From ‘ramen profitability’ to global scale: Airbnb co-founder on building a global giant

It was an existential threat. We told all our employees to stop what you're doing, go to the war room.

Oh, for sure. No, I really did not know if we were going to survive this.

It's the end of 2008 and we are on the verge of quitting because we have raised no money. We're in debt and the trajectory of the business has been flat.

Super app for travel that is of course AI powered.

We mobilize when we raise $100 million of new venture capital.

We had heard a quote. It went something like, bad companies are destroyed by crisis, good companies survive them, great companies thrive or come out better.

It's my pleasure. Thank you.

It's definitely surreal, and the numbers just keep getting bigger and in some ways are arbitrary. I think what I'm most proud about is the impact it has on individual people. I'll travel to a place like India on the other side of the planet and get some hosts together and I'll ask them, what does Airbnb mean to you, and you'll get the most heartfelt stories about how maybe not only did it help them afford their home but maybe start a business, meet new friends from around the world, give them a sense of psychological empowerment. So as an entrepreneur to know that you're impacting someone you thought you would never meet on the other side of the planet and doing that at scale is very rewarding.

Yeah. Well, I grew up in Boston and my dad was an electrical engineer and he would always be bringing things home from work and allowing me to tinker and take them apart. One year he brought home a Xerox machine, like a big huge photocopier, and I took that apart in the snow over the course of the winter. So early on I was tinkering a lot and trying to ask the question, how do things work? I was also playing a lot of computer games like a lot of young people, and that turned into a hobby of computer programming. One day at the age of 12, I was homesick from school and my dad had books about computers and I took one of them off the shelf and started looking through it. It had instructions on how to create simple scripts, which was interesting to me because to start my games back then, this is in the '90s, you had to type in lots of commands to get the CD-ROM drive to work etc. So I started creating simple scripts to play my games. But that then graduated to me asking for a book on programming that Christmas a couple months later, and I got a 500-page book on how to program in 30 days and actually 21 days and I finished it in 30 days, and this began a hobby that became a business throughout high school.

Yeah. So, it was a hobby at first and just completely self-taught. I was going to Barnes & Noble and buying another one of these books that was probably never meant to be read front to back, but I was devouring them. I was posting my work on the internet and saying, if you like what you see, please send me $5. Well, nobody ever sent me $5, but at the age of 14, somebody called me and said, I saw your work on the internet and I want to pay you $1,000 to create something similar for me. And so, I was super excited. I told my dad, somebody from the internet wants to pay me $1,000, and he's like, son, nobody from the internet's going to pay a thousand bucks, especially back in the '90s. So I was like, but whatever, dad, this is my hobby. I'm going to do it anyways. We'll see what happens. So I did it. And 30 days later, I got paid a thousand bucks. But better yet, he introduced me to other people who needed contract programming done. And so this began a business. And as I was creating these programs, spoke programs, I started realizing they had similarities. And I thought to myself, instead of reinventing the wheel each time and making a new program, why don't I create a software license and create one single program that I can resell. So this is really the beginning of the business that I ran for four to five years throughout high school into college, made almost a million dollars during this time period. But more important than the money was the lessons. The two lessons that I took away were one, I could teach myself all the skills, completely self-taught. And then two, I could create things that other people really valued. And that was really empowering. And that is kind of where I became or knew I'd be a lifelong entrepreneur.

It was email marketing. This was like before modern day web-based solutions.

Once graduating college, I kind of got a normal job as a software engineer, but I quit after seven months. The reason I quit was I wasn't feeling challenged. I had an office to myself. I could close the door. I had one meeting a week. No one knew what I was doing in there. And what I was doing was half the week I was writing code, half the day writing code, the other half the day I was trading stocks, reading blogs. And so finally I'm like, I'm not being challenged. I'm going to quit. My boss said, you can't quit. You're our most productive engineer. And that was very concerning because I was only working half the time. So, I really then knew I had to quit. And I think that's an important lesson. There's no wrong path necessarily as long as you're learning along the way. And when you stop learning, it's time to make a change. So, I chose to make a change through a friend of a friend. I got connected to a startup out here in the Bay Area and I moved from the east coast to the west coast. And yes, I like to say I learned everything not to do during this time, which only lasted about 12 months. But as soon as I joined, the two lead engineers quit. That was probably a warning sign. But it allowed me to partner directly with the founders and kind of take their big vision and break it down into a product spec, hire a team and actually build it, all in the span of 11 to 12 months. I had the opportunity to get my hands dirty and build. And so that was a huge learning opportunity, but it didn't turn out the way I expected because they were frankly burning too much capital, too much money. They had unrealistic expectations about how quickly they would succeed. Anyways, learning experience and it was through that and being out here that I then met my future co-founders for Airbnb.

