Nathan Blecharczyk: The Raw Truth of Scaling Airbnb to a $75B Empire | E122

Yeah, I got started at a very young age. Like many young people, I was into playing computer games and such. And one day at the age of 12, I was homesick from school. And my dad is an electrical engineer and he had books about computers. This is like the mid-90s, right now. So, computers are still kind of newish. Internet's definitely new. Anyways, I start looking through his books and start learning how to write simple scripts based on these books. And I was interested in that because it was relevant for playing my games. Out of that though, that Christmas I asked for a programming book and I got one that was basically how to program in 21 days and it's a 500-page book. I actually managed to complete it in about 30 days while also going to school and doing other things. So, I devoured the book. And from there on, I just kept going to the bookstore at that time, Barnes & Noble, and buying more computer books, oftentimes 500-page books, reference books that were probably not meant to be read from front to back, probably not by a kid. But I was just super curious and hungry. So, I was teaching myself how to code. It became a hobby of mine. I was posting my work on the internet. I said, 'If you like my work, please send me $5.' Nobody ever sent me $5. But better yet, at the age of 14, I got a phone call. A couple years later, I got a phone call. It was a guy who said, 'I saw your work on the internet, and I would like to pay you $1,000 to make something similar for me.' So, I'm excited. I tell my dad, 'Hey, somebody from the internet wants to pay me $1,000.' And he's like, 'Son, nobody from the internet's going to pay you $1,000.' I mean, this is the mid-90s, so this is all very novel. It's weird. It sounds like a fraud. It sounds like a scam, right? Totally. Right. It still sounds like a scam. It sounded like one back then, too. But I said, 'Whatever, Dad.' This is my hobby. I'll do it just for fun and we'll see what happens. So, I did the work and sure enough, 30 days later, I got paid, which is pretty cool. But better yet, I got introductions to other people who needed similar things made. And so, this began kind of like a consulting business where I was writing code for contract. And then I had an aha moment where I said, you know, it feels like people are asking me to write the same thing for them. Like instead of creating a bespoke product for each person and reinventing the wheel, why don't I just create a software product and sell licenses to it? And so this began a business that I ran throughout high school for about four or five years.

Yeah, I think ultimately my parents and my dad in particular kind of instilled the key ingredients. It wasn't by the name of entrepreneurship, but he taught me definitely a few things. I mentioned he was an electrical engineer, but he taught me to be curious. He was always bringing home stuff from work for me to take apart and tinker with. And he's very much about you can teach yourself anything. You can just go to the library, get a book. He never hired anyone in his life, I think, to do anything for him. He's a very handy man. And yeah, I think just kind of a work ethic as well, work hard. So yeah, I think this kind of led me towards the entrepreneurship journey.

Right. So I started off as consulting, became a software business, selling licenses to products, made almost a million dollars basically in high school. And it was just me really. I didn't have any employees. I had a few software products I was selling. More important though than the money was the lessons that imparted on me. One, I taught myself all the skills. So that gave me confidence that I could just learn whatever I needed to know on my own. And second was simply that I could do things that other people valued. I'm a teenager, so you don't necessarily think of yourself as an adult or capable of that, and yet I was doing it and I was getting a lot of positive feedback. And so that was just fuel for the fire. And out of that I think came my love for entrepreneurship. The satisfaction of building something for someone gave me a taste of entrepreneurship and that's when I became effectively a lifelong entrepreneur.

A few things happened there. So I started this in high school, then I went to college. I went to Harvard. The first year was actually pretty easy, but by second year got pretty hard. And in the second year I made a decision to shut down my business. Actually, I know some people drop out of school and pursue the business. Many of my peers have done that. But for me, I thought, you know what, this is an experience I want to have. It's a period of my life. I'm going to do this and there'll always be other entrepreneurial opportunities in the future. And so I actually shut down my business, focused on having the college experience for those four years. And then it was a question of what do I do after college and I ended up getting what I'll call a normal software engineering job at a midsize company. That might sound surprising given my entrepreneurial activity. They had come recruiting on campus and the kind of work they were doing fit some of my academic interest. So, I thought it was cool and interesting and so I went with it and I thought, this will give me just another perspective that will presumably be valuable. I don't have to do it forever. Well, I ended up being very short-lived. I only stayed there for about 7 months. By the time I showed up, which was like 5 months after I interviewed, a few months after graduating, by the time I showed up, they needed me to do something completely different than what they had sold me on. So, that was a little disappointing. And it turned out that the pace of what they were doing was very slow. And I just found myself being bored and not really engaged with it. It wasn't stimulating for me. And I went to quit and my boss said, 'Oh, you can't quit. You're our most productive engineer.' And that was really funny and alarming to me because actually what was happening was I had an office all to myself and I only had one meeting a week. So, for the most part, nobody knew what I was doing in the office. My routine was I'd come in and I'd code the first half of the day. The second half of the day I'd be trading stocks, reading blogs, not working effectively. And then to be told that you're the most productive engineer, scary for a high achiever. I think it reinforced the point that I was not being challenged. I was not growing. I wasn't gaining skills that I thought was going to further my career or my entrepreneurial ambitions. And so I quickly made the choice to leave. And I think that's a really important just general lesson. I don't think there's any wrong career choice as long as you learn in the process and you're being stimulated and that you make the decision when it stops becoming challenging. It stops becoming interesting. That's when you move on. And so that's what I did next.

