Rapid Response: Airbnb reimagined (Part 1), w/CEO Brian Chesky

0:00Scaling a business in the US can feel like a maze. Each state has its own payroll, benefits, and compliance rules, pulling your focus away from growth, which is why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert, plus Fortune 500-level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one. So, if you're scaling, make it simple with Deal. Go to deel.com. slash MOS and get up to three months free. If you're in private capital, you understand that your next great deal starts with who you know.

0:41That's why over 3 ,000 firms trust Affinity, the CRM platform purpose-built for private capital. Affinity's relationship intelligence reveals your team's strongest paths to founders, investors, and decision makers using insights It's hidden in emails, calendars, and meetings. With powerful AI tools like Affinity NoteTaker and Deal Assist, you'll spend less time managing data and more time closing the right deals. Learn more at affinity.co slash marketplace. The pandemic, you know, hit. People were predicting this is the end of Airbnb. Is Airbnb going to exist? And so in my darkest moment, you were the first podcast I ever did.

1:27And you were the first person I ever told the story to. And I just really appreciate that. You and I have been on this journey. The next podcast I did was the recovery, the comeback. Then the next one was the IPO. And I would describe this as the next chapter of Airbnb, Airbnb going beyond homes and truly entering this new creative place.

1:55That's Brian Chesky, co-founder and CEO of Airbnb, who's about to take us into a deep, revealing look into the Airbnb of today and of tomorrow. We'll start with his approach to Airbnb's earnings releases, the most recent of which he announced just a couple of days ago. And then we'll dig into Airbnb's new initiatives around icon stays inspired by the Barbie Malibu Dreamhouse. And surprise, that program offers a hint about how Airbnb will be moving into new creative places. We'll also talk about what he and Apple's longtime designer, Johnny Ive, have been collaborating on, how he's applying AI to Airbnb.

2:35Plus, Brian talks about his biceps and his bodybuilding regimen and more. It's so jam-packed, our session will unfold in two parts. Part two will release on Friday, available only through the new Rapid Response feed. So please subscribe on Apple, Spotify, wherever you get your podcasts. I'm Bob Safian, former editor-in-chief of Fast Company, founder of The Flux Group, and your host. This is Rapid Response.

3:14I'm Bob Safian, and I'm here with Brian Chesky, the founder and CEO of Airbnb. Brian, it's good to be here with you in person. It's good to be here with you as well. I'm excited to be back. So first of all, welcome to New York. Yeah. Or welcome back to New York. I know you grew up in New York. Upstate New York. Yeah. You've had a busy month. You were in L.A. for an event. Then you come here to New York to do an earnings release. Where do you stay when you're in New York? Do you have like a regular place? Yeah, at this point, I stay with my sister. You stay with your sister? Yeah, I stay in my sister's apartment in Tribeca.

3:49The whole original premise of Airbnb was the experience of staying with a close friend in the city. Well, you know, when I have close friends, if they're willing to still have me, then I'll still do that too. Yeah, a sister counts in that regard. A sister counts. A sister counts, and she's one of my closest friends. Now, I have to say, you're here in New York for earnings. Earnings cannot be the most fun part of this job. It's definitely, I will tell you, I do prefer launching new products than, you know, kind of delivering the quarterly financial results. But I will tell you something. Before I went public, I was forewarned by so many CEOs, never go public.

4:28Stay private as long as you can. and I had like in and so therefore I had a lot of caution about going public I mean when everyone tells you and by the way they they didn't just tell me like people don't like being public company CEOs a lot of people said you particularly will not like being a public company CEO and I'm like why me particular maybe it had something to do with me being a designer having gone to RISD and like why would a person like that enjoy you know the scrutiny of being a public company so I'll tell you having been public now for a little over three years and having done maybe a dozen or so earnings calls I actually kind of weirdly enjoy earnings calls and I think being a public company CEO I don't want to diminish its difficulty but I think it's easier to be a public company CEO than a late stage private company CEO because when you're a late stage private company it is like you're a public company you have to have audited financials you have an audit you have audit committee.