Well, first I had to meet my co-founders and that happened like you pointed out through Craigslist a couple months after arriving here. First I was staying with some friends but then I had to get my own place. I went on Craigslist and I found Joe and he had a nice place here in SoMa. So I became the roommate. While living with Joe, we noticed two things about each other. One was our work ethic. After work and on the weekends we would be working on our side projects late into the night. And second of all, he was a designer, I was an engineer. We had complementary skill sets and he would help me design websites. I'd help him build his websites. And so we saw the power of our combined skills. And so we kind of filed that in the back of our heads for like, wouldn't it be great to start a company together. But before that could happen, the rent on our apartment was raised 25%. And I said, that's too expensive. I'm moving out of here. But Joe wanted to stay. Also, Brian wanted to stay. Brian had been Joe's friend from university, from Rhode Island School of Design. So he was in the picture there, too. So they wanted to stay, but they had just quit their jobs to become entrepreneurs, also known as unemployed. So they didn't have the money to pay this increased rent. But they're both designers. And they saw that an international design conference was coming to San Francisco. And they saw that all the hotels were sold out. So they had an idea. Why not rent out Nate's extra bedroom to designers who might need a place to stay that one weekend for the conference? And so the bedroom was empty. I'd taken my bed. So Joe set up an air bed and instead of calling it a bed and breakfast, they called it an airbed and breakfast. So Airbnb is short for airbed and breakfast. And they were expecting guys like themselves to want to crash with them, but instead they got a 35-year-old woman from Boston, a father of four from Utah and a man from India. So a super eclectic group got an affordable place to stay that weekend. I think they paid 80 bucks a night times three people times four nights is almost a thousand bucks. So, it added up and they all went to the conference together and Joe and Brian introduced them to their friends, took them out to dinner. So, it was a whole social experience on top of having a place that was affordable to stay. And then that was almost the end of the story because it was just meant to pay the rent one weekend. And over the next two months, actually, I had now quit my job and the three of us were brainstorming ideas of things to work on. And this story I just told you never came up over two months of brainstorming. Never was the story shared. And so it's so obvious in retrospect, but in the moment, it really was not meant to be a business. It was just a fun way to earn some extra cash that one weekend. And it wasn't until January of 2008 that they shared the story. And we thought to ourselves, maybe we can do this for other people in other situations. Why don't we make a site to facilitate this on an ongoing basis?

A lot of them had to do with roommate finding services because that's a challenge that we had kind of felt earlier that year when we were finding each other. So not terribly different, but there was also apartments.com already so we weren't filling a hole in the market.

It was tough because you'd explain the idea, allowing strangers to stay with you, and people would have almost a visceral reaction. Like they would be like, someone's going to get hurt, how can you trust a stranger. And so it was just common sense that that was not a good idea. So frankly, we lost a lot of people necessarily in those early days. It was a funny situation. I think after the first year, I would send an annual update to my friends telling them about the year, kind of a year in review, and I wrote this long email about all the stuff that had happened that year and all the projects I was working on, and at the very end I mentioned, oh yeah and there's this thing Airbed and Breakfast but I don't think it's going to go anywhere. And I sent it to Joe and Brian and they were so upset that I had not put more emphasis on the idea and spoken about it more positively. It was very tough for sure. I think the only thing, there's a couple things that kept us going. One, Joe and Brian had seen the power of the idea that first weekend, real friendships were formed as a result. It wasn't just an opportunity to crash. We saw that a few more times when we launched the first kind of incarnation of this. It was at South by Southwest in I think it was March or April 2008. And again, a few people used it and they had amazing experiences. And so we'd have these breadcrumbs of people who said, wow, this is really great. Once you experience it, you're transformed. And so we saw the potential. It was just a question of how to recreate that and how to make more people take the leap of faith. So that was number one. I think number two was the partnership amongst the three of us. The fact that we were friends before we started the company because there's a lot of stress when you're working on something and it's not working. Meanwhile, you have financial realities. That whole first year, no investor would give us money. We were paying for the rent and everything else off our credit cards and accruing debt. So we had a lot of strain about whether we were on the right track and whether we should continue, but because we were friends, no one of us wanted to leave the other two hanging. So I think that kept us together as well.

That's a funny story, right? So again in 2008 during that first year we were trying to raise money from investors and we never succeeded in getting a second meeting. I mean the first meeting was hard enough. So during this time I was mostly in Boston. They were here and I would hear about this stuff secondhand, but it so happened I was going to be out here one weekend and be able to participate in one of these pitches. So, I was super excited and the night before we're reviewing the pitch and we're going through the deck and we come to the slide and the slide says that in three years we're going to make $200 million per year, and I run some quick math and I'm like, that's just totally unrealistic. At our price point, whatever, it's like 30,000 transactions a day. There's no way in three years we're going to be doing that. So that's my mindset. This kind of pragmatic analysis of the slide. And so I'm like, this is not realistic and not credible. So we should change it to something credible. So Brian says, okay, we'll change the 200 million to 20 million. I'm like, okay, that's realistic. I can stand behind that. Yes. So the next day we're in the pitch and we come to the slide and indeed the slide has been changed. But the 200 million is not 20 million, it's now two billion. So he changed in the other direction. And so afterwards I asked Brian, why'd you change it? And he said, well, after we spoke, I called up Sam Altman, who is someone we knew through Y Combinator, and Sam told me that investors don't want M's, they want B's, baby. Which Sam is right, you know, investors want home runs and they want ideas that have the potential to create a billion dollars. That's what they want to bet on, even if it's unlikely or risky. But on the other hand, we had not painted a credible path how we were going to get there. So that meeting did not go well.

