Leaders Playbook: Inside Airbnb 1/28/26

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0:35And with Discover, you can. Get this, Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. On this episode of Leaders Playbook. It all started with an airbed. Inside Airbnb, the home-sharing app that has forever changed the way we travel. Airbnb today is now known as a noun verb all over the world. Meet the leader who convinced people in hundreds of countries to let total strangers sleep in their beds. I just maybe had this core insight that people are basically good, they can trust one another.

1:22Find out how an industrial design major turned founder and CEO runs a multi-billion dollar company. At that moment, I realized that's what a leader is. Learn how the company's executives led Airbnb through one of its biggest challenges. We lost 80 % of our business in eight weeks. People were asking, is this the end of Airbnb? Our business has effectively evaporated overnight. Plus, how a major shift in how the CEO approached leadership helped save the company. I was told to hire great people and trust them and get out of the way. I think that is terrible advice for the vast majority of founders.

1:56Leaders Playbook, Airbnb, starts now. I'm meeting up with Airbnb's co-founder and CEO, Brian Chesky, at this estate in Beverly Hills, a five-star listing he's Airbnb-ing. Chesky was in town to make a big announcement. I am so excited. Launching Airbnb's super app, allowing users to book more than a place to stay. If you want to get makeup done for an event, if you want to hire a caterer, if you want to get a massage, you can just go to our app and you can book it. You don't need to be on a trip. It's one of the biggest changes he's made to the app in 17 years. I'm here to discover the leadership skills he's developed over nearly two decades as CEO.

2:41In 2007, you just moved to San Francisco. Take us back to that moment. Funny enough, I was living here in Los Angeles. I'm 25 years old. and I'm making like$40 ,000 or$45 ,000 a year as a designer. And one day, I quit my job, I pack everything in the back of an old Honda Civic, and I drive up to San Francisco thinking I'm going to start a tech company, but I don't know what kind of tech company I'm going to start. He moves in with Joe Gebbia, a friend he met at Rhode Island School of Design, to a modest apartment on Roush Street. My roommate Joe tells me we have one problem. He said, well, we rent check due, and the landlord raised the rent, so we don't have enough money to pay our rent.

3:19It turns out that weekend at International Design Conference was coming to San Francisco. All of the hotels are sold out. And we had this idea. We said, well, what if we turned our house into a bed and breakfast for the conference? Joe inflated some air beds and we called it Air Bed and Breakfast. Now, something unexpected happened. We made enough money to pay our rent. That was probably expected. But the more unexpected thing happened is these guests came as strangers. They stayed with us for a week and they left as friends. And I think we realize at that moment there's a bigger idea here. In early 2008, they bring in a friend, Nate Blajarsek, to help build a website for Air Bed and Breakfast.

3:57Just as people start to use the platform, the markets collapse during the financial crisis. Early 2009, we enter Y Combinator, a very popular startup incubator. And Paul Graham, who created Y Combinator, said, make something people want. And we realized we weren't just making something people wanted. we were making something people needed because they were losing their homes, they needed extra money. It was a perfect match for the time. It was 2011. We started taking off. We became a billion-dollar company back when there were so few billion-dollar companies. This was like three or four years before even the term unicorn came out.

4:30And very quickly, Chesky has to learn how to lead a unicorn as Airbnb's CEO. When did you start to think of yourself as a leader and not a designer, not someone who's just working on this as a side project. When did you shift into CEO mode? Summer of 2011, a woman's apartment on Airbnb was trashed. And there was a crisis of confidence in the company. And we didn't at the time have any insurance or any type of protection against damage. And everyone was outraged. And they said, like, general users, customers. There was a hashtag on Twitter trending. It was RIP Airbnb. be. People thought this was the demise of the company.

5:12And that moment, I think, was our moment of truth. And I think we stood up. I wrote an open letter to the community. I apologized to the woman who this happened to. We took a lot of responsibility. But we also came up with what was at the time a$50 ,000 guarantee against property damage that is now a$3 million guarantee against property damage for anything that occurs during your stay. I think suddenly a weakness turned into a strength. We took our Achilles heel and made it a strength. And at that moment, I realized that's what a leader is. A leader steps up in times of crisis. They're decisive.

