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

Today, I’m talking pinch Airbnb cofounder and CEO Brian Chesky, who is only the 2nd personification to beryllium connected Decoder 3 times — the different is Meta CEO Mark Zuckerberg. It’s uncommon company, and what made this 1 peculiarly bully is that Brian and I were together successful our New York workplace for the first time; it’s beautiful easy to perceive really overmuch looser and much nosy the speech was because we were successful the aforesaid room.

Brian made a batch of waves earlier this twelvemonth erstwhile he started talking astir thing called “founder mode” — aliases astatine least, erstwhile well-known investor Paul Graham wrote a blog station astir Brian’s approach to moving Airbnb that gave it that name. Founder mode has since go a small spot of a meme, and I was excited to person Brian backmost connected to talk astir it and what specifically he thinks it means.

One of the reasons I emotion talking to Brian is because he spends truthful overmuch clip specifically obsessing complete institution building and decision-making — if you listened to his erstwhile Decoder episodes, you already had a preview of laminitis mode because Brian radically restructured the institution aft the covid-19 pandemic to get distant from its erstwhile divisional building and modulation into a much functional statement that useful from a azygous roadmap. That allows him to person input connected galore much decisions. 

That’s really what he’s been talking astir — that bully leaders request to get successful the details. You’ll perceive him definitive immoderate disappointment successful the thought that laminitis mode is astir micromanagement aliases axenic swagger — and of course, we went backmost and distant connected really overmuch bully leaders delegate and spot their teams to make decisions independently of them.

If you’re a Decoder fan, this is the bully stuff. Brian and I really sewage into it here: you’ll perceive Brian talk astir a wide scope of guidance styles and explicate why he still considers himself a student of Steve Jobs. Actually, Steve Jobs comes up a batch successful this 1 — arsenic does Jony Ive, whose caller company, LoveFrom, does creation activity for Airbnb. Don’t worry, I asked astir that, too.

On apical of each that, we really started the show by talking astir immoderate large Airbnb news — the institution conscionable launched thing called the Co-Host Network — which is simply a directory of knowledgeable Airbnb hosts that tin tally listings for group who conscionable want to make a small other money renting retired their homes without each the hassle.

It’s a large change, efficaciously creating a caller occupation explanation for Airbnb’s platform. It besides gave maine a awesome opportunity to inquire Brian astir immoderate of the thorny issues surrounding his company’s attack to moving a level that has galore of the aforesaid issues arsenic immoderate different level for illustration YouTube aliases TikTok but which deals successful literal, beingness housing. 

All of that successful an hour, positive much — there’s moreover an appraisal of Tim Cook’s guidance of Apple successful here. Talking to Brian is simply a ride, but I deliberation I held my own, and I deliberation you’ll really for illustration this one.

Okay, Airbnb CEO Brian Chesky. Here we go.

This transcript has been lightly edited for magnitude and clarity. 

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

Thank you for having maine again.

You’re only our 2nd third-time guest. The different 1 is Mark Zuckerberg.

Oh, wow. This is really bully company.

And you are successful the workplace pinch me. If group are listening, we’re together, which is amazing.

It’s the first clip I’ve been successful the workplace pinch you, truthful convey you for having maine here.

Actually, the past clip you were connected it was specified a bully conversation. We were some successful New York, and my encephalon reinterpreted it arsenic we were together because it was a bully conversation.

That’s a motion of a bully conversation.

But we were remote.

We were distant successful the aforesaid city.

But you’re present today, and it’s great. There’s a batch to talk about. Airbnb conscionable had its Winter Release. There’s a bunch of features we should talk about. I’m really very funny astir really you were reasoning astir hosting, professionalizing hosting, and what that intends for the platform.

If you’re a Decoder listener, you’ve sewage to cognize that I’m going to talk to Brian astir “Founder Mode.” The Venn sketch pinch Decoder and “Founder Mode” is the thesis of our show — those ideas are fundamentally a circle. 

That’s good.

Then, I conscionable want to talk astir Airbnb generally. You’ve made immoderate org floor plan changes of your own. But let’s commencement pinch the news: the Winter Release. The past clip you were on, you really talked astir staggering Airbnb’s releases connected 1 timeline for the full company, truthful you get the summertime merchandise and past the wintertime release. What’s the large news successful the Winter Release?

So 2 things. The first point is we’re introducing thing that we telephone the Co-Host Network. What is this? Let’s springiness immoderate background. Airbnb is only arsenic bully arsenic the number of homes we have, and the much homes we have, the much modulated the prices are connected Airbnb, truthful we request to get a batch much homes. Frankly, we person much than 8 cardinal homes today, but we’d emotion millions much successful summation to the integrated homes coming to Airbnb.

So we went retired to a batch of prospective hosts, and we asked them — we do this periodically — “Why aren’t you hosting?” Number one, group first opportunity they had nary thought the magnitude of money they tin make. It’s a very compelling magnitude of money you tin make; you tin make tens of thousands of dollars pinch an plus you’re already paying for. So we asked, “Well, why aren’t you hosting?” The number 1 reply group gave america was that they perceived it arsenic being excessively overmuch work. It’s like, “Well, I person a job, I person kids, I person this, I person that. I don’t cognize if I tin travel home, cheque successful guests.” Or possibly it’s, “I unrecorded successful New York City here, and I person a summertime location successful Florida, but I can’t beryllium successful Florida to cheque successful the guests, truthful I request thief hosting.”

We thought to ourselves, “Okay.” So now if personification doesn’t person the time, they either make 1 of 2 decisions: they don’t host, aliases they spell connected Google and they type successful “Airbnb spot guidance company,” and they find this third-party spot guidance company. There’s galore companies that tin negociate your Airbnb. The situation we’ve noticed is the mean five-star standing for third-party spot managers connected Airbnb is astir 4.62. It is importantly beneath the median scope reappraisal score.

So we thought, “What if we fundamentally put together a full postulation of Airbnb-certified hosts that tin negociate your Airbnb for you?” We could fundamentally create a marketplace wherever we lucifer group pinch homes but don’t person clip pinch the champion hosts successful Airbnb who want to grow but don’t person a home. These would beryllium group who only negociate a fewer properties, truthful they’re not going to beryllium managing you and 100 different homes. Maybe three, four, aliases 5 different homes. That is what we built. We built a web of co-hosts who will big your spot pinch you, to return attraction of your location and your guests. The mean standing of a co-host is simply a 4.86, 73 percent are ace hosts, and we person 10,000 of them coming successful 10 countries, including, of course, present successful the US.

