front pricing and people aren't aware that the prices are upfront, they often are confused and they go to competitor websites that no one in our industry that I'm aware of. I think Marriott has a price toggle. It's not as prominent as us. But the other

like online travel platforms, Expedia, Verbo, booking do not have upfront pricing. They have progressive pricing. And so people come to Airbnb and they wonder, well, why our price is different. So that's where we got to this price toggle. We decided we're going to make a totally up-front. run. When you turn that toggle on is as if there are no service fees or there is no cleaning fee because it's completely baked in. Now, we don't show it after taxes. Very few things you go to store. Do you see post tax? Most everything is as pre-tax. But we've even thought about moving the toggle down the road to a post-tax. There is a benefit to doing that, which is I have a budget of $1,000. What can I get for $1,000? So totally, I mean, our vision is to get to a place where we are showing total price display. We just think of this solution that we're in as a transitional state from the old progressive pricing display, which nearly every online travel site in the United States uses, and they still use today. If you go to any other online travel site, you'll see there's a progressive pricing, especially for home rentals. But again, remember, hotels have resort fees. And sometimes you don't even see those,

but when you check in, they'll have resort fee. They'll ask put your credit card on file. They'll ask for a deposit. There's a lot of other things that they do when you check in. And so we want to move to a world where we have up front pricing. So I totally hear you. But I'd also just tell people like, it's the first thing on the homepage. You turn that thing on. It will remember you. And when you come back in a month, that toggle will be showed.

It will still be on. And you will always have upfront pricing. Is it fair for me to say that with hotels, there are those resort fees. But you don't typically get the $150 cleaning fee in the same way. Like you're not going to book a hotel room. Yeah, yeah. So the hotels bake. It's not the hotels.

don't have fixed costs, but what hotels do is they bake them into the nightly rate. And so what we noticed is like if a host does a one-night stay versus a one-week stay, they still have to have a fixed cost to clean the place and have a turnover. And so then if we don't have a cleaning fee, then they'll stop accepting short reservation. So they won't even take a one-night stay. They won't even do a two-night stay. So there are some downstream consequences. I mean, believe me, we've really thought about a lot of different solutions.

every time you make a rule, that rule has the second and third, like secondhand, third hand, third hand kind of consequences. So what we're trying to do is navigate the community towards total price display, trying to make sure the prices are affordable as possible. We've built total, we've built like a lot of pricing and discounting tools. So we now have like four out of five hosts are using like these pricing tools. And the result of all this, here's the important point. At the end of the day, I think people want to see what they're going to get up front and they want to make sure it's a good value. We now are enforcing against owners' checkout chores. People can leave reviews if they feel like they're paying the wrong chores.

We have a total price display that a third of people are turning on, but we encourage everyone to turn it on. We do intend to move towards an upfront pricing display. That is going to require a kind of transition and education process over time as people get used to the way we charge prices. And the other thing I'll just say is that prices today on Airbnb globally are actually lower. Well, this is as of July data compared to hotels. They're 1% below a year ago. And hotels, and this is according to CoStar, they're a site that does analysis of hotel and Airbnb prices,

say that their prices are up 10%. And so I hope that over the course of the next year, we're going to continue to make progress on affordability. And compare to hotels, the gap is going to widen and not close. Would you call for regulation in the U.S. that would effectively make everybody display the up-front pricing. Not only do we call for regulation, we actually went to the White House with President Biden. So what's going on there?

Yeah. Well, I wasn't actually at the event. I wasn't at the event, but our head of policy and communications, Jake Carney, I think, was there. And they actually, President Biden, who has called out hotels for resort fees, we actually did an event. it was after we made the up front pricing change. And they kind of called us out as a good standard. I mean, and we told them, I said, like, you know, we think a model where you enforce against everyone fairly is probably good because what ends up happening is if you don't do that

and one company does up front price and the other doesn't, some customers are savvy enough to know that the prices are not apples to apples, but many people aren't. And so what ends up happening is a lot of people, end up like under a false pretense that we're more expensive. And we see this in the data. So we're all in trying to, we're doing our very best to try to educate people that when you see a price in Airbnb, it's actually a different price. It's treated differently than other competitor sites. And we need to actually have an education process to tell people our prices aren't apples to apples. We're now baking fees in. They're not baking fees in. And so these have to be apples to

apples. But I think a standard approach like what they do in Australia or what they do in Europe is great. It's it takes away all this. And it trains the customer that every site they go to is going to treat price exactly the same way. It's when you go to different sites and there's a cognitive overload that they're treated differently that then creates a lot of confusion. Yeah. I see, I mean, I see you're getting very passionate about this. Well, I'm in the details. Let me just say this. Like the other thing I'm like pretty excited about is like I actually stay in the details of the product. I don't know everything. I want to like not, I don't want to suggest I'm in the detail of every part of the product. But, you know, we're a pretty big company now.

We're like, we were just, we were just added to the S&P 500 index. So that's a pretty good, like, standard of what I would consider a big company, a Fortune 500 company. And I think most of the CEOs of S&P 500 or 1400 companies, I don't, I just get the impression. I think most of them aren't really in the details of their product. I think at some point these companies get so big that it's pretty typical that you get a little detached, that it's someone's job to listen to customers, but it's not your job.