I had just a lot of confidence in my ability. So, I always knew that I could always get a job if and when I needed one, and I could also do consulting. I had also saved a bunch of my money from my high school business. I did not go and spend much of it at all. I had some cushion there to allow me to take risk. And then, I also just had confidence, too.

I quit. And at this point, I'd grown up in Boston. I went to this job that was in the greater Washington DC area. So, I'd been on the east coast exclusively and I made the decision that it was time to go west. It was time to go find other people like myself because especially back then, I found not a lot of people like me, not a lot of entrepreneurial tech people in Boston or even DC at that time. It's different now, but back then I really felt alone. All my friends from Harvard were going off to medical school, law school, business school, getting high-paying jobs. They'd ask, 'Hey, Nate, what are you doing?' and I'd say, 'I'm working on my projects.' And they'd be like, 'Uh,' you know, it just kind of became a dead conversation. They didn't understand that. And yeah, so you felt a little out of place.

It's the opposite. There everybody is an entrepreneur. Which means they're quitting their jobs and pursuing their passion. And that's the cool thing to do. It's not to go down a more traditional path. Yeah. And so I went to the west coast to try to find people like myself.

This is 2007.

And so through a friend of a friend, I got connected to a startup opportunity. This is not Airbnb. This is something else. I like to say from this opportunity, I learned everything not to do when starting a company, which is actually super valuable experience. I mean, it was definitely stressful, but it was super valuable.

Well, I think the most obvious thing is being overly confident in your business outcome, right? This was a company that they were just so confident that they were going to make $7 million in their first year that they could therefore afford to spend any sum of money in order to just move faster. And of course, I know of very few if any people who in the span of 12 months made $7 million when starting a company from scratch, right? That doesn't happen. It takes longer. And so, they just ultimately ran out of runway. But when I joined, I was joining as an engineer. As soon as I joined, the two lead engineers quit. That probably should have been a warning sign. They had already seen enough, but it ended up being a really great opportunity for me nonetheless because I got to step in and work with the founders to take their big vision, distill it down into a product specification, hire an engineering team, and go build it all in the span of 11 months. It was a highly concentrated learning experience that didn't end the way that I had hoped but also didn't necessarily negatively impact me minus the sense that I had put a lot of effort in.

It was a lot of responsibility and it included hiring people for sure, and I learned a lot of skills that were then relevant to Airbnb which is what comes next. At this point, when I moved to San Francisco in 2007, I of course need a place to live. So I go on Craigslist and I find a roommate and through Craigslist I find Joe Gebbia, who later became one of the co-founders. But he had an apartment in South Market San Francisco that looked nice. So I applied and showed up and I actually got a call the next day and he said, 'Oh, you know, sorry, but we gave it to somebody else. There was another designer that we really liked and so we're sorry we can't offer you the room.' So I was bummed but actually then a few days go by and the person they had chosen that Joe had chosen fell through and backed out. And so Joe called me back and said, 'Hey, would you like the room?' And I said, 'Oh yes, I'm still interested.' So he and I became roommates living in San Francisco together for quite a few months. And during this time we made some important observations about each other. One, after working on the weekends, we would come home and work on our passion projects. We had a lot of things we were into and we would just work hard on them late into the night. And so we saw a passion and a shared work ethic. And then second, we realized we had complementary skill sets. Joe is a designer by background. I'm an engineer by background, software engineer. So we started helping each other with our projects because we had complementary skill sets. I was building websites for him. He was building UIs and marketing material for me. We saw the power of putting different skill sets together and what we could build when you do that, right? So those were two observations that really led to the creation of the company.

Yeah. Exactly. Exactly. But I think choosing your co-founders or business partners is such a high-risk thing. It's a professional marriage and so many companies fall apart because the founding team breaks up. We had the opportunity to be friends, be roommates, observe each other's habits before getting serious about doing a business venture together. And so yeah, I think it gave us a lot of confidence that we'd make a good team.