Yeah, I know. It's crazy. The same names keep coming up over the time.

Yeah, so there's a few parts of this story to understand how it played out, but it's all very interesting. We set out to launch what you see today in August of 2008. We kind of settled on this idea in June, which was facilitating the payments and the reviews and like what you know Airbnb to be today. We scoped that in June and set out on a three-month journey to launch in August. And the whole idea was to leverage the Democratic National Convention, something that we knew everyone was going to be talking about and where we knew there was going to be a need for our product. This is when Barack Obama received the nomination of his party to become the presidential candidate. So, historic event, first African-American presidential candidate, and it was going to be held in a stadium that holds 80,000 people. And we searched Denver, and we found out there's only 17,000 hotel rooms. So, we said, there's going to be a need for extra accommodation. And we know this three months ahead of time. We're going to build like crazy to launch just in time to participate in this cultural wave or moment that's happening. So, that's the windup. And sure enough, we launched like two weeks beforehand and sure enough, this news is doing stories how people want to attend. There's no place to stay. People are going to be camping out in parks. Meanwhile, there's locals who are looking to get out of town to avoid the traffic. And some people are renting their rooms on Craigslist. So, we created this website dedicated for this purpose and we were able to convince a lot of folks on Craigslist and elsewhere to rent their homes on our site. So, within a week or two, we have 800 homes on our site. We reach out to the news and we say, we saw your story saying there's no place to stay, but guess what? Did you know there's 800 homes available on our website? And they said, we did not know that. That's really interesting. Why don't we write a story about that? So, we got all this publicity in the leadup to the DNC. Met all these political reporters who were covering it. And it was very successful, not just in terms of publicity, but actual bookings. The only problem was after the event was over, we were no longer relevant, right? It was back to square one. There was like zero bookings. And so we were asking ourselves, we met all these reporters. How can we get them to write about us again? They're political reporters though. How do we make ourselves relevant to them? And I'm not sure how it happened, but Joe and Brian got this crazy idea to create a presidentially themed breakfast cereal. Again, our name at the time was Airbed and Breakfast. So I think they were reflecting, instead of doing airbeds, let's do breakfast. So they had this idea, presidentially themed breakfast cereal, and they were going to make a box of two different boxes. One was going to be called Obama O's with a tagline of hope in every bowl, and then Captain McCain's. John McCain was the other candidate. And his tagline was a maverick in every bite. And they created original artwork for each of these boxes, lots of witty humor on it. Got them printed up. We went to the supermarket and bought cereal and restuffed it into our boxes and hot glued the boxes. The idea was that the first 100 of these boxes we were going to mail to the political reporters. We thought to ourselves, we can email them, but they'll just delete the email. But if they received a box of Obama O's in the mail, they're going to want to call us back and ask us what is the story behind this breakfast cereal. And sure enough, they did. We mailed out a hundred of these boxes and we got all these phone calls and we were on Good Morning America that week and CNN. That day we were the number one political video of the day on CNN. And with the other boxes of cereal we had, we had 400 boxes of each left over after mailing the first 100. We called those other boxes a limited edition collector's item and we numbered them and we had a website where we were selling them for $40 a box. And when we were the number one political video of the day on CNN, we sold a $40 box of cereal every three minutes until we sold out. We sold $30,000 of cereal that week, which was more money than we made all year. And so that was super exciting. Got some publicity again but again was kind of tangential to our core business and we were still at square one, no one's booking an airbed and breakfast. And so this brings me to the final leg of the story, which is it's the end of 2008 and we are on the verge of quitting because we have raised no money. We're in debt and the trajectory of the business has been flat. It's not growing. And one of our mentors suggested that we apply to Y Combinator. Y Combinator is an accelerator program that's very well known here. And so we managed to get an interview and the interview is just five minutes so it's very quick. So we go to the interview and within two minutes into the interview it goes off the rails where Paul Graham, who's the founder of this program, says, strangers staying in other people's homes? I hate that idea. And then he spends the rest of the three minutes talking about something completely different and we're now walking out of the room knowing it's gone terrible. But as we're walking out, Joe takes out of his bag a box of the Obama O's and gives it to Paul Graham and Paul Graham looks at it and he says, what's this? Did you buy me a gift? And we said, no, we made that. He looks at us some more. He's like, I don't understand. Come back in and tell me how you made this. So, we spent five more minutes talking to him about how we made the breakfast cereal and what we accomplished with the breakfast cereal. And then we go home and we get a call later that day from Paul saying, we've been admitted. And he later told us that he admitted us, not because he liked our idea of airbed and breakfast. He hated that idea. But he loved the story about the cereal because to him this was at the start of the financial recession and he was looking for super scrappy founders who would just not give up under any circumstance. And he said that story about the cereal showed me that you were so scrappy that you could create things and that you would just not give up, that you were resilient. And so that to him was more important than the idea, was that capability and quality of the founding team.