And I've always wanted to be the kind of company that felt more like a startup. I assume people listening can relate to this, which is when I started Airbnb and my two friends, we were the customers. And then I would meet the customers. And it was easy because there weren't many of them. And I would go, like we go door to door meeting host

and we talk to guests and we say, what can we improve? And I would say, as we went on this hypergrowth rocket ship from 2009 to 2019, over the 10-year period, I think we got further and further removed from the customer. And we went from us talking to customers to hiring people to talk to customers, who people who manage people, who manage people who talk to customers. Now, what I'm describing is almost every technology company in the world, that almost every large company has layers of management,

and there's a detachment that emerges over time and it happened to us between the leaders of the company and the customers and the feedback the customers give you and the roadmap that you have. And what we wanted to do over the last couple years is to be able to flatten that, to bridge that, to have our ear on the ground. And so what we did is we completely overhauled

how we develop product development at Airbnb. I came to the conclusion that the classic way that we developed products, which is not that different than other tech companies. I mean, literally, we hired people from our tech companies. They brought their way with them. our way of doing things through 2019 was some average of the people I hired who brought their methodology from their company.

I picked some kind of general average that seemed to make everyone happy. And guess what? No one was really happy, especially the customer. And I got to this point where during the pandemic, we lose like 80% of our business in eight weeks. We had to simplify the company. We had to get back to basics. And we realized, like, what we should do is we should just focus our core business, make

get as lean as possible, as efficient as possible, and build something that people truly love. And let's start with building a blueprint. Like one of the things we did is we developed a blueprint of the end-to-end experience for guests and hosts. We looked at the key frames for every guest and every host from finding an Airbnb to booking to staying. Then we mapped all the customer service complaints. Every customer service contact, tens of millions of calls and emails, you know, a social media request. You know, we would do like thousands of of town halls or like we meet with tens of thousands of people in these like, you know, online like kind of town halls where we get feedback. And through those, we're able to get a list

of like issues, reasons that people are fresh at Airbnb. And I'm on social media. And I engage quite a lot on Twitter. And we made a bunch of updates. I mean, last year we moved towards, you know, total price display toggle. In May 3rd of this year, we announced 53 upgrades and features based on feedback directly from the community. By the time the day was over, I went on Twitter, I guess now X, and I said, okay, what else can we improve? We will prioritize their top suggestions. I think we got like a few thousand responses. And I ended up having our team essentially tally the top eight responses.

We made a list of eight in priority order of the most common to the least common. The good news is most of the eight things we were already working on, a couple of them, like adding a king bed filter, we weren't. but it was on our list and we're like, let's bump it up. And now, today, why I'm here is, yep, and now I'm here is because we have updates on five of them. And I wouldn't say we've totally resolved five of them because, like, you know, we want to build a perfect service and perfection is like an ideal. You never quite get to. But we have some pretty big updates. Let's go to affordability.

You know, we show that our prices are now down 1% year of year globally while hotels are up 10%. We showed an update that 260,000 people around the world have removed. or lower their cleaning fees. Right. That's news that you're breaking today. 100%. That 2.8 million listings do not have a cleaning fee. 2.8 million listings is almost three times the inventory of Hilton or Marriott.

Are properties on Airbnb globally that don't have a cleaning fee. Out of how many? Out of 7 million. Okay. And the average cleaning fee is typically less than 10% of the total reservation when there is a cleaning fee. But again, just remember that that's an average. When you type a city and Airbnb, the first homes you see are typically the best value and the ones with the highest ratings and the highest rating for value. So generally, you know, if a host wants to charge and disorbing cleaning fee, they're going to get pushed down in search results.

They're not going to get as many bookings. And I think that has created an incentive for hosts to lower their price and be more competitive. Because one of the things we realize is like they're not our Airbnbs. They're not our homes. They're our host homes. So what we have to do is we have to build tools and incentives to bring the best out of them. to provide the best service for gas. And it's really this balancing of supply and demand.

So that's one of the things we did. I mean, obviously you mentioned, you know, pet filter and a king bed filter. Like, king bed is like this, like it's a tiny little thing. Everyone's been asking for it. We wanted to make sure we had good data

because there's no point to have a king bed filter as no one's filled it out. So the first thing we did is we started collecting data. We got to a million king beds on Airbnb. I don't think there's a hotel chain in the world that has a million king beds, but we now do. So if you hit the king bed filter,

there's a million options around the world. We have a pet filter. We had seven million guest arrivals last year where people travel at pets. So Airbnb, you know, it's really hard to travel and stay in a hotel with a pet. Airbnb's generally are pretty good. We have this new flexible date carousel. So one of the problems is people listening, they might relate to this. You type a city and Airbnb.

You add dates. Then you go to the map and you zoom in to some like four block radius. And then you might be doing this during a popular time when other people are booking. And when it's up happening is there's not as many good homes available. All the great homes, you've now narrowed in, right? You've like said this place, this block, this date, and it really narrows in. And what we wanted to do is say, you know what, if you were flexible on one day on either side of your reservation, there's all these other homes.

Now, you may not be flexible, but if you are, we want to show you because the vast majority people who book an Airbnb are traveling for vacation. They have flexibility. So we have this new flexible day carousel. It's the equivalent of adding like a million properties typically to a search result because it gives you a lot of options. So these are maybe the last thing I'll say is we have an update on verified listings. Right. Five countries that you're going to start to roll this out on.

And let me just go into this. This is a challenging problem of the internet. How do you know when you see information online if it's true, if it's verified? The word verification verified has been a very, very hot topic. I know Twitter, their version. What you have to do is pay $8 and it's true. Exactly. So we've been working really hard on verification, both verifying people's accounts and now

verifying their properties. And let me just say a little word on each. Let me first start by saying nothing is completely like airtight. Any system you can get around. So the key is can you get to a pretty high confidence level where it's very difficult to spoof or move around. We've now verified more than 100 million guests and host accounts and 100% of guest and host who book or accept a reservation must be to have a verified identity on Airbnb. And we're making upgrades over the next six to nine months on our verification system. We'll eventually have a name locks them. You verify a name.

