The Prof G Pod with Scott Galloway - Scaling Airbnb, Founder Mode, and What’s Next for Travel — with Brian Chesky

Episode Date: October 17, 2024

Brian Chesky, the co-founder and CEO of Airbnb, joins Scott to discuss the latest for Airbnb including their Co-Host Network, how the company views AI, and how it is a leading indicator for the broader economy. Brian also shares his thoughts on his viral moment around Founder Mode and what’s next for the platform. Follow Brian, @bchesky. Scott opens with his thoughts on private equity firms pouring millions of dollars into acquiring HVAC, plumbing, and electrical companies, per the WSJ.  Algebra of Happiness™: don’t keep score.  Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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can learn from each other. Listen in and subscribe to The Current at thecurrent.com or wherever you get your podcasts. Support for Prop G comes from BetterHelp. It's really empowering to face your fears. And now that we're fully in the Halloween spirit, you can have a lot of chances to seek out the things that make you jump. But what about the rest of the year? Online therapy with BetterHelp may make it easier to confront the things that scare you, not just Halloween, but throughout the year. It's entirely online, designed to be convenient and suited to you and your schedule. Visit betterhelp.com slash profg today to get 10% off your first month. That's betterhelp, H-E-L-P, dot com slash propg. Support for PropG comes from Anthropic.

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with botox for beauty pageants has lost custody of the child her daughter didn't look surprised go, go! Welcome to the 321st episode of the Prop G Pod. In today's episode, we speak with Brian Chesky, the co-founder and CEO of Airbnb. We discussed with Brian founder mode and how Airbnb is becoming a leading indicator for the broader economy. We also dive into how Airbnb is leveraging AI and what's next for the platform. Okay, I'm back in New York. What does that mean? I have self-care in New York. First off, my place here is very Zen. No kids, no shit everywhere, no like climbing walls. That's

not true. I have a climbing wall in the kids' room, everywhere, no like climbing walls. That's not true. I have a climbing wall in the kid's room, but it's more for show. It's more meant to signal like what a nice dad I am with a kid's room and I got the skateboards and everything that they don't use. But I'm mostly here for self-care, acupuncture. I do my Botox. I'm actually, if you can't tell, I'm actually crying right now. Anyways, I'm also starting this thing called NAD. And as far as I can tell, that is something that rich people do to try and pretend we can live forever. I'm spending so much time and money on self-care, and I think it's a little bit like the alternative investments universe where wealthy people like to think that they can beat the market so they pay some very credentialed person to underperform the

market by the amount of their fees. I'm not sure a lot of this is worth it. I'm actually a little fed up. Also, when you get this NAD treatment, it takes two to three hours when some lovely young woman comes over and sets up an IV and then puts basically liquid nausea into you. And I keep telling her to slow it down because I don't want to throw up in front of her. But for that nausea, I better look like fucking, you know, Macaulay Culkin in the first Home Alone. I want to look like, you know who I want to look like? I want to look like Barbra Streisand in the first Yentl or the Yentl. Papa, can you hear me? I want to look like a young Barbra Streisand. It could happen. It could happen. OK, what's happening? What's happening other than

Babs comes to New York? A big story from the Wall Street Journal. Private equity firms are spending millions of dollars to purchase HVAC plumbing and electrical companies. That's right. Private equity is coming to a van parked outside and a guy looking to fix your heater. According to PitchBook, private equity investors have purchased nearly 800 HVAC plumbing and electric companies since 2022. Why are they doing this? The Wall Street Journal reports that investors see the skilled trades as ripe for opportunity. Also, it's an industry with recurring predictable revenue, air conditioners break, boilers need upgrades, etc. I also think probably the biggest thing here is that there are supposedly tens if not hundreds of thousands of small businesses owned by boomers that have no succession plan. Their kids want to be baristas or go back and get their master's in philosophy or go touch Indians or whatever it is they're going to do.

And they have no interest in taking over dad's air conditioning repair company, despite the fact these are really good businesses. And so there's no succession plan, which means, and they're good businesses, maybe doing one, three, $5 million, $10 million, which means they're ripe for acquisition because someone just wants liquidity and an exit and probably says, okay. They've been doing this with dental clinics. I've been rolling them up and saying, all right, you stick around for four years. We'll bring in another dentist who we pay less. You'll get an exit, you'll get some liquidity, and we get to buy a business, a solid business with a built-in customer base, pretty low, multiple of EBITDA. And then we can roll them up and kind of consolidate the backend, bring some efficiencies around marketing, around technology. I think this makes a lot of sense. Now, people will say,

oh no, it's private equity showing up the bad guys. I don't think that's true at all here. I think it's giving a bunch of dentists and people who own small businesses in the trades an exit. So I think it's a good thing. We've previously spoken about the shortage of skilled tradespeople, labor shortages worsened by the impact of COVID-19 have increased competition for workers driving up wages in these sectors by over 20% since Q1 of 2020. There are a lot of jobs in the Main Street economy, and there's a critical need for these trade skills in the U.S. According to McKinsey & Company, the annual demand for critical skilled roles in the U.S. could exceed the projected annual growth in new jobs by more than 20 times between 2022 and 2032. Jesus, think about that. The U.S. could exceed the projected annual growth in new jobs by more than 20 times for critical skilled roles. Where is

this demand coming from? Infrastructure needs, a surge in real estate redevelopment, and a shift from fossil fuels to renewable energy sources. I mean, this is just such an exciting opportunity. So I really do like to never miss an opportunity to virtue signal. I'm involved in a program that increases funding for continuing education at UCLA and Berkeley because they wouldn't let me call it vocational training. But I think there's an enormous opportunity for the two-thirds of kids that don't end up with a traditional liberal arts degree. So the majority of our kids, hello parents, aren't going to end up with a traditional class degree. And guess what? It doesn't mean you failed. It doesn't mean they failed. And there are a lot of wonderful jobs in the mainstream economy.