The aha moment, right, is leading up to October 2007, the rent on our apartment is raised 25%. And I say, 'That's too expensive. I'm moving out.' And another one of the roommates moved out, but Joe wanted to stay in the apartment, but he had quit his job to become an entrepreneur, also known as unemployed, so he didn't have the money to pay the increased rent either, but he wanted to stay. He calls up Brian, our other co-founder and CEO. And Brian and Joe had gone to Rhode Island School of Design together. So, they were good friends from back then. Brian had been living in Los Angeles working a more traditional job. And Joe gives him a pep talk about quitting his job to become an entrepreneur and joining him in San Francisco for an adventure of entrepreneurship. So Brian gets inspired, quits his job, moves to San Francisco, I think without asking the cost of the rent. That whole part was not spoken about until he showed up and now there's two of them and they're realizing they still don't have the money to pay the rent. And so they're both designers by background and they noticed that an international design conference was coming to San Francisco and they noticed that all the hotels were sold out. And so they had this idea, why not take the extra bedroom, the bedroom that I had vacated and rent it to designers who might need a place to stay that one weekend as a way to make some extra money. Now this room is completely empty. He doesn't even have a bed, but Joe sets up an air bed and instead of calling it a bed and breakfast, he calls it an air bed and breakfast. So, Airbnb is short for air bed and breakfast. They create a simple blog advertising the room and the airbed and they're expecting guys like themselves. So, 25-year-old male probably and instead they get a father of four from Utah, a man from India and a 35-year-old woman from Boston. So, an eclectic group. These guests get an affordable place to stay when hotels are otherwise sold out. And Joe and Brian make I think like $80 a night, times I think three or maybe four nights times three people. So almost a thousand bucks and they all go to the conference together and have a really great time and Joe and Brian introduce them to their friends and they get meals. So, it was really actually a whole experience that created immense connection and it was really just meant to be a one weekend way to raise a couple extra bucks. But one of the guests a month later checked in and said like, 'Hey, you know, that was so much fun. What are you doing next with air bed and breakfast?' And they're like, 'Well, nothing. It was just a one-time thing.' And he's like, 'No, no, no, no. That was too cool to walk away from. You should do something more there.' In parallel to this, the three of us had been brainstorming. At this point, I had now quit my job. So, now three of us are unemployed, all wanting to be entrepreneurs, all wanting to work together. And for two months, we were brainstorming ideas of what we could do together. And we had some ideas around like a roommate matching service or something like that that seemed relevant to what we had just recently gone through trying to find roommates. We went for two months brainstorming ideas without ever talking about the story that I just shared with you.

It wasn't until we got that call from the guests encouraging Joe and Brian to kind of take the idea forward that they then shared it with me and the three of us got enthused to go make it possible to book a home just as easy as a hotel all around the world. And that's what we set off to do in early 2008.

Yeah. Well, a few things I think. One, we knew the three of us wanted to work together on something, right? And then this happened to be the idea and the story was pretty awesome. And so it seemed like a cool enough thing to work on. Now, I at the time did not think this was going to be a big idea. I actually famously wrote an end of year note which I would do every year to all my friends and I described all the things I was working on and this was in the footnote as something that was kind of fun but probably not a big deal. Much to the chagrin of Joe and Brian who also got the letter did not appreciate that characterization of our serious effort. I have to be honest, I was also a little cautious about jumping in at this point because I felt like I had a lot of opportunities as an engineer. I had skills that were very much in demand. So, there's a high opportunity cost with what else could I be doing? And it's very easy to be tempted like, should I go work for this company, get paid a lot of money, or I have like three other ideas I'm working on, like which where do you focus and what do you double down on? I was partnering with two designers and on the one hand, they had complementary skills. So, that was compelling. On the other hand, I felt a little outnumbered, right? I felt like I was the only engineer and these guys could probably dream up things faster than I could go build them. I was hesitant, but ultimately a couple things I think. One, we were able to come up with a kind of scoped down version of the vision that was manageable. So, in the span of, I think five weeks, we built our first iteration of the product. And it's a little bit different than what you see today. But very quickly we were able to get something and put it out there. Second, it did kind of come down to having somebody to work with because I had some other ideas I was also working on just myself and I remember building something that I was frankly more excited about and I was so excited to launch it. And when I launched it I realized that this was just the beginning of building a business. I built a technical thing, but that's not a business. That's just a product or a proof of concept and there's so much more that needs to happen in order to turn into a business. I need employees or business partners. And so suddenly I felt kind of very lonely and I valued that with Airbed and Breakfast I had Joe and Brian, people who are equally excited and passionate and willing to work. That was part of what propelled us in that first year. Even aside from the fact that the idea was crazy, this is what kind of set it apart from other things that were also on my mind that I was also excited about. Now, you point out how did we have confidence in this idea when it was in fact so counterintuitive at the time. How can you trust a stranger in other words? And it was based on the firsthand experiences that we were having. I mean of course that story I just shared from October 2007 is very compelling but we had other experiences shortly thereafter as we launched the product. We didn't have many people use it but when they did use it, magic did happen quite a lot and those stories were really powerful and so it can work. The question is just how to help more people take the leap and embrace meeting somebody new and having this kind of value exchange that makes a lot of sense. That's what we understood that nobody on the outside really did.

Honestly, when investors heard the idea, they would have almost a visceral reaction. It wasn't just that it was a bad idea. It was a scary idea that was almost revolting. They honestly didn't see themselves as customers, right? They're investors. They probably have a fair amount of money. They were not looking to necessarily save money on a hotel and stay in someone's extra bedroom, at least not at that time. So, yeah, they would have a pretty strong reaction over that first year. No one was willing to invest. No one would even give us a second meeting.

