From near-failure to global giant: Airbnb's co-founder on how it all almost never happened

Propel Fitness Water with Gatorade Electrolytes, Zero Sugar, and Vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolytes. It was an existential threat. We told all our employees, just stop what you're doing. Go to the war room. It must have felt like a nightmare. For sure. No, I really did not know if we were going to survive this. Today, I'm here with Nathan Blacharsik, co-founder and chief strategy officer of Airbnb. Airbnb. Airbnb. Airbnb. Known for transforming how millions of people around the world travel and experience new cities. Since inception back in 2007, Airbnb has evolved from what was seen as an odd social experiment with a couple of air mattresses into a whole new category of global business. One of Silicon Valley's most valuable companies and a major contributor to global travel GDP. Since the end of 2008. 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. The company has welcomed guests in almost every country and more recently been working to become the place where you book everything from your trip in one place. You're looking to become the super app of travel. Super app for travel that is, of course, AI powered. In this conversation, we'll get into the early days of building the brand, navigating rapid growth and global expansion. We mobilize, we raise $100 million of new venture capital. Nathan's tough. He's a big fan of the company. a night times three people times four nights is almost a thousand bucks. bucks so you know meaningful it added up and they all went to the conference together and joe and brian introduced him to their friends took him 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 now quit my job and the three of us brains were brainstorming ideas of things to work on and this story i just told you never came up of two months of brainstorming no never was the story shared time no 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 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 i'm so curious what were some of the other ideas that kind of got tossed out along the way a lot of them had to do with roommate finding services because that's you know a challenge that we had kind of felt earlier that year when we were finding each other um so you know not terribly different but there was also like apartments.com already so there wasn't we weren't filling a hole in the market okay so yes the company first started with the name airbed and breakfast and you've spoken openly about how you guys struggled to you know be taken seriously in the very beginning right in those early days how did you handle initial rejections skepticism from investors friends or family it was tough because you'd explain the idea allowing strangers to you know stay with you and uh you know people would have like almost a visceral reaction like they would be like you know someone's going to get hurt like how can you trust a stranger and so like it was just like common sense that that was not a good idea uh so you know frankly we i didn't tell a lot of people uh necessarily i didn't tell a lot of people uh necessarily uh in those early days it was a funny situation i think uh after the first year uh i i would send an annual update to my friends telling them you know about the year kind of a year in review and i wrote this long email about all the stuff that happened that year and all the projects i was working on and you know at the very end i mentioned oh yeah there's this thing airbender breakfast but i don't think it's going to go anywhere stop it and then i sent it to joe and brian and they were like so upset that you know i had uh you know not put more emphasis on the idea and you know i was like i'm not going to do that i'm not going to do that 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 you know joe and brian had seen the power of the idea that first weekend right real friendships were formed as a result it wasn't just a place 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 and i think it was march or april 2008 and again a few people used it and they had amazing experiences and so you know we'd have these breadcrumbs of people who said wow this is really great like once you experience it you're transformed and so that we saw was the potential it was just a question of how to recreate that and how to 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 problems and you're not able to 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 yeah, 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. Yeah. I have such admiration for Bootstrap founders, but it can be so hard to keep going to your point earlier. I want to ask, there was a story that you previously told, just speaking of fundraising and investors, about some advice your co-founder and Airbnb CEO, Brian Chesky, got from none other than Sam Altman, OpenAI's co-founder back in the day, which led to changes in a certain pitch deck that you guys presented. What happened there? 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. But so during this time, I was mostly in Boston. They were here and I would hear about this stuff secondhand. But it so happened that 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 reviewing the pitch, 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. Like 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, you know, just 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 it to $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 $2 billion. So he changed in the other direction. And so afterwards, I asked Brian, you know, why'd you change it? And he said, well, you know, 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, like 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 to how we were going to get there. So that meeting did not go well. Yeah, that is absolutely hilarious. And look where you are now, by the way, all of you guys in that story. Yeah, it's crazy. You know, the same names keep coming up over there. 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While I've heard that you were initially skeptical, you have said that this helped you guys earn 30k, which was more money in a week at the time that we made all year in our core business. What was that like? What did that teach you? Yeah, so there's a few parts of this story to understand how it played out. But it's all very interesting. So we set out to launch what you see today in August of 2008 was when we're going to launch it. And we kind of settled on this idea in June, which was, you know, facilitating the payments and the reviews and like what you know Airbnb to be today. We kind of scoped that in June and set out on a three month journey to launch it 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 that there was going to be a need for our product. So we set out to launch what you see today in August of 2008. 