The problem is that we shame kids and family. Have you ever been to a cocktail party or a party where all of a sudden under hushed breath, they go, well, little Johnny dropped out of Rutgers and he's home. It's like, oh no, Johnny's a failure and the parents have failed. No, most kids aren't cut out for the traditional liberal arts college degree. There is an enormous opportunity. Gen Z, more young people are turning to trades as they grow to solution with the traditional college path, which is, I don't know, inspiring or encouraging. Enrollment of vocational training programs is on the rise, as it should be,ational-focused community colleges have seen a 16% jump in enrollment since 2018. Students pursuing construction trades increased by 23%, and enrollment in HVAC and vehicle maintenance programs grew by 7%. A Harris Poll done for Intua Credit Karma found that half of Gen Z and 42% of millennials are considering switching to blue-collar jobs, jobs including welding, plumbing, or electrical work. And by the way, just free gift with purchase here, people enjoy these jobs. They like working outside. They're working with people. The day goes fast. They kind of own their own business. I mean,

this is just a fantastic opportunity for young people. There's an enormous, if you will, succession problem around these businesses. These are great jobs, they pay well. This is to a certain extent taking advantage a little bit of income inequality and that there are so many amazing mega mansions going up, but even every home needs a new roof. Every home is thinking about solar panels or energy efficient HVAC. We're going to need tens, if not hundreds of thousands of skilled tradespeople to build all these nuclear power plants, which are going to come back online. What do we need to do as parents and as people going to college? You haven't failed, nor have your parents failed, nor have you failed, if you decide to pursue a career in the trades. Yeah, you want to get a

philosophy degree and be a barista? Fine. And maybe it works out. Maybe you teach, maybe you write scripts, whatever it is you want to do. Fine. But if in fact you decide to work with your hands and make good money, maybe even great money, that's absolutely a fantastic career path. And we need more on-ramps. We need to be more thoughtful about the fact that two-thirds of our kids aren't going to end up with a traditional college degree. Work with your hands. Vocational jobs are an outstanding opportunity for America. We'll be right back for our conversation with Brian Chesky. Support for PropG comes from Mint Mobile. There are times when you discover something so incredible, so game-changingly great,

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Here's our conversation with Brian Chesky, the co-founder and CEO of Airbnb. Okay, here with Brian Chesky, the co-founder and CEO of Airbnb. Okay, here with Brian Chesky, just an upfront disclosure, Airbnb, I am a shareholder. It's one of my biggest holdings. I'm a big fan of the company. Anyways, enough of that shit. Brian, where does this podcast find you? I'm actually in New York, though I usually live in San Francisco. I'm in Airbnb's office here in New York.

Got it. I've always thought, and we'll come back, we'll talk specifically about Airbnb, but I've always thought you guys are a great forward-looking indicator of where the economy is headed and travel trends and consumer spending and what people are spending money on. What can you provide insight into in terms of the economy and travel trends as evidenced by what's happening on your platform. One of the things that I think is so notable in the last year was this the year of events on Airbnb. You know, you saw the Paris Olympics.

We had 500,000 people stay in Airbnb for the Paris Olympics. That's equivalent of like eight Olympic stadiums where the people and 50,000 new homes were listed on Airbnb just for that reason. When Taylor Swift came and she did her international tour, you can literally predict her tour by looking at the rising occupancy of Airbnbs. And it was like a massive phenomenon. And sure, tour generated a bigger business lift than some giant international events that would be in these cities. So we're starting to see like a lot of more people want to gather for events. And why are they doing that? I think people are desiring connection. They want to get out of the house. They want to have a shared experience. They want

to have the experience of other people. This often involves traveling. More and more people are not living in the same city as people they grow up with. And so they have to travel to see them. They do more of these annual trips together. We're seeing a huge boom in ski destinations. That's like really popular. It's like the Austrian Alps, the Italian Alps, the French Alps this winter. We're seeing a lot more people go to Southeast Asia. So basically the summary is that travel is going strong. I think that it's just the very beginning. You know, I think as emerging middle classes form, one of the first things people want to do is travel. And as the economy is strong, more people will travel. So that's what we're seeing. I've heard there was sort of this revenge travel trend after COVID, and that I've actually

talked to some hotel operators saying that actually travel has started to wane a little bit because people kind of got there at it scratched. And now it's starting to come back a little bit. Are you seeing the same trends? We're seeing is like what I would describe as like probably the post-pandemic kind of equilibrium. So during the pandemic, there was like basically three things didn't happen. People didn't go to cities, they didn't cross borders and they didn't travel for business. And so you had this different type of travel that we benefited from that hotels didn't happen. People didn't go to cities, they didn't cross borders, and they didn't travel for business. And so you had this different type of travel that we benefited from that hotels didn't, which is people getting in cars and staying in big homes and more rural or like less urban

destinations. Then you had this huge boom, which I think was a little bit of a natural amount of pent up demand. I think the pent up demand is now subsided. And now we're in the new world. The new world, though, is quite a lot of travel and I think it's going to continue to grow, but it's definitely not like the pent-up demand era of like 2021, 2022. Now we still grow because we grow through all that. And any trends in terms of demographics around who's traveling more, who's traveling less and what it says about the health of our economy? There's a lot more people traveling in groups. You know, before the pandemic, it was a lot of like solo travelers and couples.

