The Tim Ferriss Show - #326: Reid Hoffman of LinkedIn, Brian Chesky of Airbnb, and How to Scale to 100M+ Users

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Starting point is 00:03:25 to tease out the habits, routines, favorite books, and so on that you can use. In this episode, I'm going to let someone else do the heavy lifting. And he's very, very qualified. Reid Hoffman, on LinkedIn and Twitter as Reid Hoffman, R-E-I-D, is a frequent flyer of sorts on this show. He is often referred to as the Oracle of Silicon Valley by tech insiders who look at his company building and investing track record with awe. The companies include Facebook, Airbnb, Zynga, Flickr, and many, many, many others. Reed is well known as the co-founder of LinkedIn, which has more than 300 million users and sold to Microsoft for $26.2 billion. Prior to that, he was exec vice president at PayPal, which was purchased by eBay for $1.5 billion. And at PayPal, he was

Starting point is 00:04:12 nicknamed Firefighter-in-Chief by the then CEO, Peter Thiel, who's also been on the podcast. And Reid is widely considered one of the most successful angel investors of the past decade. He is now a partner at Greylock Partners, a top-tier venture capital firm. And on my phone, there are very few podcasts that I listen to multiple times. There are very few podcasts that I recommend over and over and over again to other people, especially entrepreneurs. And what I'm going to showcase in this episode is a conversation between Reed and Brian Chesky, who is a co-founder and CEO of Airbnb. And there are a couple of other

Starting point is 00:04:55 cameos. And I'm doing this for a number of reasons. Number one, if you want to learn how to scale your company from whatever the number might be, 200 million users, paradoxically, you can increase the likelihood of success by doing things that do not scale. And this is a really critical concept to understand, and it's best done through examples. And that is why I want to showcase this discussion, which is from the first season of Masters of Scale. And I really, really hope you enjoy it. I loved it. And Joe Gebbia, co-founder of Airbnb, has been on this podcast before. And we covered his development as a designer and an entrepreneur leading up to the original development of the business model for Airbnb.

Starting point is 00:05:49 That was part one. And I promised a part two. So this is, in some ways, that part two exactly. And Masters of Scale is a great show. If you haven't seen it, it showcases famous founders and innovative leaders and so on sharing their lessons for success. And there is a brand new season out right now. The new season includes episodes with founders of Spotify, Instagram, TaskRabbit, Shake Shack, and Glossier, among many, many others. You can subscribe to Masters of Scale on Apple Podcasts or learn more at mastersofscale.com. So without further ado,

Starting point is 00:06:26 please enjoy this short episode with Reid Hoffman, Brian Chesky, and many others. And if you've heard me recommend 1,000 True Fans to you many, many times before as the article you should read if you're only going to read one article on marketing, which is by Kevin Kelly. You can find it on kk.org. This is the audio complement to that. So with much further ado, much further ado, much further ado, please enjoy. Joe and I are broke. We're losing weight, and I don't have a lot of weight to lose you know those binders that you put baseball cards in we put credit cards in them at this point I am $25,000 in credit card debt Joe is tens of thousands of dollars in credit card debt

Starting point is 00:07:12 so this is like make or break we need the lifeline that entrepreneur in need of a lifeline that's Brian Chesky co-founder and CEO of Airbnb a service that lets you rent a couch for the night, or a cabin, or a castle. Today, Airbnb is valued at $30 billion.

Starting point is 00:07:34 Eight years ago, a very different picture. We have this website, and maybe 50 people a day are visiting it, and we're probably getting like 10 to 20 bookings a day. So, and by the way, we've been working on it for a year and a half. So for anyone who's worried that your company doesn't have traction, that was our traction. It was 2008, an election year in the United States. Barack Obama was running against John McCain. You needed a tax cut back. Ryan was at the Democratic National Convention,

Starting point is 00:08:03 hatching a PR campaign for Airbnb, one that could rescue the company and their credit card bills. Joe and I look at each other and we said, we're airbed and breakfast. The airbeds aren't going so well. Maybe breakfast will. As we thought, what if we could sell breakfast? Maybe we can make some money. What's a non-perishable breakfast? Cereal.

