Airbnb CEO Brian Chesky on the gospel of Steve Jobs and what founder mode really means

One of the reasons I love talking to Brian is because he spends so much time specifically obsessing over company structure and decision-making — if you listened to his previous Decoder episodes, you already had a preview of founder mode because Brian radically restructured the company after the covid-19 pandemic to get away from its previous divisional structure and transition into a more functional organization that works from a single roadmap. That allows him to have input on many more decisions.

That’s really what he’s been talking about — that good leaders need to get in the details. You’ll hear him express some disappointment in the idea that founder mode is about micromanagement or pure swagger — and of course, we went back and forth on how much good leaders delegate and trust their teams to make decisions independently of them.

If you’re a Decoder fan, this is the good stuff. Brian and I really got into it here: you’ll hear Brian talk about a wide range of management styles and explain why he still considers himself a student of Steve Jobs. Actually, Steve Jobs comes up a lot in this one — as does Jony Ive, whose new company, LoveFrom, does design work for Airbnb. Don’t worry, I asked about that, too.

On top of all that, we actually started the show by talking about some big Airbnb news — the company just launched something called the Co-Host Network — which is a directory of experienced Airbnb hosts that can run listings for people who just want to make a little extra money renting out their homes without all the hassle.

It’s a big change, effectively creating a new job description for Airbnb’s platform. It also gave me a great opportunity to ask Brian about some of the thorny issues surrounding his company’s approach to running a platform that has many of the same issues as any other platform like YouTube or TikTok but which deals in literal, physical housing.

All of that in an hour, plus more — there’s even an assessment of Tim Cook’s management of Apple in here. Talking to Brian is a ride, but I think I held my own, and I think you’ll really like this one.

Okay, Airbnb CEO Brian Chesky. Here we go.

This transcript has been lightly edited for length and clarity. 

Brian Chesky, you’re the co-founder and CEO of Airbnb. Welcome back to Decoder.

Thank you for having me again.

You’re only our second third-time guest. The other one is Mark Zuckerberg.

Oh, wow. This is really good company.

And you are in the studio with me. If people are listening, we’re together, which is amazing.

It’s the first time I’ve been in the studio with you, so thank you for having me here.

Actually, the last time you were on it was such a good conversation. We were both in New York, and my brain reinterpreted it as we were together because it was a good conversation.

That’s a sign of a good conversation.

But we were remote.

We were remote in the same city.

But you’re here today, and it’s great. There’s a lot to talk about. Airbnb just had its Winter Release. There’s a bunch of features we should talk about. I’m actually very curious about how you were thinking about hosting, professionalizing hosting, and what that means for the platform.

If you’re a Decoder listener, you’ve got to know that I’m going to talk to Brian about “Founder Mode.” The Venn diagram with Decoder and “Founder Mode” is the thesis of our show — those ideas are basically a circle. 

That’s good.

Then, I just want to talk about Airbnb generally. You’ve made some org chart changes of your own. But let’s start with the news: the Winter Release. The last time you were on, you actually talked about staggering Airbnb’s releases on one timeline for the whole company, so you get the summer release and then the winter release. What’s the big news in the Winter Release?

So two things. The first thing is we’re introducing something that we call the Co-Host Network. What is this? Let’s give some background. Airbnb is only as good as the number of homes we have, and the more homes we have, the more modulated the prices are on Airbnb, so we need to get a lot more homes. Frankly, we have more than 8 million homes today, but we’d love millions more in addition to the organic homes coming to Airbnb.

So we went out to a lot of prospective hosts, and we asked them — we do this periodically — “Why aren’t you hosting?” Number one, people first say they had no idea the amount of money they can make. It’s a very compelling amount of money you can make; you can make tens of thousands of dollars with an asset you’re already paying for. So we asked, “Well, why aren’t you hosting?” The number one answer people gave us was that they perceived it as being too much work. It’s like, “Well, I have a job, I have kids, I have this, I have that. I don’t know if I can come home, check in guests.” Or maybe it’s, “I live in New York City here, and I have a summer home in Florida, but I can’t be in Florida to check in the guests, so I need help hosting.”