Now it's families. And I think there's a couple of explanations for why. I mean, one obvious demographic shift is like, Scott, I mean, I started coming out as 26. I'm like a millennial. And most 26 year olds don't have families. But like, essentially there was a big question when people are in their 30s and 40s, do they age at Airbnb or do they keep using Airbnb?

Well, luckily for us, the answer is they kept using Airbnb. And a lot of those people now have families. So there's a whole generation of people that started as single people. Then they used Airbnb for couples' travels. And now they're using it for family travel. Additionally, I just think a lot of families are now realizing Airbnb is a better solution for a lot of travel than hotels. We have this big advertising campaign.

It's kind of almost like a reference is the Mac versus PC campaign. It's kind of like Airbnb versus hotels. We kind of show that for family travel, for group travel, like people being able to stay in a house, be able to cook together, not be separate in different rooms is really compelling.

So that's probably the big one. The other one we're seeing, we're seeing a couple others. People are staying longer. The length of stay is going up. And I think maybe the answer to that, the explanation is people more flexibility, right? The fact is like 10 years ago, it would be unthinkable for you and I do an interview

unless we were in the same city together. And now with Zoom and this technology, we can be able to do that. So I think there's a lot more flexibility. And then I think people are just traveling to more locations, right? I think, you know, before everyone went to Rome, everyone to Paris, everyone to Vegas, everyone to Miami, they're still going to all those places, but they're also going to a lot of smaller towns and cities and different destinations. I think social media drives that because there's a lot of new destination discovery on Instagram, TikTok and others.

So I follow you and I read your earnings releases and you talked about a new feature you guys are working on called the Co-host Network. Can you say more about that? Absolutely. You know, Airbnb, we're only as good as the homes we have. And, you know, one of the keys to Airbnb is we want to make sure Airbnb is affordable. Well, let's take a city. If a city doesn't build housing, what happens to the price of housing? It typically goes up. If we don't add enough Airbnbs, then the price of Airbnb goes up. So we need to add a lot more supply, literally millions and millions more homes we want to add in the coming years. The number one reason people don't list their home on Airbnb is because they perceive it as being too much work. And it is for some people.

And let's say, like, you live in New York and you have a summer home in Florida or maybe you use it in the winter, actually. And you want to put on Airbnb, but you're not physically there. So either you can host or you go on Google and you type like, you know, Airbnb property manager and a third party property management company that has nothing to do with Airbnb could take over custody of your property. But why that is a problem is the average five star rating for third party property manager Airbnb is only like 4.62, which is not nearly as high a rating as individual hosts. So we thought, what if we took a marketplace approach to this? What if we paired homeowners, people with homes that don't have time, that want to make extra money, with people that have time, they're really great hosts in Airbnb,

and they would like to expand, but they don't have access to property themselves. And so that's exactly what we've done. We built a network of 10,000 co-hosts. These are the best local hosts. The average rating is 4.85. So these are like great hosts and we'll match you with them. And the other thing is not only do we match you, Scott, but we built this really elegant in a software integration. I think when you, if you get your hands on it, you'll, you'll hopefully agree that it's a really beautiful, seamless integration. So they can manage everything about your Airbnb or just the bookings or just the cleaning or just the checking in of guests. You negotiate the rate

with them. And so, you know, it's pretty turnkey. Let's break down the economics. I own a place in Soho and I decide, all right, I want to monetize it or I'm going to get some return on it. And let's just say I can rent it out for 500 bucks a night. If I rent it out for 500 bucks a night, how much would I typically end up paying to Airbnb and how much if I totally wanted to outsource it of that 500 bucks would go to a co-host? I'm trying to figure out the net to the owner. We have a blended take rate of 15%.

So now if you rent it out for $500 a night, you actually get 97% of it because we withhold 3% and then we add an additional about 12% additional guest fee. But let's just keep the math really simple. And let's assume that you're saying $500 a night is what the guest pays, right? Just to keep it as simple. So it's 500 times, you know, 0.15, you know, and that's 75 bucks. Yeah. So that's $75. And then, you know, with a co-host, you'll probably negotiate between 10, 20, 30 percent take rate.

And it's basically what you negotiate and how much they take home. So I think it's very reasonable, even with a co-host, that you could take 60, 70 percent home. We'll be right back. Support for the show comes from Quint. That summer heat is finally starting to cool off. Time to pack away your flip-flops and booty shorts and bust out your cozy cold weather fits. But if you're dreading those clothes,

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You strike me as sort of ground zero for a company that could potentially leverage AI. I want to understand how you're using AI, where you've seen real ROI, where it may have been overhyped. I'm just curious as a business owner that I imagine is being pitched by, you know, I imagine you and Sam have had a lot of conversations and that there's a lot of AI companies that would love to put out a press release saying we're the exclusive AI partner, and maybe you've already done this with Airbnb. But I would like to get one, how you're using AI, and two, just as a business person who has real insight into technology, where you think AI is underhyped or overhyped? I think AI's long-term impact on society is perhaps underhyped. I think that anyone that has a child today,

the world they're going to grow up in is going to be so fundamentally different than they can imagine because of what happens when computers can essentially think. And I think it's going to change society. But I remember in like, I don't know, mid-2010s, there was the self-driving car craze. And people were saying in 2014, 2015, that there would

be very few people that would be driving cars, that driving a car would be anachronistic, like riding a horse, and you'd only do it if you enjoyed it. And while that's probably the long-term truth, we're almost 10 years post the self-driving car craze, and it's still very rare to see a self-driving car on the road. And so I think the lesson here is that this technology is going to have a much bigger impact on society than probably think. But what's that old saying? You overestimate what you can do in a year and you underestimate what's possible in 10 years.