It might not have worked out. No, it might not have. You know, if we hadn't brought that cereal.

Well, as I mentioned before, the friendship amongst the three of us, there's a strong loyalty and respect, and no one of us wanted to leave the others. And I got to be honest, I was probably the one most tempted to leave because as the engineer, I had all these other opportunities that were teasing me. So, there was a real opportunity cost that I felt. And when we applied to Y Combinator, one of the things we agreed was that if we get in, we'll give it our everything for these 13 weeks that the program goes on for. But if we're not in a material better place at the end of 13 weeks, then we all agreed to quit, to give up because it had been a year and no one wanted to disappoint the others, but we also wanted to be rational about it. So that was the agreement, that if we got in, we would do it, give it everything, but we would quit if it didn't change the trajectory of the business. Now luckily we never had to have that conversation because as you pointed out, everything changed over the course of 13 weeks.

Yeah. So it happened during YC over these 13 weeks. Going into YC, Paul Graham had told us that this is the financial recession. Investors are just going to want to know that you are profitable before they invest in you. Like that will be a powerful thing to be able to say 13 weeks from now. So he said the good news is though you can define profitability however you like because technically you don't really have any expenses. So he said, just figure out how much revenue that's going to be and what your minimum set of expenses are and set a profitability goal. So we said, okay, our basically our only cost is paying rent. And then we joked maybe buying some soup noodles to eat. So we came up with this definition what we called ramen profitability, which was $1,000 a week, enough to pay the rent and buy soup noodles. So that was our goal. We were starting from a place of making basically $200 a week prior to YC. We want to be every week increasing that number, get it climbing to 1,000 a week. And we would print out this revenue graph and place it all over the apartment, including in the middle of the bathroom mirror. So, it was the first thing you saw when you woke up. It was kind of the last thing you saw before going to bed. And we were hyperfocused on making sure that that bar chart every week increased. So, how did we do that? We got some advice from Paul Graham that we took to heart. One was he said that it's okay to do things that don't scale. We said, that's kind of counterintuitive. We're building internet companies. It's all about scale. He's like, no, it's better to have a hundred users that love you than a thousand or a million users that just kind of like you, that don't really care about you. So you need to have some really passionate evangelists who will champion your product and give you feedback and show you that you have product market fit. So, okay, how do you find those people? He said, go meet your users. Go figure out who those people are. And we said, he said, where are your users? We were like, well, they're everywhere. He's like, well, where are most of them? We said, New York. He said, well, go to New York. Which it's not something we had done because we had no money, right? We were paying off credit cards. We didn't have money to go fly to New York. But YC as part of this had given us $20,000, which in retrospect is not a lot of money, but it was enough to buy some plane tickets for a few weekends in a row. And we go to New York and meet our users. So, how do you meet your users when you are an internet company that no one's heard of or really has paid attention to?

Well, we would call up our early users and we would say, we notice that your apartment on our website doesn't have photos or the photos aren't that great. Would you like a professional photographer to come to your home and take free photos? And people were a little surprised by this offer, but usually would kind of relent and say, sure, why not? And what would happen is Joe and Brian themselves would actually rent a professional camera for the weekend, fly to New York, and take the pictures themselves. So, knock knock on the door. It's actually Joe and Brian, the founders, and they take the pictures, but they'd also sit at the computer with them and give them a tutorial, get product feedback, and also invite them to come get beer later on together with a group of people. And then over beers later on they would share the story of the last 12 months and the entrepreneurship journey we've been on and basically build a rapport with those early folks such that those early folks really loved us and they were rooting for us so much so that we could ask them to adjust their prices, for example. Their prices at the time, they wanted $400 maybe a night and we said, well, we're a website that no one's heard of, that might be a little steep for your extra bedroom, maybe start at $50 a night and if you get too many inquiries, you can always raise it. Now, if they hadn't met us and didn't like us, they would have totally ignored that request. They would have said, who are you to ask for that? But once they got to know us and liked us, they're like, well, sure, for you, for a friend. Why not? We'll try it. And so anyways, we basically managed to get nice photos of properties at very attractive prices that were very well described because now these people who met us put more effort into their profiles. And turns out, everyone in the world wants to go to New York, but it's an expensive place. So once we had an attractive product, it started getting bookings and suddenly hosts began making money and telling their friends. I hosted somebody from Paris and it was an awesome experience and suddenly their friend in New York would want to do the same thing and would look to our website and emulate what they saw, which was really high quality listings. And so that started happening. And then meanwhile, the person who came from Paris went back home and thought to himself, I can do this here. And they became host there. And so there started to be this word of mouth and global cross-pollination that started happening very quickly. And so over the course of those 13 weeks, the numbers went up every single week and surpassed $1,000 a week. Actually 13 weeks later, we got to $4,200 a week. And we also over that period got introduced to Sequoia Capital. They came as a guest speaker to dinner and were very impressed by our growth and our novel concept and they ended up investing in us at the end of the program. And so we never had that difficult conversation because Sequoia Capital, frankly one of the best firms in the world, invested in us. So we were suddenly realizing that we were on a whole new trajectory.