We'll lock your name and you'll need to get permission to change it. We'll make sure the photo is a photo of you. So that's on the identity side. On the verification of the property side, we're now verifying the house is a real house. The address you gave is your actual address and you have access to the property. and you've proven that you have that property. You have access and entry to that property. And the reason why is to make sure it's not a fake listing.

It's not a real house, but it's not yours. So you're spoofing. That's a fraudulent listing. Or you're giving it inaccurate address. And then somebody shows up. They get an Uber to the wrong place and they're like, where's my property? So we're trying to figure out how do we verify millions of properties and how do we do it in a way where we can feel like it's pretty rock solid as far as like very difficult

to get around. but it's not so much paperwork like you're mailing in documents and then no one does it and then we have a system that people don't comply with and how do you do that. So we found a system and I think it's a pretty good system. I'm going to explain how it works. It uses some pretty advanced AI technology that we developed to get around a lot of owner's paperwork. Here's how it works.

You take your app and we tell the host to open their app and go to their physical property. When they go to the physical property, we take the GPS coordinates of, that property. So if you say, let's make up an address, 2-2-2-1st Street, just a made-up address, if you say you live on 2-2-1st Street, you've got to go to your property, and we'll use the GPS coordinates to confirm you're actually at 2-2-2-1st Street. Then the next thing we do is assuming you've already uploaded your photos on your Airbnb. We're going to ask you to take a live photo of the exterior and the interior from the app. Once we take a live photo the exterior and interior of the app at those GPS coordinates, then we use a computer visioning

AI model to now cross-reference the exterior and interior photos that you took of your property with the ones were uploaded. This then creates a cross-reference map. Are the address the same and are the photos the same? And that creates a confidence score. If that constant with the score gets to a certain threshold, then we will assume it's verified. And then as a final step, we'll often do a human review just to make sure the AI system was accurate. And if that happens, then the system is verified. So this is rolling out in U.S. France, UK, Australia, and Canada. We're going to get it to 30 countries by the end of the next year.

But once we get by next summer, the vast majority homes in me will be verified because a lot of our businesses, contrary in the big key countries. And that's not the only thing we're doing on verification. That's just address in the property. There's a lot more coming out this November around the quality, making sure the property is really high quality. So we'll have more. What about penalizing hosts?

If they let somebody book and then right before their trip, they end up canceling because they, for instance, like this happened to being South by Southwest, where, like, Austin was the hottest Airbnb market, I'm sure, in the U.S. that week. You know, you book early, you lock it in, host cancels, makes that available, tells you, oh, there was a flood. So, so is there, I mean, of course, it's a real listing. It's just a host, you know, I guess it's their right, but trying to optimize profit. It just sucks for the renter. Yeah, first of all, let me just say that's a terrible experience. And, like, I understand when people get frustrated and I want people to feel like when they come to Airbnb, they have an amazing experience.

be they have an amazing experience every single time right because the hotel they wouldn't do that they would typically not do that so how do we solve for that well first of all let me just go through a couple things we don't pay the host until 24 hours after check-in so we're not like prepaying the host to incentivize them to cancel so that's the first thing the second thing is that we now have a much stronger enforcement system so if a host cancels that cancellation rate affects their search rank. If they cancel consistently, they're removed from the platform. They're suspended. But if they cancel, they're typically warned. And we also have a financial penalty system for host if they cancel. And I think we also, again, we have some updates coming in November that it will, I think,

take this to the next level. But the good news is the vast majority of our hosts keep their commitments. And the reputation system generally works really well. we've we've had more than 300 million people guest leave reviews on Airbnb homes 70% of stays after they're completed people leave a review so we typically get signal on if somebody went through this and the main principle we have is to make our information as transparent as possible right you see what we can't do is we can't inspect every property and manage them ourselves if i designed an Airbnb, I can assure you would be amazing. It would be perfect every single time. I try to make it as perfect as our software. But they're not our homes. There are homes that belong to the community of

millions of people. So what we need to do is create tools for hosts to be better, economic incentives for them. And then the other thing is we need total transparency. So every time you see a property, you know, this is a great one. This is one we have, it's new. So we don't know. You're taking a chance. Or this is one that isn't as good. And if it's not as a property, you know, it's not good, then that will should create some economic incentive where they have to charge less because they don't have as high quality. And if they're really bad, they're just going to be completely removed from the platform because we have minimum enforcement standards. That's good. All right. So let me ask you, we're talking a little bit about the product itself.

Then we're going to get into a little bit more about how you build it. You've brought up some really interesting ideas already. So advertising. You've talked at a Morgan Stanley conference that it's absolutely on the horizon for you. I'm looking at Skift today. And they say, first year for Airbnb, the estimate you'll make $317 million. And then that could go to $1.25 billion by 2026 and $3.7 billion by the end of the decade. I mean, talk about high margin business. We've talked about this on the podcast. We were talking about it Friday thinking about Instacart, right, which is a delivery business that actually makes its money on ads. And Amazon, by the way, retail business that's making its money on ads. How far along are you? Is there something that

you have to develop? Yeah, people don't realize how big the advertising business on Amazon is like probably the most profitable segment of their business. So, yeah, let's just talk about it for a second. Two of my executives are from Amazon, my CFO and my head of PR and policy and communications. So you're on board with hiring Amazon people because we've had this debate. They come in with the Amazon culture. Yeah, we've hired significantly more people from, say, Apple than Amazon. That model is a little close.