Yeah. And there was other stuff going on that was not easy. For one, actually during this time I had moved from San Francisco back to Boston. So suddenly I was working remotely with my co-founders and that was to be with my then girlfriend who had been dating for a long time was now my wife. We've been together for a couple decades now but it was time to get serious and spend some time together and so I went back to Boston to be with her but that obviously strained my ability to work with Joe and Brian and also led to some funny dynamics about just how to handle rejection. Because as the engineer who had a lot of other opportunities, I was very busy with the coding and I was not going to all the investor pitches. They were doing that out on the west coast while I was on the east coast working. So I would be eager to hear how the meetings went and they would always kind of frame it in more positive terms than it was probably the actual reality. They were like, 'Oh, they thought it was interesting and curious and they'll get back to us and they need a little more time.' They didn't tell me the part that the investor was like by kicking guest out. Yeah. And so, I also remember one time I was in San Francisco during one of these meetings and we were practicing the night before the pitch deck and we come to this slide that is basically how much revenue will we be generating three years from now and the number was 200 million and I did some quick sanity checks. I said there's no way we can ramp to 200 million from zero. It makes no sense. 20 million is more realistic. Why don't we put 20 million on the slide? And so Brian's like, 'Yeah, okay, sure.' And then the next day we're in the investor meeting and we come to the slide and the slide was not 200 million, not 20 million, but it says two billion. So instead of decreasing it, he increased it. It was at that moment in time where the investor totally just looked out the window and stopped paying attention. And so, afterwards I asked Brian, 'Why did you change it? We had talked about 20 million and now you changed it to two billion. Why'd you do that?' He said, 'Oh, well, I was talking with Sam Altman, you know, OpenAI Sam Altman, we knew him way back then. He had been in Y Combinator and kind of in our network. And so we got some advice from Sam Altman that investors don't want M's, they want B's, baby, meaning investors don't want to invest in million-dollar opportunities. They want to invest in billion-dollar opportunities.' And so, it's a prerequisite that you have to sell a big idea, which is actually, of course, true. The problem is in our pitch, we didn't really connect the dots between what we were doing and it being a billion-dollar idea. So, I think both perspectives have some validity to it. But bottom line is the pitch did not go well. And I got to see that firsthand and was definitely very alarmed by that.

Yeah. No, it's very true. And so what led up to that was it's now summer 2008 and we're going to launch the company officially at the Democratic National Convention. This is the event that took place in Denver where Barack Obama received the nomination of his party to be the presidential candidate. Historic event, first African-American presidential candidate. The stadium where it's going to be held holds 80,000 people and we know Denver only has 17,000 people. So we know there's going to be a need for alternative accommodations. And so that's why we made a whole goal of being ready to launch two weeks before then. And sure enough, it was a big success. Locals were looking to get out of town. They were putting their stuff up on Craigslist and ultimately then on Airbnb. And we ended up hosting hundreds of people for this event. And also, the newspapers and blogs and TV were doing stories about the event, of course. And of course, one of the story lines was historic event, but people have no place to stay. They're like camping out in parks. So, we wrote to the reporters and said, 'Hey, actually, we have 800 confirmed available homes on our platform still available.' And they would say, 'Oh, that's an interesting story. I'm going to feature you.' Because we rode the media wave, right? We didn't create the story. The story was out there already about the event. And we made our product relevant to that event. And so that was a great strategy in general for getting media attention. You can't make the wave, but you can ride the wave. So you just got to identify the wave and make yourself relevant to it. So that's what we did very successfully. And we were on CNN and just getting amazing coverage. And we sold hundreds of bookings. Now a week later, the convention's over and nobody cares about us anymore, right? There's zero business. And so this got us thinking, we had met all these reporters during the previous week and now they didn't care about us anymore, but how could we get back in touch with them and make ourselves relevant to them and get featured again because that was so amazing. So I don't know how it happened, but basically Joe and Brian got this idea to create a presidentially themed breakfast cereal. And it was partially because the name of our company was Airbed and Breakfast. And so, obviously the product is airbeds, but they thought it'd be funny to do something with the breakfast concept. That was also part of the name at the time. We weren't Airbnb yet. We were still Airbed and Breakfast. And they said, 'We should create a presidentially themed breakfast cereal and then we should mail these physical boxes to all the reporters and if they get a box of our presidential cereal, they'll be so curious they'll call us back and we'll start talking to them again.' They come and tell me the story and I just think it's ridiculous. And I said, 'Guys, do whatever you want, but just promise me that you won't spend any money.' I was heads down writing code and I had a backlog of things I needed to do. And I said, 'You guys can spend your time doing that, but just don't spend any money.' So, to their credit, they were super scrappy. They didn't spend any money. They got friends and people in their network to help print off the boxes. And being artists themselves, they were able to create amazing artwork for these boxes and super witty concepts and hot glued all these boxes together, stuffed them with cereal. And so they're super scrappy and they made it in the span of like a month and a half. They made presidentially themed breakfast cereal. Obama's tagline was 'Hope in every bowl' and Captain McCain's 'The Maverick in every bite.' And so the first 100 of each of these boxes they mailed in the physical mail to the reporters. And then the extra boxes that they had printed they decided to label as a limited edition collector's item. So they numbered each one 1, 2, 3, 4, all the way up to 400. And we made a little website to sell them on. So anyways, the reporters get these boxes and sure enough, this is in the lead up to the election. So there's obviously a whole hysteria about the election and excitement and people doing wacky things. And so we're an example of a wacky thing that's going on. So sure enough, we get back on CNN and Good Morning America talking about the breakfast cereal, talking about Airbed and Breakfast, what this is all about. And that day we become the number one political video of the day on CNN. And we sell a $40 box of our cereal, the limited edition collector's item on our website. $40 a box. We sold a box of cereal every three minutes until we sold out. So that week we made over $30,000. We sold out of Obama O's. We never sold out of Captain McCain's. So I guess we could have predicted the election. It was so exciting and we made more money that week than we had all year in our core business. And we thought, well, if only there was a presidential election every week, we could just be making cereals. But clearly that wasn't a repeatable strategy. And once that passed we were kind of once again back at square one with making no money. A whole year has gone by and we're asking ourselves when do you quit? 12 months in, made no money except this kind of PR stunt. But our actual business isn't making any money. It's not growing despite all the work we're doing. And we are having trouble paying our rent again. When do you quit?

