Friday, June 12, 2020

Out of the Crisis #8, Brian Chesky Part 2: building a company for continuous evolution, how travel will change, trust and love

In the second half of my conversation with Brian Chesky, we moved on from the pre-pandemic world and how he and Airbnb were coping with our rapidly changing reality. Our focus shifted to entrepreneurship and what might be possible now that everything as we've always known it has been called into question. Now it's our turn to use entrepreneurial vision and long-term thinking to create whatever comes next. As we lived through the exponential growth of the coronavirus, Brian and I talked about the opportunities that await if we can harness that kind of growth for good.

But in order to do that, we have to start with the right first principles. In the 21st century, that means considering all stakeholders from the very beginning. It means hiring carefully from the start. It means being clear and purposeful about what you're building--so much so that your intentions will live on long after you do, refined and adapted by whoever comes next. As Brian tells me, "Design your organization or it will be designed for you." This is true not just for startups, but for so many of the institutions that govern society.

Brian's philosophy of building and designing both products and organizations is based on two things: trust and love. We spoke about how he thinks they'll help us build more resilient institutions, what the future of travel and cities will look like, and the creative energy of continuous change.  

You can listen to our conversation on Apple podcasts, Google podcasts, or wherever you like to download.


In addition, a transcript of this part of the conversation is below (the transcript for the first half is here).

Highlights from the show:

  • What's coming up in the conversation (1:20)
  • Brian's vision for leaders building for what comes next (4:26)
  • Structures Brian wishes had been built into Airbnb from the start (6:58)
  • Airbnb's core values (7:40)
  • On how companies are most courageous at the start and it never gets easier to do hard things (9:22)
  • Long-term multi-stakeholder ideas and structures, and a game of cards (10:14)
  • On having a blueprint for the design of your company (11:38)
  • Brian's perspective on building a company as a designer (12:53)
  • Institutionalizing intentions (14:23)
  • The importance of founders being involved in early hiring (15:06)
  • Being shamelessly curious about learning (17:19)
  • First principles thinking (22:56)
  • On how 21st century companies can never be at rest and Bob Dylan (24:12)
  • Hiring people who will be able to make necessary change as the company evolves (26:42)
  • Brian's long-term vision for a company that isn't about him (28:40)
  • How a company is like a child (32:11)
  • The Second Half of the Chessboard strategy (32:56)
  • Harnessing exponential growth for the good of the world (35:45)
  • The Airbnb board (37:47)
  • On how most problems with boards are problems with communication (42:11)
  • On not picking the highest valuation: it does matter where the money comes from (43:13)
  • The importance of having a long time horizon in decision-making (44:42)
  • Brian's principles for building and rebuilding institutions (46:22 / 47:06)
  • Building diversity into companies from the start (49:33)
  • On why "how you do anything is how you do everything" (50:48)
  • On hiring people whose potential you can see and then pushing them to meet it (51:40)
  • On the warping of time during the pandemic and PTSD from not being able to grieve (54:32)
  • How Brian made decisions about Airbnb as the pandemic unfolded (55:57)
  • On maintaining optimism, writing down principles, and communicating clearly (57:43)
  • Trust and love as engines of business and humanity (59:27)
  • The history of tourism (1:00:41)
  • What's going to happen to travel (1:03:48)
  • How work from home and being untethered will change communities and cities (1:06:01)
  • Leadership needs to be useful and compassionate in order to build a more just world (1:09:09)
  • On where we go from here, collectively (1:11:33)
  • Businesses are built on love and trust (1:16:56)

Show-related resources:

Transcript, Out of the Crisis #8: Brian Chesky, part 2

Eric Ries: This is Out of the Crisis. I'm Eric Ries. No better time than now to be an entrepreneur. So many of the iconic companies you know began in a crisis. And in some of these conversations, we've talked about why. In the boom times, everything gets more expensive except cost of capital. In a recession, it's the reverse. No better time than now because we are living in a collapsed society. The old normal is never coming back. When there's a forest fire, the ground becomes more fertile for the next trees to grow. That process of creative destruction, it's not easy, but it does mean that right now, there is an unprecedented opportunity to shape the future. We are about to see a tectonic change in the way the world operates. New businesses, new institutions, new norms will rule. The pandemic has changed almost everything and we are living with the reality of exponential growth. This is an example of exponential growth gone bad, like a cancer or a Ponzi scheme. But what if you could harness exponential growth for good? What if you could use it to build exponentially, not just destroy?

All of our major institutions are being tested like never before, but as big as they are, as established as they are, as old as they are, remember they were built once by people, by entrepreneurs who brought that vision to reality. We are the beneficiaries of their foresight and determination. We owe our grandparents a debt of gratitude for the institutions that still govern our daily life. But what new institutions will our grandchildren thank us for having created, for having designed out of this pandemic? What if we could start a new set of exceptional companies and institutions that grow exponentially, that have positive impact exponentially, but are built on new principles, 21st-century principles that are the right mix of art and science and that make long-term bold commitments? Commitments to respect their employees, their customers, their partners. To build products that are healthy for human beings and the communities they inhabit. Focusing not just on the short term, but on generational lasting change. We have that opportunity right now, as we speak, to build the future we want if we will it. This is the moment for entrepreneurs. No time like the present.

In this, the latter half of my conversation with Brian Chesky, our focus shifted. We stopped talking about the normal that was and mourning its loss and started to talk about what the new normal could be if we seize the opportunity we have in front of us. "Design your organization or it will be designed for you," he told me. And this is true not just of startups, but of so many of the institutions that govern society. We, the broad public, we need to design the society we want to inhabit or it will be designed for us. We're going to need entrepreneurs to make that happen. No better time than now.

Here is the second part of my conversation with Brian Chesky.

Eric Ries: One of the things I've really appreciated getting the chance to work with you is that you view the decisions that you're making through this lens not only of how it affects you, your company defined narrowly, but really the effect that it has on our broader community, on many people. And in particular, you've given a lot of thought to the example that you want others to follow. So for other companies, especially for this next generation of founders who look up to you and what you have accomplished here, what do you want them to take away from your example here? What do you want them to do differently as a result of the pandemic? And what's your vision for what this new community of founders and leaders might build when we get to the new normal?

Brian Chesky: Oh, it's a good question. I'll tell you what I wish someone told me. And by the way, the advice, if anyone wants to hear this, I'll say no better time than now, this great reset. This is like a once-in-a-century reset moment, right? So, suddenly, all dogma is out the window, all convention can be jettisoned. And it's times like this that a new generation often emerges, right? And there is a new generation of entrepreneurs. And what I would tell those new entrepreneurs is the day you start your company is the day you have the most freedom you'll ever have, to do whatever you think is the right thing to do, to bake in whatever you want baked in. And every single day is harder than the day before. There's never going to be a day you go to sleep where you're going to say, you know what, it's going to be way easier to do this really hard thing. Whether it's ... I don't know, I'll just make up a bunch of things.

Maybe you want to set aside one percent of your equity for charity, or maybe you want to give some of your profits away, or maybe you want to create a nonprofit, or maybe you want to ... Here's another thing. Be very careful about being addicted to growth that is not good for the world. We've had this challenge ourselves because we have to be very mindful of the impact housing has in the communities we're in. And so it's easy to not do something until you become big and reliant, and a lot of people rely on it. And so I would try to be as principled as possible. I would tell every founder, write down who you want to be, who you want to be remembered for. What are your values? When you interview somebody, you got to ask yourself ... You're almost giving them authority to make a whole bunch of decisions and also hire people just like them with their values and you're not going to be there to audit every decision they made.

So you have to be really careful and clear about what you stand for. And the more exhaustive you are, the better. Just write down every single thing that's important to you. When's the last time we just wrote down every single thing we can think of that's important to us? That is the most important map you will ever have in your life, at least professionally, for what you're going to do. Write it down now. And by the way, you don't need to think of everything, it can be a living list. But I bet you there's a lot of things that are important to founders, they're not writing it down, they're not doing it.

Eric Ries: I know. Never. Never. They never do it and they never reflect those values and those ideas into their corporate structure and governance.

Brian Chesky: Yeah. And people ... Oh my god. Governan ... Bake that in now. Don't bake a cake, put in the oven and think you can add an egg later.

Eric Ries: Give some examples. What are those structural things that you have done now that were hard that you wish you'd done earlier, that you just ... Anyone listening, you want them to make sure they do?