5:46You're not just seeking consensus. You have to have the courage to make a defining decision that's going to chart your way forward. And that was, I think, the moment I really became a CEO. How did you know what to do in that situation? I didn't initially know what to do. And in fact, my initial response was not to do very much and not to say very much. And the longer I waited or The more things I tried to do, the worse it got. At one point, things got so dark and so dismal that I realized I don't know how this is gonna end. And I just said, I can't make a business decision. In other words, I can't game theory out how this is gonna play out.

6:21So I'm gonna make a principle decision. And a principle decision is essentially, if I don't know how it's gonna play out, how do I wanna be remembered? And I just said, this is what I wanna do. I mean, people thought it could bankrupt the company. They said, well, what if like, Like there's all these homes that get damaged and people are claiming all these damages and want to be reimbursed. And we've made it retroactive for any damage that happened up to that point. But that was also a really courageous act because we had enough confidence to say we fundamentally have a faith in humanity. We believe that, you know, people are basically good, that occasionally bad things happen, but they're exceedingly rare.

6:57By taking that risky bet on his core belief that people are basically good, Chesky managed to restore confidence in Airbnb. Over the next eight years, millions of hosts around the world join the platform, and Airbnb disrupts the hotel industry. By 2019, Airbnb is bringing in billions in revenue. Chesky and his team announce plans to go public. Coming up. We lost 80 % of our business in eight weeks. How an existential threat to Airbnb's business sparks a dramatic shift in Chesky's strategy. And later. I think I'm a bit of an experiment. What happens when a designer runs a tech company? The pros and cons of running a company with a designer's mindset.

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9:06It's smart to always have a few financial goals. And a really smart one you can set? Earning cash back on what you buy every day. And with Discover, you can. Get this. Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show. See terms at discover.com slash credit card. By the fall of 2019, there are more than 4 million hosts on Airbnb. More than 825 million guests have rented homes. Brian Chesky and his co-founders are getting ready to take Airbnb public. when a global pandemic brings travel to a screeching halt.

9:51On the Ides of March, March 15th, 2020, that's around the time that the world shut down. We lost 80 % of our business in eight weeks. People were asking, is this the end of Airbnb? And this is when we were working on our IPO and we were going to be one of the hottest IPOs in the last few years. I think it was my other defining moment as a CEO. And I think we stepped up and we stared into the abyss and we realized people still want this company to exist. We're going to get in a foxhole together, thousands of us, and we're going to work our way out step by step by making bold, decisive moves. I always think, you know, a crisis brings you clarity.

10:30Ellie Mertz, Airbnb's chief financial officer, helped Chesky navigate the crisis. At the time, she was Airbnb's VP of finance. A business that had been growing at, you know, approximately 30 percent was effectively down 80 percent. Brian, if nothing, is amazing in a crisis. And so we took this horrible exogenous hit to the business as a forcing function to not only move quickly, but also to figure out things that we could do to make ourselves a better company. So what were some of those things that you did to change the company? And how do you think you changed as a leader working with him through that?

11:06We took many actions. The first was to look at the situation of our guests and hosts. We had millions of guests and hosts who were stuck, and we had to resolve that quickly in terms of putting a huge amount of capital, of our own capital, to play to try to find a happy medium for those stakeholders. We also knew immediately that we might need more cash. We had approximately$500 million of cash outflows every month, and you played that forward. And despite the strength of our balance sheet at that time, I think we had over$3 billion of liquidity, we recognized that if you wanted to ensure the state of the business and that we would emerge intact, we should go out and raise cash.

11:46And we did that very, very quickly. That means in March of 2020, even with$3 billion in cash on hand, the company was burning through it and the stakes were high. And at the same time, Mert and Chesky identified other problems inside Airbnb. One of the big changes that we made to the company at that time was to change the overall structure. We recognized that we had become very diffuse, redundant from the perspective of having lots of teams working on the same things. And the crisis allowed us to reorg to a centralized model. For Chesky, it's a defining moment. To execute their plans for restructuring, he realized he needed to get back into the details to run Airbnb like a startup rather than a large organization.

12:31There's a paradox where being in the details sounds like micromanagement. It sounds like it's slowing teams down. But when you're in the details, you can actually help make decisions faster. The number of people in organizations that got to get their managers, managers, manager, manager to approve something. But then all these leaders have to agree to something. There's a bunch of meetings. Peers can't make fast decisions. Only a leader can make a quick decision in a room. I bring everyone in the room, everyone makes a recommendation, and we can make a really, really fast decision. I think that's the key of a leader is to make decisions.