Yeah. Well, I mentioned earlier that starting a business with other people is kind of like a professional marriage and they often fall apart. So choosing founders is really important. And also part of that is making sure you're kind of in the same stage of life, too, right? We are obviously young guys. I had a girlfriend, a serious one, but we didn't have kids yet. And we were able to take risk. And so, we had made it this far and that was pretty great, but we were all getting a little desperate and because we were all friends with one another before doing this, we really didn't want to quit and leave the other guys hanging. We kind of needed to decide this together. No one person wanted to jump ship. So, we made an agreement. We said, we've worked really hard this year. We need to give it one more shot. And we need to give it our absolute all. The truth is I had been doing some consulting on the side. I had been in Boston. They had also some side projects. So we weren't completely focused and we agreed that we were going to apply to Y Combinator, which is a well-known accelerator program even back then, and that if we got in we would do it of course. And the thing about Y Combinator is it's about a 12-week program and so it's very finite and we said we're going to do Y Combinator if we get in. At the end of the 12 weeks if the company isn't in a materially better place, we'll all quit together and not have any hard feelings about it. We'll just pre-agree up front that that's the condition for quitting. We'll see how it goes. But before we could do Y Combinator, we had to get into Y Combinator. And this in itself is a pretty interesting story and a lesson. Very selective. Y Combinator. Oh, yeah. Even back then. So, we did a lot of practicing and rehearsing and like practice stressful interviews where we're shouting questions at each other and throwing phone books around the room and just trying to make sure that we could stay on point even in a stressful situation. So, we did a lot of preparation and we go to the interview and the interview is only five minutes. It's super fast. Two minutes into the interview, Paul Graham is like, 'What? Strangers staying in other people's houses?' He's like, 'I would never do that.' He had the same reaction that everyone else did. He did not like the idea. He was almost angry about the idea. And at that point, the conversation goes sideways and he kind of says, 'You know what? I really don't like that idea, but you are handling payments between guests and hosts, and so maybe you should become a payments company.' And so he basically takes the next three minutes to try to convince us to do a different idea, which sounded a lot like what Stripe eventually became actually, which is kind of funny. Five minutes is up and we're walking out of the room realizing we had blown it, right? We completely went off the rails here. And as we're going out, Joe takes out of his bag a box of the Obama O's. And it's funny because before we had left for the interview I saw Joe putting it in his bag.

The Obama OS. I said, Joe, don't bring that to the interview, because for me, the Obama OS and that whole cereal story... to me, it represented a distraction. Although it was super clever and made $30,000, it obviously did nothing to drive our core business. And it took about a month and a half of Joe Bryan's time. So I felt like that did not really communicate that we were a serious tech company and focused. But Joe brought the Obama OS anyway. As we're walking out, he takes it out of his bag and gives it to Paul Graham. Paul Graham looks at it and says, 'What is this? Did you buy me a gift?' Joe said, 'No, we made this.' Paul Graham's looking out and says, 'I don't understand. You made this? Come back in and tell me how you made this.' So we sit down and get five more minutes with PG and we tell him how we made the cereal. Later that day, we got a call saying we were accepted into Y Combinator. Later on, Paul Graham told us we were accepted not because he liked our idea—he hated our idea—but he knows that ideas can change. Instead, he's choosing people based on the founders: who he thinks will have the tenacity, the perseverance, and the ability to create and build. From that story, what he saw was that these are guys who would not give up. They would be very resourceful and scrappy and figure out a way to do things. And so that met his criteria for admitting us. It's also just a lesson for anybody when it comes to pitching yourself: the idea is one part of it, but it's also all about you and your character.

We heard a lot of advice during Y Combinator and from other people, but especially from Paul Graham; he always has interesting things to say. The thing I'll say about advice is that not all advice is good advice. But advice is thought-provoking. Amongst all this advice we were getting, there were some real nuggets that we latched on to.