Brian Chesky: I'll just give you a list. Number one, define your core values. Your core values will evolve. Do not hire anyone without knowing the values that you want them to share with you. They may be just behaviors. Here's the way to think about your values. It's not like integrity or honesty or hard work, everyone does that. What do you believe to be true that other companies don't? Whatever those things are, those values, those behaviors. Airbnb, we care deeply about being caring and compassionate because that's the business we're in, so we have a value called be a host, and we want to make sure we bake everything we do into that basic value.

Eric Ries: It's written on every employee badge, you were just mentioning.

Brian Chesky: Yes, exactly. Be a host. And so you got to write all your values down and they can be evolved, but you really just write them down and make them non-obvious, almost like things you could disagree with and those are your defining character. Then write down all of your stakeholders. Every one of you listening probably have employees, or will, you have shareholders, you have customers or guests. You may have suppliers, vendors, partners, and then you have society. So you probably have five, you might have more. We have five. Write them down. And then, by the way, define them. What is an employee? Is a contingent worker an employee and how are you going to ... You know what I'm saying? There's shades. There's a precision to this exercise. Then write down how you will serve them. If you had to make them promises you never wanted to break, what would be the most meaningful promises you can make to these stakeholders that you never want to break? Those are your principles. And there's probably just two or three per and they're probably unique, and make sure that they get baked in.

Now start to ask yourself, when I'm designing products, let's look at these principles, let's measure them. When I'm planning my road map, look at every single one of these things and ask yourself, to what extent are you building them? I'd also look at your corporate structure. Obviously, you started LTSE. A corporate structure. The easiest time to create a corporate structure is before you've raised any money and you have any members, any venture capitalists on your board. The next easiest time to change your corporate structure is when you only have one venture capitalist on your board. And then the next easiest will only have two and you have only raised a little bit of money. And every day, it gets harder. It's kind of like exercising. I'm not sure it ever gets easier to get in shape the older you get for the first time.

Eric Ries: And governance is like that.

Brian Chesky: Pablo Picasso had a saying, "The older you get, the stronger the wind is and it's always in your face." Well, that could be said of companies. The bigger you get, the stronger the wind gets and it's always in your face. And if you think you're going to have more courage tomorrow than you do today, you're going to have a lot more pressure tomorrow than you do today. Today is your most courageous moment. Today is the moment you can do more than you ever could ever do in your life. And you may have more resources tomorrow, but you also have a lot more pressures and it's going to be really, really hard.

And so that's why companies become corporate. Being corporate is basically just an exercise in compromise, you just start making compromises. And one day, you wake up and you've made so many compromises and you're a shell of who you used to be. So, I think that governance, these are really important things. Anything that is defining. Those are just some of the things. I'm sure there's an article or blog post that I should be more organized, all the things, but those are just some-

Eric Ries: One of my favorite meetings I have ever had is with some folks on your team. You'll remember this, I actually had printed up a deck of cards, a deck of playing cards, of long-term multi-stakeholder governance ideas that encapsulated the kinds of principles that we're talking about. And we actually sat at a desk inside your headquarters and laid them all out and color-coded them against the five principles and really were like okay, if a company wants to say they're going to win the public's trust by being a 21st-century company, if we're going to make that a credible and binding promise, what should be included?

Brian Chesky: Yeah.

Eric Ries: And it was really moving to actually make it specific. So I was like, well, what should the board structure look like? Should there be a stakeholder committee of the board? Should stakeholders have representation in the governance?

Brian Chesky: Yeah.

Eric Ries: How are we going to take care of our stakeholders economically? How do we make sure that they share in the wealth creation that these incredible financial engines that we're able to build? And so I really appreciate the space that you have opened up in the conversation, not just inside your company, of course, but in Silicon Valley and in the wider world to really start to make it specific and say this isn't some empty promise, we're going to be serious that this next generation is going to build institutions that are fit for purpose in the 21st century, and here's what it might look like, here could be the blueprint.

Brian Chesky: And I think one of the things you've just touched on, you used the word blueprint. I think here's another way of saying it. You should design your company or your company will be designed for you.

Eric Ries: Ooh, yeah.

Brian Chesky: And if your company's designed for you, you-

Eric Ries: Every founder listening, underline that.

Brian Chesky: You may not like the product you have. Every single thing you do, you design or it gets designed for you. And don't expect that the organic process is going to yield the result that you're happy with. Thousands of founders and CEOs have lived with hundreds of thousands of regrets and these regrets are called organic decisions that were designed for them.

Eric Ries: It's funny that you use the word design. Famously, a RISD-trained designer and we usually think of design as something that is applied to physical objects. We talked about toothbrushes and rocket ships, but here we're talking about the design of the organization itself. So talk about that. In some ways, the product that you make is not your website, it's not the travel, it's not even the delightful experiences, the product is the organization that brings stakeholders together to produce those outcomes. And I just think what's your perspective, as a designer, on the challenge of trying to design an organization that can institutionalize those intentions?

Brian Chesky: It's a really challenging thing. When I was younger, when I first came to Silicon Valley and when I was at RISD, one of the companies that I admired, and that was one of many, was Apple. I went to RISD from 2000 to 2004, the iPod came out in 2001 and, really, that was the moment that industrial design experienced its golden age, and I was a industrial designer. And so Steve Jobs was huge influence on me and also because he was not an engineer, he was more like a designer. In fact, Steve Jobs thought of himself as an artist and when he died, he thought of his work as a body of work, like an artist. In fact, that's why Jony Ive made a special edition, like white coffee table book was a retrospective of his work, he thought of himself like an artist.

But one of the things that I think was said about Steve, and I think maybe Jony may have said it, was the greatest product that Apple ever designed was the company because the company was the foundation for all future innovation. And so I think you need to almost think of your company as a product, as the most important product you'll ever make. And let's think of it this way. The more successful you are, the longer your company will exist. And the longer your company will exist, the more your original product ideas will expire and you'll have to have an innovation engine to create many new products. And so one of the hardest things is institutionalizing something. Founders are used to doing everything themselves.

Eric Ries: So true.

Brian Chesky: Institutionalizing basically means something that you want to happen happens when you're not in the room. How do you make sure something happens that you want to happen when you're not in the room? You know how hard that is?

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: When you leave a room, does everything happen exactly as you wish it did? Not often. Well, that's what it would feel like. Imagine having thousands of people, you'll leave a room for years and over the course of years, many things happened that you wanted to have happen, maybe better than you ever would've thought. That's what it means to institutionalize. What it really means is that you have to write down all these principles, all these values. It can seem nauseating, it can seem exhausting. This is another example of being long term. When we ended up hiring people, I spent months looking to hire our first engineer with Joe and Nate.

And the reason we spent months, and a lot of people are very lackadaisical, they're very casual about their first hires, I always said would I want to hire 100 people like this person? Because whether I like it or not, if we're successful enough, I may have 100 people like them. Because you're also giving them authority to hire and make decisions, they have veto rights. And so we spent months hiring our very first people. I interviewed, personally, the first 400 hires at the company. I regret that, by the way, not interviewing the first 1000 people. I would probably interview the first 500 employees.

Eric Ries: Sure.

Brian Chesky: I don't think there's a CEO alive that is too busy to interview the first 500 employees. Somebody once said to me, you should ... Oh, Sam Altman said this. Sam Altman told me, when I first raised money for Sequoia, and he was funded by Sequoia before me, he was like the golden child of Sequoia in 2008, 2009. He said, "You should spend 50% of your time hiring." I said, "50%? I thought I should spend five percent." He goes, "50%. This is the most fundamental thing you'll ever do."

Eric Ries: It's counterintuitive.

Brian Chesky: Somebody in Andreessen Horowitz, Jeff Stump, he said, "You should spend eight hours doing reference checks per employee." Eight hours of reference checks per employee. Now I don't spend eight hours to do reference checks, but I probably spend four or five hours reference checks per employee. You know how many people do not spend four to five hours doing reference checks?

Eric Ries: Or even one hour.

Brian Chesky: Or even one hour doing any and then they're surprised that the person is not what they thought they were. Well, I mean, their job was to tell you what you want to hear in the interview, that's what an interview basically is. These are counterintuitive things that seem very, very painful. And then the other thing I'd say is in crisis, it's kind of when you shape your culture, right? You are what you do. And if you are what you do, you most are what you do during your most harrowing and defining of times, so like right now. So I'd say every single company in the world, they're probably leaving indelible marks for the next 10 years. Whether they realize it or not, they're probably doing that right now. And so if you always think of yourself as in a defining moment and you say how do you want to be remembered? It rarely will lead you down the wrong road. It doesn't mean you should spend months making the decision, you also have to be decisive.