Let's take a quick detour. I'll answer that question. And I'll come to this in a second. So we hired from all over. The way we run the company is if we had to compare it to one tech company, it's closest to Apple. The reason is closest to Apple is we're a functional organization. So for people listening, you probably know what a functional organization is. A functional organization is how every startup is organized.

There's an engineering department, a product department, a design department, a marketing, operations, finance, sales, et cetera, et cetera. Almost every large company, almost all companies Fortune 500, they're no longer functional. They are either some matrix or mostly they're divisional. They basically have multiple engineering departments. They have multiple marketing departments. They have multiple product departments. Amazon's divisional. Apple is functional.

So we are functional like Apple. Basically what that means we have experts in every single function. We're highly integrated. And the other thing is we are data informed, but we're, more like Apple than Amazon. What we look at every day is the quality of our product. We obsess. We use intuition. We use our imagination. We are a very design-led culture. We try to be the marriage of art and science. And we do these product releases twice a year, which are these big events, which are more akin to either how you release an operating system or how you release

hardware. And we don't think you should build software exactly like hardware. But I think my view is that software should not be the other pendulum necessarily of hardware. I think the best is a marriage of the constraints of hardware with the freedom and data available of software. Because when something is totally decentralized and totally bottoms up and you visualize the company, what ends up happening is, let me give you an analogy of a car. Let's say we're trying to make a car.

And we have one team doing endless AB experiments of the tires. Now those tires have to fit on the wheels, but the wheel teams doing their own AB experiments. and they don't fit. And now they fit. But now we need a better car body to fit around the wheels. But then that makes the car heavier. I'm just kind of using this example. Now we need a stronger battery. But now that battery needs to be manufactured. That's going to create a new assembly line. That assembly line has to be capitalized. Now we've got to go Wall Street. The point is that to make really big changes to your application, your service, it often requires the entire

company to row in one direction. It requires you to have a single vision, not many small visions, hit local maximums. It's so important that you have a product story that you know how to tell that it's not just enough to ship the product. It's that you have to tell the story and people have to know the product exists. You have to have a distribution in mind when you ship the product. So in these ways, we are probably a little closer to the Apple model. And I've said this publicly. We have a product marketing function. And most companies don't. When they say product marketing, they have an outbound function. We have this inbound outbound. So that's the whole thing. But let's go back to Amazon, because we do have some Amazon people, and I do try to take the best of every company.

And then we have some of our own things, only we do. But one of the things that Jeff Bezos said, and I really like it, and he was very smart about investing, is Jeff Bezos said, you should focus on the most perishable opportunities first. So what that means is there's all these things you could do. But if you can do something later, don't do it now. If there's something, if you don't do now, you can't do later. And we felt like the most perishable opportunities were around fixing our service because if people are complaining the last thing they want as an ad platform, they want the service improved. And also, travel is finally recovering in a post-pandemic world.

So there's a lot of market share available. So we want to expand our service, recruit as many hosts as possible, and perfect our core service. And that's the most perishable opportunity. The bigger we get and the stronger ecosystem gets, the more. potential value an ad platform has down the road. So we're not rushing into anything on an ad platform. We do think there would be a really great system we could build for hosts where they could you know, like there's a lot of, you know, Amazon, Etsy, eBay, I think Alibaba. I mean, our travel competitors, almost all of them have some sort of advertising. My general thing,

though, and this comes back to my, my orientation is I want to make sure we have a great user experience. And I think I want to make sure the ads don't get in the way of a good user experience or become a taxing user experience. And so that means that we're just going to go into this a little bit slower and more cautiously. But you're right. It is a billion-dollar plus revenue opportunity of very high margin that's totally available to this platform. And the bigger we get, the more valuable that opportunity is.

Brian Chesky is here with us. He is the CEO of Airbnb. You've been talking a lot about the Airbnb product. little bit more about how product is built inside the company. And yeah, we're here in New York City. So we're going to touch on the New York stuff right after the break. Hey, everyone. Let me tell you about The Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than two million professionals read the Hustle's daily email for its irreverent and informative takes

on business and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes. or less, and explain why you should care about them. So, search for The Hustled Daily Show and your favorite podcast app, like the one you're using right now. And we're back here with Brian Chesky, the CEO of Airbnb. Brian, great to be here with you. You mentioned before the break a little bit about how you structure your organization.

You touched on the product marketing function. You know, when you spoke about that at a Figma conference a little bit back, people say, said, all right, Airbnb is done with product managers. Lenny Richinsky, a former Airbnber who has a very popular substack, started to explain that this was less about eliminating product management and more about shifting the company to be more vision-oriented, big, splashy launches, and an Apple-style approach to product, which you just explained. So I text Lenny, hey, what do you want to know from Brian?

He says, ask him how to move away from traditional product management is going in and what he's learned making the shift. So you know what? I'm going to take it for the master. I'm just going to ask that question. Yeah. Let me first give a shout out to Lenny. Lenny worked for V for a number of years.

He came via acquisition called Local Mine, and he was one of the best product managers we had, and he's really amazing. And I've listened to some of his episodes on his podcast, and so I just want to give him a shout out. He's really great. So before I say how it's going, let me just recap a couple things and clarify a couple things. So I went on Figma, and I said something, and it was a Firestorm. Yeah, because it was tweet.

a little out of context. So I said we got rid of the classic product management function. And that people assumed I meant I got rid of all the product managers. I didn't. What I meant was we replaced it with a product marketing function. So let me let me just explain how it's a little bit different. In a typical tech company, you have what they usually refer to as three legs of stool. You have engineering, you have design, and you have product management. And product management is sometimes shortened just to be called product. And at a lot of companies, some to home companies, they're equal legs of stool. At a lot of companies, design reports to product. And that some companies design and engineering for reports to product, but very rarely

does product report design. So there's different models. Oftentimes, product is what we might only call an inbound function. Their job is to build software and ship it. Their job is, isn't always to figure out how to market the features that they built. That, you know, in fact, I think it's a weakness in a lot of modern software companies that people don't think about who is this for. They don't have a lot of, like, like what product marketing Airbnb is inbound and outbound. It's product management plus product marketing. Product management is the building of the software.