I think it's not about necessarily following advice, because some of it's good, some of it's bad. It's about reflecting. At the end of the day, advice causes you to reflect: is this true? Is it not? Is this a good idea? It's a stimulus, an outside stimulus; it sparks creativity. This is important because when you're starting something, so many people are secretive about what they're doing. They don't want someone to steal their idea, so it leads you to not share. I think it's a missed opportunity because it's important to hear different perspectives, get different reactions, and then reflect on that. I felt that every time we engaged someone about what we were working on, we came away with new thoughts we wouldn't have otherwise had. We made a point to go to every single office hours Y Combinator held, and we were always the first ones there. We spent the most time with Paul Graham because we wanted to hear his reactions. Even though he didn't necessarily like our idea at first, we still wanted to talk with him, understand that, and unpack it. One of the things that gets said is that it's better to have a hundred users that love you than a million users that kind of like you. You need to have evangelists—people who feel really passionate about what you do. And to do that, you kind of need to meet your users, to deeply understand their needs and how they're using your product. Both those things are a little counterintuitive, at least for us at the time, because we thought we were building an internet company. Internet companies are built for scale. If you're doing scale, of course you can't go meet your users individually; it's all about bigger numbers. These ideas kind of led us to think more about product-market fit and actually spend time meeting users. Based on that feedback, Paul Graham said, 'Well, where are your users? Why aren't you meeting them?' We said, 'Well, our platform people are based all around the world, and there's not many here in San Francisco. Actually, most of them are in New York.' He said, 'Well, why don't you go to New York?' We said, 'We're here doing Y Combinator. We don't have any money.' He said, 'I don't care. Go to New York.' When you did Y Combinator back then, you got $20,000. That's it. It wasn't like $100,000 or $200,000 like they do now. So we used much of the $20,000 going to New York for a few different weekends. When we went to New York, we realized a lot of people had photos of their homes. Some had no photos, and others had photos that were poorly lit—poor resolution, especially back then. Camera phones weren't very good. How do you meet your users when you're an internet company? We would call them up and say, 'Hey, we saw that you put your apartment on Airbnb. Would you like a professional photographer to come to your house and take some professional photos for your listing?' People were a little surprised to get this offer out of the blue, but a lot of them said yes. It was free, so sure. It was actually Joe and Brian themselves showing up at the door.

Not until they showed up. We didn't have any money. They didn't own an expensive camera, but they would rent a camera on the weekends just for this purpose. They'd go and take the photos, but while they were with the host, they would also sit down at the computer, watch them use the product, get ideas from them, give them tutorials, and then invite them to get a beer later on. We'd get a few hosts together later on for beer. Over beers, we would tell them our entrepreneurial journey—the stories I'm sharing now. People love a good story, and this was a way we started to build rapport with our early community and develop a following of people who loved Airbnb. At this point in New York, we have good photos on the properties, we've met the hosts and built a rapport. With that rapport, we were able to call them up and say, 'You know that price you set? Would you mind lowering it? If you get too much interest, you can always increase it. But we think starting at $400 a night feels a little too high. You don't have any reviews yet. Can you start low and raise it later?' If you had asked someone out of the blue to do that, they'd say, 'Who are you to suggest that?' But because they had met us and liked us, they said, 'Yeah, sure, we'd love to help you out.' Now we have well-photographed properties at attractive prices in New York City, a place people all around the world want to go to, but it's really expensive. These properties start getting bookings. The hosts start making money, they tell their friends, and their friends come to the site and see the effort the other hosts have put in. They look to emulate that because it's the recipe for success. We get more and more hosts in New York. Meanwhile, guests from around the world fly back home and think, 'Hey, maybe I could be a host in my own home city—in Paris, in Berlin.' Very quickly, there's cross-pollination. This is when things started to take off. Y Combinator was about a 12- or 13-week program. We had agreed at the start that if things didn't materially improve, we would quit at the end of 13 weeks. Before Y Combinator, we were making $200 a week in revenue, and that had been true for five months. Nothing we did seemed to increase it. Our goal during Y Combinator was to get to $1,000 a week. In the span of 13 weeks, we got to $4,200 a week—passed our goal quite a lot. During this time, we were introduced to Sequoia Capital, one of the best investors in the world. We ended that 13-week period not only with a great ramp in revenue, but Sequoia Capital investing $600,000 in our seed round, leading it at a paltry $3 million post-money valuation, which is funny. It doesn't even seem real by today's standards. But back then, this was during the recession in 2009, so these were the kinds of valuations out there. We were stoked. We had our first investor. Before, every investor had basically laughed at us and not taken a second meeting. Now here's Sequoia Capital, one of the best names in the world, investing in us. That was a huge boost in confidence, and it meant we never had to have that conversation about quitting. From there forward, it was a rocket ship.

After it stabilized. There's a sequencing to it. 2009 was really defined by our growth in New York City and starting to build the team. It was still just the three of us, and I was the only engineer until basically August 2009—18 months after having started—and at that point, the company was doing really well, making like $12,000 a week. We hired our first engineer besides myself in August 2009. By 2010, we were growing in Paris, Los Angeles—say four or five cities were thriving. Still small. Then came 2011. 2011 was another inflection point where everything happened all at once. What kicked it off was competition. Up until that point, we had been very quiet about our success. Even when we fundraised, we didn't announce it because we didn't want to tip off other people that this was a good idea. We staggered the news by four or five months. By the start of 2011, word of our Series A funding—which had happened in April 2010—had gotten out. Our Series A was a $7 million raise at roughly a $72 million post-money valuation. That got the attention of people—specifically some serial entrepreneurs based in Europe who were well known for cloning successful Silicon Valley companies, including the Samwer brothers, who have a company called Rocket Internet that famously cloned Groupon and attempted to clone Facebook. They decided to try to clone Airbnb and become the Airbnb of Europe, as did another serial entrepreneur in Europe. Suddenly we see competition. We know that travel is inherently global. To be a relevant travel company, you need to be in Europe too—it's a very important part of the travel jigsaw puzzle. We become determined to be just as local as these guys.

