Founder Mode: Brian Chesky, Founder & CEO, Airbnb

0:00Carolyn, we are here with Brian Chesky, the founder and CEO of Airbnb. We are so excited to be talking to you this morning on a special topic, founder and founder and founder. mode. And it was magical. And I want to talk more about that. Tell us about that talk. I mean, the talk was like pretty crazy, because I wasn't even planning to come. I told Gary, I'm coming from out of town. I don't think I can make it. And then the night before the talk, Ron Conway sends me like, and Ron Conway is a very persuasive person. He sends me a text message, I think it was like in all caps, like, you have to come like, like support founders, like they have to hear what you're going to say.

0:57And I'm like, okay. And I think like the schedule was like already printed. And like Steve Hoffman was supposed to be last talk. I told Gary, okay, I'll come. And I remember driving. I think it was like I got there so late. It was like dark. It was like 9 or 9.30. I get on. And I'm only supposed to go on for like 20, 30 minutes. I don't even really know what I'm going to say, except I speak a lot at Y Combinator. And I speak at the founding story. And I thought, well, there's almost like a refounding story. There's this thing that happen from the pandemic to today, I needed to tell this story.

1:28And I thought there was something about YC where there's a sense of togetherness. Before YC, I didn't know what I was doing. I thought we needed business plans. PG was like, do things that don't scale and make something people want. And we had this methodology. And there was this way to do something. And we did it. And it worked. And we had other founder friends. And we talked to each other. And they did things. And it worked. And then suddenly you go on a rocket ship and you're alone in that rocket ship. And in that rocket ship, it is so lonely because number one, your co-founders start working for you.

2:03And so suddenly you're not totally equal if you're the CEO. And then you start hiring these executives. And these executives are typically older than you and they're much more experienced and they're like adults and you're like an adolescent. That's at least what I felt like. I think a lot of people feel the way. And you don't know quite what to do. And we didn't have the same community. And so the people telling us what to do or giving us advice weren't Paul Graham, weren't other YC founders, weren't other YC alum. It's the people we hired or the people on our board who have maybe good intentions, but they're telling us how to run a big company with a professional CEO.

2:39And that is not who we were. And so they're telling you things like hire great people and trust them to do their job. How could you disagree with that? Who doesn't want to hire great people and trust them and do their job. And I did it and it was incredibly fatal because I misunderstood trust for hire them and let them do their thing without auditing what they were doing. And suddenly you might find out a couple of years later, they maybe weren't the right people. They weren't doing the right thing. They hired the wrong team and guess what? They'll leave and you have to now fix it for like five years.

3:13And this can happen over and over and over and over again. And I kind of felt like when we started Airbnb, we ran the company that we wanted to run. And then we hired people. And again, people with good intentions. But I naturally, I think I was a little bit of a people pleaser. I think a lot of founders, like we're a little bit, we can be people pleasers. We want to be liked. We want these people that work for us to like working for us. And so we listened to them and we asked them like kind of how they want to be led and what we should do. And what you end up doing is with good intentions, you basically try to find some negotiations, some midpoint between how you want to run the company and how they want to be led.

3:56Except each of them have their own perspectives. No one agrees on anything. So you're kind of negotiating with everyone who's going in every different direction and they're competing with each other. And many of them, if you're doing this as long as I am, 17 years, what you end up doing is going through many generations of this, where people say, let me do my thing. They do their thing with their team, leave. And then you inherit their team and you have to keep doing their thing. But then you hire someone else who wants to do a different thing. Not that thing that they were trying to do. And do this with 20 different groups.

4:28I'm so confused. All going in different directions. And so suddenly you start to want to get more hands-on. You have to fix things. You're saying, okay, now we're going to do this. And people are like, why aren't you trusting me? Why aren't you empowering me? You're like, you're meddling. You're micromanaging me. There's all these terms. They're all negative. They all come from this notion that you don't know what you're doing. You're not a good leader. You don't trust yourself. You start listening to everyone but your inner voice. And that's when you become a manager, not a founder. And I just like, I started thinking I was crazy.

5:01And the bigger we got and the more successful we got, the more I lost my confidence. You'd think I would have gained my confidence. Yeah. But I started losing my confidence because the thing was outscaling me and I didn't quite know what to do. And I was basically seeking advice and I should have listened to myself how I want to run the company. Because the right way is one way. And that's the only way. And the way is the way you want to do it because some people will stick with you, but many will come and go. We talk about this thing, product market fit. There's also this thing called founder market fit.

