The Prof G Pod with Scott Galloway - First Time Founders with Ed Elson – How Airbnb Scaled from 3 Guests to 2 Billion

Episode Date: September 7, 2025

Ed speaks with Nathan Blecharczyk, Chief Strategy Officer and co-founder of Airbnb. They discuss the pros and cons of starting a business with your friends, the moment he realized the business would be a success, and how he learned to turn a crisis into an opportunity.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show comes from Basecamp, the project management platform that's known for being blissfully straightforward. Listen, there's no shortage of project management platforms, but where so many others are needlessly complicated or bloated with unnecessary features, Basecamp couldn't be more simple. All communications, deadlines, assets, and scheduling happen in one place with a clean layout that's easy to navigate. Sign up for a free account at Basecamp.com slash founders. That's basecamp.com slash founders to sign up for free. get somewhere with base camp Welcome to first time Welcome to first time I'm Ed Elson

It started in 2007 with an air mattress in a cramped San Francisco apartment The rent was due hotels were booked up for a local design conference And two roommates had an idea What if they charged guests to sleep on the floor That weekend, three strangers stayed in their living room and an industry was quietly born. My next guest helps turn that idea into a platform that has redefined travel.

Today it has grown into a global network of over 8 million active listings and 5 million hosts spanning more than 150,000 cities in 220 countries. It has welcomed over 2 billion guests and in the process it's upended the traditional hospitality industry and reshaped how people experience new places. This is my conversation with Nathan Blacharsik, co-founder and chief strategy officer of Airbnb. Nathan, thank you so much for joining me on the program. Thanks, Ed.

Really excited to be here on first-time founders. So everyone knows what Airbnb is, and usually on this program, I feel like I need to give context for what it is you do and what it is you've built. I'm not going to do that, because everyone knows what it is, and it's a testament to what you've built. So I just want to start with the beginning.

We talked a little bit in the intro about how this all started, but I'd like to hear it in your words. How did this all start? I'll rewind just even a few months before October 2007, which you just kind of referenced, which was that I had moved to San Francisco to become an entrepreneur, and I'm a soccer engineer. by background, and I needed a place to live, and I went on Craigslist, and Joe became my roommate.

Joe had a vacancy in his apartment, and he put it on Craigslist, and we just got connected through serendipity there. And so Joe would later become one of my co-founders in Airbnb, but we were roommates and friends before we ever started the company. And a few months go by, and then suddenly the rent on our apartment is raised 25%. And I said, well, that's that's too expensive. I'm moving out. And so did the other roommate. But Joe wanted to stay in that apartment. And he convinced Brian to move out from Los Angeles and live in the apartment with him. But they still had a problem, which was that the rent had been increased 25%. And they had recently quit their jobs to become entrepreneurs, also known as unemployed. So they didn't have the

money to pay the rent still, even with the two of them. And that's when they had the idea. to rent out that extra room. They are both designers by background. They noticed that an international design conference was coming to San Francisco in October, and they noticed that all the hotels were sold out for this conference. And so they got the idea to rent out that vacant bedroom, my vacant bedroom,

two designers who might need a place to stay that one weekend. This room had nothing in it. I had taken all my positions. I had taken the bed, but Joe set up an airbed. And so instead of calling it a bed and breakfast for that weekend, They called it an airbed in breakfast. So Airbnb is short for airbed and breakfast. That's where the name comes from.

They were expecting to host some guys like themselves that weekend. At that time, we were about 25 years old. And instead, they got a father of four from Utah, a 35-year-old woman from Boston, and a man from India. So a very eclected group. Stayed there for $80 per person per night, four nights. I think that gets up to about $800 or $1,000,000, which meaningfully helped Joe and Brian pay the rent. Meanwhile, these guests had an affordable place to stay when hotels were otherwise sold out. But most interestingly, they all went to the conference together.

It had a great time. And Joe and Brian took, showed them around the town, gave them recommendations, introduced it to friends, went out to dinner. It was a whole social experience. And, you know, it really was going to stop there. I mean, it was meant to just pay the rent that one month, a one weekend kind of thing. There was no further thought that went into it. You know, it wasn't until a couple months later that one of the guests pinged Joe and asked, you know, like, what's come of airbed and breakfast, you know? How's that concept going?