We entertained it. We had to, and we had a fiduciary duty to at least consider the offer. It was totally shocking. At this point, we have 40 employees. I remember flying to Berlin, touring their offices, and they have 200 employees. They had just started. Partially that's because they had a pool of people working at other companies they could pull from. It was super intimidating to see all those people—so many more than we had. Ultimately, we realized these guys are a little bit like mercenaries. We viewed ourselves as missionaries. We really loved the business we were in. We were really attached to it. We lived the product. We felt our competitors were out to make a quick buck. That didn't appeal to us, so we declined the offer. But we realized we needed a plan B. We needed to get into growth mode and go from peacetime to wartime—not just going along the lazy river but really start sprinting. We needed to be more local than these European companies.

Going back to the idea of getting advice, we would always reach out to different mentors and other founders to get their perspective. In this case, our partner at Sequoia—Greg McAdoo—would have brunch with us every two weeks and just talk about what was going on with the company. He was spending a lot of time with us, being a thought partner. For this trip, he came with us. He saw everything we saw, and we had conversations about it. Together, we made the decision to turn down this offer that felt like it would lead to obvious success because these guys were so experienced operationally and had so many people, whereas going it alone felt very risky. But we made that big decision. Through our network, we started reaching out to people who had helped other companies scale internationally. In the span of a couple months, we hired country managers for 8 to 12 countries, opened offices, and hired local teams—maybe a dozen people—to bootstrap the market, get super hands-on, meet the hosts like we did in New York, photograph the properties, all the hands-on stuff necessary when attracting your first users and building credibility.

There's a sequencing here. This competition kicks off in 2011. 2011 and 2012 were really defined by the race to win Europe specifically. We were also starting to plant the seeds in Asia simultaneously, but Europe was the initial focus. By 2014 or 2015, having managed to have success in most of the other markets—if not all of them—we also started to explore China. That was a whole adventure in itself. A very unique market because of how big the ecosystem is and because of the government and all these different things. But we are incredibly popular in China amongst travelers. We used to think, 'Will this only work in New York? Will this only work in North America?' Everywhere we went, people said, 'That might work where you're coming from, but this will never work in my country.' It's so amazing to see that not be true, and to see it actually work in every country of the world. All around the world, people have a curiosity to meet people from other places and see how other people live. We tapped into that in a way that was also affordable. It's been remarkable to see how we are now ubiquitous for home sharing in every country of the world where we're allowed to operate. More than two billion people have now stayed in other people's homes. This idea of strangers is no longer.

Going into 2020, we're now coming on 12 years of growth and building the business. We had tons of success and were planning for our IPO in early 2020. In 2019, we had written the draft S1 and done all this preparation. 2020 comes, and we're planning to do this—and then COVID happens. In early March, the WHO declares a pandemic. Our business drops 80% in just eight weeks. It just disappears. That's super scary because at this point, we have 8,000 employees—maybe a little more. We're a big ship. We have a big, expensive burn rate. The costs don't stop. The revenue stops, but the costs are there. Probably people are asking for refunds. A lot was happening all at once. Travel was deeply impacted, so no more new bookings were coming in. But we also had existing bookings; guests were wanting to cancel, and that might not have been acceptable by the host's cancellation policy. There were billions of dollars of bookings that had to be sorted out in terms of whether to honor the booking and how to navigate that. There was just a burn rate situation. The issue is not just that there's no money coming in, but we don't know how long this is going to go on. Is this a two-week thing? A two-month thing? Nobody knew anything. In terms of planning how long our bank account would last, we had no idea. We knew we had to raise some money quickly, but of course, this is exactly when the market froze up. No one was willing to give you money because nobody knew anything. So it was a terrible time to raise money, and we had to make a bunch of choices. We realized right away it was a crisis. This was not something to be managed away or buy a little time. We said we're going to treat this super serious from the get-go. We're going to be bold. We're not going to take half measures. We had to first rightsize the ship financially. We did a layoff relatively quickly—one of the worst days I've had to experience. We lost 1,800 employees. But it was necessary to do that quickly, or else everything was in jeopardy. We did that with a lot of humanity too. We found ways to help employees. On the one hand, we needed to help the company, but we also understood people were going through their own situations during the pandemic. We found creative ways to help people find new jobs at other tech companies. We created a whole directory that people could opt into and shipped those names to other companies that were hiring because some companies were doing well during the pandemic. We helped people transition and find new jobs. We also went out and raised more money on terms that were tough but ultimately necessary.

It's definitely a scarier thing for sure because there's so much uncertainty and so much at stake. Everything you thought you had accomplished suddenly goes poof—faster than you thought was possible, or feeling like it could be gone. So super scary. At the same time, I think we all got into the wartime mentality: we're going to buckle down, get super focused, super disciplined. We're going to operate differently than we were weeks ago. We met as an executive team every single day to discuss the status of everything. We got really clear on tracks of work and ownership. We made decisions quickly. We acted with boldness. We came up with principles to guide our decision-making. We moved incredibly fast to deal with the situation. Something we've learned along the way is that a crisis is a terrible thing to waste. There's a quote from Andy Grove, the former Intel CEO: 'Bad companies are destroyed by crisis, good companies survive them, and great companies effectively thrive or come out stronger from a crisis.' We had experienced this before in earlier years. What started off as a crisis was a call to action that we ultimately not only survived but came out stronger because of, and came out as a better company. So as we identified this as a crisis, we were also trying to understand how we could come out stronger as a result. What is the lesson? As we had to cut down on projects because we had fewer people, we got really clear about what was important in the long term and not to sacrifice those things. We also thought to ourselves that in this pandemic, people still wanted to travel. They couldn't get on airplanes or go to other countries, but they wanted to go out to the countryside and have a home where they could socially isolate—maybe with some family members or make a bubble. We realized the desire was still there; it was just taking a different form. We became very agile in adapting our product to help people find these opportunities and travel in this new way. Very quickly—within two to four months—we stabilized our business and started growing again by meeting these new consumer behaviors. By the end of 2020, we completed our IPO. That IPO that was supposed to happen in March—a pandemic happened, we thought the company was about to implode, we stabilized it, returned to growth, and followed through on the IPO by the end of the year quite successfully. It was a remarkable turnaround in the span of 12 months.