5:24You have a lot of scrutiny in the company. So you have a lot of the downsides of being public. But you don't have the upsides. Meaning when you're a private company and you're really big, there's always this sense that you're hiding something. We're not getting the full story. And so I think once we went public, it was like this pressure valve just released. And earnings calls, I find, are actually really good disciplines to brush up on the story. And And I do find that the analyst and the investors are super fair. I do think the market is like, I'm never going to figure out the markets. But it's not that bad.

5:58As you're talking, I was thinking I had a discussion with Michael Dell when he took Dell private. And he said that one of the upsides for him of going private was that he wouldn't have to share everything. That not all of his competitors would know everything about what he was doing in the same way that he felt like he had to when he was public. Well, the good thing for you, I tend to be an oversharer. And that might not be what my team likes, but I think for you and everyone else, that works. So last summer, you launched this Barbie Malibu beach house that kind of went crazy when the movie went crazy.

6:31Went completely nuts. Right? And now you've announced 11 icon locations, right? From X-Men Mansion to Ferrari Museum to Prince's Purple Rainhouse, right? But it almost seems like this opportunity, this idea sort of presented itself to you, like the Barbie house kind of opened your eyes to things. A hundred percent. So basically the quick story, version of story, just to give some more background to icons is, you know, 10 years ago, I remember I was with my co-founder roommate and we're, so we're living at this apartment that we started the company in and we need to get some furniture. And of course, back then, Ikea would have been the place you would have gone.

7:10we get to an ikea we're walking down the the hallway and we see a bedroom like you know those ikea like showroom bedrooms i remember saying to him like wouldn't it be funny if we put this on airbnb it would like as a joke and we started like talking about it internally like a joke like we're gonna like list a night at the ikea well somebody in our australian team unbeknownst to me hears about this idea and reaches out to um like some marketing executive in ikea and they one day tell me like, hey, we got the Ikea, this Ikea in like Sydney, Australia on Airbnb. So it gets listed on Airbnb and it becomes like a bit of a sensation.

7:47Then one day somebody, our team says, we have an idea to list Blockbuster on Airbnb. And I'm like, Blockbuster? I remember this. I'm like, I didn't think there were any more Blockbusters. It used to be, it's like, actually it turns out there's one left in Bend, Oregon. So we put on Airbnb, it went all over the internet. It got thousands of press articles, probably got millions and millions of dollars with the press. So then last year, the Barbie movies coming out, I think it was Mattel and Warner Brothers that reached out to us. And they said, can we do like a promotion with Barbie? Because they were going to do a bunch of these like Barbie marketing activations.

8:21And so we said, sure. So we found a house in Malibu, in the hills of Malibu, that looked a little like the Barbie house. And we basically like, to the last detail, like really like every corner of the space, we recreated as if it was a Barbie Malibu dream house. That is your way to the last detail. To the last detail. As Charles Eames said, the details aren't the details. They make the design. And Walt Disney would look at the back of a trash can. And I do think that everything is just an accumulation of details. I think that's a good characteristic of design. So anyways, this Barbie house we put on Airbnb, it gets more press than the IPO.

8:58And we're like, what the hell? The universe is telling me that the world wants this. So there's not necessarily a strategy behind it. There's just like a feeling that like there's an opportunity here. At this point, it was purely a feeling. Like in hindsight, we backed into a strategy. And sometimes things start with a strategy. Sometimes things start with like, we need more engagement and we need blah, blah, blah. But I got to tell you, Bob, sometimes I honestly think the best ideas start with a vision. They start with an idea. They start with a feeling. And then you validate them by reverse engineering a strategy to make sure what you're doing actually makes some sort of modicum of business sense.

9:32So it's October and I rallied the team together. It was only like six, seven months ago. And I said, we need to create a platform for Barbies. I want to be able to come to Airbnb and see a whole series of Barbies on the homepage. But I don't just want them to be stays because I want them to be experiences. In fact, I want all these to feel like they're experiences, not stays, because this is going to be a bridge to where we're going. We're going to eventually relaunch experiences. And I said, this can be the way to do that. so we huddled together and you know probably my favorite concept that the team came up with is the uphouse and the uphouse the uphouse was one of my favorite movies and i said if we're going to build this uphouse you better make sure like it is down to the last detail because people have been to disneyland and their expectation is that is done to the level of disneyland craft and it can't look like a Disney knockoff.