I think we at Silk and Value do that all the time. We invent a technology and we think society is just going to adopt it and it's going to take a lot longer. And so I think that all of us were way too Pollyannish when Chat Shippee launched. And I think we all thought all of our businesses were going to change in three or four years. And honestly, like if I just like, I don't know, here's a good test. I open my phone, I look at the apps on my home screen and I ask how many of these

apps have fundamentally changed because of generative AI and I really can't say very many have, maybe the algorithms are marginally different. There's some interesting kind of on the margins filters that are possible because of AI, but their experience is not that different than a pre-AI startup. So I would say if you think about the stack, you've got the model, sorry, you've got the chips. There's a lot of development there, mostly just NVIDIA. Now there's a huge amount of development at the model level. Obviously, OpenAI was the frontier model, but there's so many others. But there's been very little innovation on the app front.

And I think all of us are trying to basically figure out what is the application interface paradigm in an AI world. One of the comments that Johnny Ive made, he's a designer that I work very closely with. He designed, you know, almost all the products between iMac and, you know, iPad and beyond. He noticed that there was a user interface paradigm of the graphical user interface formed in the 1970s, popularized in 1980s, basically a mouse and a point and click. And then you had multi-touch introduced in 2007 with the iPhone. So a lot of startups are starting to work on these new layers, but, you know, mostly what these startups are doing is scraping data, the kind of same data that OpenAI would scrape or the

data that Google would scrape. And they're just trying to do marginally different interfaces by doing these kind of pseudo, you know, assistants, but the assistants are very chatbot. And I think a chatbot is just, you know, you know why I don't think a chatbot is the right interface for the same reason that like, I have a messaging app, but I don't want to use that to do the calculate, like to, to, to do a computation. I want to open a calculator and I have a different interface for the calculator. So in other words, I think every job wants a different interface. And I don't think we can revert to that, like the universal chatbot interface to be able to handle all these different tasks. It actually is very inefficient for things like travel. I don't think a chatbot is the way to book travel. So that's like my general commentary. Now let's take Airbnb.

I think the thing that will first get revolutionized through AI via Airbnb is customer service. Just to give you a sense, we have a very, Scott, very difficult customer service challenge. We get more than 10 million calls and chats a year. They come from people in every country in the world. And a lot of the calls are urgent, like I'm locked out, there's a problem. And we often have to adjudicate disputes

between a guest and a host that don't even speak the same language. And because we're travel, we have a lot of seasonal workers, right? Like, and so the seasonal workers is a lot of turnover. And so you often call a custom service agent that is seasonal, and a lot of them are new, and they're trying to handle, like, adjudication between guests and hosts. And there's like 100 different policies. And the policies can be like 100 pages of documentation. And so AI can be the front line. It can basically speak every language.

It can be 24-7. It can read the corpus of all your policies. It can also look at the last million times something happened and say, based on that, this is the best predicted resolution. And of course, it can be a tool for customer service agents to provide better service. So I think customer service is the first thing that's going to be reinvented, at least in the e-commerce space because of AI. And then I think the question is, can you bring that customer service paradigm to search?

In other words, can search be not a chatbot, but a slightly more conversational experience where it's not like the Amazon paradigm where it's a search box and filters, but it's a little bit more of this app that's getting to know you, understanding you. It's more personalized. And that would probably be phase two. I've sort of, and I might have this wrong, but I was really just fascinated by the meta earnings call. I think it was two earnings calls ago where he said, and I've never seen this before, we've increased our revenues 23% year on year while decreasing our headcount 20%. And what I've generally found, the analogy I would use is that AI is a little bit like corporate Ozempic in that it turns off the signal we have as managers, CEOs, and directors that just because we're growing, we need to eat more,

or in this case, we don't need to hire more. Have you thought, and I realize this is a difficult conversation for CEOs to have, but has AI given you the sense to maybe rethink if you need more employees and to see how technology can make you more efficient and all? What's happened to your employee headcount over the last 12 months? I went through one of the first big layoffs in Silicon Valley, you know, since the pandemic, we were like a well-known layoff. It was, we had to cut 25% employees, but actually we lost like almost half the employees because we also had to cut 10% of contingent workers. And then when you're a travel company, a pandemic, like people tend to leave you for other hotter fields. So, or other, other industries.

So we ran the experiment of having significantly fewer employees against our will. We weren't looking to do this and something remarkable happened. The remarkable thing happened is that we actually started getting more work done with fewer people. And it was partly because there was a massive communication tax and that like people are in meetings all day and there are meetings all day because people create meetings and you can try to impose things. But it was just it turned

out we had too many people probably. And we we never would have realized that until we kind of ran the experiment of having fewer people. And we actually started getting a lot more done. So then I mentioned this to Mark Zuckerberg and, you know, I'm close to him. And, you know, I think he kind of realized that, you know, there are a lot of efficiencies to be gained. And, you know, I'm close to him. And, you know, I think he kind of realized that, you know, there were a lot of efficiencies to be gained. And, you know, obviously, he made his decisions with this year of efficiency. I'll say this. I think that most startups raise too much money. They hire too many people. I don't think that has to be against workers. I think that they can just be redistributed to other companies, that we should fund more companies. There should be more startups built, but that startups should probably not hire so many people. I think that's a general view I have. AI, I think, is making people marginally more efficient, but I've not seen yet a massive displacement of workers because of AI. You know,