We've gotten to a place now—it's 2025, five years after the start of the pandemic, and certainly three years since the pandemic dominated our attention. The pandemic caused us to put a lot of things on hold because we had to get more focused on our core business again. A lot of things we believed in were paused. One of those things was experiences. It's not that we stopped offering them, but we weren't leaning into it as much during the pandemic because people were socially isolating and not getting together in person. So that product offering grew more slowly. We recently relaunched experiences and added something we call services. Services are about thinking of all the conveniences you could find in a hotel and making sure they're available when you rent a home. If you want a personal trainer, a spa, or a chef, we can connect you to one of those people who can do that for you in your home, even in a foreign city where you don't know who to call or speak the language. We make it just as easy to book as a home through the app. We relaunched experiences and launched services with a completely new app integration. That's been really exciting to be in a place where we can start to innovate and expand into other aspects of travel. As we think about growing our business, we always think about what Airbnb can uniquely do and how we can leverage our host community to empower people to provide travel services in new ways. Experiences is a great embodiment of that.

Since the beginning, we realized the magic is in the people. The story from October 2007, when Joe and Brian hosted those three in their apartment—it wasn't just about the affordable place to stay. Obviously, it started with that, but it ended with friendship. Joe and Brian were invited to that guy from India's wedding two years later. It was pretty powerful on a personal level. Travel at its best transforms your perspective, makes the world a smaller place, and creates friendships that cross borders. That's the future and vision we're excited about creating. We do that through a product that creates trust—a framework for how you can establish trust with someone you don't know through reputation, how we handle the money, and the various protections. I also think about inspiration. We have a lot of inspiring spaces that are super fun. You never knew these things existed, and suddenly you realize on Airbnb they do—that's inspiring. Likewise with the experiences product—it's a whole new travel offering very different from the tourist bus that has traditionally been available. We think there are so many different ways to reinvent the travel offering and open up new destinations that weren't previously on the map because they had no infrastructure or hotels. Through the lens of a local, you can really unlock what's special about a place and make it into an experience that wasn't previously. That's what excites us, and we think there are a lot of new ways to continue to do that.

I was often preoccupied with opportunity cost. The idea that there are so many opportunities—what if I miss out? It can be paralyzing: which direction do I go in? As long as each experience or direction you go in is challenging and you learn, then it's just one step in a journey. It's not necessarily a final outcome; it's building your skill set for that ultimate thing you do. I did a lot of things that were frankly not successful—a lot of side projects. In retrospect, all those things that ended up being, from one perspective, a waste of time because they didn't work out as anticipated, were actually super valuable skill-building opportunities. Funny vignette: I went to Harvard, and Mark Zuckerberg is a year younger than me. He was at Harvard too. I remember that first summer when he started Facebook, he put an ad on the computer science listserv saying, 'Who wants to join me and go to Palo Alto to work on this thing?' I told my roommate, 'That sounds kind of cool. Maybe I'll apply.' My roommate said, 'No, that sounds stupid. Don't do that.' I thought, 'Yeah, you're right, that doesn't sound like a serious thing.' So I didn't. A year or two goes by, and I'm kicking myself: 'I could have been one of the Facebook co-founders had I gone to Palo Alto and not listened to my roommate.' Fast forward a few years, I have some friends working at Facebook. They invite me to lunch and tell me what they're working on, trying to convince me to join. At this point, they have 40 engineers. I thought, 'I don't know, you guys are so big already. You're using all the colleges and high schools. What more is there to do? You're done—mature as a company.' Obviously, that was not the case. They were still just getting started. So again, I was catching myself for not going down that path. Yet had I gone down that path, I wouldn't have done Airbnb. There are many right paths. The important thing is you can always course correct. As long as you're learning on whatever path you're on, you're building your skill set for that ultimate thing. There's this article in the New York Times I read about the nature of luck. It says luck is two things: there's some serendipity, but also there's opportunity around you all the time—you just have to notice it. Yes, there's serendipity, like me finding Joe on Craigslist or the other roommate falling through. But there are also moments where we saw opportunity, like applying to Y Combinator and getting the cereal out. Joe recognized a moment to make an impression right at the right moment. You can train yourself to notice the opportunity right before you. We're all surrounded by opportunities; we just fail to notice them. That's a really important lesson that would have put me at ease as a younger person when I was preoccupied with how to become successful and which path is the right one. Don't worry—actually, any of these can be right paths. Just do one thing at a time, learn, move on when you stop learning, and be observant to what's happening around you so you're ready to pounce when the right one comes across your desk. Create your own luck.

It's a lot of fun for me too. Thanks for taking the time to have me on your program. I really enjoyed it.