And the truth was, nothing was going because it was just a one-off. Meanwhile, I'd put my job as well, and the three of us were brainstorming ideas. We spent two months brainstorming ideas of what we could do together without ever, even, talking about this story that I just shared now. But after getting pinged by one of the former guests, Joe and Brian shared what they had done back in October. And we reflected on that. We thought to ourselves, why don't we make it possible, you know, for people to stay with each other in association with events. And that's what we set out to do in early 2008. And your relationship with Joe, so Joe Gabiaz, the other co-founder and Brian Chesky is the, is the,

the other co-founder as well, is now the CEO. Talk about your relationship with those two. It sounds from your description that it was three friends who decided to collaborate together and start a company, which I think is actually rarer than one would probably think in entrepreneurship. I don't think usually, I mean, starting, it sounds like a fun idea, starting a big company with all your best buds, but oftentimes it doesn't work out. talk a bit more about your relationship, the fact that you were roommates with Joe, how were you friends with Joe, what was Joe's relationship with Brian and so on? Yeah, I think the part about being friends, what's important there is, you know, we got to know each other well, you know,

before making the decision to start a company together. You know, obviously we all have lots of friends, but we chose each other explicitly. And we did that because while I was living with Joe, I noticed two things. Like one was that after work and on the weekends, You know, instead of filling out or socializing or whatnot, you know, we were working on our passion projects. And so, you know, I saw in Joe, and he saw on me an incredible work ethic and passion. And then we also started helping each other on our respective projects. You know, I, by background, I'm an engineer. So I started doing coding of his websites.

He's the designer. He started providing the designs for the things I was building. And we saw how our complementary skill sets allowed us to build products really fast. because, you know, you really do need both. Meanwhile, Joe and Bryant had gone to Rhode Island School of Design together, so they were friends from college, and that, you know, had really gotten to know each other well then and had worked on a number of projects there together as well.

So, you know, I think we knew that there was a strong compatibility and that our skill sets were good compliments, and I think that's why we were brainstorming ideas together. We didn't know what we wanted to work on, but we knew the team was a strong, team. And that was really the basis of starting the company was first and foremost the team, and then we stumbled into the idea. Yeah, I think one thing that people find quite inspirational about Airbnb and the story is that it came from a design forward perspective, which is quite

rare. And, you know, when I think about what they saw in you, I'd be interested to hear what Joe and Brian saw in you, but I'm sure a lot of it was also your technical expertise. You're working as an engineer. You knew how to get this off the ground. I'd be interested to hear more about what you saw in them. How did you identify that these designers would have what it took to build this great company?

In a way, it makes more sense to me what they're seeing in you, but less sense to me what you see in that. Well, in parallel around this time in 2007, I was working on a number of other things on the side. And one of them was a, for example, an ad network for Facebook, or that plugged into Facebook, creating social ads. And I did all this technical work to make an ad server, et cetera. And I launched it.

I'm so excited. And then I realized that, you know, the tech was just a small, small part of building a business. I needed to go out and attract publishers and advertisers and there's like just all this other stuff that needs to happen. And I realized that's not my, my passion doing those other things. And that it, you know, really does require a team. So I had come fresh off that kind of learning or reflection of like, you know, wow, I'm a great builder. But to build a real business requires a lot of different skill sets. So that was one. You know, I think also, too, just, you know, the camaraderie of it

all. It's hard going it alone. It's a lot more fun to go with a team. So, you know, the idea of team and a team that kind of complements your skillsets. And, you know, three, I think in them was just an incredible degree of passion, creativity, boldness. You know, they were not shy about kind of going out and really, you know, talking about new things and getting attention in a way that maybe wasn't natural to me, especially at the time. And then there's the fact that we had to lift together. And so we were, we were quite comfortable with one another. It wasn't like we were meeting for the first time. Yeah, I feel like the passion element is almost the most important thing. You could study anything. But so if you don't have the passion and the energy and the

drive, then you're going to go nowhere. I would also just say that this requires a great deal of evangelism, right? I mean, we were kind of pioneering a new human behavior in some ways that was counterintuitive. Right. And that story from October 2007 where they rented out the apartment, you know, that took initiative, evangelism. They did it. And, you know, that story continues in the early days where, you know, Brian was one of the first guests using the product. And they were going out into the field and meeting all the hosts and taking the photographs themselves.

And I would later become a host. But, you know, I think, you know, all that is really important. And with their design background, I think they were intensely interested in kind of interviewing all those early adopters and understanding their feedback, gathering feedback as part of the design process. So I think all that was really beneficial. I feel like all of this was almost perfectly encapsulated in this very famous serial stunt, which I'd love for you to explain. in the story of, just to set it up, Airbnb, you guys are starting to get going, but you are running out of money and you're trying to think of ways to make money to keep the business alive and you come up with this idea that has to do with cereal. Could you explain what happened

there in the story of the serial stunt? So just in terms of the timeline here, you know, October 2007 is when we rent at, Joe and Brian rent out the extra room. A couple months later in basically February of 2008, three of us, you know, start building, you know, airbed and breakfast as you kind of start to know it today. We launched that in August of that year, so several months later. And now we have launched it and that was exciting, but no one's really using it after launch. And it's coming up on a year now and we haven't made any money and we've had, the expense of the apartment and all this. So we're getting kind of desperate. And I guess I should add that when we launched in August of 2008, it was during the time of the Democratic National Convention and the Republican National Convention. And specifically, this is where Barack Obama received the nomination of his party to be the first African-American presidential candidate. And it was an historic event. And it was going to be held in a stadium in Denver that helped 80,000 people. And we looked up that Denver only has 17,000 hotel rooms.