We thought to ourselves, “Okay.” So now if somebody doesn’t have the time, they either make one of two decisions: they don’t host, or they go on Google and they type in “Airbnb property management company,” and they find this third-party property management company. There’s many companies that can manage your Airbnb. The challenge we’ve noticed is the average five-star rating for third-party property managers on Airbnb is about 4.62. It is significantly below the median range review score.

So we thought, “What if we basically put together a whole collection of Airbnb-certified hosts that can manage your Airbnb for you?” We could basically create a marketplace where we match people with homes but don’t have time with the best hosts in Airbnb who want to expand but don’t have a home. These would be people who only manage a few properties, so they’re not going to be managing you and 100 other homes. Maybe three, four, or five other homes. That is what we built. We built a network of co-hosts who will host your property with you, to take care of your home and your guests. The average rating of a co-host is a 4.86, 73 percent are super hosts, and we have 10,000 of them today in 10 countries, including, of course, here in the US.

If anyone’s listening, and they would like to make $20,000 a year with a house they already have and do very minimal work, you can go online. You’ll go to the Co-Host Network, and we’ll match you to the very best person for you. You’ll have some choices, with basically like 80 different factors to match you to the right co-host. Most importantly, where are you located? We want somebody near you. Then, you negotiate the rate. How do you pay them? They take a cut on your bookings, and you decide that cut or you negotiate together.  It can be based on whatever service you want. They can do all the hosting for you, or they can do just some of it. It’s totally in your control.

Just to bring it all back, I think this is going to unlock hundreds of thousands, potentially even millions, of homes on Airbnb. And I think, most importantly, this is going to unlock more real people —  regular people —  renting the homes they live in, rather than more furnished, dedicated rentals, which is what a third-party property manager would likely do.

That’s the main thing we announced, but of course, that’s not it. As you know, twice a year, we want to make these big upgrades. We can talk a little bit more, if you want to go into it later, why we do these. Because it’s a different way. We develop software a little more like a hardware company. Instead of just doing this continuous development every hour of every day — we do some of that — we try to have these big, single moments where we bring a lot of upgrades together.

We also have more than 50 upgrades for guests. The basic idea is to make Airbnb a more personalized experience. For decades, if you went to a travel website, whether it’s Expedia, or this or that, you’d have the same exact search experience as someone else. It’s not personalized to you, and we think travel should be more personalized. We have a whole bunch of features and upgrades that really personalize the search experience based on the past bookings you’ve done and what we know about your profile.

So those are the basic things we’ve done: 70 upgrades. The final thing I’ll say is these 70 upgrades are 70 out of 430 upgrades that we’ve made over the last two years. So I think this system of launching has really accelerated product development at Airbnb.

I want to come back to the product development cycle. You do it all very differently, but I want to stay on the Co-Host Network for one second. That is professionalizing a huge portion of Airbnb. I know some professional hosts and management companies who do other properties. Their point of view is, “You’ve got to find us. We’ll market to people who own properties, and then we’ll put you on every platform.” You’re going to do all the discovery of finding a co-host, and then negotiate a cut, and then handling the splits on your platform?

Yes.

Is that to just bring a more professional class of management companies directly into Airbnb?

No. Actually, let me break this down. So, there’s a lot of third-party, professional property management companies. If you’re a third-party company, you don’t want to have a business with just managing five people, building your own website, and building your own demand for five people, for five properties. You tend to need economies of scale, so you’re going to be managing hundreds of properties, even thousands of properties.

If you manage thousands of properties, now you have a whole bunch of employees. Then, you probably have a company name, and your employees probably wear a T-shirt with a company name on the T-shirt. This is basically just a little more of an industrial hospitality experience.

Someone might argue that it’s a little more like a hotel. There can be pluses to that from a service standpoint, but for a lot of people, this is a little bit different than the original ethos of Airbnb of “living like a local.”