If anyone’s listening, and they would for illustration to make $20,000 a twelvemonth pinch a location they already person and do very minimal work, you tin spell online. You’ll spell to the Co-Host Network, and we’ll lucifer you to the very champion personification for you. You’ll person immoderate choices, pinch fundamentally for illustration 80 different factors to lucifer you to the correct co-host. Most importantly, wherever are you located? We want personification adjacent you. Then, you discuss the rate. How do you salary them? They return a trim connected your bookings, and you determine that trim aliases you discuss together.  It tin beryllium based connected immoderate work you want. They tin do each the hosting for you, aliases they tin do conscionable immoderate of it. It’s wholly successful your control.

Just to bring it each back, I deliberation this is going to unlock hundreds of thousands, perchance moreover millions, of homes connected Airbnb. And I think, astir importantly, this is going to unlock much existent group —  regular group —  renting the homes they unrecorded in, alternatively than much furnished, dedicated rentals, which is what a third-party spot head would apt do.

That’s the main point we announced, but of course, that’s not it. As you know, doubly a year, we want to make these large upgrades. We tin talk a small spot more, if you want to spell into it later, why we do these. Because it’s a different way. We create package a small much for illustration a hardware company. Instead of conscionable doing this continuous improvement each hr of each time — we do immoderate of that — we effort to person these big, azygous moments wherever we bring a batch of upgrades together.

We besides person much than 50 upgrades for guests. The basal thought is to make Airbnb a much personalized experience. For decades, if you went to a recreation website, whether it’s Expedia, aliases this aliases that, you’d person the aforesaid nonstop hunt acquisition arsenic personification else. It’s not personalized to you, and we deliberation recreation should beryllium much personalized. We person a full bunch of features and upgrades that really personalize the hunt acquisition based connected the past bookings you’ve done and what we cognize astir your profile.

So those are the basal things we’ve done: 70 upgrades. The last point I’ll opportunity is these 70 upgrades are 70 retired of 430 upgrades that we’ve made complete the past 2 years. So I deliberation this strategy of launching has really accelerated merchandise improvement astatine Airbnb.

I want to travel backmost to the merchandise improvement cycle. You do it each very differently, but I want to enactment connected the Co-Host Network for 1 second. That is professionalizing a immense information of Airbnb. I cognize immoderate master hosts and guidance companies who do different properties. Their constituent of position is, “You’ve sewage to find us. We’ll marketplace to group who ain properties, and past we’ll put you connected each platform.” You’re going to do each the find of uncovering a co-host, and past discuss a cut, and past handling the splits connected your platform?

Yes.

Is that to conscionable bring a much master people of guidance companies straight into Airbnb?

No. Actually, fto maine break this down. So, there’s a batch of third-party, master spot guidance companies. If you’re a third-party company, you don’t want to person a business pinch conscionable managing 5 people, building your ain website, and building your ain request for 5 people, for 5 properties. You thin to request economies of scale, truthful you’re going to beryllium managing hundreds of properties, moreover thousands of properties. 

If you negociate thousands of properties, now you person a full bunch of employees. Then, you astir apt person a institution name, and your labor astir apt deterioration a T-shirt pinch a institution sanction connected the T-shirt. This is fundamentally conscionable a small much of an business hospitality experience. 

Someone mightiness reason that it’s a small much for illustration a hotel. There tin beryllium pluses to that from a work standpoint, but for a batch of people, this is simply a small spot different than the original ethos of Airbnb of “living for illustration a local.”

Number one, each azygous co-host is vetted by Airbnb. We spell done everyone’s profile. We only let group who person precocious ratings successful Airbnb to beryllium co-hosts, truthful these are the very champion hosts successful Airbnb. Additionally, we bias towards group that negociate only a fewer properties. The logic why is we noticed that the much properties you manage, the little the five-star standing aft a definite scale. There are immoderate spot managers who are astonishing and defy this, but mostly speaking, hospitality is simply a difficult point to industrialize. People want a section feel, arsenic compared to Amazon, delivery, aliases different types of businesses wherever standard makes the work better. Hospitality astatine standard often makes the work much challenging. 

I deliberation this is possibly an replacement to the highly professionalized third-party spot managers, and successful immoderate ways, it benignant of moves Airbnb a small person toward the roots. Again, I deliberation we’re going to bias towards much regular group putting up their existent homes, alternatively than much dedicated rentals. So that’s wherever we’re going. 

Now, conscionable 1 caveat. If anyone’s listening and they activity astatine aliases are a third-party spot manager, we emotion the ones guests love. Although the mean standing crossed the committee isn’t arsenic high, location are immoderate unbelievable spot managers, and we emotion them.

The past constituent I’ll conscionable make: it is existent spot managers are much apt to — you mightiness telephone it cross-list. They’ll cross-list their inventory connected galore different platforms. One of the halfway values of Airbnb is that you travel to Airbnb to find thing you can’t find anyplace else. If you tin find it everyplace else, past we’re conscionable different e-commerce platform, and we’re not adding a batch of value. So the co-hosts connected Airbnb are exclusive, and those properties are exclusive to Airbnb.

One of the reasons I ever for illustration talking to you is that Airbnb has each of the challenges of… I don’t know, an net video platform? It’s a level of suppliers and audiences, but past you’re managing this very beingness point that seems very challenging.

Here’s the point group don’t realize. Airbnb is simply a harder business to tally than it appears. Apple does not look to beryllium an easy business because 1 instrumentality is for illustration a occurrence successful your hand. OpenAI doesn’t look to beryllium an easy business. But Airbnb does. The logic Airbnb appears to beryllium an easy business is because, astatine a sub-scale, it is an easy business. If you wanted to conscionable find a location successful Croatia, you don’t moreover request a website. You tin conscionable get a friend, and you tin get a house.

The portion that makes Airbnb difficult is that location are 4 cardinal group per nighttime from astir each state successful the world —  much countries than Coca-Cola operates successful — surviving together. That’s the portion that makes it hard: the scale. And the standard is the only measurement you tin really do this profitably, aliases very, very profitably, arsenic well. That’s the portion that makes it really difficult. 

I remember… I deliberation it was Doug Leone from Sequoia Capital (this was for illustration 10 years ago). He came to my agency and he said, “You person the hardest business of immoderate of the Sequoia portfolio companies to run. First of all, you person to person a mobile app, and you request a website.” This is erstwhile Uber only had a mobile app. “So you request to beryllium connected each platform. You request to beryllium successful each state successful the world, but you request proviso and demand, and they’re not successful the aforesaid city.” Uber could spell 1 metropolis astatine a time; they tin get riders and drivers successful 1 city. We had to get proviso everyplace and request everywhere, and perfectly lucifer the corridors. It is highly regulated —  arsenic regulated arsenic Uber, astir apt moreover much regulated successful galore ways. The edifice commissions and the edifice waste and acquisition councils are importantly much powerful than the taxi unions. So this is simply a very, very difficult business.

