The Airbnb Story: How Three Guys Disrupted an Industry, Made Billions of Dollars … and Plenty of Enemies

by (Journalist) Leigh Gallagher

He was slow to hire a senior leadership team and delegate to them — the company had reached a few hundred employees, and he was still involved in thousands of minute details — and he initially had a hard time interviewing candidates who had decades more experience than him. (“You’re sitting across from them, and they’ve had to do this on the other side of the table fifty times, and you’re doing it for the first time with somebody who’s much more seasoned than you, and you’re kind of, like, ‘This is very strange.’”) When executives didn’t work out, he was slow to let them go. Once he had his full executive team — the company calls the group the “e-staff ” — in place, he then had to figure out how to get them to take things up a notch. “How do you get people to play at the next

Chesky’s fanatical belief in and devotion to what he sees as Airbnb’s higher purpose seem to be the things that drive him more than anything else. He believes in home sharing “down to his toes,” says Chip Conley, and he talks about the company’s mission, “belonging anywhere,” relentlessly, not as a CEO talking up the tagline that sells the product his company makes but as the reason he was truly put on this earth.

Warren Buffett sensed this, too. “He feels it all the way through,” he says. “I think he

Indeed, while every Silicon Valley CEO talks his or her own book, for Chesky, Airbnb seems more a calling than a job. “We have a mission to create a world where you can belong anywhere,” he explained to me over lunch at one point. He believes that if more people in the world were hosts, “the world would be an inherently more hospitable and understanding place.” Later, I ask him about his tangible business goals. “As far as a goal for 2020,” he begins, “I think we’re oriented on how many people can experience belonging in a deep, meaningful, transformational way.” He has said that nothing takes precedence over making the mission of anyone belonging anywhere real: it comes before shareholders, it comes before the valuation. It comes before profits, it comes before product, it comes before everything. He wants Airbnb’s value to peak sometime after he dies.

strangers were actually friends waiting to be discovered,” Gebbia said in a TED talk he delivered on how the company built its platform for trust. When asked about his goals for the company, Chip Conley told one of my colleagues that he would like to see it win the Nobel Peace Prize within ten years.2

During one of our conversations, I ask Chesky if anyone has ever told him he’s overly idealistic. “I think it was Tom Friedman who had a great quote,” he says, paraphrasing the New York Times columnist. “He said, ‘Pessimists are usually right, but it’s the optimists who change the world.’”

Even world changers have weaknesses. Chesky’s vision and ambition can lead him to set goals that sometimes seem impossible to reach. Paul Graham says Chesky needs to take things less personally. “When

anybody says anything bad about Airbnb — and when you get big enough, people are always saying bad things about you, it’s an automatic consequence of being big — it hurts him,” he says. “It really hurts him, as if someone had hit him. But it would save him from a lot of pain if he didn’t take things so personally. But...

was brought on to help him increase transparency and engagement between the company’s top and mid-level leaders. Airbnb has hired Simon Sinek, the author and expert on finding and articulating an organization’s “why,” or purpose. And while not in the paid category, there’s also that new bigwig Chesky shared the stage with in Cuba: President Obama.

To help find the answer, the company had an outside consultant come in to administer a 360-degree review. Candid, anonymized interviews with the dozen or so people who worked most closely with Gebbia delivered some painful results. People saw him as an optimistic, upbeat leader, but he had a reputation as a perfectionist, and people were afraid to be candid with him when projects weren’t working out. “That was a big one,” he says. Anytime anyone gave him bad news,

his body language would shut down, they said, and he became defensive; so after a while, they just didn’t give it to him. “Problems would fester and become worse, and then I would hear about them, and then they would be harder to deal with,” he says.

That perfectionism also meant that simple decisions often took a very long time to make, and he would sometimes become a bottle-neck in his own company. He also didn’t quite realize that just because he had a strong work ethic — the same drive that led him to create two companies before starting Airbnb — it didn’t mean everyone else did. The 360-degree review revealed to him that people on his team hadn’t had dinner with their significant others in weeks and weren’t doing things like goin...

The project ran for most of 2014 and saw some traction, but this was right around the time that Gebbia had hit his wall, and he soon realized he was having trouble scaling and “operationalizing” the ideas. Out of the experience came a realization for Gebbia that he was more drawn to the creation of new ideas than the implementation of existing ones.

Blecharczyk started an “activity map” to document every project being worked on throughout the company. He identified 110 of them,

The Myers-Briggs test also revealed something else: that Blecharczyk was the most different from anyone else on the team and from the general composition of the team. “The general competence of the team is inverse to whatever I am,” he says. The coaches administering the session said that was important and advised the group that Blecharczyk’s perspective was so different that he should be a part of any important conversation the company was having. He was already privy to much of that as a cofounder, but it became more evident that he represented a different and important point of view. “That was very important to lay the groundwork for my strategy role today,” he says.