5:35How do you want to run the company? You are the right founder for the right company, and you need to build your team the right way. So basically, I went last year. I told this crazy story. I basically said, like, I felt like I lost control of my company, not from the investors, but from the employees. Like, I just – we were all going in a thousand different directions, and I didn't know what to do. I started basically seeking out advice. I discovered – a couple people came in my life that were former Apple employees. They told me how Steve Jobs basically came back to Apple. He was like 90 days from bankruptcy, and he basically took what was basically a manager mode company and got it into founder mode.

6:17And I put that in my head, and I said, I wish I had permission to do that, but we're about to go public. But man, I wish I could run this company like during Y Combinator. What if we could run like a giant startup? What if we could be small? What if we could be lean? What if every manager was also in the details of the work? so they knew what they were managing? What if people weren't focused on promotions? What if they were focused on doing great work? What if the CEO was still the chief product officer? I was in the details of the work. What if I reviewed all the work and told people what good and bad was rather than just saying, I trust you, you do whatever you want because we're one brand.

6:53We must stand for something. What if we all agreed to row in one direction? And it was my direction that I set because I was the founder and I was the CEO. That was a beautiful idea. Except to do that, I had to basically rebuild the company and kind of blow it up. So I had no impetus. And then the pandemic happens. There's your impetus. And when you're a travel company, I remember the night of the pan, the Ides of March, March 15th, Ken Chenault, board member of mine, he was CEO of Amex during 9-11 and 2008. Wow. So Amex did travel, you know, they were a big travel company. And he said, I dealt with 9-11.

7:34I dealt with 2008 as a CEO. They were my defining moments as a leader. Sometime, at some point, you're going to have your 9-11. You're going to deal with your 2008. It's going to happen on your watch. Something in the world is going to happen. And it will be your defining moment as a leader. And that day, on March 15th, Ken Chenault calls me and he said, remember that conversation I had about a 9-11? This pandemic is 10 of them. Wow. Wow. This is the size of 10 9-11s. And it was. It was the size of 10 911s. That was the impact I had on travel. He said, this is your defining moment as a leader.

8:07And I thought about this Andy Grove quote. Bad companies are destroyed by a crisis. Good companies survive a crisis. But great companies are defined by a crisis. And I said, he's right. This is going to be our defining moment. And luckily, I had a blueprint. And that blueprint, we now call FounderMobo. I didn't have a name for it. I just said, it's a company that just gets shit done. and I'm not arguing with everyone about what we're doing. It's a small team. Everyone's really good. We go in this direction. We just do it and my involvement, I'm not micromanaging people because I'm not telling them what to do but I'm in the room with them like when I was a founder and we're back and forth.

8:46We're brainstorming. It's not about I'm giving you space to do your job. It's not about Jessica, go right, go left. It's about as a leader, we're all generally going this way but how do you think we can get there? Great, well, what about this? What about that? It's a creative flow. like three founders building a product? Why does it ever have to stop? And that was the creative process that allowed us to basically rebuild the company from the ground up. We went from a company that people said was going to go out of business, Wired Magazine, is this the end of Airbnb? Yeah. To suddenly having an IPO at$100 billion market cap.

9:18And was there no pushback or less pushback because you were literally fighting for your life? It was so funny. If this wasn't the pandemic, there would have been pandemonium. There would I always say really great, wonderful, well-intentioned people. That's the key. It wasn't like I hired these horrible people that are misbehaving. This is how organizations are. You can hire an incredible people that you interviewed, that you want to work with, but if you don't lead correctly and you just – leadership is presence, not absence. That's what it is. If you lose control of your company, it's often from people where you're not giving direction.

9:55I did not have permission to lead a company. I didn't think I did. When the pandemic happened for the first time in many years, everyone looks to me and they said, what do we do? Yeah. Now, they didn't say that when it was good. They said, let me do my thing. But suddenly, now that we lose 80 % of our business, everyone's like, what do we do? And I said, oh, I guess I have permission to operate in the way I've always wanted to do. And so I'm going to step up, took control of the company, went into basically what we, I think, PG coin founder mode. I went into that mode. and once the crisis is over a few people kind of they didn't say it this way but they said like okay when do we go back to the way things were and they don't go ever back to the way things were and most of them were happy about that some were unhappy and left but that's okay like i am unapologetic and if people watching say i don't want to work for a company like that then like well 99.999 percent of jobs aren't at airbnb so you got like many other flavors like i'm not apologizing for how we run the company and it's not for everyone and the most important thing is ceos and recruiters are honest about what it's like to work there and then people decide if they want to be a part of that now i'm a biased i think in the age of ai ai is all about speed and velocity i think speed and velocity is like a small team all being like we're going right and everyone goes right i think that's those so i think founder mode companies are much more likely to thrive or even survive the age of AI, because AI means every company has to reinvent itself.