Yeah, so after Y Combinator, everything was kind of up and to the right, growing very quickly and going very smoothly. And we were just letting it grow organically. But that all changed in 2011 when competition emerged. One thing I noticed was suddenly my day started, each day, I was originally the only engineer, built a lot of the early website, eventually hired a team at this point but still part of my routine in the morning was to go look through all the activity on the website and see what happened overnight and just look for things that looked out of place. And I started noticing all these stays that were for just one night popping up across Europe with guests with German surnames. I said, this is strange. Where are all these German surnames coming in? Why are they all staying just one night at all these different random places? And so you start digging around on LinkedIn and you start realizing that they're connected to Rocket Internet. And so what's this all about? Well, Rocket Internet is a company that clones a lot of Silicon Valley companies and tries to bring them to Europe faster than they can expand organically there, kind of beat them to the European market. And so that's what was happening. They had basically built a clone and they have a whole apparatus for quickly standing up large teams. And so soon thereafter they reached out and they said, look, we admire what you do but we think we can do it better in Europe and faster in Europe and you can buy us now for 10% of your company and we can team up and we can do this together and wouldn't that be great? But otherwise no worries, we'll just take the European market. That was kind of the pitch and we had to take that seriously. So we went out to Berlin and we met their team and we go into their office and mind you at this time we had 40 people in our company. So we walk into their office that for this company that literally has existed for a couple months and they have 200 people because they've repurposed people from other projects in the span of just weeks to work on this. And each of these people are basically dissecting our website. They have the source code up. They're copying the CSS. They're logging into our website sending messages to our hosts basically booking reservations so they can stay one night and meet the host and try to convince them to come to their product instead. So they're effectively a traveling sales team army they had going. So this was like a big threat and concern. And so we met them and one of our reflections was if we team up I'm sure we can win but also we felt like they were mercenaries. They were just motivated by fast growth and they didn't actually really care about the concept. They didn't have any personal connection to it or any heart. We just felt much more strongly about what we were doing and wanted to build a team and a culture of missionaries. And so we said, we could win if we join forces, but we might not like who we become. And so we said, we want to build this our own way, but we can't just continue on the path that we've been on, meaning taking our time. We got to go into wartime mode, from peacetime mode to wartime mode. So we mobilize, we raise $100 million of new venture capital. Then our competition in Europe claimed to have raised $100 million too. So that was no longer an advantage. But we started going across Europe hiring country managers and opening offices in each of the important markets and building a local team. We said we can't, they were claiming to be the Airbnb of Europe and we were like, well we have to be just as local as they are. So we need to have local teams, local country managers, offices and make our community there feel like we are present and just as local and just as legitimate. That's what we set out to build. And that year we went from 40 people to 400 people in the span of 12 months. So it was a really crazy year racing around the world building teams launching new markets. And over the course of the next 18 months we succeeded. I think what people realized was that we were really committed to building a high-quality product and a real sense of community and that the other company was really just a hyped up sales operation, but didn't necessarily have the substance to follow through on the quality of service.

Yeah, it was exciting and terrifying all at the same time, right? Because it was an existential threat. And it was also at this time that we had our first real kind of trust and safety incident that kind of reaffirmed what a lot of people felt, which is how can you trust a stranger? Someone's apartment had gotten vandalized on our platform and it was a highly public event. Meanwhile, you just raised all this money. You're getting ready to expand globally and suddenly the underpinnings of what you're all about is being questioned. Can you actually even trust a stranger in the first place? Is this even a viable model? Is it not going to scale? And the way we overcame that was to take that crisis very seriously. We didn't just try to manage our way out of it. We really tried to take it to heart and surpass expectations. We had heard a quote, I think it's from Andy Grove, the former Intel CEO. It went something like, bad companies are destroyed by crisis. Good companies survive them. Great companies thrive or come out better. And so we said, well, we want to be a great company. This is a crisis. We want it to make us better. How can it make us better? We told all our employees at that point, which is halfway through the year, we had 200 people. We told 200 people, stop what you're doing. Take two weeks to brainstorm and build any type of trust and safety feature you can think of. We just told everybody whether you're an engineer or not, just stop what you're doing and figure out some ideas and build it, make it happen. So, two weeks later, we launched 40 new trust and safety features. And I think that got everyone's attention. People were not expecting us to really innovate and surpass what they were expecting. And so I think that kind of reset the narrative and showed that there are ways to create guardrails and safety nets and take these things seriously and that's how we moved beyond the crisis.