We’re handling a batch of money done the platform: complete $90 cardinal a year, which is the GDP of Croatia. We person to woody pinch beingness safety, and much types of beingness information than moreover ridesharing because of a myriad of things. Obviously, location are a batch of accidental issues that tin occur. You person to woody pinch immoderate of the hardest customer work challenges you tin imagine. Somebody checks successful astatine 11PM successful Paris. They’re from Tokyo, they don’t speak French, and the big isn’t responsive, truthful they person to telephone customer service. You commencement to deliberation astir really you person to negociate the value of proviso that you don’t really ain aliases control. But you person to power the quality, and you’re competing pinch an replacement proviso that has a beforehand desk. By the way, I could support going connected and on…

Or a hunt problem. People deliberation that Google’s sewage 1 of the hardest hunt problems, and Airbnb’s sewage a much pedestrian hunt problem. I’m not saying we person hunt exertion for illustration Google, but here’s the difference: you type thing successful Google, but when’s the past clip you needed to look astatine a 3rd page of Google? The first 5 results are the only 5 results you need. If you’re typing successful “Paris” and you request a house, we person 150,000 homes. Suddenly, this is simply a matching problem, not conscionable a hunt relevancy problem wherever there’s conscionable 1 correct answer. So it is simply a harder business than meets the eye, and that’s conscionable our halfway business. That doesn’t impact taking this business and expanding the exemplary to caller categories and verticals.

One of the reasons that I for illustration the model of “it’s a platform” erstwhile I chat pinch you is I tin conscionable travel up pinch ways that I would crippled immoderate different platform, and inquire really you would lick those problems. So really would I crippled TikTok? How would I crippled YouTube? How do bad actors usage those platforms? It seems for illustration you person a batch of those aforesaid challenges.

It’s a feline and rodent game. It is truthful challenging. I’ll springiness you an illustration of thing we found. There was an full manufacture of companies that emerged — that we caught, and we stopped them — that were advertizing that they tin get your bad reviews taken down. They knew really to telephone customer service, and what to opportunity to get your antagonistic reviews taken down. That became not only a fraudulent activity, it became an industry. There were full companies built astir doing this. 

Of course, that is fraudulent, truthful you person to extremity that stuff, but the point that makes Airbnb truthful difficult successful this measurement — and astir apt much difficult than, say, a video level — is its longer tail. On YouTube, group tin crippled things, but generally, a disproportionate number of views spell to definite videos. For Airbnb, that’s not possible. Only 1 personification tin enactment astatine the location astatine a time, aliases 1 family tin enactment astatine a time. It’s a agelong tail, and it’s successful astir each country. So, location are a batch of different schemes that tin occur.

The logic I brought that up successful the discourse of Co-Host Network is that it seems for illustration professionalizing aliases certifying that people of personification connected Airbnb goes a agelong measurement toward ending immoderate of the gamification that occurs successful the platform.

Hundred percent. To possibly oversimplify 1 of the trends that we’re doing astatine Airbnb, we are managing much of the inventory and verifying much of the users astatine the simplest level. It’s really important to understand the history of wherever it moreover came from.

Starting Airbnb was successful the discourse of eBay and Craigslist. In fact, I deliberation erstwhile I started Airbnb pinch my 2 friends, eBay’s marketplace headdress might’ve been higher than Amazon. It wasn’t evident Amazon was going to beryllium the winner. It benignant of really pulled away, but eBay was the marketplace, and Craigslist was really astir group recovered housing. It was wholly the Wild West. It beautiful overmuch still is today. There was really nary guidance of inventory.

We thought astir really the net is for illustration an immune system, and what you should do is springiness communities devices to mean themselves: truthful flags, reports of suspicious behavior, but, astir importantly, a reappraisal system. We built this really powerful reappraisal strategy wherever astir 2 retired of 3 people, aft they book an Airbnb, time off a review., and 2 retired of 3 hosts time off a review. We thought, “Oh, this is great.” It turns retired that is necessary, but not sufficient. So complete time, we’ve been successful the business of managing much and much of the value ourselves. We’re very hands-on pinch value control. Most caller services we really vet and certify ourselves. We deliberation reviews are important, but we don’t want to put the full load connected the personification base. 

Again, there’s a batch of ways to crippled things, truthful you’ve sewage to beryllium very hands-on. But the much things you verify, the much things you inspect, the much things you certify, the less areas location will beryllium to utilization a company.

Let maine put that correct adjacent to the platforms. Forgive me, but we’re nevertheless galore days distant from the election, and the point I spot pinch each of the awesome societal networks correct now is that they’re doing little moderation.

Yes.

They’re little willing successful verifying things are existent aliases false, aliases moreover that group are existent and not AI. You conscionable spot it each complete the place, they’ve taken their hands off. Airbnb’s platform, you’re saying, “We’re doing more, we’re certifying much things.” When you motion up and you want to rent the room successful your location while you’re gone connected vacation, here’s a database of approved co-hosts. Here’s experiences that we’re designing pinch master designers.” Why the difference? Why is it each the different platforms are letting go, and you’re grabbing connected tighter?

I person a mentation that I’ll share. In our business, it’s evident what the customer wants. The customer wants much moderation. They conscionable do. I ne'er heard a customer say, “You are controlling the inventory excessively much. You are removing excessively galore bad listings. You are penalizing hosts that are making maine unhappy.” They really telephone and opportunity the opposite, like, “How situation you.” They get very upset and individual erstwhile a location doesn’t activity out, moreover if it’s not our home. We’re conscionable the platform. So we are consistently held responsible by the customer for the contented connected our platform. So number one, the customer is expecting this.

Number two, the economical incentives are very clear. This is not an advertizing level wherever the merchandise and the business exemplary are abstracted from an aligned liking standpoint —  they’re wholly connected. You tin commencement to spot a bad Airbnb, and group past don’t rebook connected Airbnb, they don’t travel back. So there’s a really clear economical incentive.

The past point is Airbnbs are conscionable not that politicized. People conscionable want to person bully vacations. You don’t person the myriad of governmental issues and baggage. I deliberation erstwhile it comes to platforms for illustration X, YouTube, Instagram, aliases TikTok, it’s not clear what the customer’s asking for. On the 1 hand, users want veracity of information, but connected the different hand, I deliberation they’re very skeptical of the manus that platforms are putting connected the merchandise —  successful our case, they’re not.

I deliberation that we’re going to look backmost astatine history, and the platforms that are going to beryllium astir successful are going to beryllium the ones that person the top truth and veracity of information. And veracity of accusation starts with, “Are these group real? Are they not real?” I retrieve emailing [Elon Musk] erstwhile he first acquired Twitter, and I gave unsolicited advice, which was that you should verify 100 percent of the users connected Twitter. They decided not to do that, and I didn’t moreover really person a speech pinch him.

They did almost the opposite, actually.