Starting point is 00:08:20 And so we thought, the presidential campaign's coming up. We just launched with the DNC. What if we created a Barack Obama-themed breakfast cereal? And we thought, what would a Barack Obama-themed breakfast cereal be called? Obama-O's, like Cheerios, the breakfast of change. We thought, well, we want to be a nonpartisan website, so we'd also have to need a John McCain-themed cereal. And that's a no-brainer.

Starting point is 00:08:42 John McCain was a captain of the Navy, And so we came up with Captain McCain's, like Captain Crunch, a maverick in every bite. We ended up making a thousand boxes of collectible breakfast cereal. We sold them for $40 a box. That's $40,000. Not bad for pocket change. And it got them through a cash crunch,

Starting point is 00:09:02 but it came at a cost. We had to physically make the breakfast cereal ourselves, meaning we get a printed poster board and we had to fold it and hot glue it. No one told me I had hot glue breakfast cereal. And they should call it burn glue because every time you get on you, you burn you. And I had a perfect one-to-one ratio of burn to box. And so I literally had to hot glue a thousand boxes of cereal. At one point in the middle of the night, I remember reading, I wonder if when Mark Zuckerberg started Facebook, he had to hot glue breakfast cereal. The answer was no, and this was not a

Starting point is 00:09:33 good sign. But what was a good sign was Brian's willingness to work with his hands, burns and all. I'd argue that painstaking handcrafted labor is actually the foundation of his success. In order to scale, you have to do things that don't scale. You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. And then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working as a three-bedroom apartment. Stuff that just

Starting point is 00:10:10 seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it. This is Masters of Scale. I'm Reid Hoffman, co-founder of LinkedIn, partner at Greylock, and your host. On this episode, I'll make the is Masters of Scale. Over the last 20 years, I've worked on or invested in many companies that scale to 100 million users or more. But here's the thing. You don't start with 100 million users. You start with a few. So stop thinking big and start thinking small. Hand-serve your customers, win them over, one by one.

Starting point is 00:10:58 Now, this may sound like odd advice if you're an entrepreneur with global ambitions. Mark Zuckerberg didn't personally invite 1.8 billion people to Facebook. He built a great product, and the users just poured in, right? Not exactly. On this show, I'll dispel that myth by talking to founders who fought to win their users. I'm starting with Brian Chesky, CEO of Airbnb,

Starting point is 00:11:21 because he epitomizes the idea of handcrafting the user experience before you start to scale. It's a principle he first absorbed in design school. I was doing medical design once. I designed a children's ventilator. I had to sit in the shoes of the child. And so I had to imagine being a child, get in the operating table. You had to put yourself in the shoes of the patient or the person using your product.

Starting point is 00:11:44 And if you're only doing A-B tests, you're never designing with empathy. But a funny thing happened to Brian when he moved to Silicon Valley. He sort of forgot about designing with empathy for a single user. It's a common mistake amongst entrepreneurs with global ambitions. They have to promise investors the world. Tens of millions of customers, billions in revenue. It's intoxicating. Just listen to Brian go. This is a travel industry that is something like 7% of global GDP, somewhere between $5 and $7 trillion, 10 times the market size of Google's market size. And Brian might have stayed in the stratosphere, if not for a fateful meeting with

Starting point is 00:12:21 Paul Graham, co-founder of Y Combinator. Y Combinator is a startup incubator which cultivates and invests in early stage companies. Brian was admitted to Y Combinator in 2009, and his first meeting with Paul was confounding. Paul tends to stump people with deceptively simple questions. And he asked us, where's your business? And I go, what do you mean? Like, where's your traction? I go, well, we don't have a lot of traction. He goes, well, people must be using it.

Starting point is 00:12:47 I said, there's a few people in New York using it. He said something I'll never forget. He said, so your users are in New York, and you're still in Mountain Dew? I said, yeah. He said, what are you still doing here? I go, what do you mean? He said, go to your users. Get to know them.