So I don't know, I'm just thinking out loud here, but these are just some things that come to mind. I mean, I'm also a student. I studied companies that I admire and I was shameless about learning every single thing about them, try to reverse engineer. When we launched, we were a marketplace. We couldn't figure out how to explain our concept and Paul Graham was one of the people, he started Y Combinator, he was one of the people that kind of helped popularize the X for Y. Like Airbnb for dogs, right? The this for that. And before there were Airbnb for X or Uber for X, we were the eBay of space. He said, "You should say you're the eBay of space because eBay is big and everyone has space." And so we became the eBay for space. At that point, I decided to become a student of eBay. I ended up interviewing a couple dozen executives from eBay, former executives, learning every single thing about eBay, what they did right, what they did wrong.

And then I started learning about Amazon, frankly, when Amazon started hurting eBay and what did they get right that eBay got wrong? And so I started interviewing all these people at Amazon and becoming a student. I wanted to feel like I understood the company at a level even deeper than the executives who were there because they had never been introspective about why they were successful or failed, they just happen to them. And I said I want to be an author, I want to really understand this. I did the same thing to Apple. The thing that is so defining of Airbnb, another thing, is not just head and heart, it's art and science. I'm a designer, Joe's a designer, my co-founder, Nate, is a computer scientist, went to Harvard. So Apple is the marriage of the liberal arts and technology, so I studied them inside and out and got to know a lot-

Eric Ries: You just made a great hire from Apple, actually.

Brian Chesky: Just, literally, hours ago, announced we hired the VP of AppleCare and she manages all the customer service in AppleCare and she's totally amazing. Her name's Tara Bunch. So we hired her and I-

Eric Ries: Congratulations.

Brian Chesky: I've worked in the past with Jony Ive, who's been a friend and others. And so I'm pretty shameless, and I found that those that are often most successful are those that are most shameless. And I don't mean shameless like you're disrespectful, just you're trying to learn. You're trying to learn, ask for help. The people that grow the fastest ask for help. I can always predict the people that aren't going to get promoted and are going flame out, the know-it-alls. Because if you know everything, you're not going to learn anything. And I can, be assured, you're not going to know everything you need to know to go on this adventure, whatever that adventure is, especially entrepreneurship. The problem entrepreneurship is we're in the pioneering business, we're in the biz of doing what's not been done before.

Well, therefore, textbooks are not so useful. They're only useful for principles. I can learn about eBay's principles, but I can't do what eBay did because the technology in the world's changed. I got to do something new. So you got to kind of learn how to think, you got to be shameless. And to use another Pablo Picasso quote, because I'm obviously a fan of him, he said, "It took me four years to learn to paint like Raphael, but it took me a lifetime to learn how to paint like a child." All children are born artists, the problem is to remain artists as we grow up. A child is curious, they're open-minded, they learn, they grow. The year I probably learned the most were any of the first five years of my life. And doesn't it seem like every year we're alive, we seem to learn less than the year before, fortunately?

Eric Ries: Hey, I got a six year old at home, I can attest to this firsthand.

Brian Chesky: If only you could learn as quickly as your six year old. And then some of it's biological, obviously, but some of it's also the mentality. And so, so long as we can be curious and be shameful. Just be shameful. Ask people for help, very few people will say no to you. And by the way, it doesn't cost anything to ask and you'll be surprised the generosity. And that's one of the things that's really defining about Silicon Valley is that people are wanting to help you, if only you'll ask.

Eric Ries: Yeah, it's very much a pay-it-forward culture.

Brian Chesky: And I think that people sometimes are very afraid of being vulnerable. They don't want to seem stupid, they want to show the world they know everything and it's like, who gives a shit? Who cares? Just be shameless and take in knowledge as quickly as possible, that's what an entrepreneur does. What an entrepreneur does is they use every single advantage they have and they are shameless about splitting the advantages that they have, obviously with-

Eric Ries: You can't afford to give any of them away-

Brian Chesky: Yes.

Eric Ries: You're trying to do something impossible.

Brian Chesky: Obviously in the context of being ethical, but you should be shameless. If you're really good at something, don't feel bad about leveraging the thing you're really good at. Maybe another way of saying it is be willing to be vulnerable and ask for help-

Eric Ries: And learn.

Brian Chesky: And don't be afraid to ask for help and never ever be afraid to say you don't know something, it is actually freeing to be able to do that. We're all in the business of learning. The number one thing I ever had to learn how to do was to learn, and the way to learn is to go to the source. If you had 10 hours to learn about a subject, the average person would read everything they can about a subject in those 10 hours. But what happens when you're an entrepreneur and you have 10 hours and you have to learn 10 things? What you start to learn how to do is to learn quickly. And the way to learn is to spend more time not learning about the subject, but spend more time learning who the source is, the defining source, the oracle of that subject matter.

And then learn the first principles, the defining principles that you can hold information onto. And it's like a tree, don't learn about the tree leaves, learn about the fundamental branches. But you often need to go to the sources who know the subject the most clearly. And so if you want to learn about management, I don't know, read High Output Management. That book will teach you the fundamental first principles of management, rather than reading a whole bunch of articles online or all these self-help business books and you haven't really learned the first principles.

Eric Ries: Yeah. I found that first principles type thinking to be maybe one of the most impactful things I've ever, ever discovered in my life.

Brian Chesky: Yeah, I think first principle thinking gets you away from analogy thinking and it gets you away from dogma, and dogma is the death of being an entrepreneur. There's probably a good reason it's that way. Well, there's a reason it's that way, it's because people before you had less information than you had. That's why.

Eric Ries: I was talking to a bunch of tech executives who wanted to know how they could help in the pandemic response and we were talking about the different efforts that need to get built here. And everything that I was saying, they were kind of very skeptical about this relief effort or that relief effort and they're like, that seems ... Everything seemed really small and how big a deal could it be? We're talking about look, the institutions that we take for granted that make up our specific life today, from the United Nations on down, the people who built those institutions from scratch didn't know that they were building the United Nations. They didn't know what it was going to be, they didn't know it was going to work. And when these institutions become big and they become part of our lives, we kind of forget that there was a pioneer behind every single one of them.

Especially as those organizations lose their soul and become corporate and stayed and bureaucratic, they start to seem inevitable, like, well, they were just always here. And we forget that somebody had to take that initial leap of faith, had to have that initial insight. And, of course, it's often not just one somebody, but that spirit is something that we don't want to lose. And I feel like one of the things I've watched you do in your own work is to insist that a 21st-century company is one that could never really rest, it has to always be reinventing itself, engaged in this process of continuous transformation, always seeking out the next opportunity, the next way to be of service. And I think that philosophy has served you really well in this crisis.

Brian Chesky: Oh, yeah. I mean, I'm also a Bob Dylan fan. Bob Dylan said, "An artist has to be in a constant state of becoming, and the moment you think you became something is the moment it's over." Let's take a technology company. What does the word technology means? A synonym of the word technology is change. So for a technology company, we're really saying is we're a change company. And a change company in a world that is changing quicker every year than the year before, acceleration and Moore's Law. And so the most important thing a company can do is be really good at changing and evolving.

Now there are some things that should never change, probably your principles. You think about the United States, it's founded on, probably, two core values, two basic principles. The first principle is one of equality. We hold these truth to be self-evident. And the second core value, which sometimes comes in conflict with the first, is this idea, the pursuit of happiness, that everyone's idea, the American Dream, the pursuit of happiness. And these two principles have been around for hundreds of years. And you hold true to those principles, you don't let go of those, but everything else can change and evolve and you have to. And sometimes we think the color of the paint is the thing that's precious, we think the surface-

Eric Ries: Surface and things.

Brian Chesky: And thing that's precious. No, none of that really ... All that can change. There's a few things that are going to endure and the things you write down now when you're young, those are the things to endure, everything else can change. And years later, you're going to hire people, if you have a company, and they're going to think they can't change ... I can't change the color of this thing, I can't change this, somebody before me. And-

Eric Ries: They must've known what they were doing.

Brian Chesky: They must've known what they were doing. Well, you know what, we didn't. We made really quick decisions and we had to make the best decision we had, the information we had, and we hired you to change things. And every time I hire someone, I said I just need you to know one thing. You're on your honeymoon, you're happy, you joined here. If you weren't happy, you wouldn't have joined. And this is the happiest you'll ever be, it's your first day. Welcome to Airbnb. 100 days from now, couple hundred days from now, some point, the honeymoon's going to wear off and then suddenly, you realize this place isn't as perfect as you thought. And when that happens, I want you to look around and I want you to know that everything built around you was built by people before you and they had less information than you have and you're here to change things.