whether it's customer service, we still have mostly agents doing it. And then software engineering, you know, it can make software developers a lot more efficient, but it is not reducing our workforce. And actually, the way this would probably work is we'd probably, if AI made make software developers a lot more efficient but it is not reducing our workforce and actually the way this would probably work is we'd probably ins if ai made everyone more efficient instead of um downscaling the employee base we'd probably try to get more revenue per employee so we wouldn't be doing we wouldn't be eliminating jobs we would hope that the revenue per employee would increase so they have more leverage and we're starting to see this. We're starting to see that what we're seeing is our headcount is only growing in low single-digit percentages year over year, and our revenue is growing faster in our headcount. And I

like that to continue. And so a metric of revenue per employee or free cash flow per employee hopefully will massively increase. We won't have fewer employees. We'll just do more revenue. So you had a bit of a viral moment. You probably weren't planning this. And I just want to say, I thought your comments were sort of taken out of context around founder mode. Talk a little bit about what you meant. And it kind of went wild. My favorite meme was, I'm going to go founder mode on this breakfast burrito. Founder mode, question mark. Let me say this. I'm going to go founder mode on this breakfast burrito founder mode question mark let me say this um I'm not sure anyone really knows that founder mode is because Paul Gurman essay about it but never described exactly what it was so let me just give a little bit of backstory I was asked to go to see a Y to Y comedy or alumni event it was the first time they got

basically a hundred startups that are you know like around a billion dollar market cap or higher later stage companies. They did a basically like a, like a, the quote level conference, they had different speakers. I joined last minute. It was off the record. I remember they'd tell you like, you're going to do this talk and no one's ever going to know you did this talk. It's off the record. There'll be no knowledge of it. So I do this talk off the record. And I basically describe my experience from 2009 to 2019 going through hyper growth. But the problem was I was told a certain philosophy of leadership, which is you hire, you know, hire great people and entrust them, empower them to do their job. And that sounds great, but there was a big missing piece of the puzzle, which was being in the

details and being close. And I had let go. And I noticed this paradox that the more I let go, the more dysfunctional the company got, the more people thought it was leadership meddling. And so the further I got from the details of the company, and I would hire these people and I thought they were doing a good job. And I would find out years later, they weren't doing the job I thought they were doing because I wasn't close enough to the job. So I think Paul Graham wrote this essay. It was a very compelling essay. I think the theory is a really great way he framed it, that there's this orientation that is germane to founders, which is being in the details, having real ownership of

your company, which is different than a classic manager mode. But to be clear, I never said this was something exclusive to founders. Basically, the general principle is being in the details and being very, very hands-on. And it's this basic idea that great leadership is not absence. Great leadership is presence. And then the counterpoint is, well, what about like, isn't this sound like micromanagement? Isn't this micromanagement? And no one wants to work for a micromanager. And here are my two thoughts on micromanagement. Number one, I actually think like a lot of people are afraid to get in the details because they'd be accused of being a micromanager. And I actually think a lot more leaders would benefit from being in the details and model more hands-on leadership. But the other thing is what

Steve Jobs said, because what I took from founder mode, a lot of it was what I learned observing Steve Jobs. And Steve Jobs said he didn't believe he was a man of it was what I learned observing Steve Jobs. And Steve Jobs said he didn't believe he was a micromanager because he said that what I do is I'm in the details, but I'm partnering with the people. And if you ask Johnny Ive, I don't think Johnny Ive thought Steve Jobs was a micromanager. But Steve Jobs visits the design studio every single day. They had lunch every single day together. They were talking. Steve was steeped in every detail of the design of the iPhone, but he wasn't telling Johnny what to do.

They were having discussions. They were partnering. And I think that's the key. I remember one time I had an employee and they asked me, is this your decision or is this my decision? And I said, that's exactly the problem. Every decision should be our decision. This notion of this black and white decision-making authority

between owner and worker, manager and employee is, I think, the problem, that you're kind of partnering with people in the details, working with them. And so that was probably the single most important philosophy, that as a founder or as a leader, you set the pace of the organization, you set the standards of equality, you set the pace of the organization. You set the standards of equality. You set the standard of how much you care. You identify excellence, that you work with the leaders on the ground and you don't defer to them, but you don't tell them what to do. You're constantly partnering with them. And the one reason you shouldn't defer to your leaders is because oftentimes you'll have different leaders come from different functions with different interests and they'll conflict.

And you're the only leader, or maybe if you're a general manager, you're one of the ones that can actually consolidate and have the most global view and make the most macro decision based on all the different inputs. So let's talk a little bit about the company and the stock. And you're a public company CEO,

so you can plead the fifth on anything here or just say you can't comment. But your revenue is two and three quarter billion most recent quarter. That's up double digits. That's up 11% year on year. Net income over half a billion, 555 million, representing a net income margin of 20%, which is very healthy. Adjusted EBITDA of about 8894 million, up 9% year on year, and represented an adjusted EBITDA margin of 33%. These are solid numbers. Airbnb generated a billion of free cash flow in Q2 and 4.3 billion of free cash flow over the trailing 12 months, which is, I think, the most you've ever done. Now, the bad news. Since the company went public, its first trade to retail investors, I figure we went public four or five years ago, it's effectively flat. If you've purchased a

stock, you're effectively flat. I mean, there's been some bumps and some ups and downs. But is this a case of where, quite frankly, you went public in a market that was very frothy and the company is growing into that valuation? At some point, investors are going to get, or shareholders are going to get restless and say, this is a great company that's growing. How come it's not reflected in the stock price? What is it as a CEO? Is it you're going to continue to block and tackle and just continue to stay the course? Do you think it might involve acquisitions moving forward? But what would you say to a shareholder who's been in the stock the last four years and, quite frankly, it's underperformed the rest of the market? I think there's a couple of things going on.

