From Toilet Seats to $1 Billion: Lessons from Airbnb’s Brian Chesky

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From Toilet Seats to $1 Billion: Lessons from Airbnb’s Brian Chesky

by Jared Tame on May 30, 2011




You may have just read the news that Airbnb raised $100 million at a $1 billion valuation, but what you may not know is what happened before all of that. When I read that story, I wasn’t too surprised having interviewed Brian Chesky and seeing how his mind works in Startups Open Sourced.

You may not realize that Brian Chesky had no idea he’d be making headlines or even living in Silicon Valley if you asked him. Just a couple of years ago, Brian was designing toilet seats in Los Angeles, with no plans to be in San Francisco until his nagging cofounder persisted for over 2 years to get him to relocate. Here are some lessons we can learn from Brian:

Brian Chesky, Founder/CEO Airbnb.com

Don’t give up when you experience your trough of sorrow moment.

Everyone goes through it, and everyone deals with it differently. But everyone persists through it and figures out a way to change what they’re doing. For Airbnb, it was all about figuring out how to make the experience less awkward. That was a pivotal moment in Airbnb’s history where the company could have easily stagnated or failed.

Q: So your SXSW launch went pretty well?

Actually not really, not many people noticed. No, I think we only had two people book rooms and I was one of the two people. So it was cool but we realized that we had a lot of work to do. We had not nailed the product yet; this wasn’t something that was just going to take off. We regrouped and thought about the vision, then we started using the product and through using the product we realized that the vision we had come up with was too narrow. There were a few observations I made. So I used the product and I stayed with a guy who was a PhD candidate at the University of Texas at Austin. We hadn’t built payments yet, so we still had to transact through cash just like Craigslist.

So I showed up at this guy’s house; I had a great experience. His girlfriend prepared a Vietnamese dinner for me, the whole thing was really funny and kind of cool and so I had a great time with him. I think later at night before we went to bed he asked me where his money was. It was kind of a cold exchange, only because, here it was, it felt very personal, suddenly it immediately felt very financial and I also think I didn’t even have the money at the time! I had forgotten to go to the ATM and I just remember the experience feeling not very streamlined and not very great overall. You have to exchange the cash, then you’ve got to get change, and there was no real transactional record of what was happening. The whole thing just felt very illegitimate and under the table and so we realized that we had to build payments and we thought building payments would be the thing that really created our business and so that was the first thing.

You don’t have to be a programmer to make it big in the Valley.

Brian Chesky is an artist, not a programmer. He attended RISD, a top design school. What makes Chesky succeed is his drive to create the perfect user experience and his ideology that every problem has a creative solution on the other side of it.

Joe and I were primarily the ones pitching investors and we had never—Joe had done a web startup before, but Joe and I are both first-time founders. Both of us were trying to do something very ambitious and we both have unorthodox backgrounds—we come from design—so I’m not sure in the early days that our backgrounds were viewed as strengths. I think today maybe they are. People might look our site and say “oh, that’s why the site is great, it’s well-designed” and things like that. But in the early days, I think people were concerned that we didn’t have the technical background. I remember some investors saying “you have a lack of a technical team” and of course we had Nate, but they were used to seeing multiple technical founders. I think investors were not seeing the whole picture: first, they were undervaluing design by saying that, but also they were not recognizing that when you build a marketplace, all the nontechnical challenges exist to build it. It’s one thing to technically build our web site—that’s the easy part. Get the marketplace going, get traction, and build a community—that’s the hard part.

Things aren’t impossible, they are only seemingly impossible.

When Brian attended RISD, he said he was given a seemingly impossible task, and that helped prepare him for his job at Airbnb where he and his employees approach tasks with the same attitude:

I remember one of the first days of class we got a project, one of the projects RISD is most famous for. First, they give you an assignment to do a self-portrait. You can draw yourself using any medium you want and you have a week to do it. On the first day of class, everyone wants to impress everyone else, so they’re going to do really over the top drawings, put in a lot of work and a lot of time. When we came to class the next week we presented what we had done during a crit, short for critique—every week you have a crit, freshman year.

So the teacher critiqued everything and then gave us the next week’s assignment. If he had asked for another self-portrait we would have spent another 10 hours doing another self portrait and he knew that, so, what he said instead was, “what I want you to do for next week is 200 self-portraits”; that kind of teaches you to develop a new process. In other words, it’s a seemingly impossible assignment. It’s not actually possible to do 200 self-portraits under normal means in a week. It could take a year, so you have to come up with a new process to get to 200. It’s an entire sketchpad.