So we knew there was going to be a need for extra accommodation. And so we focused on this moment as the right launch opportunity. And it was very successful. We got hundreds of people staying on Airbnb in the span of a couple of weeks. And we were on TV, on CNN, talking about what Airbnb was in connection to the DNC event in Obama. So it was tremendously exciting. But a few weeks later, it was gone. It was a flash.

and nobody cared anymore and yet we had all these political reporters that we had met and we're thinking to ourselves how do we generate some more attention for the company? We have all these reporters that we met

how do we make ourselves relevant to them again? And somehow, Ryan and Joe have this crazy idea one night that we should create a presidentially themed breakfast cereal. Again, our name at the time was Air Bed and Breakfast.

So they're thinking breakfast. Let's do something fun with the breakfast concept and do something that would be relevant to all these reporters we met and somehow basically do a stunt. Okay, so they come up with this concept of creating ObamaOs

and Captain McCain's. These are breakfast cereals. And they come up with a tagline for each. Obama owes is hope in every bowl. Captain McCain's, a Maverick in every bite, as he was a kind of a, I think a Navy captain or something in his

and they come up with artwork for these physical cereal boxes that they're going to create and a lot of witty humor on it. Yeah. And they use their contacts from Rhode Island's World Design to get the boxes printed officially at a printing press, free of charge, actually. And they do this whole thing to create it. And I remember, first of all, when they told me about this idea, you know, my response was, if you want to do this, promise me you're not going to spend any money.

Because we didn't have any money, and this sounded like, you know, a whole effort to create cereal and it was going to potentially cost money. So I said, do whatever you want to do, just don't spend any money. Meanwhile, I'm going to stay focused on, you know, building the website for airbed and breakfast. So they go off and they actually, you know, create these really compelling, funny cereal boxes without spending any money because they're very scrappy. And we send the first 100 boxes of each to those political reporters that we had met. And the idea was we could email them, but, you know, they get emails all day long to probably delete them. if they received this physical box of the mail,

they're going to have to call us back and want to know more about it. And so that was the idea, and we did it, and it worked. We sent out these boxes, and soon enough, as soon as they were received, we ended up being on Good Morning America. We were back on CNN, talking about the serial, talking about its connection to the company. And we also, we had extra boxes printed off. So we had 500 boxes in each of the first 100 we sent to the reporters.

the other 400 we numbered and called them like limited edition collector's items. And we created a little website for them where we sold boxes of cereal that you could buy and we priced them at $40 a box. Anyways, when we were on CNN International, that became the number one political video of the day, us talking about the cereal. Wow. And we sold a $40 box of cereal every three minutes until we sold out. And so we made about $30,000 selling these cereal boxes in the span of that week.

and we like to say that that's more money than we made all year on our core business and materially helped us to pay the rent and a few bills and so that was kind of funny and kind of cool and we thought to ourselves

maybe we should become a serial company except if only there was a presidential election every month to generate that kind of interest so we knew that wasn't the answer but the truth is also it didn't really help our core business right? It wasn't helping us to rent more rooms in that moment. It was a funny story. It sold soupbox and cereals. It allowed us to earn $30,000,

but it wasn't selling more rooms on Ayrbed and Breakfast.com. Where this story becomes transformative in terms of what it did for us is a few months later. A few months later, it's now at the end of 2008. It's been one year. We're about to give up. And we say, before we give up, we have to give it one last chance. We had gotten some advice that we should apply to Y Combinator, that that would be a great way to re-energize ourselves and re-commit and give it like one last chance with some good mentorship.

But before you can do Y Combinator, you have to get into Y Combinator. And Y Combinator is incredibly selective, incredibly popular, and has a very low acceptance rate. Yes, this is the exclusive startup accelerator, very much exclusive. at the time, too. Absolutely, right.