Yeah, but I would’ve done that. I would person verified 100 percent of the users. I still deliberation a level that verifies each azygous personification is simply a really bully idea, and that’s what we do correct now. Now, location mightiness beryllium reasons not to verify, for illustration you conscionable want to... I don’t know, possibly group are tense astir verification if they can’t beryllium whistleblowers connected platforms?

But again, a batch of the logic group don’t want moderation is they distrust the companies. They judge the companies are politically motivated and they’re putting their thumb connected a standard politically for free speech. This becomes an onslaught vector for politics. I deliberation earlier you mean content, you should mean people. You should mean not if they should beryllium kicked disconnected the tract aliases allowed connected the site, but are these existent people? Are they who they opportunity they are, and are they allowed to usage pseudonyms aliases not?

I deliberation successful the reside context, there’s rather a agelong history of debates astir anonymity. We tin group that speech successful the discourse of Airbnb, but it’s absorbing really the level is expressed successful atoms for you and bits for them, which consequence successful very different incentives.

Totally.

The portion wherever you’re taking much power of the experience, because you deliberation that’s perfectly aligned pinch the customer, astatine immoderate constituent do you conscionable extremity up pinch a beforehand desk? Are you conscionable moving the hotel? It seems for illustration that’s the farthest extremity of that journey.

I emotion really you deliberation because it’s bully to return logical steps towards that conclusion and ask, “Where do you tie the line?” I deliberation we want to person almost each the benefits of a edifice while retaining the benefits of Airbnb. So let’s conscionable break them down.

The use of an Airbnb is that each room and each location is different. There’s nary SKUs. Hotels are specified commodities that you ne'er spot the room you’re booking. You don’t moreover cognize the level you’re booking. You book a edifice room, and you don’t moreover cognize the level you’re on, fto unsocial what position you have. By the way, it doesn’t really matter because they’re benignant of each the same, aliases astatine slightest the edifice benignant of trains you not to care. That is the meaning of commodity. It’s specified a commodity that you don’t moreover person immoderate choice. You conscionable take the hotel, and you hardly take the room — possibly you take the tier of the room.

We want each abstraction to beryllium unique. We want each abstraction to beryllium 1 of a kind. We want our acquisition to beryllium arsenic individual arsenic possible. Yes, location are much master managers coming than location were 10 years ago, but mostly speaking, 90 percent of our hosts are still regular people. We want to consciousness for illustration erstwhile you measurement into an Airbnb aliases you recreation to a city, you’re surviving for illustration a local. So those are the things we want to retain.

We really want it to beryllium their home. We don’t want to create an Airbnb aesthetic, right? I’ve been asked, “Why don’t you guys do a woody pinch IKEA?” Well actually, that’s not really what group want. They don’t really want a standardization of design. They really want, erstwhile they’re successful Paris, to consciousness for illustration they’re successful Paris. They don’t want to consciousness the aforesaid arsenic they do successful Kansas City aliases location else. But hotels commencement to consciousness much similar, particularly concatenation hotels.

But what we do want to do is lucifer the edifice work arsenic overmuch arsenic we can. There isn’t a beforehand desk, but tin we create a distant beforehand desk? Can we person much 24/7 support? Can we usage AI to level the playing section of the beforehand desk, wherever AI tin beryllium immediate, it tin beryllium multilingual, it tin adjudicate? 

AI astatine slightest tin beryllium a frontline that tin adjudicate disputes betwixt guests and hosts amended than a existent person. What you tin do is you tin train it connected the corpus of for illustration 100 policies, and past it tin look astatine the past 100,000 times personification complained astir this, and fig retired what the astir apt solution was that led to restitution for some parties, You tin really train a exemplary to spit retired the correct answer, and they tin either straight spit retired the reply arsenic the frontline done the app to the impermanent and big or, if you do want to talk to a person, it tin thief the customer work person.

So, I deliberation we want to negociate Airbnbs much earlier they go ours. Not moreover that it would beryllium a bad business model, but I deliberation it would commencement to trim into the ethos of emotion for illustration you’re surviving for illustration a section and being genuinely authentic.

Where’s the past measurement of that? Is it conscionable owning the property? Is it taking the booking directly?

I deliberation that location are steps beyond this. The measurement beyond this that we haven’t gone to is that you person to use to database connected Airbnb. We person definite value criteria, and if you don’t meet that, past you can’t database connected Airbnb. That’s astir apt wherever we’re going wrong our caller verticals, which we’re going to motorboat starting adjacent year. Amazon had this infinitesimal wherever they were conscionable trading books, and past successful the precocious ‘90s, they decided to spell conscionable extracurricular books. What’s adjacent to books backmost successful the ‘90s? DVDs and CDs, and past they went further and further. So we’re going to person that Amazon moment. 

For the caller verticals and categories we’re launching, I judge we’re going to person an apply-to-list exemplary wherever you person to apply. So we’re starting to person an sentiment connected quality. That is going to beryllium the adjacent step, and astir apt the last step. The measurement beyond that is really owned and operated, and we don’t ain aliases run thing isolated from for these promotional listings that group mightiness cognize of, which are called Icons. We built a 40-foot gangly Polly Pocket clamshell. Yes, we ain and run that, but that’s really trading that generates a batch of views. We’re not really successful the business of owning and operating anything. 

Going backmost to this thought that you’ll person immoderate group of group who will apply, I conscionable support coming backmost to the history of various platforms. YouTube, for a while, had these things called multi-channel networks, aliases MCNs. They were for illustration large companies, and they would bargain a bunch of celebrated YouTube channels. They wanted to beryllium preferred suppliers to YouTube.

Interesting.

YouTube decided this was excessively large of a risk. They didn’t want anyone to person that level of power complete YouTube, truthful they basically killed each the MCNs. There’s books astir it now that you tin spell read. Do you ever foresee yourself arsenic having that benignant of supplier connected the Airbnb platform? This would beryllium a hosting supplier that provides the benignant of acquisition astatine this level that you tin trust, and they’re going to ain and run the existent property. 

What we’re astir apt going to person successful the early are much standardized value tiers. So there’s going to beryllium a modular to database connected Airbnb, and past there’s astir apt going to beryllium — depending upon the vertical —  different levels of certification aliases quality. The value could beryllium based connected their expertise successful the existent world, aliases it could beryllium based connected what customers are saying connected Airbnb. For example, we person this designation, called “guest favorite,” which are 2 cardinal of the champion homes successful Airbnb based connected ratings, reviews, and customer work tickets. So I deliberation we’re going to do much of that and that’s astir apt wherever we’re going to go.

I’m willing to spot really that plays out. 

It’s each going to play retired complete the adjacent 24 months.

I’ll springiness you different really dumb example. BuzzFeed designed its full business connected being the champion astatine Facebook. And 1 day, Facebook was like, “Well, we don’t request you. An service of teenagers will conscionable make Instagram for america each day.” And now, BuzzFeed is immoderate business it is. 