10:27You know, you open the mailbox and there's brochures and they're graphic designed. It's that level of detail. So we do that. We design this house. It takes like a hundred people to do. We assemble like fabricators, like prop designers. We had to assemble like a team of a hundred people to build this house. Then I have this thought. I said, wait a second. I know we're going to build a house, but if it doesn't go in the sky, it's not really the uphouse. And the problem is most houses aren't constructed to be lifted in the air. No, they're supported by the ground. Yeah. And so if you lift a house, it collapses, no structural integrity.

10:59So we ended up working with structural like engineers to figure out how can you construct a house that's 40 ,000 pounds, okay, 40 ,000 pounds that can be lifted 50 feet in the air, 50 feet, five stories in the air and above it will have 8 ,000 balloons. Now you can't be helium balloons. Obviously the physics doesn't actually work out that that you'd need like the biggest helium balloons in the world. And if they deflate, you like fall to your desk. So you can't do that. So we ended up creating a steel structure. And then we found the biggest crane in the world or one of the biggest cranes in the world.

11:33And these cranes are basically used for windmills, those like wind farms. And we had to work with like safety experts to figure out like how the house doesn't rock. And we had to work with meteorologists because it turns out about 11 miles an hour, the amount of wind that house can withstand before the rocking becomes dangerous and the props basically just dismantle. We found land in New Mexico where they filmed Oppenheimer and that's basically, it kind of looks a little like Venezuela, so where the film takes place. And so that's just one of the icons. We do this for like 11 of them. Given the response of Barbie, I knew if we put out icons, number one, we'd remain top of mind.

12:12Now everyone knows Airbnb, but like our competitors spend four or five billion dollars a year on like performance marketing to stay top of mind. And everyone knows of them too. So we're in an industry where even if people know you, people only come to your app once or twice a year, not like Instagram, because you travel. So you have to remain top of mind. The second thing is like, we're in every country in the world with only a few exceptions, but like this was the best way to reach certain audiences. We want to reach the community in India, who's the biggest Bollywood star. Let's work with one of them.

12:41So it really works. And the third thing is the Airbnb brand, on the one hand, it's pretty amazing. It's a noun and a verb. It's one of the only brands that is like Xerox or Kleenex, right? It means something. The problem is it's a noun, a verb that means a B &B, a place to stay. It's almost like if Nike meant running shoes, how do you sell basketball shoes? Right. It becomes narrow. It becomes narrow. So it turned out that by building this platform for icons, it kept us top of mind. It allowed us to reach all these segments. and it became a gateway to people thinking about Airbnb, not just for stays, but experiences.

13:20And that allows us to pave the way for the next few years. Yeah, I mean, it's, you know, as you're talking about the uphouse, like clearly it costs you a lot of money. Yes. You know, it was expensive. And when I think about the other things that you and I have talked about, you know, pandemic and IPO and whatever, like 11 listings on a service the size of Airbnb can seem kind of modest. Like, why spend all that money on just that? But as you're talking about it, like, this is a strategic decision investment in brand and awareness and sort of the reputation and perception of what Airbnb is and could be?

13:57There's two things. Number one, while we don't spend nearly as much as our competitors are marketing. So, like, you know, travel is an industry where people spend a lot on marketing. Our competitors, like some of the biggest OTAs, spend almost 40 % of their revenue on marketing. So I was like, that's a lot. It's a very marketing-driven industry. We spend about half what our other competitors spend on marketing, but we still spend over a billion dollars a year on marketing, right? So this is a very marketing-driven industry. So it turns out that if you consider this a marketing expense, this is some of the highest ROI marketing you can do.

14:33So it's just like versus Google AdWords or TV ads or digital ads on Instagram or TikTok or Snap, how does this perform? And our theory is this will be some of the best ROI that we'll ever do for marketing. So that's kind of number one. Because you get so much earned media, basically. Basically everyone, I mean, we've had nearly 10 ,000 articles written about us and it's almost twice as much coverage as the IPO. What's an IPO worth? People say it's tens of millions of dollars of free marketing. This was way more than that. This I think also like was a brand repositioning for us a little bit. But there's another reason that we did it.