I think that beginning of 2020, we had a private market valuation of $30 billion. Then the pandemic hit and we raised debt and the warrants were priced at $18 billion. So that might be the best proxy for a valuation. In April 2020 were priced at $18 billion. So that might be the best proxy for evaluation. In April 2020, we were $18 billion. Then our goal in the summer was to go public at $30 billion. We don't want the last round investors to be underwater, so we would like to clear $30 billion. And then by the time we priced the stock, we priced it at $50 billion. And then the first day of closing went to a hundred billion. And that was crazy.

And it was not what we expected. I did not think the stock would pop a double. If I did, I probably would have increased the issue price. And we probably at that point had a valuation that was a little ahead of our numbers. We were not generating a huge amount of free cashflow. We were not profitable on an EBITDA basis in 2020. The market was super frothy. So now, you know, there's this old saying, you know, you're never as good as they seem. You're never as bad as they seem. We're really as good as they seem in 2020. I don't know. Maybe we got a little frothy, but we're certainly not

as bad as people say now. You know, those that are a little bit cynical of the company. I mean, you know, you mentioned we did like over four billion in free cash flow. We have one of the highest free cash flow margins in all of Silicon Valley. You know, we put out a little bit softer guidance for a quarter and that like really had a huge impact on the stock price because investors, they'll like kind of forecast a subtle change in growth rate over the next five or 10 years. And it massively changed your valuation. What I would just say is the following. I'm 43. I intend to, you know, continue to run this company for the coming decades.

I want to build one of the great defining generational companies, and I'm spending a lot of energy taking Airbnb, which was basically a noun and a verb that's one vertical and trying to do what Amazon did in the late nin Airbnb, which was basically a noun and a verb. That's one vertical and trying to do what Amazon did in the late nineties, which was take a platform, an e-commerce platform that's designed for books and bring it to everything. And I think that there's going to be a massive amount of category expansion for Airbnb beyond short-term rentals. So you're going to start to see that next year. We have some really exciting ideas that we're working on. But beyond that, there's a huge amount of growth in our core business. And I would just point to a few things. Number one, quality control. We are now bumping up against the growth rate of what Airbnb can

kind of grow its growth rate without better quality control, because we are now an alternative to hotels. A lot of hotel travelers comparing Air Airbnbs and they want the similar level of consistency and quality. For every person who stays in Airbnb, nine people stay in a hotel. If we can get one of those people to stay in Airbnb, we double the size of our business. And then you've got international markets. Most of our business is in like six or seven countries. So we're in 220 countries, but most of our business is in US, Canada, Australia, UK, France. So there's so many opportunities in Asia. I mean, there's many countries in Europe, Latin America, where there's huge growth expansion. So that's the next frontier.

Okay. So without revealing your corporate plans, I think of Airbnb loosely as you're great at monetizing fellow assets and creating community. And that might be the wrong description, but that's how I think of it. So what are the most monetizable assets? People's homes, you're kind of in that. Next would be commercial real estate. I could see, I don't like apparel, people have tried that, it isn't working. I could see private jets. I could see, what am I missing? What are in your view without giving? Oh, you're, you're missing the biggest one of all people's time. So like Skillshare, tell us what you mean by that. Well, what do I say without saying it? There's a lot of services that are available that we could go into. So imagine Amazon, they had books,

but they went initially into DVDs and CDs when those existed. And then all these different retail categories. So we're looking at, let me just break it down for you. So you have short-term rentals, which are Corbin's. You have long-term rentals. Long-term rentals would be defined as 30 days or longer. So that's the same asset, but for longer stays and seasonal, that's huge. Then yes, you do have like car rentals and boats and other large assets um they're not as big as your house but those are your next biggest assets your life um but again the biggest asset are people's time so services and experiences would be a big opportunity for us um but as far as like going down the list of those categories there are dozens and dozens of categories but i'll kind of

start to accidentally talk and reveal our new product if I do that. But just to double click on that, I'm outstanding at installing energy efficient HVAC and I'm in Delray Beach and I'm very good at installing solar panels or installing soapstone kitchen counters in homes that need this. My problem is new business. Can I see an environment where I put my services and pictures and photos, similar to the way you would advertise an apartment, on your platform and you bring them a bunch of business and assure a certain level of quality in exchange for that 15% fee everybody

wins? Is that a logical extension? That's a logical extension. It wouldn't be the first extension. We would probably start with things a little more adjacent to travel and to hosting an Airbnb. But down the road, almost any type of service, I don't want to say almost any type of service, but many services including building maintenance, cleaning, interior design, upkeep your property. We built the Coase platform. This Coase network we built, we took lessons from Amazon. And the lesson from Amazon is don't build a book marketplace based on ISBNs. Build an abstracted marketplace where you can sell diapers and books and a number of things on the same platform. So that's what we've done. We basically re-architected an entire platform. And so there's many services that could use the Coase network. And then on the demand side, I'll probably stop there because there's, you know, but you'll see, there'll be more things coming.

And when you're thinking is kind of 2025 the year you start rolling out and testing? Every year, I made a statement on the earnings call. I believe I can stick with it, which is every year from now on, we're going to launch two to three new businesses or verticals that we believe will one day generate an incremental billion dollars of revenue or more. So you're going to start to see those next year. And will you do this organically or will you make small token acquisitions to give you a head start? Primarily organically. And the reason why is because similar to Apple, when Steve ran it, we're a functional organization. And so it's kind of difficult organization to plug in like businesses because then they become divisions. But, you know,

if they're small positions or if it's extremely compelling, we'll always take a look at it. And I mean, I will just say like a lot of entrepreneurs really want to work with Airbnb. They're very motivated. I think we have a very entrepreneurial culture, especially for an S&P 500 company. So it is a very appealing place for an acquisition candidate. Well, let me just ask you this. You've got a $85 billion market cap. I'm sorry, $84, $85 billion market cap. Lyft, the number two, has a $6 billion market cap. So you'd have to pay a premium of $8 billion for 10% dilution, why wouldn't you take a flyer and become the number two and then maybe the number one in terms of sharing or monetizing people's cars? I mean, I think there's a lot of opportunities. One of the frameworks that Jeff Bezos had, I think, is this idea of perishable, non-perishable opportunities.