Product marketing is deciding what to build and to figure out how you're going to talk about the product and how you're going to distribute the story to the customers so they know about the benefits of the product. What's happened in Silicon Valley is I believe it's become a very inbound function. And so you end up in a situation where people don't conceive of at a time what the story of the product is before they build it. And if you build a product and no one knows about it, was it worth building? Probably not. I also find that if you think about the story of the product as you're building it, it affects how you're building it. It often makes the product simpler. You know, you're not going to build something if you don't know how to talk about it

coherently. And I think having a story of the product along the way is a really good way to govern making a really great simple product. We also took a lot of... So does that mean that product mark, like the marketing comes first and then everything flows from there? Like how do you operate that? So how does that work functional? The story comes first. So it sounds Amazon like, honestly. A little different. Amazon uses press releases. We don't... We don't do press releases. The problem we found with the Amazon style press release where they write a press release ahead of time is, okay, let's take the iPhone. What would the press release have been for the iPhone?

The problem is like you don't know the press releases when you start the project because you learn what the project is as you start working on it. And so that press release is really good for efficiency type things like Amazon where it's like half off or it's going to now appear in a day. But for a lot of these features, you discover the product along the way. So often starts the insight. It starts the fuzzy story. It might start with a rough keynote. But the key is the story is an evolving thing that you discover as you tell the product. But it often might start with an insight.

So for example, Airbnb Rooms, we launched a refresh of Airbnb Rooms. They were used to be called private rooms. And we had a court insight that a lot of people were nervous about staying in a house of other host because they didn't know who the host was. and it was just kind of sketchy. And so we developed this idea of a host passport, this new type of profile that they would fill out and you'd be able to have this really cool preview

where the booklet would open up. You'd be able to get a sense of who they are. And then we also started doing research about that people were nervous about, well, is the kitchen shared and is this bathroom, my bathroom, and who's going to be living with me and are they there with their family? And so a lot of product marketing, here are the things the product management is missing. one good consumer insights sometimes product managers do this sometimes they have a quote research

function sometimes they put research and design but a lot of times they just don't have great consumer insights like like who is the customer what are we solving what are they saying really really good customer insights what a lot of product managers do they just look at data they look at site data in usage we might call engagement and engagement data is important but it's only part of the story what does the data mean so that's the first thing the second thing is you tell a story. It's an evolving story. The third thing is distribution. How you can get that story out? Having a great story and no one hearing your story, it's like if you ship a product and no one uses it, it's because it wasn't a good product or because no one knew that you shipped

the product. Depends who you ask. But it's often a combination. So product and marketing should be connected. I always feel like you can tell the health of an organization by seeing how close engineering and marketing are. If you want to go in a company, just see how well the engineers and marketers get along. And by the way, I bet you have many companies don't even know each other. They may never talk to each other. And that's red flag because you really want the product engine of the company and the storytelling engine the company, I think, to be working in lockstep. If they're disconnected, that's not good for anyone. So we basically created this product marketing function. We have fewer people absolute. We basically kept our handcount flat.

We feel like most companies probably have too many product managers. So it's a leaner function. The most senior people have a title called product marketing. The junior product marketers, I think they do have a product management title, but they're junior product marketers. We just took the title convention from Apple, but we also have a very robust program management function. And a lot of companies, they have product managers doing program management. And we also have technical program managers.

So the people making sure everything is on schedule and the nitty-gritty aren't product managers, they're program managers. The product managers are ultimately, the product marketers are ultimately responsible for delivering the product. But they are working in lockstep with the program managers. And then the other thing is engineers and designers probably have a little more power. Because at most companies, if the product manager is like the CEO of the product, they're telling the designer, here's your specs, here's what you're doing. And engineers, here's the schedule. Here's the build on this schedule.

In this case, the product marketers aren't in charge. They're just like the long pole in the tent. And so all of this is like an orchestra. Now, how do you make sure decisions get made? Decisions get made from me and the executive team. I review all of the work every week, every two weeks, every four weeks, every 12 weeks. There's a schedule. We call it CEO reviews.

And I review the work and everything works on a release cycle. So we do releases every May and November. I know what we're shipping typically as much as 18 months out. Some things, you know, there's a long horizon. So we're working on stuff now for next November. and we do these reviews. I try to make sure the work is really, really well enforced. It's already been reviewed by other people.

And you'll just keep doing these iterations until you have something you're really proud of. Do you inject ideas like into this process? Yeah. Is that sort of what the idea of asking people what they want on Airbnb on Twitter was was basically like you're sitting there. You're at like the kind of the focal point of all this stuff and they're looking to you for guidance. Yeah, I want to be clear that like the majority ideas and majority insights do not come from. me, but I always bring something to the table. We have a really rigorous blueprint. So I want to say one other thing we created. We created this thing called the Airbnb Community blueprint,

where we blueprinted the end-to-end experience for every guest and host. Then we mapped every single screen of the site and the journey, every pixel, every user policy, every customer contact. And we looked at every complaint. And we used that blueprint to prioritize what we want to focus on. And then what I do is every six months, we do a top-down prioritization. So we basically, you know how companies have an annual plan and they typically have an annual planning process starts in September, ends in November. So we don't do that. We do have like an annual budget, but it's like, you know, very, very short. What we do is we have a rolling two-year plan and we update it every six months. And so we do a big leadership offsite, like a two-day off-site.