It is nerve-wracking. I think some of the habits that helped, I've always been into running and I find that's a great mental reset to calm one's nerves and deliver some endorphins and just create a sense of calm and focus and compartmentalize. You just like with anything that you're building, you have to take it one step at a time. You can't think about everything all at once. And so, you work backwards and you organize the problem and you just say one thing at a time. I'm going to work on this part and then I'm going to work on this part. And you don't get overwhelmed by the fact that there's a hundred things to do because you just need to pick one thing to start on.

Yeah, this was kind of our next biggest crisis because once we got past 2011, the company really continued to grow very smoothly, for the most part, at a high level for the next nine years. And we were planning to have our IPO. We had written our first draft of the S1. It was supposed to go out in March of 2020. And by January, February we were seeing what was happening in China then in Korea and by March it was a full-on pandemic. What was hard about that was first of all, pandemic, all travel just kind of stopped. Our revenue dropped 80% in the span of a few weeks and meanwhile our costs did not change that much. We had like 8,000 employees. This is like a huge ship. What was equally hard was the uncertainty around how long will this last? Is this like a four-week thing? Is this a four-month thing? Is this a four-year thing? We don't know. And so, how are you supposed to budget when you're hemorrhaging money and you don't know how long that will go on for. So, we had to do a lot of things really fast. We had to raise additional capital during a time when everyone was having problems and no one was feeling super generous about loaning capital. We had to rightsize our expenses. I think before we did anything though, we said, look, we're going to have to make a lot of decisions really quickly and we need a framework, principles to guide these decisions. And so, what would our principles be? And so we came up with a list of five or six things. One was, first and foremost, this is a public health crisis, so we're going to do what's right by public health, not just what's right financially or what's right for hosts, but think about what's right for society in a public health crisis. Two was that we were going to make bold decisions, not half steps. We weren't just going to try to buy ourselves a week at a time or two weeks. We were going to assume kind of the worst case and be ready for the worst case. But three, we weren't going to sacrifice the long term. And all these principles were a little bit inspired by again that quote I shared, that a great company can actually come out even better as a result of a crisis. So we're asking ourselves, what is the silver lining here? How can we use this crisis to refocus our company on what matters most and become more lean and more effective of an organization? Ultimately, that's what we did. We refocused on our core business because at this point, we had been starting to spin up new lines of business besides accommodation, besides homes. We put all that other stuff on hold. We doubled down on our core business. And we also just reorganized the company because we had gone through 10 years of hyper-growth with access to lots of capital. So we had hired lots of people but the way we were working was not optimized. And frankly we had to go through a painful layoff because financially we couldn't support 8,000 people. So we had to say goodbye to 1,800 fellow colleagues. That was probably the hardest moment of this entire period of 18 years, saying goodbye to folks that you work so closely with, but it was financially necessary and it was also an opportunity to change the ways of working and be more focused on the top priorities. I think one thing important throughout all this was communication. So because there were a lot of stakeholders, our guests, our hosts, our employees, our board, every day we met as an executive team to talk about progress on the different tracks of work. But every week we met with all the employees over Zoom, of course, because this was the pandemic, but we shared with them our principles at the very beginning and we shared with them the problems that we were grappling with and they could see the progression of our thought over the course of weeks and so there was never really a big surprise when we arrived at difficult conclusions because they knew the principles that we were operating under. And so I think that kind of constant communication during crisis is really important. And likewise, we did the same thing with the board so that they had confidence and understanding of why we were making the decisions that we were.

For sure. No, I really did not know if we were going to survive this or at least survive this in any way that resembled what we were before. Probably the realistic scenario was that we would run out of cash and then we would have to sell ourselves to another travel company that was better financed. To us that would be failing because we would lose our independence and it would probably be in a distressed kind of situation. So no, I think it was a real concern because we didn't know how long this was going to go for.

It was so crazy. Yeah, because like earlier that year and even just six months before, we really didn't know if this company was going to survive. And what happened was it turned out that although people were not getting on airplanes, they still wanted to get out of their house. They wanted to go to rural areas, they wanted to get a house and form a bubble with other family members for a month and have a longer stay. And those are all use cases that a home can really accommodate well and we have homes everywhere, not just in cities but rural areas. We ended up recovering faster than expected through this different use case. Not only were we surviving but I think we were demonstrating to investors two things that were really important. One was just the resilience of the business model. Yes, there was no international travel happening but consumer preference had changed to this other kind of travel and we were able to meet the moment almost instantaneously. So that demonstrated the resiliency of the business model and two, we demonstrated we can make tough decisions as a leadership team in terms of figuring out what to prioritize, going through that reorg, figuring out how to treat guests and hosts during this time. A lot of difficult decisions were made. I can't say they were all perfect. But I think we held up under pressure and I think investors appreciated that and what they saw was a leaner company that actually now was succeeding against all odds really. And that made a very exciting IPO for them. But it was a remarkable turnaround.