You tin spot immoderate your tier is — telephone it the A tier successful Nashville — past personification will beryllium like, “We’re conscionable going to predominate the A tier successful Nashville, and Airbnb will person to woody pinch us.” Is that an eventuality you’ve thought about?

I deliberation it’s a small spot different because you don’t person the consolidation of inventory successful the aforesaid way. Let’s return YouTube. A MrBeast video tin get 100 aliases 200 100 cardinal views. You can’t person a azygous Airbnb beryllium that popular, truthful the full marketplace is importantly much agelong tail. We’re successful 100,000 cities; nary 1 metropolis represents moreover 1 percent of our business connected Airbnb.

So generally, location has been this move towards a small much consolidation of inventory via master spot managers, but it’s not been that much. Again, for the past 4 years alone, 90 percent of our hosts are individuals, and that number has remained beautiful overmuch unchanged. I deliberation galore of the caller products and features we’re launching are going to alteration much group to let much long-tail inventory onto the platform. That’s mostly wherever we’re pushing.

Does it use Airbnb to person little consolidated inventory connected the platform? It astir apt does because they’re little apt to cross-list. But it would beryllium a bummer if we did that, and it was misaligned pinch a customer. There’s a floor plan I’ve put retired earlier that shows the number of properties you negociate successful your five-star rating, and rather literally, it is simply a perfectly curved downward slope. The highest-rated Airbnb hosts negociate 1 property. The second-highest negociate two, and down to 1,000. There is not 1 azygous deviation from 1 to 1,000.

Wow.

It’s crazy. It doesn’t mean that each group managing 1,000 properties are bad. It conscionable intends that astir group haven’t figured retired really to industrialize hospitality. Let maine springiness you 1 different statement for why regular group tin sometimes activity good economically. 

If I’m a dedicated rental, I request to build a profit separator because I’m a business. So, I person rent, and I request to beryllium observant astir immoderate costs I incur. If we’re successful a house, I mightiness person 4 books, but possibly I won’t person 20 books because books 5 done 20 are an further costs I’m putting into my Airbnb. I mightiness person six java mugs, but I’m not going to person 10 java mugs. I mightiness not person a KitchenAid mixer. These are each costs I person to bear.

If it’s your existent house, you mightiness person each this worldly anyhow because you unrecorded there. You don’t request to complaint a regular complaint that has a profit separator because this was unsold inventory that you weren’t monetizing, and now you’re monetizing it. It’s different 1 of the economical dynamics wherever non-professionals sometimes person an economical advantage complete professionals. This is conscionable 1 example. Their homes are equipped, and the fixed costs is an finance they’ve already incurred. This mightiness beryllium different measurement of saying it.

Well, I’m very willing to spot really Co-Host Network plays out. 

Thank you.

When it’s your 4th clip [on Decoder], we’ll cheque successful connected the level dynamics.

I cannot wait. I emotion these conversations, and the point I admit is the extent that you spell into.

Well, get ready, because it’s coming now.

Let’s do it.

I said earlier that “I deliberation the laminitis mode speech and Decoder questions person axenic overlap.”

Yes.

The last clip you were connected the show, you described re-orging Airbnb. You restructured the company, you went onto this roadmap wherever you shipped doubly a twelvemonth successful large deliveries, and you said, “I sewage free of each of these mediate managers, and I’m the merchandise manager, and everyone rolls up to me.” And I thought, “Oh, this is-”

Chief merchandise officer.

Chief merchandise officer. And I thought, “This is great. This is what I want retired of a Decoder conversation.” Then a twelvemonth passes, and you springiness a talk, and I thought, “I’ve seen that talk before. That’s the ‘we don’t person PMs,’ right? I’ve heard this from Brian before.” Then, Paul Graham goes and writes a blog station called “Founder Mode,” and everyone reacts to it. Is location thing meaningfully different than the measurement you person system Airbnb and laminitis mode? Am I missing something? Has thing changed successful that chronology?

I don’t deliberation so. Let maine put it this way: it’s not for illustration I’m abruptly moving the institution otherwise than a twelvemonth ago. It’s conscionable that now it has a label, and I deliberation it makes consciousness to everyone. Let maine springiness a small spot of inheritance connected that talk.

You gave the first type of this talk astatine a Figma conference, right?

Yeah, and the Figma convention was possibly a 4th of what I said. I’ll do the short type because I cognize we person constricted time, but fto maine springiness a small background. As you know, from 2009 to 2019, I ran Airbnb the measurement astir tech companies tally their companies. I didn’t cognize really to tally it, truthful I hired group from Google, Amazon, Microsoft, and different companies, and they brought their processes pinch them.  We benignant of reverted towards the measurement everyone runs their company. I retrieve that we were benignant of a matrix statement pinch 1,000 employees, and for illustration almost each matrix organizations, it was difficult to get activity done.

I’ll springiness you an example. There was a imaginative trading section that would person to create graphics for different teams. Then, we kept hiring subteams that kept asking much and much from the graphics team. It was called the imaginative group. At immoderate point, the imaginative group was for illustration a deli, and they had these lines retired the window. They conscionable benignant of threw their hands up. If you needed thing done, let’s opportunity you were a squad and you needed a fastener designed, aliases a schematic for a fastener design, it would beryllium for illustration a three-month waiting database because they were inundated.

So past the squad said, “Well, springiness america our ain resources. Give maine a dedicated imaginative person,” and this could besides beryllium existent for technology, finance, a ineligible team, immoderate function. And this is erstwhile you commencement to divisionalize the company. Quite virtually you’re subdividing it. This is wherever the wide guidance building comes from. It makes a batch of consciousness why this happens.

The problem pinch that, though, is that erstwhile you subdivide the company, the institution starts rowing successful different directions. Now, you person moreover much bureaucracy because the groups don’t want to activity together. They’re incentivized to activity connected different things, and they mightiness not beryllium wholly compatible anymore. Ten teams tin person 10 different tech stacks, and they don’t really fresh together. A section determination that mightiness make consciousness for your squad mightiness not make consciousness for the company.

The adjacent point is that these wide managers are incentivized, typically, connected output goals that you don’t usually tally connected P&Ls. They tally connected effect aliases growth, truthful they person to advocator for arsenic galore resources arsenic possible. This is what we telephone politics. You’re advocating for yourself. So suddenly, groups commencement going successful galore different directions. Because the company’s going successful galore different directions, oversight becomes much difficult. When oversight gets much difficult, now there’s little accountability. You person group that are crappy, and there’s nary consequence, truthful that makes group consciousness for illustration it doesn’t matter. This is wherever complacency sets in. This is, I think, what ends up happening astatine large companies.