We just did one last week. And we review all. the priorities in the company over the next two years. I'd like to even get out three years. Because the problem of the plan is it's too short. One year's too short. And you only update it every year. So in November, you've got to imagine everything that's going to happen for a year. So all I, I, this is what's unique. I hold the roadmap, not the head of product. So I make all final product decisions. Now, I'm not making every decision unilaterally. I'm like an editor. So most things are recommendations. And I'm changing things five to 10 percent because my job is to like balance every stakeholder inside the company because it's functional.

There's no general managers. And I basically keep a living roadmap document that is kept updated with a two-year horizon. So anyways, that's a little bit how it's different. Now, I guess that's a really long-winded explanation. And I don't even know if I fully explained it. But now let's talk about how it's working. I have found that this system is far superior for Airbnb. whether this is a good system for other companies, I am not certain yet.

I'm certain that other companies should try this. Not everyone, but some companies should. I think that if you're really like, you care a lot about design, you care a lot about craft, you care a lot about the core technical talent of the company. And if you're a company where the CEO wants to be fairly hands-on, if the CEO has a pretty good product sensibility, if you are really just one app and one brand, and you don't want to do lots of disparate things,

then I would argue to be as integrated as possible. If you want to do lots of disparate things, like if we wanted to have like a clothing line and a fast food line and the jet turbine line, then this integrated model would be so much context switching. And the head of engineering for software is not the kind of head engineering you need for a jet turbine. So if your business is going to do lots of disparate things,

then this is not a good model. The Amazon model is good. If your business is going to be really integrated and you're like Apple and you're not going to do that many different things, you're going to be really focused, then as integrated to models possible is great. When I told people, here's here's a counter, I'm going to give you something counterintuitive.

When I told people about this model, you know what the biggest criticism was? They said, this is going to be, you're going to be a huge bottleneck. Like you, the CEO, and this model is going to be a huge bottleneck and everything's going to be slower and you're not going to ship as much.

What I would say is what we found is we've shipped more than we ever have. We've shipped by last count over 300, 350 upgrades and new features since we moved to this model. The velocity is somewhere between 2 and 5x greater than it was before. It might even be greater. The quality of the product is better. And it's just like I think that people think like when a Cia reviews work,

it slows it down. In the end, it actually speeds it up. The more review work, the faster people work. Because if people are blocked or there's a bottleneck, If you're reviewing work frequently, you will be able to, I see those bottlenecks. We never, we've, I've, I've not encountered in the last two years a situation where some person in one department refused to collaborate with someone in some other part of the department or they like didn't prioritize the work.

That happens all the time at big companies at Airbnb. If that were to happen, a project would be stalled. I'd see it in a review and I'd be like, what's going on? Why is this blocked? And then we'd immediately elevate the situation. So I think this really enforces the right kind of pace. I didn't invent this model. Walt Disney did things this way.

Steve Jobs did things this way. And Elon in his own way, although it's a little less, like it's a little more maybe. Yeah, a little bit. But he does it in a certain way. Now, what most of them have in common is they involve hardware or production. So what's new is most people haven't applied this to software. The basic idea is we have ubiquitous data. Just give people a mission.

Don't tell them what to do. Don't tell them how to do it. And make them free of constraints and give them autonomy. And that's the classic conventional wisdom of software development. And what I found is giving lots of autonomy seems good in the short run, but it's very stifling to empowerment in the long run. Because when it ends up happening is you have like 10 teams going in 10 different directions. None of them have enough resources.

So they now advocate during budgeting season to get many more resources. They get more and more controlled. They're always underutilized. They never have the way the company behind them. There's uneven standards across the divisions. They're using different technology stacks. They're putting out different messages. And they're often inadvertently sometimes working the same projects,

conflicting each other. What ends up happening is you end up getting bureaucracy. You sometimes get politics and you often get basically chaos. And out of all those things, sometimes comes complacency. Right. If a CEO doesn't know what's, going on, how could he hold anyone accountable? And when everything is integrated in one system, then you suddenly have a lot more information about, and you have more accountability. People want

accountability. Accountability can sound stifling, but actually, do you want to work at a company where people don't know the difference between who's doing a good job and bad job? That's horrible. No. So someone can just do like nothing or be toxic and no one knows the difference. Something can be a high performer and it doesn't matter. That would be a world where you become completely nihilistic. Nothing would matter. And so we want to be the opposite of complacent and nihilistic, where great people are noticed and rewarded and held on to. And attrition is down, productivity is up. The downside is we are not able to do lots of disparate things, very, very disparate things.

Doesn't mean we can't do a lot of things, but we can't do things that are disconnected. So if some opportunity were to emerge, that has nothing to do with travel or Airbnb, it might be a great business. and we won't go into it because it may compromise our model because it would require another division and that tax is not worth it for the way we're on the company. So everything you do has a pro and a con. We've decided to optimize for integration. Optimize integration is good

so long as you don't want to do lots of disintegrated things. We have a few minutes left. I want to talk to you about something that you've been talking about a lot, which is loneliness and how you're trying to connect people and Airbnb can be a solution for some of the loneliness we see in the world. I just want to present the other argument. you know, and see what you think about it. So, you know, we've been moving to more and more lonely society, a less engaged society. And a lot of that is due to the dissolution of our civic society

where we need stronger, where we've lost what really were strong neighborhoods and strong communities. Now, I was looking at your tweet asking for ideas for the product. And here's one from a woman named Desi Ivanova. It's not really an idea. It's more of a complaint. I'm sure you're sick of the the complaints anyway, but I want to pose it to you and see what you think. So she says, Airbnb is ruining the communal feel of the neighborhood I live in, which is a very residential area. Tourists come in for a couple of days and leave. So personally, I think a top priority should be a policy that restricts the number of Airbnb.