13:04Chesky's leadership strategy has been called founder mode, a term coined by Paul Graham, the founder of startup incubator Y Combinator. A year ago, I went to a Y Combinator alumni event. It was supposed to be an off-the-record talk, and they told me, like, no one will ever know about this talk. So don't worry. So I kind of let loose. I talked about my journey, how I felt like I was a really good founder, but then I was CEO and I was told to hire great people and trust them and get out of the way, let them do their job. I think that is terrible advice for the vast majority of founders. Paul Graham coined founder mode because he said, you know, professional managers often were never founders.

13:42They weren't in the details. So it's not germane to them to be in the details, but it was always a founder's instinct to be in the details. I think the CEO should essentially be the chief product officer if they can be, because the most important thing a company to is make a great product. To me, as a designer, I just thought maybe there was a different way to design a company based on the complaints people had in large companies. Coming up, Founder Mode's impact on Airbnb. We're going to have as few people as possible working on things. And later, leading with a designer's mindset. I think I'm a bit of an experiment.

14:16What happens when a designer runs a tech company?

14:48We'll see you next time.

14:52At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. that's unstoppable energy it's smart to always have a few financial goals and a really smart one you can set earning cash back on what you buy every day and with Discover you can get this Discover automatically matches all the cash back you've earned at the end of your first year seriously all of it and we trust you to make smart decisions after all you listen to this show See terms at discover.com slash credit card.

15:50Despite the challenges facing Airbnb during the pandemic, Chesky and his team take the company public on December 10th, 2020. They couldn't ring the bell at the NASDAQ, so Airbnb released this video in Times Square. By markets closed, the home sharing platform was worth$86.5 billion, more than Marriott and Hilton combined. Leading Airbnb through COVID in founder mode worked. So many of the things you described, like being in the room for the decisions, having the leader be involved in all these small decisions, how is this different from micromanaging? The best answer to your question was something that Johnny Ive explained to me.

16:32Johnny Ive was the head of design at Apple. Because Steve Jobs was notorious for being in all the details. You could say he was a micromanager. And I asked Johnny Ive, I said, do you ever feel like Steve Jobs micromanaged you? because he was in every detail. He said, no, he didn't micromanage me. He partnered with me. We were working on problems together. And I felt like him being in the details made me better. So here's the question. If I'm in the details with somebody, am I making them better or am I disempowering them? And I hope that when people feel like I'm involved in projects, they feel like I am helping them push to think bigger.

17:08How do you avoid having that bottleneck decision-making, though, and slow down the process? Because you can only be in so many places at once. Most of what I do every week is I review projects. Anything a customer will ever see, I review every week, every two weeks, every four weeks, every eight weeks. We have a robust program management function. Things come to me. I have the full chain of command in the room. So I have my direct report, their directs, their directs, their directs. Instead of all of those being separate meetings where someone has a meeting, they elevate, they elevate, they elevate.

17:37We all just kind of meet together. So first of all, that actually saves a lot of time. Everyone in the entire company is going to work on the same problem together. We're going to have as few people as possible working on things. People are going to be experts and we're going to operate this way. And it turns out that was the best thing that ever happened to the company. Chesky says he's focused on making a great product and thinks about financial planning differently than most CEOs. I've read that you have decoupled strategy and budget. You want your employees to focus on making the best things, to serving your customers, and to maybe not have the question of budget distracting from that.

18:14But in most companies, strategy and budget are hand in hand. Most companies, here's what I think they do. They have an annual plan. And the annual plan is usually kicked off in September. And the CFO kind of works on a forecast for the year. And then the CEO has 5, 10, 20 teams. And they come back to them with plans. And the plans usually are, here's what I want to do next year. There's strategy. Here's what I need, my resources, my headcount, the hires, the amount of resources I need. And that rolls up to a budget. So it's essentially a bottoms-up plan. So now you have 20 different plans. They all have to be reconciled.

18:52And then you essentially approve it in November, and you kick it off in December, and now you have a 12-month plan. Here's the problem with that. On average, it's a six-month plan. We thought instead of having a 12-month plan, we're gonna have a two-year plan and we're gonna update it every six months. That is a strategy. It's completely separate from a budget. Our budget is an annual plan. It's done almost entirely by the finance organization working with me and then any incremental outperformance like a venture capitalist is essentially invested on an ongoing basis. It's decoupled from the strategic plan.