And so we managed to get an interview, which is incredible. So we go into the interview, and the interview typically lasts about five minutes. Very quick. And you're in there, at least at that time with maybe four other people. One of them was Paul Graham, you know, the founder of the program. And I remember we go in there for the interview. Well, I'll back up. Before leaving the apartment to go to the interview, I see Joe putting a box of Obama

into his backpack to bring to the interview. And I said, Joe, what are you doing? Why are you bringing the Obamos to interview? I said, don't do that. That, to me, was an embarrassment that we had spent so much time on Obama's. I mean, it was a funny story, but it had nothing to do with our business being a likely success, in my mind, at least. Because to me, it represented distraction. As an engineer, I saw it as having been a distraction because it's a cool story, but it honestly took about two months of time to pull all that off.

so just is okay i won't bring it so anyways we're now at the interview we go into the room we have five minutes within two minutes paul graham says what strangers staying with other strangers and people's homes i would never do that that's that's strange that's weird you know i don't like that idea like he had a like a really negative reaction and then he kind of pivoted the conversation towards like well you know you guys are handling money and payments like maybe you should start a payments company and he basically went on to describe stripe. So the last few minutes of the interview we're basically spent with him pitching us on what we should be doing. And then the interview was over. And we knew that, you know, that was not a good outcome, right? Like that interview had gone off

the rails. And so we're walking out the door and suddenly Joe pulls out of his backpack, a box of the Obama owes. And he says, oh, Paul, before we leave, we wanted to give you this. And Paul looks out and says, what, you guys bought me a gift? He's just looking at it mystified. And he's just looking at it, mystified. And we said, Joe said, no, we made this. And he's still looking at it. He says, well, sit back down and tell me how you made this. And so we get five more minutes with him. And we tell him the story of Obama and Captain McCain's. And, you know, the whole kind of stunt we pulled off and selling $30,000 worth of cereal. And then we leave the room. And later that day, we get a call. And the call was that we were accepted to Y Combinator. And he later told us that we were

accepted into Y Combinter, not because he liked Airbed and Breakfast, the idea that we pitched him on. He actually really did not let that idea at all, which was clear. He accepted us into a Y Comiter because of the serial story. And what was powerful about the serial story to him

was it represented how scrappy we were and how we would never give up, right? With our backs up against the wall, needing money, we come up with a very creative idea to generate publicity, and and earn some extra dollars, you know, really quick.

And he said, you know, he needs to hire or not hire, but, you know, led into Ypomator, those who can actually build and execute. And so we demonstrated that we could build, that we could execute, that we were scrappy, and that, you know, we were not ones to give up, even when things were tough. And he said, you know, especially at that time, this was now 2000, end of 2008, the financial recession had begun. You know, he was looking for founders. We're really tough.

who would have the perseverance and never quit. And so that's what he saw in us when he heard the serial story. And so that's the real power of the story of Obama O's and Captain McCain's that demonstrated our scrappiness and our perseverance. It's so interesting because to your point

when you were going off to the interview at Y Combinator, it's true that what you did was maybe a waste of time, maybe it was a distraction, Maybe, you know, you should have been spending more time figuring out the idea. But at the same time, it had this incredible payoff because it demonstrated the grit, the determination, also the creativity, the excitement, the energy. There was clearly just this spark that you decided in that moment, or perhaps maybe Joe decided in that moment, that he was going to follow. And it's interesting to me because both of you were right.

You were right in the fact that it's a distraction, but he's also right in the fact that sometimes these things are important. It's important to follow whatever the passion is and whatever the spark is. And so I'd be interested to hear how you view that as you sort of scale a company. Like how do you balance those two competing narratives where on the one hand, maybe we should be focusing on what really matters logically, but on the other hand, maybe we should just be spending frivolously on things that excite people and capture their imagination? Well, I think from the beginning, we, you know, the whole team was formed on a respect, you know, for one another's strengths and the value of different perspectives.

And, you know, this was reinforced, you know, by us getting into Y Comrader based on the serial box experience. And so, you know, we're becoming to really realize that, you know, Although we see things differently, that the different perspectives are super valuable. We have real, real value that we're each bringing, and we want to preserve that going forward. And we've always felt that Airbnb is kind of like a three-legged stool. And, you know, if any one of us were not a part of it, you know, the stool would have tipped over. And that Airbnb is also kind of the marriage of art and science. And both those things are equally important.

And so, you know, I think what that allowed us to do as we went forward was just make sure, you know, each of our voices were heard as we made important decisions and respect. And I would say that, honestly, it led to a lot of conflict because when you see things differently, you disagree. But because we respected the value of each other, you know, based on the experiences we have had thus far, the friendship, you know, we had the patience to listen and find compromise. And compromise was always the best outcome because compromise meant we were taking into account, different perspectives and meeting in the middle. And I think that was just a really powerful thing.

And it's really become a neat part of the company's culture. We'll be right back. Support for the show comes from Basecamp. There are so many project management platforms out there through a virtual rock and you'll hit a few. And most of the platforms promise all kinds of bells and whistles that they say will revolutionize the way you work. Well, Basecamp is for the teams that don't need a gimmick. It's the project management system that is straightforward, simple to get started, and easy to organize, period. The built-in message board means fewer emails, the shared to-do list means transparent delegating and clear due dates.