Starting point is 00:13:00 Get your customers one by one. I said, but that won't scale. We're hugely millions of customers. We can't meet every customer. And he said, that's exactly why you should do it now. Because this is the only time you'll ever be small enough that you can meet all your customers, get to know them and make something directly for them. Brian and his co-founders followed his advice to the letter. We literally commuted to New York from Mountain View. So we would be in Wicom Air for, was it Tuesday night dinners? And then Wednesday,

Starting point is 00:13:26 Joe and I would go to New York. We literally would knock on the doors of all of our hosts. We had their addresses. We'd say, knock, knock, hello, hey, this is Brian, Joe, we're founders, we just want to meet you. It's a little creepy just to knock on the door unannounced. We needed excuses to get in their home. So they came up with an offer

Starting point is 00:13:42 that the host couldn't refuse. We'd send a professional photographer to your home and photograph your home. Of course, we didn't have any money and we couldn't employ photographers. So Joe and I, we'd show up at their door and they're like, wow, this company's pretty small. These home visits became Airbnb's secret weapon.

Starting point is 00:13:57 It's how they learned what people loved. It's really hard to get even 10 people to love anything, but it's not hard if you spend a ton of time with them so if i want to make something amazing i just spend time with you and i'm like well what if i did this what if i did this what if i did this from those questions a handcrafted experience is born we'd find out hey i don't feel comfortable the guest i don't know who they are well what if we had profiles great well what do you want your profile well i want a photo great what else i want to know where they work, where they went to school.

Starting point is 00:14:26 Okay. So you add that stuff. And then you literally start designing touch point by touch point. The creation of the peer review system, customer support, all these things came from us. Literally, we didn't just meet our users. We live with them. And I used to joke that when you bought an iPhone, Steve Jobs didn't come see from your couch, but I did.

Starting point is 00:14:52 Was there a particular experience that has really stuck in your mind? I remember we met with a couple hosts, and it's winter. It's snowing outside, and we're in snow boots. We walk up to the apartment, and we went there to photograph the homes. We're like, hey, I'll upload your photos to the website. Do you have any other feedback? He comes back with a book, it's like a binder. And he's got dozens of pages and notes. And he ends up creating a product roadmap for us. We should have this, this, this, this, this.

Starting point is 00:15:16 And we're like, oh my god, this is our roadmap. Because he's the customer. I think that always stuck in our mind, as the roadmap often exists in the minds of the users you're off track. Passionate feedback is a clue that your product really matters to someone, and one passionate user can turn into many if you listen to them carefully. It's essential to get this kind of feedback early while you're still defining the product. It's like setting a foundation as an architect. You wouldn't build a skyscraper before you've built a solid foundation. User feedback ensures you won't build a dozen floors on an unstable swamp.

Starting point is 00:16:06 Brian has a simple method for extracting detailed feedback from users. He doesn't ask about the product he already built. He asks about the product of their dreams. We'd ask these questions, like what could we do to surprise you? Like what could we do, not to make this better, but to make you tell everyone about it?

Starting point is 00:16:22 And that answer is different. If I say, what could I do to make this better? They'll say something small. If I were to say, Reed, what would it take for me to design something that you would literally tell every single person you've ever encountered? So you start to ask these questions and it really helps you think through this problem. It's essential to seek out and listen to user feedback. But the caveat is you have to figure out which users to listen to. You're going to have different kinds of users giving you feedback and some of it will take you in the wrong direction. So you need to figure out which users to listen to. You're going to have different kinds of users giving you feedback,

Starting point is 00:16:47 and some of it will take you in the wrong direction. So you need to exercise judgment in discerning, will this particular user and particular feedback lead me to the mass market, or is it an edge case? For example, at LinkedIn, we had one group of users who invented a name for themselves. They called themselves Lions, which is LinkedIn Open Networkers, because their theory of the world was that everyone wants to directly connect to everyone else in the world because that's the way they wanted it. But they're actually not the majority case. A lot of people who are very busy, who have access to resources, who have some celebrity status, do not want that.

Starting point is 00:17:20 And if we followed their feedback, LinkedIn would not be where it is today. We had to steer away from a bunch of passionate users who told us very explicitly that we were fools for not following their advice. If you want to build something that's truly viral, you have to create a total like mind experience that you tell everyone about. And so we basically took one part of our product and we extrapolated what would a five-star experience be and then we went crazy. So a one, two, or three-star experience is you get to your Airbnb and no one's there. So you knock on the door, they don't open, that's a one-star. Or maybe it's a three-star, if they don't open, you have to wait 20 minutes.