Well, as founders, I think we have a tendency to have visions and ideas and want to think long term. I think that is how we are inherently kind of focused on. I think, of course, as a public company, you do want to create continuity and make sure you perform in the short term so that you can get to the long term. That being said, the company's been around for 18 years. So, we've had a lot of practice even before going public. It was a large company in terms of employees and the way we ran our board meetings was no different than we run them now. So, I think we had a lot of practice well in advance of the IPO. We've found that there isn't a trade-off for us, that it's a business model that is very resilient, very predictable in terms of kind of the short-term output and then we can focus on the long term and we have a lot of ideas about the future.

Coming out of the pandemic and kind of now being in a position of strength, we're once again ready to invest in other aspects of what we call the trip. And we long ago recognized that our consumers, they're not just booking a home. They're on a trip and a home is just one of many things they need. And trip planning is quite complex and finding all the different pieces that comprise your trip takes you to different websites. And so, we have wanted to become the one-stop shop for travel where you get everything in one place. As we do that, we also want to share our perspective on travel, which is celebrating connection between people and place, showing people kind of an insider view of off-the-beaten-track spots to the extent possible and connecting with other people. But there's many ways we can do that. It doesn't have to be through a home. It can be through an experience. We offer experiences now hosted by our community. And there's also just practical things you need as well. We now have services where airport pickup, that's a useful thing. Grocery stocking of your home before you arrive, that's a useful thing. So there's all these things that are practical bits that people need that now a click or two you can get set up because we know your other details.

Well, I mean, I'm very familiar with the super apps of Asia. There aren't really super apps in the US in the same way. That being said, I think things are changing and there is a why now to this, which is that with AI, AI stitching together itineraries and pulling together lots of information into an organized plan. So I think of course we want to ride this revolution of AI and I think there's more for AI to do if we can offer all the parts of the trip because AI can be the bridge over the top. So before the interface was a super app, you went in and you saw all the little icons and you could go into different categories. I think the future is an AI knows you, knows a lot about you and just recommends an itinerary and then you can tweak and edit it and nudge it in different directions. But it all gets assembled and sold to you as if it were a travel agent, but it's mostly automated.

Yeah.

Probably underestimating. I mean, even I am still wrapping my head around what AI can do, but when you dig in, it's pretty profound how people are using, how our engineers who are on the cutting edge are using this and how it changes their way of work. So, I think the capabilities are immense. I think there's going to be a multi-year period of course of applying these capabilities to different businesses and different workflows, that takes time to play out. So I think the capabilities exist but the process of inserting them into the way people work will take years frankly but the opportunity is sitting there in front of us as innovators to harness this and start using it. And in terms of Airbnb, I think our vision of AI is, first of all, a lot of people are afraid of AI. They're afraid that AI is going to replace humans. And our vision of AI is using AI to connect people. That's what we're always excited about, connecting people through travel, with people, with places. And I think AI can be a catalyst for that because to do that, you need a few things. One is trust, right? Let's go back to the beginning. The original innovation here is trust. How can you trust a stranger? I think AI can help break the ice because AI knows everything about two different people and can basically provide that introduction of, hey, here's what you have in common. Here's what you might like talking about. Here's why you should trust each other, frankly. And we have a lot of data sources from which we can pull, prior reviews that were written and things that you tell us about your travel habits. So, I think using AI, we can more personally introduce people together, tell people why they might really enjoy a certain place. Maybe it's because their friends stayed there or people like themselves had these experiences. We can paint a much more rich picture instead of just recommending a list of things. We could literally write paragraphs of text about why this one thing is worth checking out and here's what you might enjoy about it.

I haven't checked it out either, but that certainly sounds possible, right?

I was very excited at the time, and I still am. I think I was excited because of the mission of our company, to connect people, and there's more than a billion people in China so how can you connect the world without connecting China as part of it. So I always thought that was important. In terms of our priorities, I mentioned our international expansion in 2011 and particularly in Europe. So we started in Europe because that's where we faced the most competition. But after Europe, we went to Asia. But still in Asia, we didn't focus on China right away. We focused on other Asian countries. We saved China to the very end of our international expansion process. Why? Because everyone told us it was so hard and frankly not possible to succeed. And so we said, it won't be the first thing we do. Maybe it's the last thing we do, but it's still an important thing to do because of our mission. How can you be a global travel company and not be facilitating this in China? That was kind of the premise. And yes, there's a billion people there. In theory, there's a big business there. The challenge is the level of competition. It's just so fiercely competitive. It's a huge market and it has its own tech ecosystem, its own capital ecosystem. And there is an approach of providing subsidies, using the investment money to subsidize the product in a way that is just hyper-competitive and difficult for western companies to want to follow along and emulate. I'm very proud of what we accomplished over those years. We had at one point a quarter of a million homes across China using the product. And today still we have many Chinese travelers using Airbnb to go abroad. And we have an office in China of a few hundred people. So, we're still very much focused on the China opportunity, but we're focused on Chinese travelers who are going abroad. They're actually the biggest spenders on international tourism. So, we think that's a financially valuable piece of the pie. But the domestic market within China, homes in China, we found that to be highly competitive and frankly, we didn't see a path to ever making money there. And so there came a point we said, well this isn't a financially viable path, we need to refocus on just the outbound piece.