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We're back with first-time founders. Just going back to what Paul Graham thought about the idea itself. You know, he thought that having strangers live in, other people's homes was not going to work. He didn't want to do it himself, bad idea, but he was betting on the creativity and the determination of the founding team. Maybe he was right, but I kind of think he was wrong. I think in hindsight, I mean, hindsight's 2020, I think your idea was correct, and you'd proven it. So tell me more about what Paul might have gotten wrong. And I'd be interested to know if you feel as I do that you guys

actually were correct from the very beginning, that this was something that the market always needed and that you provided. Well, clearly, we were ultimately correct. I think the biggest kind of entrepreneurial ideas tend to be ones that are non-consensus where it's not obvious, right? And so this is obviously not an obvious idea. And that doesn't mean that all non-obvious ideas are good ideas. But why was this one a good one? And how did we know? Well, I think it's because we experienced it firsthand, right? We, Joe and Biden were the first hosts. And they viscerally felt the power of the experience, right? It wasn't just an economic transaction. Like, they met people. And it was really transformative. And like, friendships arose out of that. The guy from India who stayed with

them, two years later, invited them to his wedding. It's hard to capture the power of that when you relay it as part of a pitch or whatnot. So there was that. I think as we started building the product and using the product, again, we were very close to the experience in the customers. Brian was amongst the first guest using the product and many learnings came out of that. We were, you know, interviewing all those first users and, you know, understanding, you know, why they were doing us, what their questions were. What was powerful about the experience. And all that really, I think, gave us conviction that we were on to something special. Maybe most people didn't see it, but those who were brave enough to try it and were actually using it were coming away transformed. And so the only question was how can you get people over that initial hump, that trust hurdle. How can I trust a stranger? Once they trusted the stranger, once they trusted Air Bed and Breakfast or Airbnb, then they were transformed. And it was hugely successful,

and they were huge advocates. So it was just about that initial hurdle on how to get over it. And, you know, this is where design comes into play again, right? It's kind of a design problem. How do you create trust? And, you know, I remember one of the things in early hosts said, And he said, you know, all my friends think I'm crazy allowing strangers in my home. And he said, I see it as a stranger is just a friend I haven't met yet. You know, that's a really beautiful thing. And we also noticed that when you talk to people about this idea and you framed it as strangers, of course, they hated the idea.

But if you framed it as, you know, would you like to host a guest who is from your alma mater, you know, who is from your university or, you know, in your professional field? or, you know, like, if you, if you added some context to it and demystified who this person was, you know, people would actually get really intellectually interested in and be like to, yeah, you know, I would like to consider that. I would be interested. And so as we started to design the website, you know, the three kind of core pillars to creating trust were just three things. One was rich user profiles. So we were going to show you a picture of the guest and of the host and, you know, who they were and like where they went to school.

what did they do professionally? We try to build out an image. In relative to something like Craigslist, where you had no idea who was posting the advertisement. Our whole thing was let's demystify who the person is and humanize it. Second, when it comes to handling the money, the transaction happens through the platform, so you're protected.

You can't really have financial scans on Airbnb because the money is paid to the host only after this day, successfully kicks off. And so, you know, that addressed that potential problem. And then third was the review system. The fact that at the end of this day, the guest reviews the host, the host also reviews the guest. This creates a powerful incentive for both actors to follow through on kind of what they've committed and be good guests and hosts. And then also, you know, both parties accumulate reputation over time as a result. And so just these three things, I think, were kind of the initial

building blocks to creating trust on the platform. Of course, the whole design of the website too was very friendly and inspired trust. And again, I think that the design background of Joe and Brian specifically, you know, helped us to achieve that. It's such an interesting problem that you solve. I mean, you think about the kinds of solutions that people are trying to create when they're building companies. I love the way you put that. You're basically, the problem you were trying to solve is How do we turn a stranger into a guest? What is the difference between those two things? And how do we, as a company, make that shift?

And it's just a fascinating problem to be solving. And I'm sure a lot of people would find that very inspirational, what you just said. What was the point at which you realized that you had something really great? I think a lot of people, a lot of founders, they have their inflection point. They suddenly, something happens, and they go, oh my gosh, I'm actually onto something.

What was that moment for you? Well, everything changed over the course of Y Combinator. We'd go into Y Combinator and we'd been making basically $200 a week for the last five months. And nothing we did seemed to change that. And our goal over the course of Y Combinator was to achieve $1,000 a week in revenue. And actually, at the end of Y Combinator, and it's a 13-week program at that time. So 13 weeks later, we go. from $200 a week to actually over $4,000 a week.

So, you know, vastly outpacing what we thought was an ambitious goal. And coming out of Y Combinator with that kind of growth trajectory, we were able to raise our seed round from Sequoia Capital. And so we went from a place at the end of 2008, at the start of Y Comeromater, really thinking that we were ready to quit. And Y Comer was our last effort to give it all we got. but we had a verbal agreement that if by the end of Y Combinator things weren't in a better place, we would quit and we would support each other in that decision because nobody wanted to abandon the other two.