15:09And it kind of brings me back to Walt Disney. Before Walt Disney built Disneyland, he built a small train set in his backyard. And no one can understand why a guy that had this huge Hollywood studio, he was like one of those famous people in the world, is spending all his time on this little train set. He had Salvador or Dolly come to this train set. And what he was doing was practicing. He was building the muscle at a small scale for something that was gonna be unleashed to the world. And eventually what was unleashed was Disneyland. Icons helped us build some muscle for something that we will unleash that will reach millions of people.

15:45I mean, they're Disney-like experiences, right? You're not going into the theme park business. Or are you thinking about how do you do theme park business in an Airbnb way? Yeah, it's a little bit like, I think you could think of it as like, we launched experiences like a long time ago. It got some traction, never really captured the public's imagination like a core business. And I think one of the lessons was it was different, but not quite different enough. It didn't quite have enough magic. So we said, let's start with something completely unscalable. That's pure magic. And by the way, they'll be guaranteed to be sold out.

16:25There's about 4 ,000 tickets a year. So clearly these would be sold out and they're going to be a low price. And we'll start with like the craziest of magic and just really then figure out how can we take that magic and then bring it to the millions of people. And so we're going to start very high end with icons and then we're moving to mass. It won't be a theme park. I think it's going to reinvent the company and it's going to be the beginning of the next chapter of Airbnb and we're going to launch it next year. Next year? Next year. I can't wait to be back here again. And I can't wait to tell you about it.

16:58And I told the team one thing. I said, if we can make a 40 ,000-pound house float in the sky, we can do anything. So I'll confess that when I first heard about Airbnb's Icons initiatives, I thought it was a bit of a gimmick. But as Brian explains, it reinforces the brand's relevance and currency by tapping into culture and celebrity. And I also love how it emerged organically unplanned that Brian pulled on a thread Airbnb had explored before and leaned into it as an opportunity. And the fact that it unlocks the way to a new expanded purview for the company. Well, Brian has a few more hints to share about that.

17:40After the break, we'll dig into the head to head ad campaign he's launched against hotels, the obsession about his biceps and his bodybuilding regimen and more. Stay with us.

17:58Real leaders don't back down when the stakes are high. They innovate, they push forward, and then they take the stage at the Masters of Scale Summit. Join us in San Francisco, October 7th to 9th, to hear from the CEO of the New York Times, scientists using cutting-edge technology to find cures, the leader of crypto powerhouse Coinbase, a retired four-star general, and many, many more. Apply now at mastersofscale.com slash apply25. That's mastersofscale.com slash apply25. If you're ready to take your startup from idea to impact, then AWS is your launchpad. From data storage to machine learning to secure app hosting, AWS gives you the tech trusted by the world's fastest scaling startups.

18:48And here's the best part. Join AWS Activate today and you could score up to$100 ,000 in AWS credits tailored to your stage and network. Go to aws.amazon.com slash activate and start building. Expanding your business in the U.S. can feel like a maze. Every state has its own payroll, benefits, and compliance rules, which can pull your focus away from growth. That's why founders use Deal. Deal is the professional employer organization, or PEO, that gives you a dedicated HR expert plus Fortune 500 level benefits for your team. The National Association of PEOs says businesses can grow twice as fast if they use one.

19:31So if you're scaling, make it simple with Deal. Go to deel.com slash MOS and get up to three months free. Before the break, we heard Airbnb's Brian Chesky talk about why he's invested heavily in creating just 11 low-revenue stays called icons. Now we talk about how he's recently gone on the offensive to compete against big hotel chains, what his exercise regimen teaches him about business, and how he manages the mental health toll of leadership, what he calls the inescapable nightmare. Let's jump back in.