Yeah. Well, Airbnb is pretty much in every country of the world for the most part. So we are ubiquitous for what we do. That being said, 70% of our revenues come from just five countries. And so it's still a little bit concentrated. Naturally there should be more dispersion of revenue. So what we see is some of our fastest growing countries are outside of those five places like Brazil, Mexico, India are all growing tremendously fast. They have big populations and they have a rising middle class. So we think those are really interesting opportunities. We're investing a lot in those places and elsewhere too. But that I think will provide decades more of growth as we build our presence in these other emerging markets.

I think there's so much more to do in travel and that could last us a decade or multiple decades. I think we can actually even go beyond travel because even in people's hometowns, people are looking for connection. They're looking to connect with other people. They're looking to have meaningful experiences. And that's what we do. We happen to focus on doing that when people are away from their homes. But we have travelers coming right here to San Francisco and having those kinds of experiences, wanting to have those experiences and we do see with our experiences product that in many cities half of the experiences are being done by local people. So I even think that is on the table.

I think bottom line is we want to be bringing people together in novel ways. And it might be through an in real life experience. I think we could create new types of experiences that are focused on people meeting. And I think whatever we do, AI is going to be opening up your eyes to the kinds of experiences you can have because I think a lot of people want to have experiences, but they don't know where to start. And the special thing about Airbnb is the long tail of experiences that you can have. You can have all these experiences you never imagined. You can stay in a treehouse. You can go to the small town that you've never heard of. And there are so many great experiences you could have if you took the leap, but you don't know about it. And you need to build the trust necessary to take that leap. You need to have confidence that this is a good use of your time or your money. And I think AI can paint a really compelling picture of, here is what this is going to be like for you. Here's why you're going to like it. Here's exactly what you could be doing in terms of pictures and laying it out in a very compelling manner such that with a click you can book it and go on that adventure.

Well, first we ask, what can we do that others cannot do? Because if you find yourself going head-to-head competing, it's less likely that consumers are going to pick you over the other person. So, we think about what are our natural strengths, things like our host community. Very few companies have millions of hosts who are so entrepreneurial and looking to either share their home or provide their passion as a service. So we ask ourselves, is the idea leveraging any of our unique strengths. If yes, it's a more durable opportunity. Of course there's the classic questions of TAM, total addressable market. How big could this thing be? Things like that. But I think the really important question is, does it leverage any of our superpowers?

Okay.

It's been in Bali in a bamboo treehouse-like structure.

The most important question is what brings them to Airbnb? Why Airbnb? We hire missionaries, not mercenaries. So we want to make sure people have a real genuine connection to the mission of the company.

Well, I think our success in China, although it did not end successfully for us, we had triple-digit percentage growth for a while. We built something that I'm proud of there, even if it wasn't a financial priority after that period. But looking at the markets we're in today, the fact that India is our fastest growing country is pretty remarkable because India has some unique trust concerns. It's a country of over a billion people, all different socioeconomics. For a long time we were not growing there. We started in India I think in 2012 if I recall, and for many years we were just kind of on one trajectory and then in the last year it just started to take off.

Oh jeez. I don't want to be a doomsayer. I think actually there's going to be a lot of jobs created. But all jobs are going to change.

I think one piece of advice is just making sure you're clear for what you're solving for. I mean, it sounds like a very basic thing, but at this scale, I spend most of my day reading proposals of teams that want to do work and helping them make sure they have a clear way of thinking about what problem they're solving for and what is truly most important. Oftentimes they'll say, these five things, if we do this thing, we can accomplish five things. Okay, great. But let's prioritize them and let's make sure that the proposal and everything we're doing actually maps clearly to those five things, that it's not a handwave and giving teams a framework for seeing how you think about the business. Because after 18 years, I have a lot of frameworks in my head, a lot of ways in which I evaluate things and it's my job to not just tell them what I think the answer is but share my thought process about why I'm thinking the things that I am.

Yeah. Like I don't make the strategy, ideas are coming from left and right. But providing a framework for evaluating them and asking the right questions and exposing that thinking so that others can apply it on their own is very important. Be clear on why you're building what you're building. That's the advice here.

Me, too. Thanks.