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's going to be held in a stadium that holds 80,000 people. And we searched Denver. And we said, Oh, we found out there's only 17,000 hotel rooms. So we said, Okay, 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, this, you know, cultural, wave or moment that's happening. So that's the wind up. And sure enough, we launched like two weeks beforehand. And sure enough, you know, 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, you know, sure enough, we create this website dedicated for this purpose. And we're able to convince a lot of folks on Craigslist and elsewhere to run the show. 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 you why don't we write a story about that. So we got all this publicity in the lead up 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. You know, 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 of presidentially themed breakfast cereal. And they were going to make a box of of two different boxes. One was going to be called Obama owes with a tagline of hope in every bowl and then captain mccain's john mccain was the other canada and uh he was going to be his tagline was a maverick in every bite and uh they created uh 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 said we thought to ourselves we can email them but they'll just delete the email but if they receive the box of obama is in the mail they're going to want to call us back and ask us what is the story behind this breakfast cereal and uh and sure enough they did we mailed out 100 of these boxes and we got all these phone calls and we were on good morning america that week and cnn and um that day we were the number one political video uh the day on cnn and at the time 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 so what 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 out we sold 30 000 a cereal that week which was more money than we made all year um and so that was super exciting got some publicity again but again was kind of tangential to our core business and we were kind of still in square one of you know 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 uh 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 of the interview into the interview it goes off the rails where paul graham who's the founder of this program says what strangers staying in other people's homes i hate that idea you know 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's and gives it to paul graham and paul graham looks at it and he's like oh my god i'm so sorry i'm so sorry i'm so sorry i'm so sorry i'm so sorry he says what's this and he said did you buy me a gift and we said no we made that he says he looks at it 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 air bed and breakfast he hated that idea but he loved the story about the cereal because to him uh this was at the start of the financial recession and he was looking for super scrappy uh 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 that capability and quality of the founding team that is such a story and you know it's so funny to hear you you know tell that story because i remember i think i saw an interview where you talked about how you didn't want your co-founders to bring it out and you were like it's gonna look desperate you know like let's not do that but look at that that pretty much turned around the whole story because it seems like the turning point in the story really seems to be with y combinator yes which for those who don't know has long been premier uh considered the premier startup accelerator here in san francisco highly competitive it might not have worked out no it might not have you know if we hadn't brought that cereal during all the lows nate i'm so curious how did you stay motivated you know did you seriously think about throwing in the towel because i know you said like you were pretty much at that point already but was it just that final push that you guys all collectively decided you know what let's just give it one more go well as i mentioned before the friendship amongst the three of us like there's a strong loyalty and respect and no one of us wanted to leave the others um and i gotta be honest i was probably the one most tempted to leave because as i said i was the one most tempted to leave the others because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because as i said i was the one most tempted to leave because 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. It's just so crazy because yeah, it's like, can you imagine during this period with YC, when did you start seeing a turnaround in revenue and the numbers that you were actually excited about, you know, and to what did you attribute that? Yeah. So it happened during YC over these 13 weeks going into YC, Paul Graham had told us that this is the financial, a financial recession. Investors are just going to want to know that you are profitable before they invest in you. Like that's, 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, right? So he said, you know, 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, like our, uh, basically our only cost is paying rent. Uh, and then we joked maybe buying some soup noodles to eat. So we came up with this definite definition, what we call it ramen profitability, which was a thousand dollars 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, you know, get climbing to 1000 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 as kind of the last thing you saw before going to bed. And we were hyper-focused 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, it's okay to do things that don't scale. We said, oh, that's, that's kind of counterintuitive. Like we're building internet companies all about scale. He's like, no, uh, it's better to have a hundred users that love you than like a thousand or a million users that just kind of like you that don't really care about you. So like you need to have some really passionate evangelists who will champion your product and give you feedback and show you that your product market fit. So, okay. How do you find those people? He said, go meet your users, go figure out like who those people are. And we said, he's like, where are your users? We were like, well, they're, they're everywhere. He's like, well, where are most of them? We said, New York. He said, New York, which it's not something we had done because we had no money, right? Like we were paying off credit cards. We didn't have money to go fly into 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'd 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 noticed that you your, uh, 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 it's 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, uh, and they take the pictures, but they 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're like, they wanted $400 a week. They wanted $400 a week. They wanted maybe a night. And we said, well, you know, 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, right? And 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. Um, that were very well described because now these people have met us, put more effort into their profiles. Uh, and turns out, you know, 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, would look to our website and emulate what they saw, which was like really high quality listings. Uh, and so that started happening. And then we started getting more and more bookings. Um, and meanwhile, the person who came from Paris went back home and thought to himself, I can do this here. And they, they became hosts there. And so there started to be this word started happening very quickly. Yeah. 