And so we kind of agreed up front what the parameters were for kind of the go, no go at the end of Y Combinator. Well, anyway, so at the end of Y Combinator, things are on a vastly different trajectory. And that's because over Y Comiter, we're focused on New York City and photographing the listing in New York and meeting the users and a whole bunch of things happen, which I can talk about if you like. But coming out of that, we get introduced to Sequoie Capital, one of the top firms in the world for venture funding, someone we never thought would be interested based on where we were just 13 weeks earlier. And they end up funding our seed round. And so that was an incredible validation and gave us a whole injection of confidence.

Over the course of the remainder of that year, by August, we're making, I think, $12,000 a week. So it continued to ramp aggressively over those months. At that point, in 2008, is primarily a business that was taking place in New York City, and this is 2009. Over the course of 2010, it continued to grow and branch out to maybe five or eight more cities. Most of the business was happening, including places like Paris. But these were like top destinations in the world. And then it was really 2011 where just things weren't bananas. And we started the year 2011 with 40 employees.

We ended with 400. We became an international company opening 12 offices around the world. And, you know, really racing to build a global network. And so I think we were ecstatic in 2009 where that changed in trajectory and we had a lot of confidence. But there was always this question of, you know, is this a business that only, make sense in New York City, where hotels are incredibly expensive and where everyone in the world wants to go there, though? Or does this generalize and become kind of a global phenomenon? And, you know, starting in 2011, we were able to demonstrate this is truly a global business.

You know, and by 2013, it was literally everywhere all around the globe. What do you think happened in 2011? What took you from 40 employees to 400? Why did it explode in the way that it did? Competition. Competition. Competition. As it. has a way of accelerating things. Yeah. So up until that point, we had been very quiet about our success. But by 2011,

word of our Series A fundraising had gotten out. Series A had happened in April of 2010. It was a $7 million raise at roughly $70 million valuation. Based on that news, there was a number of European serial entrepreneurs who kind of took up the idea

and wanted to be the Airbnb of Europe. So by 2011, these two new companies kind of emerged and we said, well, hey, this is inherently a global idea. Travel's inherently global. You know, we need to be the Airbnb of Europe. We can't have

others taking that when we're a travel company. So it kind of set off a race and these companies were based in Europe and we said, well, we have to be, just as local as they are. So that motivated us to open local offices in each of the most important countries from a travel

perspective, places like France and Spain and Italy and Germany, et cetera, and hire local teams who knew the market and vigorously recruit kind of new hosts to the platform and really take a more active role in, you know, building the marketplace and scaling it quickly. So we kind of went from what I call like kind of a peacetime mentality to a wartime mentality where we were, you know, leaning in and not letting it just grow organically. We also raised a lot of money that year. We raised $100 million in May of 2011.

So that gave us the capital to, you know, also really lean in on the investments and grow the business. The moment that competition comes in is so interesting because, as you say, from 2007 to 2011, you're trying to prove to people that you're right. And as you say, you're the evangelist. You're walking into boardrooms and meetings, saying, we know you don't think that this makes sense, but trust us, it makes sense. We really want to prove to you.

And suddenly, once the competition gets involved, it's like, oh, my God, okay, we're right. This is legit. And it's so interesting that sort of shifted. mindset that every entrepreneur who succeeds has to go through where you have to shift from, I'm going to try to prove to everyone that I'm right. And now I know I'm right. What do I do with that? So I'd be interested here, it sounds like, you know, the wartime mentality beefing up on fundraising. But are there any ways that sort of your management principles changed during that time? Maybe the way that you conduct meetings, maybe the way that you have. Maybe the way that

you hire, maybe the way that you speak to employees, what was some of the changes that you felt happening from a management perspective around that time? Well, I mean, I think first, I think you're exactly right that this was when was an inflection point from, you know, this is still kind of non-obvious to this is obvious because in April of 2010, we raised money at roughly $70 million valuation. And when we raised again one year later in May 2011, it was a $1.3 billion valuation. But I'll tell you, leading up to that, there was a lot of skepticism. There were a lot of investors who loved, were excited about how different this was and how it was growing, but they weren't ready to step up and bring the valuation up to that

high. And then suddenly, the round was oversubscribed and the valuation was pushed up even higher than we thought, you know, it would be. We were targeting a billion and ended up being 1.3. But leading up to that for months. Nobody wanted to go maybe about $500 million. So anyways, the perception really shifted over those months. And, you know, it was also because we were buckling down and going from like the peacetime to wartime kind of way of operating the company. And what did that mean in practice? I mean, first we had to had to recruit and, you know, hire these country managers. And so there were a dozen countries we were hiring for, and how do you do that in the span of just a couple months? We had to move really fast.