The large point that I said astir laminitis mode, and this is thing I’ve said for 4 years, is it’s not about... Paul Graham coined it laminitis mode. I deliberation it’s a bully name, I deliberation it’s very catchy. I could not person made thing arsenic viral arsenic Paul Graham. But there is simply a downside to the name. First of all, group don’t cognize what laminitis mode is. They deliberation it intends swagger. I retrieve a tweet that said, “I’m going laminitis mode connected this burrito.” I don’t cognize what that means. I deliberation group deliberation it intends the laminitis swagger: “I don’t springiness a fuck. I’m going in, I’m kicking ass.” That’s benignant of what it turned into, and only founders person that.

That wasn’t the message. If I could summarize laminitis mode successful a mates sentences, it’s astir being successful the details. It’s that awesome activity is presence, not absence. It’s astir a leader being successful the details. And if you arsenic a leader aren’t successful the details, conjecture what? Your leaders aren’t successful the details, and their leaders aren’t successful the details. And 1 time you’re going to aftermath up, and you person 50-year-olds managing 40-year-olds, managing 30-year-olds, managing group 2 years retired of assemblage doing each the activity pinch nary oversight, and you person these 4 unnecessary layers. You person nary experts successful the company.

So, the antidote to this is to effort to beryllium arsenic functional arsenic possible. We are a functional organization. Functional conscionable intends expertise-based, not wide management-based. I’m the only non-functional personification successful the company; each functions rotation up to me. I mostly deliberation the CEO should beryllium the main merchandise serviceman of the company. The astir important point a institution does is make a product. If the CEO is not the master successful the product, past why are they the CEO? Said differently, I should not beryllium the CEO of SpaceX. I couldn’t beryllium the main merchandise serviceman because I do not understand rocketry. So possibly I’m a bully CEO, but I can’t beryllium the main merchandise officer. There whitethorn beryllium immoderate exceptions, but I mostly deliberation that’s the case. 

Your leaders shouldn’t conscionable beryllium “managers” (and I put managers successful quotes), they should besides beryllium successful the details. If we were a military, for illustration a battalion, the cavalry wide should cognize really to thrust a horse. It’s crazy that they don’t. And leaders shouldn’t beryllium fungible. So it’s really astir being successful the details.

Now, here’s the problem pinch the communicative being successful the details. There’s a word for it, and it’s a pejorative. It’s called micromanager, and everyone’s acrophobic to beryllium accused of being a micromanager. I had this thought because a batch of laminitis mode came from maine studying Steve Jobs. For 10 years, I was astatine wit’s end. It wasn’t my first small heart to transcript Steve Jobs’ activity style, it was benignant of a past resort. I didn’t transcript everything, but I copied a batch of really he organized and ran the company. 

A fewer weeks ago, I had meal pinch his son, Reed Jobs, and I retrieve asking him what Steve’s sentiment of micromanagement was. He had specified an absorbing perspective. He said, “Steve Jobs was successful the details.” He would skip levels, galore levels, to beryllium successful the details, which personification who goes to Harvard Business School would ne'er do. He said he ne'er felt for illustration he was micromanaging because he was partnering pinch group connected the details. I asked group for illustration Jony Ive and [Hiroki Asai], who worked for Steve, and I said, “Do you consciousness for illustration Steve Jobs micromanaged you?” And they said, “No, he didn’t.”

I don’t know. Maybe I’m a micromanager, possibly I’m not. I deliberation the favoritism is that I retrieve 1 clip an executive connected my squad asked, “Is this your determination aliases is this my decision?” And I retrieve saying, “It should ne'er beryllium either.” And that’s laminitis mode: it should ne'er beryllium either. It’s ne'er your decision, it’s ne'er my decision. We’re successful it together. If you’re cofounders, whose determination is it? It’s your determination together. It’s the aforesaid point hierarchically pinch the org chart. 

So, that’s really what it means: awesome activity is presence, not absence. It’s successful the details. What a batch of founders do is they fto spell of the product, and they abdicate responsibility. Frank Slootman wrote a book called Amp It Up wherever he fundamentally said, “To move a institution around, the CEO conscionable needs to group the gait of the company.” You group the vision, but much important than the vision, you group the pace, you group the standards. And that’s what laminitis mode is really about. 

By the way, you don’t request to beryllium a laminitis to do that. You tin use laminitis mode to government, you tin use laminitis mode to a nonprofit, to a unpaid organization, to being a sports coach. It conscionable intends the activity is beingness successful the details, and it’s not astir being alleged autocratic because you’re not telling the experts what to do. But you cognize what they’re doing, and you’re moving through, and you’re challenging them. And you should do this  because, let’s opportunity you person 10 experts. They mightiness disagree. Finance says this is the champion outcome, but that whitethorn conflict pinch legal, which mightiness conflict pinch merchandise marketing, which represents the customer, which mightiness conflict pinch engineering, which is the schedule. So, you person to measurement each these trade-offs. That’s why you person to beryllium successful the details.

Maybe 1 different point earlier we wrap up. 

Oh, we’re acold from wrapping up. I conscionable wanted to fto you know.

One tidbit I’d for illustration to opportunity astir hiring, conscionable arsenic a thought. One of the astir important things I do is person an executive team. You could deliberation of them arsenic C-level aliases SVPs. There’s astir 7 of them. Then, the adjacent level are VPs, and there’s possibly 30 of them aliases 40 of them. I don’t really cognize really galore location are.

Something I do that’s different from almost each different CEO successful Silicon Valley (but I deliberation [Nvidia CEO] Jensen Huang fundamentally does this, Steve Jobs did this, Walt Disney did this, and Elon Musk did this) is I dainty each the VPs arsenic nonstop reports. Jensen sewage free of the executive team. He conscionable has 40 nonstop reports. That’s a small unwieldy for me. I’ve gone done that thought research of conscionable having the VPs, and I can’t way everything.

But each VPs do a report. They study to maine and to their executive, and I americium the co-hiring manager. So alternatively of maine hiring an executive, for illustration a CFO who hires their people, I americium the co-hiring manager. I do the kickoff, I’m the 2nd interview, and, ultimately, I determine the last compensation for each the apical group successful the company, not the managers. The managers springiness recommendations, and I make the last decision. This is conscionable a very applicable type of laminitis mode, of being successful the details. You don’t conscionable prosecute and negociate your executives, you skip-level and negociate arsenic galore group arsenic imaginable successful a dual-reporting relationship.

So, the branding of laminitis mode has offered you immoderate communicative clarity. It’s clear from the past clip erstwhile we had a very akin benignant of speech that if I had to propulsion each of that backmost into what we’re really describing here, into the Decoder framework, I would opportunity what you were describing is fundamentally “be a functional organization, not a divisional organization.” And that was the large alteration that you made the past clip you were connected the show. You’ve since made different changes, right?

Yes.