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: And I think it's really important that we always remember that we're in the change business, we're constantly here to change things, so long as a few enduring principles go on, you should change everything as quickly as possible. Yet I think that companies lose their nerve, they lose their courage. You get bigger, the wind gets stronger and it's in your face and it's harder to make change. And the real challenge of leadership is to, I don't know, to keep your boldness, to not lose your nerve as you grow and you have to more to lose.

Eric Ries: You talked about the importance of having those fundamental principles and truths be reflected in the decisions that people make when you're not there. And, of course, the ultimate version of that is none of us are going to live forever, except maybe the guys working on the immortality startups are an exception, but the rest of us plan to build organizations that someone else will run some time in the future. And one of the big lessons that I've learned building LTSE is people ask me all the time, hey, but couldn't companies just do the things that you advocate for on their own? And the answer to that is of course they could. But the question is if you're going to make a binding promise, if you're going to institutionalize your intentions, eventually this company will be run by somebody else. You'll have a different board, a different CEO, a different CFO. And why on earth would you have any reason to believe that they will share the commitments that you've made?

So you can make all the promises you want that you're going to take care of your community or have whatever your philosophy is, but how do you make commitments that could be enduring through the fabric of the organization for a long time? And that's one of the things I really have appreciated in working together is you seem to have this perspective that it's not all about you, even though, yes, you're the founder, yes, you are the head of community, you're the one who has accomplished so much on behalf of the organization. Yet you had this vision that more is possible if people carry that vision into the future and can do more even than you could conceive. And so can you just share a little bit about why do you think you have view that's so different than other tech founders, and a just, frankly, wise perspective?

Brian Chesky: Well, first of all, it's definitely not about me and most people don't give a crap about me, and I'm okay with that and maybe I even take peace in that. Once you get really big in Silicon Valley, it's odd, everyone here is really religious, they all think they're God. So yeah, no, it's actually a really religious place here. It's like everyone thinks they're God. There's a lot of odd messianic tendencies in Silicon Valley and I think you have to be cautious about that. And I understand why people lose their shit, basically. So the first point is that you can really lose your shit because you have this power you've never had and you can see that you can impact people's lives and it can be wonderful, but it can really distort you.

And I've seen a lot of founders ... I mean, I'm not going to name names, but I will just leave it blank and you can fill in with whatever names you want. But think about it, I've been in Silicon Valley for 10 years, I've seen a lot of founders that seem to have their head together, and then their head really wasn't screwed on quite right. And any instability, they suddenly thought they were ... And it really took them down. I mean, it's almost like the best thing you can do to be as successful as possible and to preserve yourself is to not think you're so great.

Eric Ries: You and I sat ... I mean, we won't name any names here, but in the last 18 months, we have had number of occasions to sit with founding teams and CEOs of other high-profile companies that are thinking about what they want their long-term future to be, and try to convince them to buy into this vision. And I don't know how much you want to talk about those conversations-

Brian Chesky: Yeah, they were mixed.

Eric Ries: Just keep them anonymous. But I couldn't believe the arrogance and the denial and this feeling that they have it covered, they'll be fine and bad things aren't going to happen to them. And the indifference to the impacts that their work's going to have on others, and then now it's been enough time to see many of those companies run into exactly the problems we were trying to warn them about.

Brian Chesky: Don't you feel like so many people that were so arrogant were been humbled by this pandemic because anyone that thought they knew everything realizes how little we really know about the world?

Eric Ries: Yeah, us included.

Brian Chesky: Us included. And it's been a humbling experience for me and I think it's been a humbling experience for so many of us. I have two thoughts. The first thought is you, first of all, can't think it's all about you. And by the way, we've had 700 million guest arrivals, very few of them know who I am and care. And I'm okay with that, I understand that they have their needs, their life and they need to live their life. The second thing I'll say is this though, and this is maybe the more important point. First of all, I don't have any children and so those who have children and have founded companies, I reserve the right to let them disagree with this analogy. You have children and a founder, so you can tell me if you disagree with this analogy. I'm going to presume something.

Though I don't have children, I think starting a company, especially a company that you deeply love and care for, that becomes your life, and that's what it's been for Airbnb, as a founder, I think of myself a bit like the parent and I think of Airbnb as the child. I did not know until recently, when people say bad things about me in the press, it doesn't actually bother me as much as when they say bad things about Airbnb. I would've thought the inverse. I would've thought it was more personal when you attack me. And oddly, and it somehow feels more personal when people attack the company than me. I don't know, I can't quite put my finger on it. Except I think if you insulted a parent, I think they'd be less insulted than if you insulted their child, right?

Eric Ries: By 100,000 times. You can't even ... Yeah. It's exactly the same thing and I have had the same phenomenon.

Brian Chesky: Yeah, so I don't know. I mean, maybe it's not a great analogy. Maybe some would say oh, you're fricking crazy, wait till you have a child, it's nothing like that. But I do feel like a parent and the thing as a parent is you want your child to outlive you. And I do not want, on my watch, while I'm alive, watch something that has been so important to me not endure. And it doesn't mean all companies are meant to live forever and they're not going to live forever, but these things ... There's this old story called The Second Half of the Chessboard, it was told to me by Tom Friedman, he's a columnist for New York Times. And he uses this story, it's a parable. So I don't know if it'll ever happen, but the parable goes like this.

This peasant invents the game of chess and he goes to the king of the local tribe and he shows him, "Look what I did." And the king said, "Wow, how can I repay you for your service?" And he said, "All I want is enough rice to feed my family for the rest of my life." And the king says, "Surely, I'll grant you your wish. How much rice is that?" And he says, "Here's what you do. I want you to take a grain of rice and put it on the first square, and then I want you to double each square. So, put two grains of rice in the second, then four, then eight, 16, 32, 64 ..." You get the idea.

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: And the king laughs and he says, "Surely, I'll grant you all that rice", not realizing that he granted him the power of 64, so it's like doubling every times is 1000, so that's 1000, a million, a billion, a trillion, a quintillion, a sep ... So it's like a few septillion grains of rice or something like that. And the point is all the gains are on the second half of the chessboard, so if you really want to make an impact on the world, the biggest impact the company's going to make are in its most later years. If you study companies around for 100, 150 years, the founders would've been gone for decades, sometimes they've been gone for 50, 75 years, most of the impact was made after them.

Now that doesn't mean that everyone wants to start a company ... And, again, I don't want to sound like I'm also some crazy person who thinks I'm going to ... This enduring impact on the world. But if you are going to pour your heart and soul into something, it's not significantly more work to also try to ensure its survivability. And I think some of the most important things and institutions in the world are things that endure. And so your company doesn't have to endure, but it can be very special and it can make a unique impact on the world and it can touch so many more lives if it does. And so going back to a new CEO, here's how to think about it. You should design your company so that the wrong person running your company doesn't ruin your company because, eventually, that might happen.

Eric Ries: We'll put a link in the show notes to the second half of the chessboard strategy. I think, originally, it was applied to technology by Ray Kurzweil, so-

Brian Chesky: Oh, that's right.

Eric Ries: To get that link-

Brian Chesky: That's really good-

Eric Ries: It's an ancient story, but it's a really important one because it's become a cliché that tech companies are trying to change the world, but things that truly change the world, as we're all living through right now, are things that have this exponential impact to them. And I think what people forget is that cancer is exponential, a Ponzi scheme is exponential. Exponential growth is dangerous, as we're living through right now. And the art of hyper-growth entrepreneurship is how do you harness those exponential forces to do good in the world?

Brian Chesky: Yeah. Maybe the only thing worse than your company not enduring is your company enduring for the wrong reasons.

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: And it being bad for the world and having some live on effects that weren't intended and that continues to grow. And so it's really, really important in the early parts of your history that you're really thoughtful. And if you feel like there's parts of your company that you can't defend, that you don't try to defend them, that you try to fix them. And I'm confronted with this myself every day, I can't convince myself that 100% of everything I'm doing is right. It doesn't mean you're trying to ever do something wrong, but there's no way you can build a product, hundreds of millions of people use it, and every single way it's used was how it was originally intended for and you're really proud of that.