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 we're very impressed by our growth and kind of our novel concept. And they ended up investing 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. I'm sure things really finally felt like they were trending the right way. You must have been ecstatic, maybe even in disbelief initially. And it's just so fascinating to hear how all of this rapidly turned around. One thing that really struck me, is that obviously over the years, Airbnb has gone through so many ups and downs, as have every business, right? I want to ask you about one of the things that you went through, which was in 2011. This is only a few years after this Sequoia investment. You faced a major threat from Wimdu, a well-founded European clone that had allegedly copied your entire platform, was aggressively targeting your hosts. Brian, your co-founder, has previously said that, all of a sudden, I felt like we had a gun to our head. What was that period like for you? Yeah. So, you know, after Y Combinator, everything was kind of up and to the right, growing very quickly and going very smoothly. And we were just like letting it grow kind of organically. But that all changed in 2011 when competition emerged. And one thing I noticed was suddenly, my day started each day. As I mentioned, I was originally like 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 people 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 for this company that literally has existed for a couple of 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 to 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. Nick Neumann: 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 kind of like 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, "Well, we could win if we join forces, but we might not like who we become." And so I said, "We are going to 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 like wartime mode, from peacetime mode to wartime mode. So we mobilize, we raise $100 million of new venture capital. Nick Neumann: Then our competition in Europe claimed to have raised $100 million too. So that was no longer an advantage. Nick Neumann: But we started going across Europe, hiring country managers and opening offices in each of the kind of important markets and building a local team. 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 like a really, really crazy year, racing around the world, building teams, launching new markets. And over the course of the next, we'll say 18 months, we succeeded. I think what people realized was that we were really committed to building a high quality product in a real sense of community, and that the other company was really just a hyped up sales operation. But, you know, didn't necessarily have the substance to follow through on their quality of service. But what did that feel like, Nathan? Because it must have felt like a nightmare when you walked in. 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 like, 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 raise 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." Nathan: 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. You seem like someone who takes everything in stride. But I'm so curious, during this period, it was just such immense pressure day after day. How did you cope with that? Were there any habits that you picked up along the way that kind of allowed you to unwind, frankly, when you were going through this process of, as you call it, warfare? It is nerve-wracking. I think, with some of the habits that helped, I've always been into running. And I find that's a great just 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 that. There's a hundred things to do because you just need to pick one thing to start on. What propels you? It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Listeners of this show will get a $75 sponsored job credit at indeed.com/podcast. That's indeed.com/podcast. Need a hiring hero? The challenge did come many years later, though. In 2019, you announced plans to go public the following year, but obviously months later, COVID hit, bringing travel to a standstill. What were some of the hardest decisions you had to make in this time? Yeah, this was kind of our next biggest crisis, because once we got past 2011, And the company really continued to grow very smoothly, I'll say, for the most part, like 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, we were supposed to go out in March of 2020. And, you know, by January, February, we were seeing what was happening in China, then in Korea. And, you know, by March, it was a full-on pandemic. What was hard about that was, first of all, pandemic, all travel just kind of stopped. You know, our revenue dropped 80% in the span of a few weeks. And, you know, 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? Like, we don't know. And so how are you supposed to budget when you're hemorrhaging? How are you supposed to budget when you're hemorrhaging? 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, you know, everyone was having problems and no one was feeling super generous about loaning capital. We had to, you know, kind of right-size our expenses and whatnot. I think before we did anything, though, we said, look, we're going to have to make a lot of decisions really quickly. We're for like principles to guide these decisions. And so like, what would our principles be? And so we came up with a list of five or six things, you know, like if it was like one was, you know, first and foremost, this is a public health crisis. So we're going to do what's right by public health, you know, not just like what's right financially or what's right for hosts, but think about like what's right for society and a public health crisis. You know, that was like one, you know, two was that we were going to, you know, make bold decisions, not half steps. We weren't just going to try to buy ourselves a week at a time. We were going to kind of, you know, assume kind of the worst case and be ready for the worst case. But three, like we weren't going to sacrifice the long-term and like all these principles were a little bit inspired by, again, that quote I shared that, you know, that a great company can actually come out even better as a result of a crisis. So we're asking ourselves like, 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 re-orged 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 like 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, you know, this entire period of 18 years saying goodbye to, you know, folks that you work so closely with, but it was financially necessary. And it was also an opportunity to kind of change the ways of working and be more focused on the top priorities. I think one thing important throughout all this was communication, right? So because there were a lot of stakeholders, our guests, our hosts, our employees, our board. And so every day we met as an executive team to talk about, you know, 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 share with them our principles at the very beginning. And we shared with the problems that we were grappling with. And, you know, they. We 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 what were 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. Kind of gave you an opportunity to recenter and get everyone back on the same page as well. You know, certainly it sounds like that was the toughest time for you as a leader. Was there ever a fear that you guys weren't going to make it in this time? Or do you feel like, no, OK, at least you knew that whatever happened, Airbnb would still be there for years to come? 