Chesky thinks one thing that can help scale its culture is to make sure the company remains transparent as it adjusts to its new size. Implementing an idea he gleaned from Stanley McChrystal, in order to foster better communication from the top to the bottom of the organization, the company instituted a new weekly call for executive staff members plus every one of their direct reports (about one hundred people).

technology companies, but Airbnb also had a major issue with discriminatory behavior by hosts on its platform. Many (including the company’s founders) say a lack of diversity in the company — starting with its founders, three white men — is one reason that it failed to anticipate that its platform might enable such behavior.

tech companies that were really big, he pointed out, had more than one product. Apple had computers first, then the phone and the watch. Amazon had books, then everything else. “I think all enduring companies have to do that,” he said. “Because if you’re a technology company, you can’t presume your original invention is the thing that you’re selling many years from now.” For Airbnb, the new thing it was about to start selling was the rest of the trip.

roster

“This is the beginning of Airbnb becoming integrated into your daily life,” Chesky tells me. “This is not just a new way to travel but it is a new way to live, in some ways.” The new venture will be called Trips, but he said that he hopes that one day the company will lose that distinction and all the products and services it offers on its platform will become known simply as Airbnb. Renting homes, he says, might ultimately represent less than half of the company’s revenue.

The business case for getting into these new enterprises is that if Airbnb can offer a range of experiences throughout a trip, it can capture additional revenue across all activities throughout the trip — and even in one’s home city — and, critically, it can significantly deepen its relationship with

Chesky also says he took some advice from Elon Musk of Tesla. Musk cautioned him against becoming a company that gets so big that it enters what he calls the “administration era”: a phase of 10 or 20 percent growth that a company settles into after the “creation era” and then the “building era” and signals a mature business. “Airbnb will never be in an administration era,” Chesky vows. “It will always be in a building era. It will always be in a phase 1,

“Obviously all companies hit some kind of saturation point,” says Reid Hoffman. “And to go and rent an apartment from a different person isn’t for everybody. But nominally it could get many orders of magnitude larger than it currently is.”

markets, there’s one group of people outside of Wall Street that will be paying close attention: some of Airbnb’s hosts. There’s no doubt that many of the millions of Airbnb hosts will see the occasion as a victory and an important milestone for the company that has afforded them an income stream. But some are starting to feel that they should get some shares, too. They helped build the business, after all, and they control the product and experience that makes the platform possible.

That said, if Airbnb doesn’t find a way to reward hosts, it could turn the spectacle and celebration of an IPO into a potential moment of resentment for some in the company’s most important stakeholder group.

Much bigger questions are these: What happens to the company’s soul should it become a public company? What happens to the mission of “belonging”? What happens to changing the world? What happens to “the United Nations at the kitchen table”? Can you have a social mission and be a big behemoth on Wall Street? Plenty of tech-industry giants, of course, claim they have missions. Facebook’s is “Make the world more open and connected.” Google had “Don’t be evil” until its new parent, Alphabet, changed it to “Do the right thing.” But balancing mission and Wall Street expectations is a tricky thing.

peculiar parameters of venture-based start-ups are that the demand for growth is so important that it takes precedence over everything,” she says.

Airbnb investor and board member Jeff Jordan takes a stronger view. “People think it’s evil [to go public or to take venture funding], but to build an enduring long-term company where your invention will last for long periods of time, almost all of them are public companies,” he says. “Google, Facebook, Alibaba — these are the companies that are changing the world. If you want to build something that will last and you want to control your own destiny, going public is the way you do it.”

the expansion into the trips business is a move that doubles down on the “uniqueness” element of Airbnb, at least for now.

Chesky has taken one big lesson away from the experience: he planned the next chapter of Airbnb’s business assuming it would face enemies. When the founders started Airbnb, they had no assumption that it would become so big or so polarizing and so detested. This time around, Chesky says he has been designing the new Trips business with that assumption baked in — and with “eyes wide open” to all possible consequences the business could have on neighborhoods and established players. “Having lived through eight years in homes, and all the protests and the criticisms, this is not going to be without its critics,” he says.

There are specific reasons that Airbnb took off among the rest of us nonmillennials, too — namely, a long, slow, general

decline of human connection in today’s complicated world. A growing separation of society had already pushed people into solitary boxes, whether in big suburban homes, in cars on grinding daily commutes, or, increasingly, into our own solitary smartphone trances. This goes even deeper: as Sebastian Junger points out in his book Tribe, we are the first modern society in human history where people live alone in apartments and where children have their own bedrooms.

Chesky, Gebbia, and Blecharczyk are all fully aware that what happened to them happened against all odds. “We weren’t visionaries,” as Chesky told me in one of our earliest conversations. “We are ordinary guys. And this isn’t that crazy of an idea.” But it’s also true that not just any three ordinary guys could have pulled off what they pulled off. “We had instincts and we had courage,” Chesky says. But he thinks one of their biggest strengths was precisely how little they knew. “I think if we knew better, we probably would have known better than to do this,” he says. “Because in hindsight, everything had to click. Like, it was kind of a weird million-to-one shot. And if we lived another thousand lives, it would be hard to imagine if everything were to click in the same way.”

Chesky unveils a whole suite of bells and whistles: local meetups, restaurant reservations, recommendation tools organized by passion (gluten-free Los Angeles, anyone?), a series of guided audio walks. He teases that car rentals, add-on services, and something involving flights are coming soon. It will all live on the new Trips platform, of which homes will be just one part. “Everything that we do, and everything that we will do, will be powered by people,”

“This company is about bringing people together and about loving one another!”)

He pointed out that when cars

Navigating all of this is precisely the challenge that comes with bold ideas and big change, and it should be no surprise that the challenge only becomes bigger and the stakes higher the larger the disrupter gets.