And I think that's the humility that we all need to have is to recognize that we design these tools, that these tools were used for good and not so good, that technology is like power, it's like nuclear power, it can be used for good or bad, and you got to be really thoughtful. The ultimate idea of a designer is to put thought, care and love into your product and be very thoughtful about how your products are used. And I think the one thing that is so frustrating is when you feel like there was this sense of carelessness designed into a product. And I think the opposite of carelessness is a deep sense of care, and that is one of the greatest ways to give a gift to somebody else is to show that you care, even if it's imbued through your own products.

Eric Ries: So you've talked a lot about learning, about humility, about learning from others, but also about your board and the role that your board has played. You're lucky to have a very strong board, with leaders like Ken Chenault, who led American Express through 9/11, and Angela and Ann and others. Talk a little bit about how Ken and the other board members have helped you navigate this.

Brian Chesky: Oh, we have an incredible board and we're very, very lucky. And by the way, I never really quite understood the value of a board until a crisis like this. You need your board in a crisis. When times are good, it probably doesn't matter a lot. I mean, a really bad board member can get in the way. Board members are a one, a zero, or a minus one. A zero is like they're there, they add no value, they take away no value. That's a zero. And then a one is, I think, pretty obvious, they help you. And then you got to be careful for the minus ones. Even in good times, they just can slow you down, they can steer you the wrong way. And never underestimate the power of somebody whispering something in your ear, you just might listen to it, it just may affect you.

So there's an old saying, you're the average of the people you surround yourself with. Well, you often are the average of the collective wisdom of the board. And even if you have all the voting power, you will just be persuaded in conversations. So you have to be very thoughtful about adding people to your board that share your values. That's also why, if you're raising money for a venture capitalist, I would take a 10 to 20% valuation discount, if you have to, early on, to get a much better board member. Because you know what, the wrong board member's going to erode more than 10 to 20% of your value over the course of 10 years, I think, if they're really bad. And there's, unfortunately, a lot of stories of that. So it's really important you should have a board that shares your values.

I ended up bringing on a handful of board members, four independents, in addition to Belinda was three. And I had two great venture capitalists, one from Sequoia, Alfred Lin, and one from Andreessen Horowitz, Jeff Jordan. And then we added Ken Chenault, he was CEO of American Express. By the way, unbelievable because he lived through two crises. He ran Amex through 9/11 and 2008. 9/11, very exposed to travel. 2008, financial services. So went through two crises. We added Ann Mather, she was CFO of Pixar under Steve Jobs. She was the auditor for Google and Netflix, so I knew this was somebody who knew how to invest in innovation. And lastly, we added Angela Ahrendts. And Angela Ahrendts was CEO of Burberry and then she ran all of Apple retail, all the retail stores and And-

Eric Ries: She's a powerhouse.

Brian Chesky: For every time I got a board member, I said you can't bring ... It's like a pot luck, you need to bring multiple things to this party, you can't just bring one thing. So Ken brought, God knows, a whole bunch. Public company CEO, understands trust, Amex's trust. Payments, we handle a lot of money, they handle payments. Amex started as a ... Well, I guess they started as a express company, like shipping, but they also were a travel company, so they have a huge history in travel. Amex is very much about brand and we are very much about brand. So, there was a lot that Ken brought to the table. Ann Mather sat at the intersection of art and science, she was CFO of Pixar. How do you evaluate the financial cost of creativity? You can't test your way towards a great Pixar film, right? But financial analysis likes historical data, so she brought a lot there. And there were a number of other things she brought, like long-term thinking, big bold bets. Think about Netflix, think about Google, think about the bets they made.

And then Angela Ahrendts. She, beyond all the other things you'd know of her, she understands fashion, understands art, creativity in a profound kind of way. But also, retail, service. Airbnb has a service element, people are greeting you in their home, providing service. They're hosting you on experiences. So it was really important when we built our board that I really thought about numerous skills, but I also looked at my core values and my principles and I wanted to make sure ... I said as long as my board and I agree on principles, we'll never truly disagree. You know what I'm saying? True disagreements are disagreements over values and principles because a disagreement of our values is like a disagreement of which mountain to climb. If we're both agreeing to climb this mountain, you want to go that path, I can go that path, we both are probably going to get up the same mountain. So, you got to make sure you do that.

The other thing with boards is most people have problems with boards. I'd say 80 or 90% of problems of boards are problems of lack of communication. The more you communicate with somebody, the stronger your relationship with them will be, almost always. The less you communicate with somebody, the less strong it will be. Never wait for your board member to communicate with you. If you hear from your board member, it's usually because you're not communicating enough. So I try to have a piece of communication to every single board member almost every single week for years. Think about how much communication that is. You don't just communicate with your board at board meetings. You never want your board to learn anything at a board meeting. I try to make sure that I have a relationship with them. And the way to use your board is ... It's like a relationship. If you're in a relationship with somebody, but you only talk to them every three months, that wouldn't be much of a relationship. By the way, not be that helpful in a meeting.

So they need to have context and to have context, they have to live with the problem like you do. So, that's the key. And so then you ask the question, do I really not talk to this person every week or a few times a week? And don't add people to the board that you don't really want to talk to every few weeks. And this goes for investors, because if you're starting out, you don't get to always pick your board members as much. But no one ever forces you to take money, unless you got a gun to head, I guess, in a bad situation. And so that's why a lot of entrepreneurs try to pick the biggest valuation and I almost ... I'm not sure we ever ... In the first seven rounds of the company, we had raised three billion dollars. I don't think we ever picked the highest price in any round. Every single round, we left money on the table because we went with somebody that we just felt like was a better fit for us. And we wouldn't pick the lowest price, but you don't squeeze out that last price. Now I know other entrepreneurs and I don't think it worked as well, they tried to squeeze money and they said, "Money is money." I remember people saying, "Money is money. It's just money."

Eric Ries: I've heard that a lot.

Brian Chesky: "Money is money, it doesn't matter where it comes from." And I said, oh, man. That's right in the short term. You weren't wrong, you just had a different time horizon. And by the way, somebody who told me that is a very famous CEO who is now fired by his own board, so I think that was a really unfortunate way to learn that lesson.

Eric Ries: Sure. It reminds me of a great founder, a story we were talking about the other day, who was on his deathbed regretting who he put on his board because they ousted him.

Brian Chesky: Oh.

Eric Ries: And had built a company over the course of decades and then saw his board dismantle it. So yeah, I think these are all instances of ways in which founders and leaders, more generally, don't really think through the long-term societal ramifications. As you said-

Brian Chesky: You know what, here's another way of saying it, Eric. A lot of what we call virtuous is time horizon. It's less that somebody did the right thing or wrong thing and it's more time horizon, right? There are such a thing as ethics, but it's not so black and white that someone just did something horrible and evil or somebody did something incredibly virtuous. Most decisions in business are way greater than that, and it tends to be a short-term decision versus a long-term decision.

And if you kind of think about things over a long horizon, just imagining ... I mean, one way to think about it is imagine the second or third order of consequences and just use your imagination. And if you just extend your time horizon and get beyond living through today, you have a way of probably making a more sustainable and better decision and more of a right decision. By the way, we tend to evaluate the right thing to do years later, right? So it's age, it's time. And so what we call the right thing is often the long-term thing. By the way, that's because we evaluate it through the prism of history, which occurs over time.

Eric Ries: The root cause of so many of the problems that afflict our world today, not just the pandemic, but inequality, climate, lack of sustainability, diversity, you name it, they have that ... Even the epidemic of social isolation. If you've read a book like Bowling Alone, it's-

Brian Chesky: Yeah.

Eric Ries: It's, so clearly to me, policymakers and leaders and corporations taking the short-term easy way out time and time again. And I find what you're saying to be bracing, but also kind of a necessary corrective.

Brian Chesky: Yeah.

Eric Ries: So as we build these new institutions that are going to guide us in this new normal, both companies and non-profits and new government agencies, we're in this now a social rebuilding phase, what do you want to see layered into the foundation from those first principles? What are the principles, what are the values you want to see these new organizations embody?

Brian Chesky: And just to clarify, when you say new organizations, you mean new companies or any kind of institution?

Eric Ries: Yeah, yeah. I mean, we're, of course, primarily talking about new startups. There's for-profit startup companies that are-

Brian Chesky: Oh, I see.

Eric Ries: But there's also startup agencies and startup non-profits and all kind of institutions, they all had to start somewhere.