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. All right. Like probably the realistic scenario was that we would run out of cash and then we would get have to sell ourselves to another travel company that was, you know, better financed. But to us, that would be, you know, 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. And speaking of financing, actually not too much longer later, Airbnb eventually did go public, actually still in 2020, I believe. It was December 2020. Kind of remarkable, yeah. One of the most successful market debuts in tech history, with shares more than doubling on listing day. I still remember seeing all the clips. That must have been a lot of money. That must have been just a pinch me moment for you. You know, what was going through your mind that day? It was so crazy. Yeah. Because I earlier that year and even just six months before, like we really didn't know if like 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, you know, other family members for a month and have a longer stay. And, you know, those are all things that we're going to have to deal with. Those are all use cases that a home can really accommodate well. And we have homes everywhere, not just in the 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 you know, consumer preference had changed to this other kind of travel and we were able to meet the moment, you know, almost instantaneously. So that was like a demonstrated the resiliency of the business model. And two, you know, 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, you know, we held up under pressure and I think investors appreciated that and what they saw was a leaner company. That actually now was succeeding despite, against all odds, really. And that made it a very, I think, exciting IPO for them, but it was a remarkable turnaround. Yeah. And for you as well, right? And you know, what's really interesting is we hear CEOs talk about this all the time, but it's kind of an age old question. You know, after going public, it just struck me. You went from a three person bootstrap startup to leading a major public company. How do you balance the short-term expectations? How do you balance the long-term expectations of Wall Street with creating value for the long run? Well, as founders, I think we're, you know, we have a tendency to have visions and ideas and want to think long-term. So I think that is how we are inherently kind of focused on. I think, you know, 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. You know, that being said, we've had. The company's been around for 18 years, so we've had a lot of practice even before going public. Like 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 found that there isn't a trade off for us. That you know, it's a business model that is very resilient, very predictable in terms of kind of the short term output. And then, you know, we can focus on the long term and we have a lot of ideas about the future. Yes. Well, speaking of which, you know, I wasn't going to ask you this until much later, but obviously you guys had a very, very big year last year announcing a whole suite of new offerings and the key focus on growing beyond homes. Can you talk us through a little bit how you envision Airbnb evolving in the next few years? Coming out of the pandemic and kind of now being in a position of strength, we're once again ready to invest in other assets. We're 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, like 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, you know, we have wanted to become the one stop shop for travel where you get everything in one place. We also want to share our perspective on travel, which is, you know, celebrating connection between people and place, like 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, you know, airport pickup. Like, that's a useful thing. Grocery stocking of your home before you arrive. That's a useful thing. So, there's like all these things. are practical bits that people need that you know but now a click or two you can get set up because we know your other details yeah i saw that actually so you you guys have started piloting grocery delivery through partners yes is that right yes that's so interesting you know when i first read this that what i thought was they're trying to build a super app and you know coming from asia i grew up in hong kong that's not necessarily a new thing right we've got wechat we've got grab i'm sure you're familiar with some of these platforms i'm curious if you kind of took inspiration from any other players out there that have started to roll out these one-stop shops uh well i mean i'm very familiar with the super apps of asia you know there aren't really super apps in the u.s in the same way that being said i think you know things are changing and like there is a why now to this which is that with ai like ai is amazing at stitching together an itinerary and like pulling together lots of information into an organized you know plan so i think of course we want to be 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 to the top so before the interface was a super app you went in and you saw the little icons and you could go into different categories i think the future is in 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 um but it all gets assembled in so many different ways and so many different ways and so many different and sold to you kind of as if it were a travel agent, but it's mostly automated. Yeah. So just to be clear, you're looking to become the super app of travel. Super app for travel. That is, of course, AI powered, which is different than super apps of like a decade ago. Yeah. And on AI, obviously, just this year, you guys welcomed a new CTO, I think, who's known for his leadership in AI at Meta. Recently, Brian has also said that from a business standpoint, I think AI is the best thing that's ever happened to Airbnb. What is the long-term game plan for this? And as someone with a computer science background in particular, do you feel the industry is overestimating or underestimating the impact of AI at this moment? 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 it, how our engineers who are on the cutting edge are using it. And I think that's a really good point. 