I think the lesson was that things that seem impossible aren’t impossible; there’s always a creative solution to them.

The only thing that separates you from Brian Chesky is the willingness to act on your ideas.

When Brian was designing products at a consulting firm, he talks about his breakthrough moment where he realized what separated him from everyone else doing something:

I was a designer on a reality TV show on ABC that Simon Cowell produced called American Inventor. Basically there were contestants—I wasn’t a contestant—and they had these inventions. Over the course of the show they turned their inventions or their prototypes into much more functional prototypes that resembled a real product, to eventually get manufactured. We had to essentially design the final prototype before it got manufactured. The whole process was really funny; we all went to a hotel room and I think they rented out 20 different rooms in a hotel. So 20 designers bid on the work and each design company got a hotel room as their presentation room, like musical chairs. The contestant would go from room to room presenting what they had in a few minutes and then we would show them our portfolio and they selected which firm they liked the most.Each inventor would come in and basically just present what they were working on. We bid and they bid, and eventually I got matched with a guy—funny enough there always seem to be people with toilet inventions—who had this invention for a new toilet seat for people with suppressed immune systems, primarily in hospitals or adult homes. It was a funny project but I actually was pretty proud of the result that we came up with.

So essentially the job was: people would come into the office with either ideas—whether they were established corporations or aspiring entrepreneurs with just a little bit of capital—and they’d want to turn their visions into functioning products and prototypes. We would have to think through their vision, what kind of problem they were trying to solve, what markets they could go after, and develop a strategy for a product and bring it to market. After having practiced at that for a couple of years, I was sort of thinking to myself, what is really stopping me from releasing a product of my own? And the only difference between them, and me, was that they had done it and I hadn’t. It was literally just a decision. They decided to do it and I had not decided to. I hadn’t taken that leap yet and that was really the only difference.

Go out and meet your users. Talk to them, understand them.

When Paul Graham wrote about the Airbnb founders, he told Fred Wilson, “It just seemed a very good sign to me that these guys were actually on the ground in NYC hunting down (and understanding) their users.On top of several previous good signs.” This is exactly what they did:

Q: For me, this is where Airbnb’s story gets exciting because I see New York as your major turning point. This is the tipping point where Airbnb made it out of the trough of sorrow and exploded into the successful model that we hear about in the news today. When Paul Graham told you to focus on cities instead of events, you went to New York. Can you talk about how you started Airbnb in New York?

We literally would fly to New York every Thursday or Friday during Y Combinator. We did this every week and we would be there throughout the weekend. There were a myriad of tactics we used—we went as far as knocking on people’s doors. We did everything we could think of. We would stay until Monday and fly back Tuesday. Sometimes we’d be going straight to Y Combinator with our luggage.

Q: How did you find those first few people to get started using Airbnb?

Because of the Democratic National Conventions, some people were using the site in New York and listing places. What we would do is reach out to the very few people we had and basically talk to them, get to know them, figure out what products they needed and what we could offer them. We tried to build loyalty knowing that if we did that, they would tell their friends. We’d host parties and meetups and all sorts of different things. We’d just visit all of our users, we’d go to their homes and talk to them and do interviews.

Through that process, they’d get very excited and tell their friends about Airbnb. It was mostly about generating as much buzz and excitement to get them to tell their friends about us.

Q: Did you guys ever dress up in gorilla suits or pass out fliers on the streets?

We never dressed up in gorilla suits but we passed out fliers in coffee shops, train stations—we did all sorts of things. I don’t know what tactics worked more than others, but I think press was always the number one tactic for us. The press would spark another group of users, then we’d go visit those people and talk to them and get them excited. It was a pattern that repeated itself.

Live and die by who you hire. Preserve your company culture.

I had the same discussion about “company breakage” with Foursquare. The crucial point for startups seem to be around 50 employees. You need to be sure you’re finding the right people who will help preserve the startup and founders’ culture for years to come.

Q: You and Foursquare seem to be on the same level of scale. Dennis Crowley mentioned that was a big challenge: adding people to the organization without things breaking. Can you elaborate there? Is it a matter of cultural fit; are there potential problems from hiring a certain type of individual?