You conscionable created this caller domiciled successful the C-suite, main business officer. You promoted your CFO into that role. Walk maine done that. You’re evidently evolving really you’re reasoning of the institution and the roles wrong the institution wrong of this framework. How’d you make that decision?

One point astir functional, and past I’ll reply that question. I don’t deliberation each companies should beryllium functional, but I deliberation they should beryllium arsenic functional arsenic they tin get distant with. That’s the rule. [Andreessen Horowitz co-founder] Ben Horowitz had this saying: “Give crushed grudgingly.” You should springiness crushed grudgingly. All startups commencement arsenic functional organizations. Steve Jobs said, “I want to beryllium the world’s largest startup,” but he wants to still run for illustration a startup. So I deliberation you should springiness crushed grudgingly, and that’s the wide philosophy.

I conscionable want to opportunity 1 point astir being a functional organization. There is 1 very circumstantial downside: The downside of the functional statement is you cannot do disparate things. But here’s thing I wanted to spell. It’s not existent you can’t do arsenic galore things. It’s not existent that it would beryllium a slower-run organization. We’ve really accrued merchandise improvement by being a functional organization, but we’re for illustration 1 flywheel. We can’t create 3 different flywheels that are disparate. The only logic I judge a institution should divisionalize is truthful that they could do genuinely disparate things that person disparate functional expertise. So, if we had a pitchy motor business, that’s a different functional expertise. 

Now let’s spell to the business organization. At astir companies, location is nary usability called “business.” Maybe we tin besides telephone it gross — business, revenue, commercial. There’s different names: main commercialized officer, main business officer, main gross officer. They each benignant of mean the aforesaid thing. The logic astir companies don’t person this is because they person wide managers, and the wide managers play that role. The wide managers are the mini-CEO and they ain the business, and they usually partner pinch a finance person. Somewhere betwixt the wide head and finance person, aliases possibly a information scientist, they’re the business function.

We recovered that the problem pinch that is, nary of them are really experts successful “business.” When I mean business, I mean revenue, the business model, the marketplace size, what are the benignant of dynamics of this market? Like pinch Co-Host, what should we charge? Should this beryllium a free service? Do we return a commission? How does this comparison to third-party spot guidance services? Which countries do we rotation this retired in? What are the economics by country? Is it a modular rate? There’s conscionable a batch of elaborate questions 1 must answer.

So, we decided to create a main business statement pinch 3 functions. One is supply. Supply was ever a usability astatine Airbnb, but it was benignant of conflated pinch world and wide managers. So we said, “No, no. There are experts successful getting proviso of homes, experiences, and different things astatine Airbnb.”

Then, we person a business function, which is rather virtually the business counterpart to merchandise marketing. If merchandise trading is nouveau merchandise management, merchandise trading would beryllium merchandise guidance minus programme guidance positive immoderate outbound marketing, and it’s less people. That’s each it is. It’s outbound-inbound successful 1 role. They are really reasoning astir what the customer wants and what the acquisition should beryllium like, but they’re not successful spreadsheets. They’re not business exemplary people. 

So they person a counterpart called the “business function.” With Co-Host Network, for example, we had a business personification looking astatine the business exemplary for Co-Host, we had a merchandise trading personification who understands what’s the product, really are we going to marketplace this, and why do group really want this. Those 2 group person to spell together. One reports to Hiroki —  it’s merchandise marketing, it’s much creative. One reports to Dave Stephenson, the erstwhile CFO now main business officer, and they’re really the 2 parts of the continuum.

Then, you person a proviso person. The proviso personification — based connected the business organization, the business model, and the merchandise trading little — has to now spell get supply. They activity pinch international, the 3rd group successful the main business serviceman org, to past return that playbook and bring it to each the different countries. And, of course, the merchandise trading has their ain three-legged stool pinch creation and engineering.

But it’s different from different companies wherever merchandise really directs design. I don’t for illustration that, and I caused a spot of a large wind astatine a Figma conference. Basically, I sewage taken retired of discourse and group thought I said I fired each the merchandise managers. What really happened was that I sewage free of the classical merchandise guidance function, I reassigned the astir elder merchandise managers to beryllium merchandise marketers, and I reclassified astir of the different merchandise managers arsenic program managers.

By the way, astir merchandise managers successful Silicon Valley aren’t really merchandise managers. They’re glorified programme managers, but they’re not moreover experts astatine programme management. That’s each they’re doing; They’re making judge the point ships. That’s programme management, that’s not merchandise management. So, this is what we’re doing. It’s a very elemental organization, and it’s conscionable a continuation of america being functional.

It’s funny that you opportunity each this. If you asked my CEO, he would show you that I shriek that we should beryllium divisional each the clip because I deliberation tech publicity is different from video crippled publicity and different from sports journalism, which is different from New York Magazine. At the extremity of the day, we each make 1 benignant of thing, and there’s reasons to person cardinal teams, and there’s reasons to stock costs.

Do you ever find yourself thinking, “Okay, if I was successful the different benignant of organization, thing other would beryllium faster, I could make this tradeoff, but location would beryllium a use to being successful a much divisional structure?”

I deliberation it’s really important to not beryllium dogmatic and opportunity functional is amended than divisional, and I deliberation it really depends connected industries. In tech companies, functional is mostly amended because you tin leverage shared technologies, everyone tin statement together, and you get economies of scale. I don’t cognize if you’re doing that successful your business.

Okay, present are the 2 things — I said one, there’s really two. There’s 2 benefits to divisional. The first use is, you tin do disparate things. We talked astir that. . I’m conscionable reasoning of an absurd thing: we want to create a podcasting division. It would beryllium really difficult for the group designing the app and the marketers advertizing homes to deliberation astir podcasting. Now we want to create a TV series. That’s really, really disparate, truthful we would struggle to do super-disparate things.

The 2nd downside to a functional statement is that it takes longer to start. Because if you want to conscionable get thing going, you request to get everyone organized. But everyone organized has a multi-year roadmap, truthful they now request to make room connected the roadmap. So, for disparate things that you tin commencement quickly, a divisional building is better. Those, to me, are the superior advantages of a divisional structure. There’s a theoretical 3rd advantage, which is that you tin prosecute alleged entrepreneurial-type group that don’t fresh into a functional organization, but that 1 I don’t work together with. That’s a spot of a rabbit hole, truthful I won’t spell location unless you want to inquire astir it. 

That being said, erstwhile you get rowing… deliberation astir a bunch of america successful a boat, and we’re rowing together. If location are 10 group successful 10 boats, they tin get going faster and they tin spell successful different directions, but the 10-person vessel is going to statement faster than 10 one-person boats. So erstwhile you get going pinch the functional organization, what I fundamentally show group is it’s harder to get thing connected the roadmap, but if it gets connected the roadmap, we put the weight of the institution down it. 