I mean, basically it is that the core of the argument is it creates more familiarity in communities as opposed to roots. What do you think about that? And how does that fit into your desire for less loneliness? I okay there's a couple things going on here let's start with the neighborhood and let's then zoom out to loneliness they're just I think they're just distinct topics okay so on the neighborhood topic we want to strengthen the communities we're in we don't want to detract from the communities I do not think communities should be totally transient and I think it really depends on the nature

of every community the way we've tried to solve this is not for us to impose caps on cities but work with cities and let them impose their own restrictions. So many cities, so if you take the top 200 markets in the world, 80% of them have a law on the book in our jurisdictions. There's some regulation in place. The regulations they usually put in place have a registration system. The registration system will often provide like a nice cap. Like you're allowed to host six months a year, 120 days a year.

You need to get this license, this registration. And what we've learned is that a one-size-fits-all imposition that we use on every city, doesn't work. Because some cities live and die by tourism, they need it. Some cities have too many tourists. And so what we think is number one principle is treat every city personally, comply with local laws, regulations, and really make sure that cities have the right solution for them. The second thing is, I don't, like, there is this concept of overtourism. And overtourism is a very real thing. But overtourism isn't too many people in the world traveling. Over tourism, I believe, is too many people going to the same place at the same time.

I remember a number of years ago, I went to Paris. I met with the minister, I think, of tourism. And he said to me something like, there's too many people visiting Paris, but there's not a lot of people visiting places in France outside of Paris. And I thought I was thinking to myself, well, a lot of people visit Paris because they've seen a movie of Paris.

They probably couldn't name you a French town outside of Paris. A lot of Americans couldn't name, like, like they couldn't name as or province or something but they can tell you Paris. And so we all tend to gravitate just like we gravitate celebrities, we gravitate to iconic destinations. One of the things

I'd love to do with Airbnb is redistribute travel. Instead of having everyone go to the same cities and the same districts spread people out as many places as possible. So one of the things we're seeing is that we're seeing a lot of what we call travel redistribution. People traveling to more locations than

flooding the same zones. And you're City here. Well, New York City is a unique example. Let's get to that in a second. But let me fully answer this. Everyone in the New York City pretty much stays 85% of people, I think, stay in a hotel district. So not staying in different neighborhoods. They're staying in one crowded hotel district. And then they're patroning multinational corporations and restaurants in that hotel district. I think the best model would be to diffuse travel across as many destinations as possible and to get people to stay longer. Airbnb, you know, nearly half our business, people stay for longer than a week.

The fifth of our business is longer than a month. So this is really what we're trying to do. So I guess I just recap by saying, we try to comply the local laws and regulations. Every city wants to be treated differently. The way cities generally solve this is by having registration systems. They can govern the amount of activity in their system by setting up these systems that we will comply with. We want to diffuse travel.

We want people to stay longer. But yes, you're right. I'm going to be self-critical. Like, we do not want to create a museumification of cities. And this is often why we've worked with cities to try to find sensible regulation to work for them. At the same time, a city that has no outsiders is not healthy either. A completely insular society where no one from outside comes in is generally not good for the economy. I'm not even sure it's good socially to never have an outside in your community.

Those are typically closed off communities. So we think the best societies are the ones that have the right mix of locals and travelers. And generally, there's always more locals and travelers, but there's this really good mix. Now, we'll just do quick loneliness, and we can talk about New York. I think that loneliness, first of all, is much bigger than Airbnb. Loneliness has been rising since, I think, like, World War II. I'm not blaming Airbnb. Yeah, yeah.

And we'll, well, I mean, we're much more part of the solution to the problem. Let's just start with that. But let's go into why. Loneliness has been rising certainly in the last few decades. There's a bunch of reasons potentially why. There is an erosion of physical communities, but it's mostly people aren't going to as many physical places. They're not going. The mall is now Amazon. You know, the theater is now Netflix. The office for many people is now Zoom. And the bank is now like online banking and not as many people go to church.

And fewer people live with their families or their extended family. And they're not going to as many physical community spaces. None of these individual things is bad. Like I think there's been a generally increase in standard of living that's been really, really great. But the aggregate is I think we're designing a system where modern life is starting to make us a little bit lonely. And I've identified with this. I do think that there's a lot of great things about society, but we have to be very careful that technology often wants to find the shortest point between A and B. And human connection is often very inefficient.

So if we're not careful, we can design solutions that remove people from the equation. And each thing seems like a step forward for humanity. But when you take a larger step back, it's almost like we're on the path to recreating Wally where we're in these like self-driving pods. We're staring at screens all day and we're a little bit disconnected from those around us. So what is the solution? There's probably going to be a lot of solutions. I think one of the big solutions is just get people to spend time in the physical world, not just digitally, but in the physical world with others. I don't think social media is per se good or bad. If social media is a destination for your

social interaction, it's probably not good for loneliness. If social media is a waste station, to connect you to people that you eventually develop real world relationships is probably good. The same thing with Airbnb. Are we a gateway to physical interactions? And one of the things that could help is getting more people to travel with their friends and family. So, for example, I have college friends. We live in different parts of the country. I don't see them except for once or twice a year.