20:17So you've talked about sort of this longtime message of Airbnb being around experiences and being local, feeling like you're having a local experience. You've started running ads against hotels. Yes. That is sort of, I don't know, directly going against the traveler marketplace. What is that about? Because it's almost like you're making fun of their reliability. Like it's reliable, but it's reliably maybe something you don't want. Yeah. Let me talk to you about that campaign. So first of all, for like the last 10 or 12 years, we've been the receiving end of a lot of contrast of Airbnb versus like hotels.

20:59It's possible there's been billions of dollars spent that we've been on the receiving end on the last like decade or like a dozen years. Most of the team that I have today on the marketing and creative side was actually at Apple and Shiat Day during the golden age of Apple. I hired someone named Hiroki Asai. He was the creative director at Apple. He brought in these two great creative directors, Scott Trattner and Eric Rumbom. Turns out Scott Trattner and Eric Rumbom created the Mac versus PC campaign. And I've always kind of wanted to do like an Airbnb versus hotel campaign, but I didn't want to punch down.

21:31Well, actually punch up. They're much bigger than us. I wanted it to be something that was like endearing and lovable. And I didn't want to do a campaign that said we're better than hotels in every way. In fact, if you need to stay one night and you're on a business trip, I think hotels are better. And we have hotels in Airbnb. So it's not like that's blasphemy for me. Like we own a hotel tonight. And if you need a hotel, if you need a place tonight, get a hotel. But it turns out that 80 % of our trips are two or more people. And if you're traveling with a group, if you're traveling with your family, it's almost always better than a hotel.

22:07For every person who stays in Airbnb, eight or nine people stay in a hotel. And if we can get one of those people to stay in Airbnb, we will double the size of our company. And so how do we do that? We do that by not convincing them we're better all the time, but convincing them that those family trips and those group trips just do in Airbnb. So now we have a concept. So then how do we make that concept an ad? I told our team, I said, I want to explore a concept around Pixar level 3D animation and let's find an iconic voiceover artist. We ended up finding Claire Danes. She does it and just make it kind of playful and fun, humorous, making fun of them a little bit, but not like totally destroying them, like just light.

22:51And that became the genesis of this campaign. And it's been just the punchline is it's been the highest performing campaign we've ever done. It's, you know, I think great marketing is education. You're educating people about some indisputable truth. It is an indisputable truth that like, it is just cheaper and you don't have to go to bed at the same time. And you can all sit around the kitchen, you can have a pool of yours. So those are just indisputable truths. You can't argue with them. Whether you want those or not, separate. So when Icons was announced, there was nearly as much social coverage of your biceps as of the house.

23:25um i wasn't i wasn't expecting that i've had these biceps the whole time yeah i know some reason people notice you're i know you you and i haven't talked about this before but i understand you did bodybuilding when you were when you were younger i was 19 i was a competitive bodybuilder yeah so what's your routine like is it like is it an outlet for you for frustration is it like meditation like what it's all the above but like i started bodybuilding when i was 16 17 years old So I kind of joke, I wasn't like a tech founder of that midlife crisis. I had an adolescent crisis. So the reason I started bodybuilding is I was the same height I am now and I was 120, 125 pounds.

24:02I was like, just like super skinny. I remember there was like a program and I was listed 135 pounds and all the other players are like 180 pounds. So I started weightlifting. And I remember telling my friends when I was 17, they were kind of like playfully teasing me that I was like super skinny. I said, well, I'll be the most muscular teenager in the country in two years. And two years later, I was the seventh most muscular teenager in the country. I competed in what basically the Teenage Mr. America was called the MPC Teenage Nationals and Collegiate Nationals. And I learned two lessons from bodybuilding that I brought to tech.

24:38The first lesson I learned is if you can change your body, you can change your life. It was almost like you can change your life and you can start inside out. Like the body is almost the most fundamental place. I mean, even like a lot of therapists, they might say, start with your body. It's like trying to start with your thoughts, like start with your body, start with something fundamental. The second thing about bodybuilding that it taught me, and this is really good for tech, you can't get in shape in one workout. It's just consistency. And I think there's this narrative in Silicon Valley and tech and business that like somebody has like this flash of insight and anyone who's done this knows it's not one idea, it's a hundred thousand ideas.