19:29This allows us to essentially have a longer-range plan that is updated more frequently. And the other thing is the plan is much more top-down. Instead of trying to reconcile all these different teams going in different directions, I work with a team to create an overall plan. One of the more radical ideas that Brian has talked about is this idea of decoupling financial planning from product development, which seems like it would be very challenging for you as a CFO. It's not to say that we don't have financial planning around our product development. I would say there's much more of a ideation phase before we get into the financial modeling.

20:04And that would be the, I would say, clear distinction in terms of the concept that Brian is talking about. We spend a lot of time thinking about what are we trying to design? What are we trying to offer for the customer as opposed to starting with the, you know, what is the incremental dollar you are going to generate? That comes after. It's let's think about the great idea that a consumer is going to love us for. And then let's build a financial model behind that. You convince people to open up their homes to strangers and not worry about their homes being trashed. And you convince people that instead of going to a hotel, they should stay in someone else's house or apartment with their sheets and towels and not room service and all those things people were used to.

20:45You were absolutely shifting consumer behavior. And in the early days, there were a lot of naysayers. I remember when I was starting Airbnb, it felt like it was easier to imagine living like this on Mars than living differently on this planet. People just could not wrap their head around any social behavior being different. So your challenge as a leader was to get both parts of that marketplace to scale. So how did you start off this whole process? You have to get buyers and sellers at the same time. Now with Airbnb, I think it was even more difficult in some ways than say Uber. If you start like Uber, DoorDash, you've got to get riders and drivers in one city.

21:22In Airbnb, most people are not looking for homes in their own city. So you have to basically build this global network where you have to basically figure out what are the key destinations around the world that a critical mass of people want to travel to. You've got to get all that supply at once. But then it's also a very high intent purchase. These aren't like$20,$30 purchases. These are$2,$3,$400,$500, even$1 ,000 purchases. So you need a global network effect that is a two-sided marketplace that's high trust, high consideration. It's highly regulated in a lot of markets, handling money across borders with cultures that have often, you know, not really interacted or lived together at a scale before.

22:04So there was a lot of problems to work through. What was your strategy to approach each of those challenges? One foot in front of the other. You know, it's essentially every day you wake up and you just need to figure out how to get through the day. And I think a lot of it's just having really great people, taking a problem, breaking down its components, working through, starting again the next day. You're an optimist. You believe in the goodness of people. It's sort of functionally an important part of the way Airbnb works, not just the original part of the app, but all these areas you're expanding into.

22:36As a leader, what do you think your superpower is? That's a great question. You know, I went to design school. I remember when I was raising money, somebody said to me, I like everything but you and your idea. They really manage. Strangers will never trust one another and designers don't start companies. I think there's a clue in there. And the clue is that one of, I think, my superpowers is maybe I'm just an optimist. I have a huge imagination for what's possible in the world. And I just maybe had this core insight that people are basically good. They could trust one another and we could bring people together and people are better when they're together.

23:12I think the second thing is my skill set as a designer. And I think with people who are a designer, they assume it means like the aesthetic, the way something looks. I think design is so much deeper than that. Design is how something works. I think design is about imagination. It's about creativity. It's about assembling something. It's about solving a problem in a deep and fundamental way. Brian was told designers don't start companies. Yes. You went to business school. He did not. How do you see his designer mindset impacting the way he leads Airbnb. I think one of the reasons that we work well together is that we both didn't go to business school, we both didn't go to design school, and said there's a kind of complementary leadership style.

23:51I think about Brian's key assets around being a designer, it's about thinking many years out as to where's the world going and how can Airbnb contribute to a better world. And from my vantage point of not just the CFO role but obviously being business school graduate and coming from that competency, it's saying, what is that vision? How do we prioritize our actions to make that vision a reality as opposed to merely a dream? It's unusual to have a founder like Brian continue to be CEO long after the company has gone public and to have so much success. It's just a relatively unusual thing in the tech ecosystem.

24:30And that makes your role relatively unusual as well, working with a founder CEO. What's the hardest part of your job? Ours part is really being a productive complement. There are often tensions in terms of different points of view, and it's really making sure that we are capturing the dream and the vision. Chesky and Mertz's different backgrounds and leadership skills complement each other. Their teamwork enables Chesky's instincts as a designer to power him as a CEO and for Airbnb to experiment and grow. Very rarely in history have designers been given a bigger canvas than a company as big as Airbnb.