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 the Airbnb, I think our vision of AI is like, 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, but 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 like, 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, right? Prior reviews that were written and things that you tell us about your travel habits. So I think using AI, we can 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. And 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. Yeah. And I think we've seen that, right? Even with dating apps, when you were talking, I just thought of that. I think there are AI-powered icebreakers now to connect people on dating apps. I wouldn't know that. I wouldn't know I'm not on them. I haven't checked it out either, but that certainly sounds possible, right? It sounds like a good use case as well. What propels you? It gives your job post the boost it needs to be seen and helps people with the right skills, certifications, and more. Need a hiring hero? I can't let you go without talking a bit about global strategy because obviously your remit is global. You know, for a while, it looked like Airbnb was one of the few places where you could U.S. tech companies to successfully plant a flag in China, which has long been recognized as a vast but complex market. Nathan, you were previously chairman of the China business yourself, and you've even said that pre-pandemic, you personally flew from San Francisco to Beijing every month. So I would be remiss if I didn't ask, you know, how bullish were you on the opportunity at the time? And, you know, what happened there? Would you ever go back? I was very excited at the time, and I still am. I think I was excited because of the mission of our company, you know, to connect people. And, you know, I was very excited because of the mission of our company, you know, to connect you know, there's more than a billion people in China. And so, like, 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 at the very end of our international expansion process. Why? Because everyone told us that it was going to be hard and, frankly, not possible to succeed. And so we said, okay, well, 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 facilitated 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. You know, 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've 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 where we said, well, this isn't a financially viable path. We need to refocus on just the outbound piece. Where do you see the bright spots now, zooming out and looking at the rest of the world? I heard that India has become increasingly important for you. LATAM, you're seeing lots of growth. Yeah. I'm curious to hear about any other markets that you see as really key in the next couple of years. 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. So we're seeing a lot of growth. And we're seeing a lot of growth. And we're seeing a lot of growth in 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. Yeah. I saw that in your investor update most recently, that 70% of your business is still concentrated in five countries. That struck me because there's still so much room to run. What is the end game here? If we were to sit back down again in 15, 20 years, where would you want Airbnb to be? 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 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, um, in many cities, half of the experiences are being done by local people. So I even think that that is, is on the table. Anything you can tease specifically? Um, I think bottom line is we want to be bringing people together in novel ways. Uh, and it might be through it 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, you know, 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, right? You can stay in a tree house. You can go, 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. Like 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, you know, 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. All right. This brings me to a segment we're calling what it takes where an audience member gets to ask for advice or hear more on what it takes to get where you are today. Evo founder of a recruitment firm in Germany asks as Airbnb started working, I imagine you were flooded with new ideas and directions. How do you decide which opportunities to ignore? Even if they show promise, is there a rule of thumb you employ? Well, first we ask like, what can we do that others cannot do, right? Because if you find yourself going head to head competing, you know, it's less likely that consumers are going to pick you over the other 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 like we ask ourselves, is the idea leveraging any of our unique strengths? If yes, it's a more durable opportunity. Of course, it's the classic questions of, you know, TAM, total addressable market, how big it could this thing be? Things like that. But I think, really important question is, does it leverage any of our superpowers? Well said. Okay. Now we're going to do a quick rapid fire round to end. Don't overthink it. Just say whatever comes to mind. Ready? Okay. Where has your favorite Airbnb stay been so far? It's been in Bali in a bamboo tree house like structure. Oh my goodness. I got married in Bali. So beautiful place. Love that. What do you like to ask when hiring? Most important question is what brings them to Airbnb? Why Airbnb? We hire missionaries, not mercenaries, right? So we want to make sure people have a real genuine connection to the mission of the company. What's been the most surprising market for Airbnb's growth? Where has the company overperformed seemingly randomly? Well, I think like our success in China, although it did not end successfully. You had like 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 I think 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 just were kind of on one trajectory. And then in the last year, it just started to take off. What job do you think is most likely to disappear because of AI? Oh, geez. I don't want to be a doomsdayer. I think actually, it's going to be a lot of jobs created. But all jobs are going to change. What is one piece of advice you come back to often? I think one piece of advice is just making sure you're clear for what you're doing. You're going to be able to do what you're doing. And 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 to 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, "Oh, these five things. If we do this thing, we can accomplish five things." Okay, well, 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 like a hand wave. And giving teams a framework for seeing how you think about the business, right? 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. So that's a little bit of a peek into your day as Chief Strategy Officer, some of the stuff that you get across the list. Yeah, yeah. I don't make the strategy, right? People bringing 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. Yes. Yeah. Well said. Nathan, thank you so much. I've enjoyed this. Me too. Thanks. Thanks for joining us on Behind the Business. 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