There are a number of things, and these are all going through my head right now. The first thing is finding the talent. When you start to build an organization, you need to have seen your talent. It’s not as hard to find the talent, it’s knowing: when you see someone really good, how do you know they’re good? How do you know when you meet a director of marketing that they’re actually a good director of marketing? How do you know when you meet a communications person that they’re the best communications person in the world or that they’re merely average? How would you know? How do you know if they’re the right stage person for the stage your company is at? I could go down a list—like staff accountant. Clearly, it’s one thing if you’re an engineer or a designer. You’ve done the job and you feel like you can evaluate people, but what if you’ve never done the job yourself? What if nobody in the company has done the job and you don’t even know what you need? There’s a certain leap of faith even being able to evaluate who the people are that you need. Then you have to ask yourself, “do I now need young generalists or do I need specialists? Do I need senior people? How senior should they be?” These are all interesting questions we wrestle with very frequently.

And then there’s integrating them, whether they’re junior or senior. Keeping the culture—if you’re growing quickly, there’s going to be a point where a majority of the people in the room are not going to know much about your company; they’re not going to know much about the history. Some people will not have been there from the start. If you’re doubling in size every quarter like what we’re doing, what that means is 3 months from now, if the people in that room haven’t been fully assimilated and trained, half the room isn’t fully on board culturally. When the organization changes that quickly, it has a profound impact on people’s positions, responsibilities, who everyone works with, and so on. You have to manage all the things that happen with those changes, whether they’re good or bad.

Q: Can you talk about culture a little bit? What’s it like working or being at Airbnb? Are there lots of meetings, for example? Is the floor plan open?

We have an open floor plan. We have a weekly product meeting and a weekly engineering meeting. There may be daily meetings, but those are impromptu for a few minutes where you just huddle together over a computer and call that a product meeting. We really believe in sharing ideas—a meeting can mean a lot of things, it could be a very formal accountability meeting where things don’t get done, or it could be a few people having a conversation about a challenge. Depending on your definition, I’d say we only have formal meetings a few times a week. The collaborative meetings happen very frequently and they’re usually not scheduled. This probably has to do with our open floor plan. We’re moving into a new office and that new office also has an open plan, so there are no private offices. People could work from the kitchen if they wanted.
We don’t typically have set hours. Most people get here by 9 AM and leave at 6 or 7 PM. It varies though. Some people are here during weekends, but it’s very flexible. People’s schedules are dictated by the projects they’re working on and the deadlines they have.

Q: Are there any cultural values you’re afraid of losing in all of the hiring you’re doing?

Yeah, I worry about losing values. I think there are a couple of things: it’s important for us to hire people who are passionate about Airbnb and the community and our mission. When you’re growing fast and becoming a hot company, there are numerous things that can attract a person to a company. When you’re really small and not successful, you can argue that the only thing that attracts people to you is you can pay them and they need a job—that’s also not a good motivation. To an extent it’s easy to be passionate about Airbnb: people in Silicon Valley are very ambitious and they want to be successful. They see this could be a vehicle to them having a lot of responsibility and becoming very successful.

You want to hire the right people who are very ambitious. Would they truly want to work here over any other hot company if they had the exact same offer? That’s something we ask ourselves a lot.

We have a lot of core values that we measure people on that affect hiring, but one thing that’s hard to understand is: how do you know you’re hiring the right person given the stage you’re in? For instance, if we need a finance person, should we hire the CFO of Google? Would that make sense at this stage of the company? There are a lot of questions to ask from there. There’s a risk of hiring people who are too senior to “roll up their sleeves and get their hands dirty” as some people might say.The other risk is hiring people into positions with lots of responsibility if the individual isn’t as experienced—they can get overwhelmed too quickly. That’s the challenge: keeping a balance somewhere in the middle.

I think it’s hard to stand by your values and have the same level of standards when you need to hire quickly. What if you really need someone for a position, you have 3 candidates, and none of them are perfect, what do you do? Do you say “no” to all 3 and then wait? What if saying “no” to all 3 means waiting months? What if waiting months could cost you millions of dollars in opportunity costs? This is what’s going through my head when I’m interviewing people.

If you enjoy this article, you’ll enjoy reading Startups Open Sourced, an Amazon bestseller that interviews founders of successful startups.

Are you trying to land a job at these startups? Have you read Infiltrating Any Startup? For a great example of someone who is doing more than just sending a resume, check out LorenBurton.com, which has resulted in Brian Chesky contacting him (verified).

 

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