Starting point is 00:18:01 And if they never show up and you're pissed and you need to get your money back, that's a one-star, you're never using those again. So a five-star experience is you knock on the door, they open the door, they let you in. Great. That's not a big deal. You're not going to tell every friend about it. You might say, I used Airbnb, it worked. So we thought, what would a six-star experience be? A six-star experience, knock on the door, the host opens, hey, I'm Reid, welcome to my house. You're the host in this case. And you would show them around and on the table would be a welcome gift. It would be a bottle of wine, maybe some candy. You'd open the fridge, there's water. You go to the bathroom,

Starting point is 00:18:38 there's toiletries, and the whole thing is great. That's a six-star experience. And you'd say, wow, I love this more than a hotel. I'm definitely going to use Airbnb again. It worked better than I expected. What's a seven-star experience? Knock on the door. Reid Hoffman opened. Get in. Welcome. Here's my full kitchen. I know you like surfing. There's a surfboard waiting for you. I've booked lessons for you. It's going to be an amazing experience. And by the way, here's my car. You can use my car. And I also want to surprise you, but I got you, this is the best restaurant in the city of San Francisco. I got you a table there. And you're like, whoa, this is way beyond. Adding stars clearly excites Brian. It took some time to run through this mental exercise. We'll skip ahead to the 10-star experience. So what would a 10-star check-in be?

Starting point is 00:19:25 A 10-star check-in would be the Beatles check-in in 1964. I'd get off the plane, and there'd be 5,000 high school kids cheering my name with cars welcoming me to the country. I'd get to the front yard of your house, and there'd be a press conference for me, and that would be just a mind-f***ing experience. So what would an 11 star

Starting point is 00:19:45 experience be? I would show up to the airport and you'd be there with Elon Musk and you're saying you're going to space. The point of the process is that maybe 9, 10, 11 are not feasible. But if you go through the crazy exercise of keep going, there's some sweet spot between they showed up and they opened the door and I went to space. That's a sweet spot. And you have to almost design the extreme to come backwards. Suddenly doesn't just like having like knowing my preferences and having a surfboard in the house seem like not crazy and reasonable. It's actually kind of crazy logistically. But this is the kind of stuff that creates great experience.

Starting point is 00:20:21 But how far do you go toward the 11-star experience? To create the Nirvana product, all successful entrepreneurs at some point have to come back down to earth. There's really two stages of a startup's product. The first is design a perfect experience, and then you scale that experience. And that's it. But which part of the perfect experience do you scale? So the most ambitious entrepreneurs, let's call them the Elons after my friend Elon Musk, probably get there through raw energy because they're convinced they need to solve a problem. And the unscalable thing is one step that they have to push through on the way. The Elons say, I'm going to Mars. But first, I've got to solve this problem right in front of me.

Starting point is 00:21:01 First, I need to get that rocket launched. And I need to have a business model for that first rocket. And that looks like satellites. Okay, I'm going to try satellite launches. And how do I get my first rocket? I need to create a scalable rocket platform. But unless I get the first rocket up, it doesn't matter. And you kind of work back to that. Then you've got folks like Brian who say, I realized that to get this awesome experience, I have to ratchet back to something that still seems like magic, but is totally doable. And then I need to design the elements that get me into the totally doable thing. So how does Brian decide on the doable thing?

Starting point is 00:21:35 He settled on a service with the appropriate level of magic and started building it. And here's the next thing to notice. They didn't launch perfectly scaled services. They built everything by hand. We had a saying that you would do everything by hand until it was painful. So Joe and I would photograph homes until it was painful. Then we'd get our photographers. Then we'd manage them with spreadsheets until it was painful.

Starting point is 00:21:54 Then we got an intern. I don't think I knew how anything would grow to the level that it did. That's Ellie Thiel. She's the intern who managed those spreadsheets. She still works at Airbnb. Very manually, I would email the photographer and the host and connect them. And the photographer would then send me the photos. I would go through each one, giving feedback if they needed to be retouched. And then I would manually upload them to the host's website, their listing, one by one.

Starting point is 00:22:25 It would take hours to upload. Multitasking was the name of the game. And then we automate the tools to make her more efficient. And we kind of looked at this and we said, OK, what is the easiest thing that we can automate? Any little thing that changed was, you know, quite a shift in what I had been doing. But for the better. And I remember one day, Brian would come to me at the end of every day, how many did we get? How many photos were shot?