Brian Chesky: Yeah. It's a really good question. So I would bake, in every company, just this idea of acknowledging that your company does not exist in a bubble. You exist in a world, and so you have to consider the world when you're building your company. And so I think institutionalizing that you have multiple stakeholders. I like to say everyone has multiple stakeholders, whether they choose to acknowledge them or not, that's a choice they have, but they have them. And by the way, you will learn eventually, or sometimes the hard way, that you have multiple stakeholders.

Eric Ries: Yeah. In the same way that history will judge you one way or the other.

Brian Chesky: People often learn about their stakeholders the hard way. Like, oh, yeah, that stakeholder exists when they are subpoenaed. So, you got to kind of learn ahead of time. I hope another value is that you exist, have a purpose and a mission, not just to be successful. And I like to ask entrepreneurs, why do you deserve to exist? Why does your company deserve to exist? It's kind of a hard answer.

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: And the best generic answer I've ever heard to why I deserve to exist is because if I don't do it, no one will. Because the answer to that is it won't happen, but if I do it, it will happen. Now it could be something modest, it's not saying you're changing the course of history. But the alternative is if I don't do it, someone else will and they'll make money, and that's the less idealized answer. So you have to have a real collated purpose. I like this exercise somebody once said. People should care enough about your company that if your company had a death, that people would show up to the eulogy of the company and they'd have something meaningful to say. And you couldn't say that about everyone and, again, it's a dramatization. But, again, these are-

Eric Ries: But there's a lot of companies that have gone under business that I feel that way about. I think of all the products that have been discontinued that you have that feeling that gosh, I wish that they'd found a way to make it.

Brian Chesky: When Virgin America was discontinued, a lot of people really mourned it, they really liked it. And you could go down the list of companies. And there are other companies out of business, you don't give a crap at all, it's like whatever. And so you really want to stand for something and to mean something. I also would say I would build diversity in. Steve Jobs used to use a quote, but I learned it when I was a kid because I played ice hockey. Wayne Gretzky said, "My secret is I skate to where the puck is going, not to where its been." Because ice hockey, everything moves so fast, you can't skate to where the puck is, you have to skate to where you think it will be. Well, we should build our companies anticipating where it will be and where it will be, you should bake in things like diversity. How diverse do you think the world will be in 10 years? Build that in now. Get there earlier. By the way, I'm not saying that we're there, not at all.

Eric Ries: No, it's been a real struggle.

Brian Chesky: Yeah, in every way, in our community, in our company and I wish we were further and I wish I did more diversity sooner. Again, it gets harder as you get older.

Eric Ries: So that's something every early stage company could be doing, right?

Brian Chesky: Every early stage company should over-rotate on diversity, it will make you more successful. Oh and, by the way, a more diverse environment is going to be an environment that is more tolerant of crazy ideas and so you'll probably be more innovative and it's going to be a safer place to have crazy ideas than a place that is maybe more homogenous, right? That's a little bit more of a boiler room, it's going to be a less creative environment. These are things that I feel fairly confident saying. The best piece of advice I ever got was from Paul Graham, he said, "It's better to have 100 people love you than a million people that sort of like you." Build something people want, build something people love. If they love it, they'll tell everyone else about it. So it's really important to only focus on the first 100 people and make sure that people love.

I mean, maybe business is so simple. Maybe all businesses is you build a product that people love, built by employees that love the company. Maybe that's all it really is at the end of the day, these two really basic ideas. Build something people truly love. And that's what you should measure, not just retention, adoption, that's heuristics that you think are indicators they really love it. Just be honest, do they truly love it? I think that is incredibly important. How you do anything is how you do everything. There's one of the famous business books by a football coach and it's called The Score Takes Care of Itself. Basically, do everything perfectly and you'll win, don't worry about winning. In fact, the most winning is coaches. John Wooden in basketball, UCLA, Bill Walsh.

Eric Ries: They're process-orientated.

Brian Chesky: Yeah. They were ... John Wooden, most winningest college basketball coach in college history, I believe. He said his secret was not to focus on winning, but to focus on his players doing their best. But he said here's the secret, most parents, when they tell their kid to do their best, it's BS and it means they don't really believe in them, it's a participation trophies. The secret is all you ever have to do is expect the best in you and expect the best of those who work for you, that's it. But here's the secret. The secret is that you can't let yourself off the hook, you have to know that you have untapped potential, potential that no-one has ever had.

The secret of leadership ... Well, I don't want to say it's a secret, sounds like a self-help book. But here's what I'd say about leadership. It's not a secret, but I'll say this. Leadership is believing in people who work for you more than they believe in themselves, and holding the standards they wouldn't hold to themselves because you believe and you see potential in them they don't see in themselves. And by the way, you can push people way outside their comfort zone and if you don't believe in them and you just grind them, they'll hate you. But if you push them because they know you believe in them, they will give you permission to push them way outside their comfort zone.

Eric Ries: I have watched you do that. Man, it is-

Brian Chesky: So I get permission to do that. I mean, maybe sometimes I can be more graceful. But what we know about the hero's journey, to go back to the thing I said before, transformation is basically ... It's equation. You have to step out of your comfort zone, you have to adapt your comfort zone and adapting outside of your comfort zone is growth. That's what it is. You don't learn and grow without stepping out of your comfort zone, and the leader must push them outside their comfort zone.

And so I think you have to build the potential into how you're hiring people and I think you need to think about the early employees as founding employees, think of them as founding employees because they're founding your culture with you. And every time you hire someone, ask do I want 10 people like them? Do I want 100 people like them? Because I might end up with people like them in the company. There's no such thing as a high-class problem. High-class problems are basically problems that happen when you're successful. Well, why would-

Eric Ries: They're still problems.

Brian Chesky: Yeah. Why would you not plan for success? Because otherwise, you're guaranteeing some mediocre midpoint. I think these are just some of the basic things. And the other thing I just say in the early days is never optimize for any one thing. Don't worry about winning an argument with your co-founders, don't worry about winning a deal, worry about people loving you and having a great reputation. If you have a great reputation, people will trust you, you'll win every deal in the future because people will give you the benefit of the doubt. And if you try to take every last dime off the table, you're going to be one of those founders where, every year, the job gets harder. And you're suddenly ... It's like, why is everything getting harder? Well, because people aren't trusting you as much, but they don't tell you that, it just seems harder every year.

Eric Ries: I want to take you back to the pandemic itself for a moment.

Brian Chesky: Yeah.

Eric Ries: COVID-19 was declared a pandemic nine weeks ago, if you can believe it.

Brian Chesky: How long does that feel?

Eric Ries: I mean, to me, it feels like nine years. I envy the people who are bored. I have never been so busy in my life and time has been ... The time dilation effect has just been intense and I mean, it must be even more intense for you.

Brian Chesky: It is odd because we perceive time through non-routine, right? So somebody once told me, "I travel to make my life seem longer." Because I remember I went on the school bus for 10 years, I don't remember every school bus experience because I basically took an approximation of thousands of experiences and I abstract them into a singular experience. So isn't it odd that our physical environment doesn't change, we don't really do that many new things and yet, it still seems like an eternity?

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: It's a very odd experience and I think-

Eric Ries: Very, very strange.

Brian Chesky: I think what's happening is I think the world is going through trauma and I think if we're not careful, we're going to collectively have PTSD if we're not able to process it, and I think we have to, obviously be very careful about that.

Eric Ries: I've been really bothering me that we're having a hard time grieving for those we've lost collectively.

Brian Chesky: Yeah.

Eric Ries: Because it's just people have become a statistic. We say, so easily, 100,000 people dead.

Brian Chesky: Yeah, it's almost taken away from us. And people are saying good-bye to loved ones on Zoom. That's going to leave a mark.

Eric Ries: Yeah. So you were the CEO of a travel company at the very moment while travel was brought to a complete standstill.

Brian Chesky: It's not funny, but-

Eric Ries: That must've been ... Forced you to make these hard decisions. How did you think through your decisions in the immediate wake of the pandemic?

Brian Chesky: Well, again, I guess I went back to those core principles. And by the way, sometimes you kind of form them. It doesn't mean you have to sit in a room and come up with them, but just write down whatever you think is important at that time. And if you can't think of other stuff, that's fine, but use that as a guideline.

Eric Ries: Mm-hmm (affirmative).

Brian Chesky: And so the first thing I thought is we're going to be decisive, this is going to be our defining moment. I'm going to be completely present, decisive, clear-thinking, and just almost own that as a persona. And, again, then you kind of work down your list of what am I actually prioritizing? And the other thing in a crisis, you have to have lots of communication. Decisions are made very, very quickly, you can misunderstand things, so you have to step up your decision-making. The other thing I left out is optimism. There's a lot of quotes about optimism, I won't be able to paraphrase them adequately. But basically, if you think you're screwed, you kind of are screwed. And if you think you're going to be okay, you probably are.