And these competitors that we were up against, these were serial entrepreneurs, they were moving very fast. They had existing operations and people whom they could repurpose to this project. So I remember, you know, one of the companies was founded by the San War Brothers, also known as Rocket Internet. they've cloned many kind of Silicon Valley companies successfully and I remember them reaching out to us and saying,

hey, look, you know, you can acquire us now and we can work together or otherwise we're going to be the Airbnb of Europe. It's pretty much the bitch. And so as, you know, part of that, we had to take it seriously

and we had to go meet them and so we'd fly out to Berlin and we go to their office and, you know, meet their team. And they had 200 people in that office. And back home, we had, you know, maybe 60 people. And so it was clear that the competition had an ability to scale that we just weren't used to. And part of that reason was they had existing people and assets that they could just repurpose and segue into this new company.

But we realized we had to move really fast. And so, you know, we found a few regional partners, investors who were well connected with entrepreneurs across Europe. And, you know, in the span of just weeks, you know, Brian and I and Joe, we flew around and, you know, interviewed these guys and, you know, made decisions quickly and, you know, just did things that we wouldn't otherwise be doing. I think we would otherwise have been back in San Francisco looking at mockups, a product. And instead, you know, we were meeting in airports across Europe, interviewing country managers and, you know, making decisions within a week or two about, you know, who we wanted to hire and giving them permission to set up an office. you know, a budget to build a team. So, you know, it just was a whole different kind of mentality and definitely outside of our comfort zone. But frankly, we were very worried. We were worried that we weren't going to exist in Europe because this competition had such a track record of, you know, successfully cloning Silicon Valley companies. We'll be right back. Basecamp is a project management platform that strikes the perfect balance between straightforward simplicity and powerful capacity.

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Sign up for a free account at Basecamp.com slash founders. That's basecamp.com slash founders to sign up for free. Get Somewhere with BASECamp We're back with First Time. We're back with first-time founders. How many moments, when you look through the history of the company, from, when you're, it's three of you basically with just an idea in a dorm room, essentially, to this giant global, iconic public.

company that it is today, how many moments are there in that journey where things could have gone to zero? I mean, the first that comes to mind is you're walking out of that Y Combinator pitch meeting and Joe decides to pull out the cereal box. That was a moment where it was zero versus today. Perhaps this interaction with the competitor in Europe, that might have been another moment. How many of those moments can

you identify and is that something that every founder has to deal with if you're scaling from zero to what you are today? I think there's two others. There was the summer of 2011 where we had our

first major trust and safety incident and trust was really violated and it became a very public incident and we had to basically regain the trust of our community. And, you know, what I'll say about each of these, you know, the importance is to treat them like a crisis.

And I talked about peacetime versus wartime, but maybe another way to say it is like to recognize that you're in a crisis and not just try to manage the crisis away, but recognize that a crisis is a transformative opportunity that can make a good company great. And so you're not just trying to survive a crisis, you're trying to transform yourself over the course of the crisis. And so, you know, with the international competition, you know, it was a threat that could have, you know, sent the company to zero, I suppose, over time. But actually, it made us so much stronger because it motivated us to grow and become more local

and all these countries around the world. And likewise, with the trust incident, when that happened, instead of just trying to treat it like a PR incident and minimize it, you know, we leaned in and we said, everybody, stop what you're doing. We want everybody in the company to work on building trust and safety features for at least the next few weeks. And we want in a few weeks to make an announcement about all the innovation that we've done in the space of trust and safety. And so literally about two weeks later, we were able to announce 40 new features that were designed to make Airbnb that much more trustworthy. And I think the idea was like, we wanted to go above and beyond what customers expected. And so, you know, a lot of those features are still with us today.

Like, for example, the idea that with every booking, there is protection against damage included free of charge. And there's, you know, dedicated customer service. There's a dedicated trust and safety team. You know, a lot of this stuff was pioneered in that moment. And, you know, at the beginning, like, there was a lot of doubt about, you know, can we do these things well? Like, is this actually a good idea? Like, what if something goes wrong? Are we liable?

etc, et cetera, et cetera. But, you know, we took the moment, seized the moment, and innovated and led with boldness. And a lot of that lives with us today and made us, you know, a stronger company. So you identified two moments. That's the trust and safety one is the third moment. There's a fourth moment, which is the pandemic. In the span of eight weeks, our business dropped 80%. And, you know, what was worse was we didn't know how long this was going to last for. And of course, at that point, we have like roughly 8,000 employees. So we have a tremendous burn rate, and yet suddenly there's no revenue coming in, and we don't know how long that's going to last for. And of course, the whole market is in crisis, and so it's not a