Starting point is 00:22:51 And it was like, oh gosh, I have to go through and count all of these. And then eventually a system does everything. We build a system where now a host comes, they press a button, it alerts our system, which goes to a dispatch of photographers. It's all managed through technology. They get the job, they market through an app that we build, and then payment happens. The whole thing is automated now. Note how they gradually worked out a solution.

Starting point is 00:23:15 They didn't guess at what users wanted. They reacted to what users asked for. And then they met the demand through a piecemeal process. And here we come to the true art of doing things that don't scale. It's not just a crude way of succeeding on a shoestring budget. It also gives your team the inspiration and urgency to build the features that users really want. I've seen this hand crafting story play out over and over again with entrepreneurs. Take my friend Patrick Collison. He's the founding CEO of Stripe, an online payments company.

Starting point is 00:23:45 Today, thousands of businesses use Stripe to process payments from their online customers. But in the early days, they were a scrappy startup, and Patrick paid close attention to his users. Very close attention. We had a chat room where we would just help customers with, well, whatever issue they wanted to ask about. And we were very distressed after a while to notice that occasionally people would come into the chat room while we were sleeping and ask a question and they wouldn't get any

Starting point is 00:24:10 response. And so we wrote a bot that would just page one of us. If somebody asked a question, they didn't get a response after more than 30 seconds or something. And someone would kind of groggily, bleary-eyed wake up and like help them out and then go back to sleep. So in addition to being CEO, Patrick had become Stripe's bleary-eyed customer service rep. Frustrated users would page him at all hours. It sure did not feel glamorous. He was tapping away on my laptop for half an hour in bed.

Starting point is 00:24:35 Actually, it reminds me, I don't know if you know Paul English, who founded Kayak. Kayak is an online travel service that finds the lowest available rates across different websites. We know each other a little bit. Yeah. Paul, for a number of years in Kayak, had his cell phone number as the customer service number. We also had one of our, there was someone at Stripe who did exactly the same thing. Now, it's common for entrepreneurs to swap stories like this. And I think it's worth dwelling on these early days of handcrafted work because most entrepreneurs tend to have a funny reaction to these experiences. They may laugh about it later.

Starting point is 00:25:08 They may call the work unglamorous. They may celebrate the day they could hire a helping hand or automate these chores out of existence. But thoughtful founders will never say, what a complete waste of time. They'll often look back on this period as one of the most creative phases of their careers. Nancy Lublin, for instance, scrappily launched an international nonprofit from her New York City apartment. Her organization, Dressed for Success, started as a clothing drive for women who needed to walk into a job interview looking sharp and feeling confident. Nancy stockpiled sweaters on her bed and jewelry in her refrigerator. And soon she was inviting volunteers into her apartment for informal training sessions.

Starting point is 00:25:51 So people started hearing about Dress for Success and would contact me. Just random people would contact me and say, I want to start this in St. Louis. I want to start this in Hartford. And I would say, great. You want to come stay with me? People, literally strangers, would fly from St. Louis and stay on my futon, my college futon, in my tiny law school apartment in New York. And I'd be like, the transition from the handcrafted phase to the massive scale phase is a challenging one. And I want to dispel any illusions that you can switch from one to the other with ease. In fact, it requires two opposing mindsets. You have to fully empathize with a single user. At the same time, you have to worry about everyone. I like the way that Brian describes the difference. The designing of experience is a different part of

Starting point is 00:26:44 your brain than the scaling of your experience. It's a different skill set. The scaling experience I like the way that Brian describes the difference. One parallel might be writing and editing. So the handcrafted phase tends to be more like writing. It's a more inventive and creative process. Whereas the scaling phase tends to be more analytical. It's more like being an editor. At that point, you tend to do more pruning. You realize, well, this whole thing is magical, but if we focus on this 20%, we get 80% of the magic. So you prune, you compact, you distill, and you architect. So it can now run at a rocket ship rate. You're transitioning the product or service over to a scale organization that can now run it. The organization needs a simple plan with very few errors and very little improvisation. Now you might think the first step,

Starting point is 00:27:36 design the ideal user experience, drops away as soon as your product goes viral. Then comes the glamorous work of expanding to new countries and thinking about your strategy in the years ahead. Handcrafted work is essentially a kind of booster rocket that helps you get in orbit, but it's not Then comes the glamorous work of expanding new countries and thinking about your strategy in the years ahead. Handcrafted work is essentially a kind of booster rocket that helps you get in orbit, but it's not the kind of rocket for the whole trajectory. It gets you out of the gravity well, and after that, get ready to slingshot around the world. We became an international company.