And this is less obvious in times of peace, but in times of war, and this is a very well understood thing in generals, in battle, the psychology of the leader becomes the psychology of the organization, it becomes contagious. And so if the leader is hopeful and believes they can do it, the organization assumes that mentality and they believe they can do it. They believe they can do it. If you think you're smart, you actually often perform higher. If you think you're a creative person, you will come up with more creative solutions because you're going to be resilient, you're going to be pushing through the discomfort and you're going to keep going.

And so one of the most important things I had to have was an unyielding and unrelenting optimism through the darkest hours. And the worse things get, the more optimistic you have to be. I'm not talking about blind optimism that is not anchored in any reality, I'm talking about anchoring optimism and some cold hard facts to say I know it seems like it's really bad, but things are never quite as good as they seem or as bad as they seem and I'm here to show you the way out of this. And I think that unrelenting optimism every step of the way is really, really hard. It's one of the hardest things to do. To manage your own psychology, you have to be your own psychologist or maybe you need people to support you, and you need to surround yourself with people that give you energy during a crisis.

So one of the first things I did was write down my principles, then I surrounded myself with people that I trust, that give me energy and keep my spirits up, but also people that tell me the truth. You can't always have people only tell you the truth and get your spirits down, and you can't only have people getting your spirits up without having the truth. You need both. And you have one or the other, you're totally dead. You need both. And you can't just have conflict because then your psychology will be beaten down and you're going to lose hope, and then it's going to have a negative spiral on the organization. So these are the things you do, and then you have momentum. You communicate three times as much as usual, very frequent. You're visible.

I made a decision, when this crisis happened, that I would do a Q and A the employees every single week and I would answer any question they had. And this was controversial. You know why? Because I knew that I would be getting questions every week like, will we have lay offs? And that would be really hard for me to answer and there's all these really hard questions you can't answer. And I said I'd rather, every single week, look them in the eye, or look them in the camera, which is kind of the eye, and just say I'm human, I'm going to do my very best and if you trust me, then it will be a lot better. And no matter how hard-

Eric Ries: Do you always bring it back to trust?

Brian Chesky: Yeah. Well, I mean, what are the most fundamental first principles of humanity? Trust, love. These are root words, right? It's hard to come up with the words to describe words like those. Businesses are built on love and trust, that's kind of what it is. And we don't talk about it, but actually that's kind of the end of the day and I don't know why it sometimes ... It takes a crisis for us to learn the hard way.

Eric Ries: Being forward-looking for a moment, travel, obviously, is not going to come back in the way that it was before. There's going to be a new normal for travel and that's going to be very impactful for Airbnb, and that's going to be true for so many things in our society. And we can't predict exactly what the future will be, we don't know exactly what the new normal will look like, but what are some of the things that are on your mind in terms of what you think the long-term impact of this crisis will be?

Brian Chesky: In that idea that there are decades nothing happens, or weeks, decades happen, that's happened to travel. I think what's happened is travel was going through a transformation over the course of 30, 40 years and 30 to 40 years just happened in nine weeks. And so now, everything we know about travel's going to be changed. Tourism comes from the root word tour, and the word tour comes from this thing called the grand tour.

Eric Ries: The grand tour, yeah.

Brian Chesky: The grand tour is the root of what we now know as modern tourism. And by the way, just to ... I'll give a little bit of a lesson on tourism here, then we're talk to the future and I can go to more broad stuff. I remember when I was raising money, one investor said, "We don't really invest in travel companies, the market's not big enough." It actually turns out that the travel industry is larger than the oil industry. One in four new jobs created every year, before COVID, was in the travel and hospitality industry. It is somewhere between two and eight trillion dollars, and the global GDP's, what, 80 trillion dollars, so it depends on how you size it. It's a massive industry. And the tourism industry is ... Mass tourism as know it in rooted in the grand tour.

The grand tour was basically created in the 17th century, 1600s, it went to the late 1800s, and it was basically aristocratic, mostly men, in England that would go on a one or two year grand tour throughout Europe. And they actually have a whole map, they would go from then England down through northern Europe, all the way down to France, and they'd usually end up through Italy. And in the grand tour, you would basically learn to become cultured. So you would study painting. So you would go to Paris and you eat the food of Paris, you might have friends, even a romantic relationship, and you would take painting classes. And the grand tour ... This is why I think people go to art galleries and they travel. The grand tour, which was painting lessons to become cultured, became looking at paintings behind glass with a bunch of selfie sticks around subject matter that most of us know nothing about and we don't understand the culture significance of.

So I don't know why so many travelers would go to museums. And by the way, I'm an artist and I said do not go to art museums, you don't give a shit about art. What you don't do in your own city, why do you do it when you travel? But I think the reason people went to museums and landmarks is they wanted to get connected to the culture. And I say if you want to get connected to the culture, don't look at the creations of dead people in museums, culture is alive through the people still there. Don't go to a monument to understand the culture of those before you, learn about the people that are around you right now. And so I think that what's going to happen in travel is the era of mass tourism, at least as we know it, is now ending. And the era of mass tourism is basically people going to hotel districts, 80% of the hotels are in one district. Doesn't mean hotels are going away, but the hotel districts. Times Square, Fisherman's Wharf. I don't know, every city's got them.

And then you eat at a multinational corporation, like ... Name your multinational corporation. Then you go shopping. By the way, when people spend money on travel, in order, they spend money on flights, then accommodations, then restaurants, then shopping. These are the big four. And isn't it crazy that restaurants ... I mean, they'll go eat local, but a lot of people eat at chain places when they travel. And then they go shop at multinational corporation stores at the same stores in the cities they go to. I think all that's ending. I think suddenly, it's going to be more local, more communal.

Here's what's going to happen. Travel's going to become, A, more affordable. We were born in a crisis, we're back in a crisis of the recession, travel's going to have to be more affordable. You're going to see a generational shift towards Gen Z and Gen Y, so people under 35 and people under 25. And so new tectonic shifts in the economy often lead to the adoption of new audiences. So think about the 1920s, the jazz age was very much adopted by young people. These were modern movements and the jazz age was obviously enabled by prohibition, and prohibition meant that there was this creation, this thing called the speakeasy. A speakeasy was a place you could patron and get alcohol illegally. It was underground. What do speakeasies do to get people to come to their establishments? They have live performances. What kind of live performance happened in the '20s? Jazz. Jazz came from New Orleans, went to Chicago and New York. There were 100,000 speakeasies, supposedly, according to one person that was, at the time, writing about speakeasies, in Manhattan at the time. So it's just an example of these pandemics, these once in a generational things tend to lead to new mass adoption and they tend to be from younger people.

The next thing that's going to happen is people aren't going to patron mega-metropolises in the same rate they used to. I think that we've lived in the era of this city. For the first time in human history, last year or a few years ago, more people lived in a city than out of the city, and I think the mega-metropolis was emerging, right? Mega-metropolis is more than 10 million people all over the world. I think now we're going to have this thing called travel redistribution. People are going to now travel to small towns, to more small cities and I think this is, ultimately, a good thing, not to overly concentrate one city.

I used to joke, Pittsburgh is the new Paris. When you no longer travel to see a landmark, you're traveling to see people. Well, the people are interesting everywhere and so Pittsburgh's the new Paris. And it sounds silly, but it's really every little town around you is the new Paris because not everyone's going to Paris, they're going to the small towns around them. So, that's another thing. So, in a way, near is the new far. And by the way, the more you're in your home, doesn't down the street feel like further than it used to and the other side of the city feels suddenly like you're traveling again? So, that's a huge tectonic shift and I think that's going to change.

I think there's another fundamental shift that's going to happen, and this is maybe the most profound shift of all. If I can just give you a really big prediction that transcends travel, I'll give you one. And I feel like because of the business I'm in, I'm a good authority to say this. I think suddenly, people are realizing, especially people doing white collar jobs, and more and more jobs can be done in a automated way by a laptop, that they can ... I think more and more people are realizing that they can work from home, that they can work and do meetings from Zoom, right? And so if that's true, if you can work remotely, then do you need to be in the same city that your company's headquartered in? Especially if your city happens to be one with a very expensive rent, like San Francisco or New York. Or can you live somewhere else?