11:28Yeah. And you did reinvent yourself. One thing that stuck out for me from the talk, and then you mentioned it again last night in your talk at the Y Combinator founder mode retreat, as it's now called. The idea about the skip level meetings and how important that concept is. I was told this overly simplistic view of how to run a big company. There's how to run a small company. And I think like Paul has written many essays about it. And I think there's a lot of knowledge that's correct written about how to run a small company. But the thing about being a founder before I answer this question is it's intuitive.

12:03Like notwithstanding some unintuitive things like do things that don't scale and like kind of really simple principles like make something people want as in don't worry about like how you're going to make money. If you make some people want you'll probably make a lot of money and we do because people want what we make. I think being a founder was intuitive. I think being a CEO is like not intuitive. I don't think your intuition works. It's said differently. I think people are kind of born good as founders. They're innately good founders. I don't think people are innately good CEOs. I think many of the good CEOs start as bad CEOs.

12:33I think Jeff Bezos say he started as a bad CEO. Steve Jobs, I mean, he got kicked out of Apple the first time. So I think even the great CEOs started out as not great CEOs because it's intuitive job. And what people say, again, I think it's kind of not the way that a founder would operate. So one of the things they say is the job of a CEO is to hire a great executive team and let them basically run their company. And that to me is absolutely not what you should do. What you need to do is you need to have relationships with as many people as possible in the company. You need to be as close to the people doing the work as possible.

13:12In an imaginary world, if you had infinite time, all thousand people would report to you. Now, that's not possible. But in a theoretical world, there would be no management. Like you could theoretically work with everyone doing the work. But of course, that's not possible. People need direction, they need alignment. And you're not an expert in every specialty of what everyone's doing, and you have limited time. So you create this like management layer and management is necessary. Maybe one day, one person can manage a thousand bots. I even think in that structure, they'll need a management structure.

13:44I even think you're not going to be able to track a thousand bots. You're still going to have a management structure, even if you're thinking you're managing AIs. I guarantee you it's going to be just like people. But I do think that you need to have relationships with as many people as possible. The only way to do that is to skip level. This is what they call it. It's like you talk to, if it's a CTO or SVP of engineering, you got to talk to the people reporting to them. A lot of executives don't like that. I'm not saying all executives. A lot of executives are like, why are you talking to my people?

14:15Or they might not accuse you of anything, but like, is everything okay? Or people initially, when you skip a level, they don't want to tell you everything because they're afraid. And people get really anxious. Or they're like, hey, I need to be on the same page. I don't know what you're telling my team. So people, for good intentions, good intentions are like, you told my team direction. I didn't know about it. Or bad intentions. I'm insecure. By the way, they don't like it. There's a responsible way of doing it, though. The first thing I do is I say, first of all, they're not your people. They're the company's people or they're my people.

14:48Because if the executive thinks they're their people and they leave, well, guess who has the team? You. And this has happened over and over and over and over again. So first of all, I want to have a relationship with them. Second of all, how do you know if the executive is doing a good job if you're not skip leveling? Of course, the executives might not like that. But if they're doing a good job, I would want them to skip level to know how good of a job I'm doing. Right. Right? So this is only kind of a – this is kind of like a – you know, this is kind of like a confirmation bias towards the good or the bad.

15:19And then – but also like you want to be close to the vision. Like what is the job of a founder? I think a lot of people think the job of a founder is to like set the vision. And I'm like, what does that even mean, set the vision? I think it's to set – maybe another way of saying it is to set the vision every day. It's to set the pace of the company. It's to shape it every single day. It's not like we just dream up something, we tell a bunch of people and they do it. Every single day we need to be on the journey together. And the vision changes a little bit every single day. I mean it's the same mountaintop, but the tip of the mountaintop, the way you get up it, it changes every single day.