Starting point is 00:27:59 Then, middle of 2011, we raised money. We're like this billion-dollar valuation company. And then in summer 2011, a woman's home got trashed. And then we had to go the next step, which was, we are just this little company department. But as far as the world's concerned, we have a giant office building. We better be grownups. So we had to build 24-7 support, had to have more secure payment instruments. We had to add a trust and safety team. We had to verify people's identity. We realized we had to get our money transmission licenses. So then there's this whole like administrative bureaucracy that gets added. Then 2012, we get to the point where we have like 50, 100 employees. We have no executive team.

Starting point is 00:28:35 There's no management. There's no like company meetings. There's no communication. So no one knows anything. I don't know anything. Like literally nothing. I don't even know how we ran the company. And so I instituted some basic things. I have to have an executive team. And then the lawsuits come in. And you have to really sort it out. And unfortunately, we're not regulated at the federal level. We're regulated at the city level. And every city is different. And they're like, I see what you do in Paris. But here in New York, we're different. And so you have to go city by city. You've got to hire those people to really triage and deal with all these issues. It's like a video game.

Starting point is 00:29:08 You slay a dragon, you think you've completed the board game, and then you're the next level, and all of a sudden the dragons get really big. But when you're slaying dragons, it's hard to hold on to the handcrafted mindset. Still, I would argue that the sharpest founders never fully abandon the mindset,

Starting point is 00:29:23 no matter how big their company gets. And so the organization will start having antibodies against new handcrafted things. It's a response that protects organizational efficiency. It says, look, this new thing, we can't get it to scale. It won't operationalize. It won't fit within our process. The reason that scaled companies have a hard time with this handcrafted process is all in the list of objections about why this won't work, why this shouldn't be integrated as part of the company. And so what you need to do as a founder is be extremely choiceful about which handcrafted innovation you choose and how you protect it

Starting point is 00:29:58 organizationally. You need to protect it because the natural reaction of the scale organization will be to kill it. He wanted to reinvent the industry again, and he knew he had more to learn about the travel experience in order to do it. Quiet on the set. So he turned to Hollywood for help. I often find that to reinvent an industry, you do not take inspiration directly from that industry. That you need to look at orthogonal industries. And for us, the orthogonal industry to travel was cinema.

Starting point is 00:30:26 And the best trips you've ever seen are the trips that characters in movies have. And that we would provide that analogy in real life. And I actually literally hired a storyboard artist from Pixar. And we had him storyboard the perfect Airbnb experience. When we did that, we realized there was like this two-hour movie, and only 20 minutes were in the home. And cut. There was all this like leading up to the home, getting to the airport, going around, going to dinner, hanging out with friends out and about. And like most of the trip was not in the home.

Starting point is 00:30:54 But we realized at that point we need to be in the end to end business of travel. So the same way that we did things that don't scale, we called it magical trips. We decided let's find one traveler and create the perfect trip for them. Notice how quickly Brian turns his attention to a single traveler. In an instant, he switches from global concerns back to his artisanal roots. And that's because he's building something radically new here. He wants to scale the perfect trip. But what is the perfect trip? What are the essential ingredients that make a vacation truly memorable?

Starting point is 00:31:29 It's a question that Brian can't even begin to answer until he delivers that experience to at least one person. You're about to get a masterclass in handcrafting. And so we put up these flyers anonymously saying, seeking a traveler, we'll photograph your trip to San Francisco if you let us follow you. This guy, Ricardo, replied.

Starting point is 00:31:50 He was from London. Here we go. And we sent a photographer around him while he was just traveling to San Francisco. What we learned was his trip was awful. Like he'd show up, he'd go to Alcatraz by himself, put on the headset, and then he'd go to Bubblegum Shrimp. He'd stay in like a budget hotel. He'd go to a hotel bar by himself, like sitting the headset, and then you go to Bubblegum Shrimp. He'd stay in a budget hotel. He'd go to a hotel bar by himself,

Starting point is 00:32:07 sitting with a bunch of dudes at the bar. Al Zone is basically a rolled up pizza. He didn't talk to anyone because he's introverted. We call him back. We say, Ricardo, we want to create the perfect trip to San Francisco for you. We fly him back, and we had the team storyboard the perfect experience for Airbnb.