We do an annual trip. And we stay in Airbnb's because we choose to stay in Airbnb's because if we stay in, I mean, beyond the fact that I'm a founder, If we stay in a hotel, we'd have to be in four different rooms. Instead, we can be in one house, sit around the pool, hang out. And the reason we travel is because we all live in different places. Instead of all of us going to one person's house, and then that person's the burden of hosting all of us, we can all go one place. That's just one small example.

So I would love for Airbnb to be part of the solution, not part of the problem. And I think the way we can be part of solution is we can encourage more people to travel with their friends, their family, their loved ones. And we also can use Airbnb as a way to match people. in the physical world, both for travel experiences and maybe beyond travel experiences. And I think that's something we can really do. We also, by the way, when they do travel, we would like people to feel less transient. Like they have a context in the community, a context of a neighborhood, that they're hosted,

that the host gives them the context, the type of place they are in, and that we can connect them to the local spots so they can feel like they can participate in the daily life of locals. And that plays into the New York question. So let me just tee up because this is going to be the last question. we're running out of time. I think some of the backlash has been that people stop seeing Airbnb as like you go, you rent a room, you're part of a community, and that person kind of tells you about the neighborhood and shows you around. And more like people see this as a good investment opportunity. They buy seven apartments. They rent them out whenever they can. And they sort of hog some of the neighborhood real estate. And that's what Airbnb has become to a lot of people. And hence this

crackdown in New York, there's something like 77% of the short term rentals have been taken off the market since New York had had this clamp down. We're right. I mean, I started in New York City government right down the block from the old office that I used to work at at New York City's Economic Development Corporation. We were always pro tech. We wanted more tech to come into the city. So it's kind of interesting to be sitting here with you now. But I'm kind of curious in this context. So I am curious what you think about about the background that sort of led to this and what's happening in New York right now. I think it's a hugely disappointing. It's a cautionary retail for New York, and it's a very bad decision, and I think they're going to come to

regret it, and it's not popular. Let's talk about why. First of all, the statement you said that 70% of housing stay off the market is not true. You don't know that. The fact, the vast majority is that people see entire homes on Airbnb. No, no, that's that's the Airbnb short-term rentals. No, no, I'm saying, I'm saying, I'm not talking about apartment. Okay, okay. Since this, this is according to Skift. Okay. You're talking about been delisted? Your, your inventory. A Airbnb inventory has been delisted since the regulations in New York. Okay, sorry. So, yeah, a lot of it's going to be affected.

It's going through a whole process where properties have to be registered. But the big challenge here is that a lot of our hosts were everyday people. I think there was this like point of this thought that like a lot of people were professional real estate prospectors. the way other cities have dealt with this and every city's chosen to be to be a little bit different is that they could have set up a registration system set up a registration system that has a night's cap you're allowed to host X amount of nights a year you can prove ownership or residency in that area we will collect your hotel tax and I think that what ended up happening was these were laws that

were like passed I mean there was an original law passed in 2010 there was another like registrar duration law that was passed under the Diplasia administration. And it's just, you know, at this point, we're at this point where obviously tens of thousands of hosts won't be able to travel or to be able to host. And then another consequence is this going to be that like if people are now going to travel to New York City, there will obviously be fewer Airbnbs. They're not going to build enough corresponding hotel rooms in the near term. And so what's going to happen is you're going to have more demand, less supply, and probably prices will go up. So I do think this was, this could have been a win-win. I really wish there was a way we could have worked together where we could have

found a system that could have worked for everyone. We could have collected a limited hotel tax. We could have had a like a registration system that worked for everyone. I mean, we ultimately want to exist in cities and a way that works for them. And if in and but we don't want to do business if we're not welcome. And so obviously, you know, that this is how it's played out. But I think that, you know, the thing about everything is we're 100,000 cities. So you get to see. like 100,000 different applications of how Airbnb works. And I think there's probably some better examples of Airbnb in other cities, but we'll play it by year.

I'm optimistic in the long run. I'm optimistic that at some point in the future, we maybe all be able to come back to the table and people will realize, wait, I can use Airbnb in most other cities in the world. There's got to be a workable solution for Airbnb. And maybe the question shouldn't be, should Airbnb exist, but maybe the question should be, how should Airbnb exist? Well, how should it exist in a way that helps your city? And, you know, right now, the way we exist is for stays of

longer than 30 days. And the way we exist in New York is to book an Airbnb experience. You know, we have these like three-hour walking tours or cooking classes or, you know, music experiences. But I'm optimistic that at some point down the road, there will be a way to work together, but probably not anytime soon, you know, we're going to, we're, this has been a kind of a a long drawn-out process. I feel, I feel, I really do feel for the host who, you know, obviously a lot of them told us that they need this income to be able to pay their rent or their mortgage. And obviously, they're going to have to find some other supplementary income to be able to do this. So, but, you know, we're always willing to, you know, kind of try to find a

workable solution with cities. You know, Brian, one of the questions that people had for me that they wanted me to ask you is, you know, you're one of the few CEOs who's been around more than decades, still running the company. And they wanted to know why you're still doing it and how long you're going to stay. But I don't even need to ask that to you, because hearing you speak about this business and hearing you speak about the company is, makes it eminently clear. So I appreciate you coming here. Thank you. I'm a passionate about the business engaging with the community, engaging with our audience. And, you know, not everybody does that. And you're out there talking about what Airbnb is about and

where it's going. I appreciate you doing it. I appreciate you being here. and hope we can do it again soon. Thank you very much. All right. Thank you, Brian. Thanks everybody for listening. Thank you, Nick Watney, for handling the audio, LinkedIn, for having me as part of your podcast network and all of you for listening.

We'll see you next time on Big Technology Podcasts.