15:57And you need to be on that journey. So I think of myself as concentric circles. So my directs, my directs, directs. And I treat the directs of my directs as my directs. So it's a concentric circle of like 40 or 50 people, and I treat them all as my directs. I skip level, I co-hire them, and I make decisions on whether or not working out and leave the company. Like hire, fire, promote, and manage. I co-do it with my executives. It's a lot of work. But it's necessary. Now, Jensen, NVIDIA, took it further. He didn't even have an executive team. I believe he has 40 or 50 directs. He just said, I'm just going to manage them all.

16:34I think that's like if you could theoretically do it, it might work. And he's such a seasoned CEO. He's been doing it for 30 years. I think that will be unwieldy for most people. Even for me, that's unwieldy. That's just a lot of administration in a company. And I don't want to get too bogged down. But the inverse is like you have to be able to – and I sometimes skip a little four layers. Because ultimately you want to work with the people doing the work and solve the problem. And by the way, why do founders do this and not managers? because founders are usually more technical. They actually know usually how to do the thing so they can sit with the people doing the thing.

17:09And the reason why is because they did the thing before they hired the person to do the thing. Because there was no one else to do the thing. So every job in the company I've done as a founder. Now I'd like to tell people I did it worse than you. That's why you're doing it. But every single job in the company the founder did so they can skip level because they're just doing your old job. If you're a manager, they came up some silo. So every other of the 20 silos are unfamiliar domains that were parallel to something they've done. They don't know about it. And they're just a little more wired for status.

17:42It's just little things. Like founders get their hands dirty. Like if you're in the bathroom and there's like a paper towel, a founder will pick it up and put it in the trash. A manager will be like, why is there a paper towel there? It's like a little thing. Because the founder was starting an apartment where if they didn't take the paper towel, I'll throw it out. No one did. So it's just like it's ingrained in you. And that's a metaphor. But that metaphor is true of everything. And so I don't think all founders should or are capable of running giant companies. But I do think the best companies are when it works in the founder scale.

18:15It's unmistakable. It's unmistakable in the data. And you look at the most valuable companies in the world. They're either run by founders or they have, you know, the founders gave them a ton of momentum like Amazon. or in the case of Satya, they are very close and characteristic to a founder to reinvent themselves. He acts close to a founder. He's not a founder, but he's acting close to a founder in the way of reinventing himself. And I think there's very few exceptions to this. I mean, maybe kind of Google, but even then, Larry, Sergey, and Eric were kind of a trumpet for a very, very long time.

18:49And then they have a kind of a search monopoly. But there's really not a lot of exceptions to this. I mean, once you get escape velocity, like Tim Cook was able to take the most successful product of all time and just sell the hell out of it for 13 years. But if Steve died in 2005, would they have come out with the iPhone? I don't think so. No. Do you ever think about where Airbnb would be right now if the pandemic hadn't happened? I think we would have. The pandemic happened in March. I transformed the company. I made like I made what felt like five years decisions in three months and I worry that if the pandemic hadn't happened I might still be making five years worth decisions but in seven three months in five years and so maybe everything I've done in the last five years it would take me another five or ten years to do and I'd probably be tired I'd be exhausted I'd have bags under my eyes I'd be really frustrated I don't even know what I'd be telling you I'd probably have all the same lessons but like in with a lot more frustration, a lot less to show for it.

19:51You know, there's an old saying, a crisis is a terrible opportunity to waste. And man was an opportunity when I've never asked for it. And I hope that people watching don't need a once in a generation pandemic. And so that's why I wanted to do this because I want to help founders like keep control of their company and keep control. The company is not vis-a-vis investors. It's vis-a-vis your own team. And by the way, your employees will mostly all be happier. It turns out I was afraid to lead. I thought I would be bossy. And I thought people don't want to be told what to do. It turns out people do want direction.

20:23They may not want to be told exactly how to do their job, but the bigger the company, the more you're yearning for direction. Because without direction, you have politics, you have bureaucracy. You've got all the reasons why people don't want to work at a big company. I love it. I think we should end there. All right, great. This is such an important concept. Thank you for being so open and sharing it with us because you are going to inspire a lot of founders out there. Well, I hope to keep doing this with you and Carolyn PG and Gary. And I'd love to keep talking about this because I think it's really the part two to Y Combinator.

20:54It's like you leave Y Combinator, now what? Yeah, exactly. I think the punchline here is we want people to be in founder mode without having to have a crisis. So if you give them all the tools and all the content, they won't need a pandemic. Stay in founder mode. Well, thanks for coming on the social radars. Thank you, guys. Bye. Bye. Bye-bye. organisation dei οποist