Starting point is 00:32:24 We had a driver pick him up at the airport, and we took him to the perfect Airbnb. There were all these services. He went on these dinner parties. We got him the best seats at restaurants. We took him on this midnight mystery bike tour. Like 60 riders go on it, and nobody but the leader knows what will end up.

Starting point is 00:32:40 And it's just like there was this crazy, magical world. I see him at the end of the trip. I say, how was your trip? He says it was amazing. And then I walk away. He yells at me, Brian, one more thing. And he starts like crying. And he breaks down and says, thank you.

Starting point is 00:32:57 This is the best trip I've ever had. I was like, oh my God, I guess it kind of worked. Like it really moved him. Because I don't think anyone ever tried to design an end-to-end experience for somebody like they're in a movie before, and we did it. That became a blueprint, and we said, we are confident on an unscalable basis

Starting point is 00:33:15 that we know how to create a trip that deeply moves somebody. It's better than anything they've ever experienced. The question is, can we develop a technology that scales and do it 100 million times? Notice here how quickly Brian switches back to the analytic mindset. He can extrapolate from a single journey to a list of essential ingredients. Here is a systematic breakdown of the perfect trip. When you first go to Citi, you need a welcome event within the first 24, 48 hours where you're around people.

Starting point is 00:33:44 When you land, you need to get acclimated to the neighborhood. That by day two or three, you need to have a challenge out of your comfort zone. If you do not leave your comfort zone, you do not remember the trip. And if you can belong out of your comfort zone and something new happens to you, then there's going to be a moment of transformation where the person you were in a small way dies and a new, better version of yourself is reborn. Now, this is the narrative of every movie you've ever seen. A main character starts in their ordinary world. They leave their ordinary world. They cross the threshold to a new, magical world where all these obstacles happen and

Starting point is 00:34:22 they overcome something and they call it the hero's journey. And we applied this to trips, built a small team, and we spent the last couple of years figuring out how to scale this. And this has led to what we have today, which we call Airbnb trips. In November of 2016, Brian unveiled 500 trip packages in 12 cities. And now he's fully in the scaling mindset, figuring out how to expand the service to new destinations. But as Brian will tell you, he misses the handcrafted work. He has a surprising message for entrepreneurs who have only a handful of users to serve. I kind of tell a lot of entrepreneurs who don't have traction, I miss those times.

Starting point is 00:35:01 I mean, yes, it's exciting to have traction, to have a super, like, company that's, like, huge scale. But the biggest leaps you ever get is when you're small. And another way of saying it is your product changes less the bigger you get. Because there's bigger, more customers, more blowback, more systems, more legacy. The most innovative leaps you'll ever make, often, especially for your network, are going to be when you're really, really small. You can change the product entirely in a week. Try doing that at LinkedIn or Airbnb today. That'd be a huge disaster. So I think taking advantage of that subscale,

Starting point is 00:35:33 designing the perfect experience, asking yourself what you could do is amazing. Now is the moment you can take the most daring leaps of your career. Dream big and act small. Pay passionate attention to your users. Handcraft the core service for them. Create a magical experience. And then figure out what part of that magical handcrafted thing can scale. I'm Reid Hoffman. Thank you for listening. Masters of Scale is a Wait What original.

Starting point is 00:36:13 Our executive producers are June Cohen and Darren Triff. Our producers are Dan Kedmi, Jenny Cataldo, and Ben Manilla. Special thanks to Jessica Johnston, Saida Sepieva, Elisa Schreiber, Chris Yeh, David Sanford, Jay Punjabi, Stephanie Kent, and Rafina Ahmad. Original music is by the Holiday Brothers. Mixing and mastering by Brian Pugh. Visit mastersofscale.com to find the transcript for this episode. Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun for the weekend?

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The Tim Ferriss Show - #326: Reid Hoffman of LinkedIn, Brian Chesky of Airbnb, and How to Scale to 100M+ Users

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