And I think doing an acquisition, most of those acquisitions are not perishable. I mean, maybe someone else could take them out, but we generally think that we want to get a little more momentum in the core business, get to a little bit larger scale before we tried to absorb large companies and large acquisitions. So that's kind of why we've tried to build our muscle. Having done acquisitions in the past, they're very, very time consuming. I think acquisitions benefit larger corporations because they can very, very time consuming. I think acquisitions benefit larger corporations because they can absorb the acquisition, right? I think a smaller company struggles with just the administrative. You think of yourself as a small, you're $84 billion market cap. You're by far and away the largest hotel company in the world by

number of rooms, growth. You have solid EBITDA. It's just funny that you think that way. I would think that- We're a baby compared to what we're going to become. And by the way, we only have 7,000 employees or so. I think Uber has like 30,000. So yeah, maybe today they're double the market cap, but they also have like four to five times the number of employees. So we're actually a smaller company from an employee base than people realize. We try to build like this, not a Navy, but like the Navy SEALs, this lean elite group. But I think this is just the very beginning. Like I got to tell you, Scott, I'm 43, but I have more energy, more motivation and more passion than I was when I was 26 and I was running this company. And I just see endless opportunity for this company. I think we've done

a lot of the hard work to rebuild our company from the ground up, to be prepared for this next phase where we can take Airbnb and bring it to more business models around the world. So I mean, yeah, it's just maybe it's a mindset, you know, Jeff, like Steve Jobs said, Apple's the world's biggest startup. And, you know, I think you know what he means by that. Jeff Bezos had his version. He called it day one. It's all basically is the road in front of you longer than the road behind you? And for us, it is. So I pitched you on this idea privately 18 months ago, and the statute of limitations are over, so I can pitch it to you publicly. But Airbnb Plus, or whatever we call it, and I pay $50 a month, and it does a few things.

One, when I'm in a city, I have access to cool gyms like an Equinox or whatever. I have access to cool gyms like an Equinox or whatever. I have access to concierge services. But more than anything, it's a thinly veiled aspirational community slash dating site. And that is, I travel so much. And when I'm in a town, I'm almost always alone. And I find myself at 5 or 6 or 7 p.m. thinking, I don't know what to do. And if there were other entrepreneurs, if there were other academics, if there were other people from New York or just locals, what about some sort of Airbnb plus community offering? I think it's incredibly compelling. I think you've sold me. I'm in. Listen, 18 months ago, I was in when you told me. And the only reason we haven't done it is because we had really

foundational things. People were complaining about Airbnb's aren't affordable. They were complaining about our customer service. They were complaining about, like there were a lot of things. There were a lot of complaints. And so I felt like, well, we got to get our house in order. We still have to grow into this valuation. We have to generate a real consistent profit

on a free cashflow basis. And we have to address a lot of these issues that customers are brought up. And over the last two years, we made 430 upgrades and improvements. So yes, we are now looking for this expansion. I've always believed that there was some type of Airbnb membership model, not necessarily a points program, but where you get access. And I guess my only question back to you is, are you available as an advisor?

Oh, Jesus Christ, Brian. You're so full of shit. I'm always available. I'm always, you know, I love this company. We're going to talk privately after this. But I think it's a great idea. And I generally do see Airbnb as a community. I mean, like in Berlin tonight,

there are tens of thousands of Airbnb people that are staying there. We can match them together. They can do a variety of things. Those local businesses would love to have specific travelers and they could tell us which travelers they want and we could target just those travelers. I think there's a social overlay here and that is, I think that there's a crisis or an epidemic in loneliness. A hundred percent. And young people aren't connecting in a safe environment where they want to know each

other and want to establish professional and personal relationships. There's a lack of third spaces. People aren't going into work, they aren't going to church, they aren't participating in organized athletics as much. And I think that you guys are in a position to provide third spaces on a pretty big scale. Look, now I'm going to sound like your mother here. Last time you were on the show, you spoke about feeling like a 61-year-old and you were 41 there, so 43-year-old's body, working 18 hours a day, essentially living like a monk during the pandemic to scale Airbnb from 18 to 85 billion. So over a year later, have you been able to make strides in reconnecting with the personal side of your life? Do you feel as if you found more balance or is this still kind of an ongoing journey?

No, it's been a major change for me. Kind of three changes. The first change is I've gotten much healthier. I was always into exercise, but I think a lot of entrepreneurs, we glamorize sleep deprivation. And I think until recently, no one was talking about the benefits of sleep. I think only like the last five or 10 years. But when I started, like it was a badge of honor to never sleep. And I do that for years.

And, you know, we didn't really like we weren't that healthy. And I'm much more healthy now. I'm sleeping more, exercising. And I think that's a good trend in Silicon Valley that like people seem to be much more mindful of health and fitness. That's the first thing. Second thing is I'm spending a lot more time with friends. And one of the things I do with friends is I travel. You and I talked about one of the great ways to have a shared experience is to travel with people.