And so I think what's going to happen is the mega-metropolis created really high housing prices and it was very, very packed and then, suddenly, people realized they can earn the same amount of income in a lower cost environment and have more property and more space. And people are starting to realize they don't have to be tethered to one city. Working from home can suddenly be working from any home and any location. And then suddenly, if we're always connected digitally, that means we can live anywhere. I think the one year lease is dead, it's going to go away. The first month's rent, last month's rent's over and you're going to have a whole generation of people that can move and live around the world and we're going to be less tethered to cities. The idea of community is going to be more ... It's going to change a little bit. I'm not saying it's good or bad, I'm just saying this seems obvious.

So these are some of the things that are going to happen. And I also think if, suddenly, everyone can work remotely, then suddenly, the global outsourcing is going to be profoundly greater actually. If you think things were outsourced before and you were competing with global talent before, even more so now because, suddenly, you can theoretically hire anyone. I mean, they may be on a different timezone, they can be working from anywhere. So I think almost every industry will be reshaped. I think these things will have a way of accelerating old technology, so almost everything's going to be digitized. All the offline businesses will become more online. I think a lot of small businesses are going to get turned over. There will be restaurants in the future, but it'll be a new generation of restaurants, they'll probably look different. I think a lot of shopping is going to go away. Shopping is entertainment. It doesn't mean all of it will, but I think people are going to have to adopt new forms of entertainment. I think mega, mega crowds and mega-metropolises will be replaced by small intimate gatherings in a more distributed way.

So I think you're going to see a lot of these things happening, but I also think some basics of human nature are going to endure. I think that people are going to realize that belonging and love and humanity and connection with one another is going to matter more than ever because you start to realize how crazy you go without it. And so I think that maybe we're going to see a dystopian glimpse of the future path we're on and realize that we don't want to be glued to our phones and we actually do want to get out in the real world and we do want to have real relationships. So these are some things, I mean, my predictions are a little bit biased towards the world I'm in, but if you ask me other things, I could give you those opinions as well. And I don't know if they're any better than anyone else is listening, but those are some things I think would happen.

Eric Ries: What do you hope other CEOs and leaders will do to help with the pandemic and the relief efforts and to help us build a more fair and just world coming out of this?

Brian Chesky: Be useful and be compassionate. I mean, first, be useful. This crisis is not the responsibility of a government, it's not the responsibility of just healthcare workers, it's not the responsibility of some companies and some governments and some companies and industries, I think it's a collective responsibility. Never in human history has all seven billion people have shared a common predicament, a common cause. And I think every single company can help in their own way, I'm sure they can. And so that's the first thing, find a way to be useful, even in your own modest way.

And the second thing is be compassionate. It doesn't cost a lot to be compassionate and it matters and can be felt so much. And it just kind of means have a heart, overcompensate a little bit because these are really trying times and people are suffering. And I think now, more than ever, don't you feel like we want people that are compassionate because there's just so much suffering? And maybe we could've tolerated it 10 weeks ago, we could've tolerated autocrats that are just demagogues and nativist and people spewing hate and people not caring and people being cold and calculating. That may have seemed logical 10 weeks ago and then, suddenly, I don't think that's what people want in leadership anymore because people need leaders that care about others because they're suffering and they need someone to help them.

And so suddenly, I think the definition of leadership is evolving and I think compassion and caring for others and having a heart, it suddenly goes from this hippy dippy thing to an essential. Doesn't it just feel suddenly essential when 35 million Americans don't have a job, hundreds of millions of people around the world, people are dying? And anyone with any kind of responsibility whatsoever, when they see someone suffer, they have a choice and I think the choice of compassion, it will be the right one. And it's not that hard, actually. It's not that much harder. In fact, sometimes it's even easier. It's almost more natural.

Eric Ries: So, Brian, where do you think we go from here? How do we get out of the crisis?

Brian Chesky: Well, I don't know. There's a quote attributed to Winston Churchill, he may never have said it, but the quote, I really love. It's, "If you're going through hell, just keep going." Don't stop. We have no choice, we have to keep going, we have to manage this way through this crisis. And I think that every single person should ask themselves how they can be useful and how can they be helpful? And I'm sure that everyone can in their own way, so modest as it is. Number one is we have to keep going. Number two, we have to be useful. Number three, I'd say ... I think that we're going to have to be really coordinated. Unfortunately, a pandemic itself as a virus is very coordinated, so if the response is uncoordinated, it can be existential, right? And so it just doesn't help if half the people do something and the other half don't, so we're going to have to be really coordinated, right? Doesn't it feel like more than any time in human history, we're truly in this together? We are-

Eric Ries: That's right.

Brian Chesky: At a very root level, we are now more in this together. Our survivability requires us to be in this together. And it is unfortunate that maybe that this is the reminder that we've had to have. We needed a pandemic to realize that the other is not so other. That person in that other country who looks different, who sounds different, they're not so different. That actually there's this basic common truth that people are 99% the same and a pandemic is revealing that. Doesn't it just become the great equalizer? And so I think we need to remember that we're all in this together. And I think we need to stave off that temptation. A lot of fascism and Nazism rose on the wake of the Spanish flu. I think there's a real risk of division and anger and hostility. How are we going to respond to this? Are we going to become divisive, angry? Are we going to become a protest culture? Are we going to actually be one that tries to heal people, bring them together?

I think that we collectively have a choice of how we're going to continue to respond to this. I hope that we're a society that listens to expertise, that thinks we're all in this together, that is not ... These are, I think, things that we need to do. But greater minds than mine about matters such as this are going to have much better advice on how to navigate through this. I will say that we're probably going to end up, if we're not already, in a depression, an economic global depression, that will be the worst one we've seen since the 1930s. And it's going to have marks that are going to be left for a decade, we're going to feel this for such a long time. Think about how many jobs were lost in nine weeks in the United States, over 30 million. Some weeks, five to six million jobs lost and that's just the economic damage. So, I think that's really important.

But I think the opportunity on the other side is that we're living through a moment of ... It's like a great reset. It's like a great reset. And if somebody is creative, if they're an entrepreneur, it's like ... I don't know, it's a like a 00 game again for so many people and you can suddenly change things in a way that maybe you couldn't before. And so-

Eric Ries: All I can think of is 30 million unemployed people is 30 million potential entrepreneurs if we give them the support and the resources that they need.

Brian Chesky: Exactly. And, again, not everyone is meant to be an entrepreneur in a classical sense and not everyone ... We don't provide our own opportunities completely, so much as we think we do. We exist in a society that enables us. And so, I mean, maybe another place we go is to just try to help one another. If everyone tried to help one person, it'll be very, very different. And so I think there should be an era of not self-preservation, but of maybe the opposite, right? Maybe an era where you care for others. That would be a really good thing. This is like an era of service, right? I always was wondering why doesn't our nation have service anymore? It doesn't mean we should all go to war, but wouldn't we all be better if everyone just spent a year in service? Well, suddenly, the world is demanding service and we may not all take a year off to give back, but we all can give our own way, I think, and I think the world actually needs it now more than ever.

Eric Ries: Brian, I want to thank you for taking time to have this conversation and, of course, for the work that you've been doing. I know it's been a brutal couple of months now, as this has unfolded. But during the boom times, during the crisis, you have been a consistent voice for companies taking responsibility for their broader consequences, taking care of their stakeholders, their employees, their broader community. Being an advocate for the notion that we all belong somewhere. And I'll close with the quote that you gave that I'm writing it down and underlining and you're going to hear me use it again, which is that businesses are built on love and trust. And if you take that seriously, I think it's actually a very radical statement for a CEO to make. So, I just wanted to thank you for sharing that perspective and being really honest and vulnerable about it.

Brian Chesky: I appreciate that. I really think that's true. Businesses, in the end, are built on love and trust. And it can sound like a real new age-y thing in times of peace, but in times of war, times of crisis, when you're facing the abyss and your most harrowing of moments, it suddenly feels like a deeper truth. And unfortunate that sometimes it takes a crisis to remind us of the most fundamental needs, of the most fundamental things of human nature. Businesses are built on love and trust. That's probably what I'll end with.

Eric Ries: This has been Out of the Crisis. I'm Eric Ries. Out of the Crisis is produced by Ben Ehrlich, edited by Jacob Tender and Sean Maguire. Music composed and performed by Cody Martin. Hosting by Breaker. For more information on the COVID-19 crisis and ways you can help, visit If you are working on a project related to the pandemic, please reach out to me. I am E-R-I-C-R-I-E-S on Twitter. Thanks for listening.

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