Number one, every single co-host is vetted by Airbnb. We go through everyone’s profile. We only allow people who have high ratings in Airbnb to be co-hosts, so these are the very best hosts in Airbnb. Additionally, we bias towards people that manage only a few properties. The reason why is we noticed that the more properties you manage, the lower the five-star rating after a certain scale. There are some property managers who are amazing and defy this, but generally speaking, hospitality is a difficult thing to industrialize. People want a local feel, as compared to Amazon, delivery, or other types of businesses where scale makes the service better. Hospitality at scale often makes the service more challenging.

I think this is maybe an alternative to the extremely professionalized third-party property managers, and in some ways, it kind of moves Airbnb a little closer toward the roots. Again, I think we’re going to bias towards more regular people putting up their real homes, rather than more dedicated rentals. So that’s where we’re going.

Now, just one caveat. If anyone’s listening and they work at or are a third-party property manager, we love the ones guests love. Although the average rating across the board isn’t as high, there are some unbelievable property managers, and we love them.

The last point I’ll just make: it is true property managers are more likely to — you might call it cross-list. They’ll cross-list their inventory on many different platforms. One of the core values of Airbnb is that you come to Airbnb to find something you can’t find anywhere else. If you can find it everywhere else, then we’re just another e-commerce platform, and we’re not adding a lot of value. So the co-hosts on Airbnb are exclusive, and those properties are exclusive to Airbnb.

One of the reasons I always like talking to you is that Airbnb has all of the challenges of… I don’t know, an internet video platform? It’s a platform of suppliers and audiences, but then you’re managing this very physical thing that seems very challenging.

Here’s the thing people don’t realize. Airbnb is a harder business to run than it appears. Apple does not appear to be an easy business because one device is like a miracle in your hand. OpenAI doesn’t appear to be an easy business. But Airbnb does. The reason Airbnb appears to be an easy business is because, at a sub-scale, it is an easy business. If you wanted to just find a home in Croatia, you don’t even need a website. You can just get a friend, and you can get a house.

The part that makes Airbnb hard is that there are 4 million people per night from nearly every country in the world —  more countries than Coca-Cola operates in — living together. That’s the part that makes it hard: the scale. And the scale is the only way you can actually do this profitably, or very, very profitably, as well. That’s the part that makes it really difficult.

I remember… I think it was Doug Leone from Sequoia Capital (this was like 10 years ago). He came to my office and he said, “You have the hardest business of any of the Sequoia portfolio companies to run. First of all, you have to have a mobile app, and you need a website.” This is when Uber only had a mobile app. “So you need to be on every platform. You need to be in every country in the world, but you need supply and demand, and they’re not in the same city.” Uber could go one city at a time; they can get riders and drivers in one city. We had to get supply everywhere and demand everywhere, and perfectly match the corridors. It is highly regulated —  as regulated as Uber, probably even more regulated in many ways. The hotel commissions and the hotel trade councils are significantly more powerful than the taxi unions. So this is a very, very difficult business.

We’re handling a lot of money through the platform: over $90 billion a year, which is the GDP of Croatia. We have to deal with physical safety, and more types of physical safety than even ridesharing because of a myriad of things. Obviously, there are a lot of accidental issues that can occur. You have to deal with some of the hardest customer service challenges you can imagine. Somebody checks in at 11PM in Paris. They’re from Tokyo, they don’t speak French, and the host isn’t responsive, so they have to call customer service. You start to think about how you have to manage the quality of supply that you don’t actually own or control. But you have to influence the quality, and you’re competing with an alternative supply that has a front desk. By the way, I could keep going on and on…

Or a search problem. People think that Google’s got one of the hardest search problems, and Airbnb’s got a more pedestrian search problem. I’m not saying we have search technology like Google, but here’s the difference: you type something in Google, but when’s the last time you needed to look at a third page of Google? The first five results are the only five results you need. If you’re typing in “Paris” and you need a house, we have 150,000 homes. Suddenly, this is a matching problem, not just a search relevancy problem where there’s just one right answer. So it is a harder business than meets the eye, and that’s just our core business. That doesn’t involve taking this business and expanding the model to new categories and verticals.