And that's a great form of memories. And I do that. And then I've started to – the third category is like I'm single and I'm 43. And I've waited longer than I ever thought I would to meet someone and have a family. But I do desire to, the third category is like, I'm single and I'm 43. And then I've waited longer than I ever thought I would to meet someone and have a family. But I do desire to have a family. And so I've been dating a little bit and hopefully I meet someone. And you also said on the professional front, you talked about your desire for Airbnb to have a next act, your Disneyland, your AWS, your iPhone moment.

Give me a moonshot crazy idea that you wouldn't, people wouldn't expect from Airbnb or Brian Chesky. There's so many, but I'll just pick one based on the conversation we've had. Loneliness. People are lonely. I think there's a massive way that we can facilitate people meeting one another. So I'll give you an example. If you travel by yourself, you ever go to a restaurant, you got to eat at the bar by yourself. And sometimes all the time. OK, it's literally one of my favorite things. And it's pathetic. Yeah, yeah. And I do it, too, actually.

You know, I do go to the bar and sometimes by myself get food and I like it. But I have no alternative. Like if I'm traveling by myself, that's the only choice. So what if we could basically pair and meet travelers together at at restaurants pre-book reservations and bring travelers together taylor swift um number two she like um obviously had this incredibly unprecedentedly successful concert tour and we noticed in europe where her concert was we saw this massive rise in every bookings and what if you could pair what if you could sell concert tickets on airbnb but not

just sell concert tickets but you could actually pair people together to go to the concerts they can meet one another um we could go down the list of other types of things like pickup sports so there are kind of things you might not think of as airbnb but if we're talking about difficulty meeting one another there's a lot of ways we can pair people together. So I think the most not obvious biggest idea would be Airbnb becoming like a social network in the physical world, not an online social network, but essentially a physical social network where we're matching people together in real life around events and shared experiences. God, I just thought you should take on Live Nation. By the way, I love the idea of you sitting alone at a bar and everybody being like, isn't that Brian Chesky? By the way, you know what I call when I see I'm not young nor a billionaire and not as good looking as you.

You know what I call eye contact at a bar when I'm meeting alone? What? A prostitute. Oh. Anyways, there you go. All right, Brian. Brian's literally turning beet red. Yeah, what a great way to land this interview.

This is great. He's literally turning beet red. Yeah, what a great way to land this interview. This is great. He's literally turning beet red here. Brian Chesky is the co-founder and CEO of Airbnb. Since launching in 2007, the firm has grown to a community of over 5 million hosts who have welcomed more than 2 billion guests in almost every country across the globe. He joins us from New York. Brian, you know I'm an enormous fan of you. I think you're not only a baller professionally in the world of tech, but I think you're just, generally speaking, a good person and think about the Commonwealth and what's good for society.

And we don't always have that peanut butter and chocolate combination. So thanks for your time, Brian. Oh, thank you so much, Scott. Thanks for having me. Algebra of happiness. My sister and I have put my father into hospice, and hospice is a scary sounding word. Jimmy Carter's been in hospice for five years. It's basically saying we're not going to continue to shuttle him to the hospital. If something goes wrong, we're just going to try and make him as comfortable as possible. And my father's 94 and has declined pretty significantly in the last two and a half months.

He had a series of very weird bladder infections and UTIs that just took it out of him. And the last time I went down there and I knew he was coming, he didn't recognize me. And I saw him about two months ago, and we had a conversation. And then two months later, he's like a baby and he doesn't recognize me, which is obviously very, I was prepared for it, but you can't really prepare for it. Just a couple of takeaways. Something I'm really happy about is I knew the end or that end where I would no longer have my father. He would have me in terms of consciousness was coming. And I said a lot of nice things to my father and I made sure that he felt loved. And I've also,

about 25 years ago, one of the best decisions I've ever made is that I've always thought of relationships as transactions. And my father wasn't very involved in my life and I resented him for it. And then I decided across all my relationships that I was just going to decide, okay, don't keep score. What kind of partner, what kind of father, what kind of son do you want to be? And I decided I wanted to be a generous and loving son, distinct of what I thought his contribution was. And also I was a little bit hard on my father. I think when you're the child of divorce and you live with your mother,

you have a tendency to sanctify or deify your mother because she's taking care of you and making you breakfast and demonize a little bit dad because it was his fault. My dad, divorce really kind of was his fault. But look, the thing you got to think about your parents, what I come to realize is that their number one job is to be a better dad to you than their dad was to them. And I found out at a much older age, my dad never said this to me, that my father was abused by his father, physically abused. His father was an alcoholic and used to come home and get this, wake him up, start yelling at him and beat him. And I just think about Jesus Christ, talk about trauma that might not make you a wonderful dad. And my dad did try. He wasn't always there, but he did try. And so I forgave

my dad 25 years ago and said, I'm just going to be a generous, loving son. And I've been that. I'm really glad I was that. That gives me a great deal of comfort. The other takeaway is that it's so wonderful to have siblings in this situation. My sister handles all the logistics and makes the millions of decisions you need to make every day when your father's not doing well. And it's actually brought us closer. And I can't imagine how difficult it can be for siblings that don't get along or one contributes more than the other and the resentment and the martyrdom. And some people just don't show up. And I handle the money side of things because I'm blessed on that end, which is important. And it's a sad reality here. It is just so goddamn expensive.

And so if you're in a position where you're making some money and you have aging parents, you may want to think about the costs that are going to be involved there. And if you can't, otherwise they're going to have to live with you. But let me just try and land this plane. I didn't know where this was going to go. I decided to put the scorecard away and be a generous, loving son. And that was the right call. This episode was produced by Jennifer Sanchez and Caroline Chagrin. And Drew Burrows is our technical director.

Thank you for listening to the Prop G Pod and the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.