good time to raise more capital either. And so, you know, that was a moment where we wondered, like, what's going to happen? Can we adjust fast enough to course correct? And ultimately, we went through the pandemic and came out way stronger, way successful, and actually went public that same year quite successfully by the end. end of 2020. And so that was probably the fourth time where I think, you know, it could have gone to zero, but because of decisions we made and kind of leaning into the crisis and coming out stronger, you know, made it not only not go to zero, but become a much more valuable company. I feel like inherent to all of those moments and the way that you dealt with it is

this almost respect or fear for your own mortality. It's like a crisis arises and instead of basically resting on your laurels and saying, you know, we're great. Look at our track record. We're great. You're saying, no, we need to really reckon with this. This gets at the heart of who we are. This could be the end of us. And I think that's clear to everyone when you're just starting out as a company, or even when you're raising your early rounds, your A or your B, I think that sense of, that feeling of mortality is very strong. I think there is a feeling among most people that as you get bigger and bigger and bigger, once you become Airbnb, once you become a massive company, you don't have to worry about that anymore. And I'd like to understand from your

perspective, does that fear ever go away? Do you ever think, is there ever a moment where you think, we're fine now? We'll definitely figure everything out. Or does it always live inside you that, you know, there could be a moment where things go to zero? Look, I don't think things are going to go to zero realistically, right? At this scale, and given, you know, how ubiquitous Airbnb is around the globe. So I don't think that's realistic, even in a crisis. But I would say we definitely don't have any complacency. And for a couple of reasons.

One, I think the opportunity is so much bigger than we've realized at this point. I mean, I think conceptually we realize it, but in terms of the size of the company today, I think it could be so much more. I think there's so much more to be done in travel. I think there's so much more that we can do leveraging our host community to create really special experiences. And so I think there's an opportunity ahead of us that's so much bigger. And it's hard to rest or get comfortable when you see such a big gap between where you

are today and where you want to be. So the ambition is still so much bigger than we've captured or grown into. So I think that keeps us very hungry. I'd also say that having had those four experiences I mentioned, we understand that a crisis this is a terrible thing to waste. And so, whether it's a crisis or not, these challenges are real opportunities. And I think when we see them,

I mean, they are, of course, scary and not fun, and no one would wish a crisis. But at the same time, you know, it immediately gets us thinking, how can we come out stronger? You know, what's the silver lining here? Happen we better ourselves. And so, yeah, I think we're just always looking

for opportunities to innovate because we know that opportunity is so big and we know that in difficult times there are hidden opportunities. We're going to start to wrap up here, but just as you look back at what you've built and this pretty insane journey that is very unique in terms of lives,

a life that you can live, you've had a pretty interesting one. What has the whole journey taught you? about humanity? What has it taught you about people? What have you learned about the human experience from building this company? As I mentioned, the real innovation here is around trust.

That was question number one from day one. And we always had a point of view that people are fundamentally good. I think we've proven that. the fact that 2 billion people, two billion guests have arrived into other people's homes over these last 17 years, that's a huge number. So we have 2 billion data points.

And not every trip is perfect, but the vast majority are very, very positive experiences. You can read the reviews on the website. Most guests leave reviews. So we have, you know, numerical data and, you know, written prose describing these experiences. And again, the vast majority of people are good. And I think there's a hunger for travel and for seeing the world and understanding different cultures. You know, if you look at the trends for international travel

going back to the 60s, it's just been exponential growth and continues to be the first thing people want to do and they have disposable income, including developing parts of the world, places like China, India, whatever, you know, you're just seeing tons of interest in people leaving their own kind of home country, their own experience, and seeing the world, seeing what's out there, connecting with others. And so, you know, I think that's really an inspiring thing because, you know, I think ultimately it makes the world a smaller place that fosters understanding. We need that more than ever in these at times of everything being politicized, we need to understand that behind, you know, the politics and the ideology. There are, you know, ordinary people who are much like ourselves, who, you know, want to

meet people, want to have good times, you know, want to be financially successful, and are willing to work hard. And, you know, that's true all around the world. And, you know, we create a marketplace, a platform where people can do that, where we can make these connections. So, you know, I think very much there's a shared mentality out there around entrepreneurship and being a global citizen that we've kind of tapped into and, you know, is popular in every country of the world, especially as people get to experience it themselves. You know, they get a lot of satisfaction out of it. Nathan Blachosick is the co-founder and chief strategy officer of Airbnb.

Nathan, this was really informative and also inspiring. We really appreciate your time. I enjoyed it very much. Thank you so much. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research associate is Dan Chalon. Thank you for listening to first-time founders from the Vox Media Podcast Network. We'll see you next month. with another founder story.

Thanks to Basecamp for their support. Basecamp is the no-nonsense, streamlined, practical, reliable, and simple project management platform you've been waiting for. Stop wasting time toggling between endless apps and services, drowning in email chains, or wondering if so-and-so messaged you know who about that thing that they needed to do yesterday. With Basecamp, all your communications, tasks, deadlines, and schedules are in one easy to navigate place.

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