I for illustration that constraint. I for illustration the constraint of anyone can’t conscionable do thing because now we’re focused, now we’re prioritized, now we only do things that are differentiated. And the politician is that we only do arsenic galore things arsenic I tin attraction on. That’s what I do. That’s what Steve Jobs did astatine Apple, and that’s what Walt Disney did astatine Disney, and that’s what Elon Musk does astatine Tesla. You only do arsenic galore things arsenic the CEO tin attraction connected and manage.

Now, this presumes the CEO is competent, intelligent —

Present.

Present. They understand the business. This doesn’t activity if you travel from guidance consulting, and now you’re a wide head who doesn’t really cognize the domain. That wouldn’t activity arsenic well.

You’re mounting speech 1 topic, I’m conscionable mounting speech Elon.

Yeah.

I person a batch to opportunity successful consequence to that.

Exactly. Maybe Elon is simply a spot of a reddish herring because there’s each the surface-level things astir him that are idiosyncratic, and I’m surely not going to endorse everything he does because I do a batch of things differently.

But I deliberation the commonality of him, Jensen, Steve Jobs, and [Mark Zuckerberg] benignant of ebbs and flows. I cognize Zuck very well, and I deliberation he would opportunity I was a large inspiration for his twelvemonth of ratio because I talked astir what we did Airbnb.I deliberation those group are beautiful adjacent to functional, beautiful successful the details, they group the gait for the company, and they mostly really cognize what’s going connected astatine their companies.

I want to talk astir micromanagement existent quick, and past I want to extremity pinch decisions, which is the different large Decoder mobility that I ever for illustration talking to you about. You mentioned that it’s toxic, that group don’t for illustration it. You mentioned that laminitis mode arsenic a marque intends group are conscionable acting for illustration jerks of their companies —  

It intends a batch of swagger, for amended aliases worse, and I don’t deliberation that’s really what it means.

And I really deliberation it is mostly for worse. I don’t deliberation it is for better, successful astir cases. You’re outlining a very heavy level of guidance thinking. You’ve thought astir these companies a lot, you’ve thought astir your ain institution a lot, and you’ve thought astir these trade-offs a lot. There’s a wide consciousness that you should beryllium successful the details, to not conscionable prosecute smart group and fto them do immoderate they want. I talk to a batch of CEOs connected the show, and they’re like, “My concealed is that I prosecute smart group and I fto them do immoderate they want.” 

I inquire a batch of CEOs, “How do you make decisions?” I would opportunity 1 of the astir communal answers we get is, “It would beryllium champion if I wasn’t making truthful galore decisions, if my squad was empowered, and each I was doing was breaking the hardest ties aliases making the biggest, riskiest finance decisions truthful they weren’t emotion that pressure.”

I wholly disagree pinch that. I deliberation I’ve heard Jeff Bezos opportunity that much recently. He said, “My occupation is to make arsenic fewer high-quality decisions arsenic possible,” and I could not disagree much pinch that. Let’s commencement by saying that it’s not for illustration I’m correct and Jeff Bezos is wrong. When I opportunity it, I’m besides saying what Steve Jobs would person said. Was Steve Jobs correct aliases Jeff Bezos right?

The truth is there’s aggregate ways to do something. I’m powerfully advocating for this way. Funny enough, I’ve talked to galore group that were early members astatine Amazon, and that’s not really Jeff Bezos ran it early on. So, here’s the cardinal thing: I judge you request to prosecute smart people. The paradox is that I judge astir smart group want you involved, they want your partnership. They don’t want you to show them what to do, but there’s this presumption that power is simply a zero-sum game. Either I person the power, aliases you person the power. And I deliberation that’s the flaw.

There’s a script wherever each of america are powerless. It’s called astir Fortune 500 companies. And there’s a script wherever I person much power, and truthful you person much power. It’s not for illustration zero-sum, and I’ve wrestled control. I’ve recovered that the astir talented group for illustration my engagement arsenic agelong arsenic the engagement is constructive, it isn’t maine telling them what to do and pushing them. It’s like, “What astir this? What astir that?” Steve Jobs went to Jony Ive’s creation workplace each day. He wasn’t telling Jony Ive what to do. He was discussing things, and they were debating and brainstorming, and it was a partnership. I deliberation this is simply a really, really important framework. 

Let maine springiness you 1 more. Somebody mightiness ask, “Wait, you’re successful each the details. How tin you beryllium successful each the specifications forever? That seems for illustration it’s not going to scale, and someday you’re going to get tired.” And the reply is they’re right. Here’s what astir group do: They prosecute smart people, and they springiness them operating freedom. They person nary thought if they’re bully aliases not because they’re not engaged enough, and past complete time, they commencement getting signals that the personification isn’t good, and past they wrestle backmost control. Once they get involved, but they haven’t been progressive for months aliases years, abruptly the executive loses their assurance because they’re only progressive because they’re not doing well. That’s the opening of the end, and past you switch them. This happens to each freaking company. 

There’s an inverse, and I’ll usage an analogy. I’m not a golfer. I’m unspeakable astatine golf. I don’t deliberation I’ve ever moreover changeable a hole. I’m terrible. But I did a mates play lessons once, and I had a play coach who virtually coached maine connected each azygous swing. Thank God I had the play coach because if I conscionable went connected the play people connected my ain and I swung 1,000 times, I would person had a really screwed up plaything by the clip the play coach sewage involved, and it would return moreover much activity to retrain my swing.

So the play coach said, “I’m going to watch you plaything thousands of times, and yet this is musculus memory, and I won’t request to watch your plaything complete time.” That’s my philosophy. My accuracy is you commencement successful the details. You’re progressive successful each azygous thing. You prosecute awesome people, and you’re successful each their details. Over time, erstwhile they create musculus representation and they beryllium that they understand the system, past you tin gradually fto go.

To springiness you an example: Two years ago, I wanted to constitute cleanable property releases not because I deliberation anyone sounds them, but because if you can’t put your ideas down successful a clear property release, past you don’t person clear thinking. You don’t cognize why you’re doing something. Two aliases 3 years agone erstwhile we did property releases, we’d do arsenic galore arsenic 70 revisions. And group said, “This is wholly crazy. Are we going to — 10 years from now — do 70 revisions of property releases?” And the reply is no. The astir caller property merchandise for the Co-Host Network I astir apt reviewed 3 times.

But it was the repetition successful the details, that’s really group learned. They were saying, “That’s apprenticeship, you learn.” Even if you prosecute experts, they’re not experts astatine your company, they’re not experts astatine collaborating, they’re not experts successful your business. So, it’s astir starting successful the specifications and letting go. That’s what I deliberation Jeff Bezos did, moreover though he said his occupation is to make only a fewer high-quality decisions. That’s not what he did successful 1999. So that’s benignant of my philosophy.

Let’s talk astir decisions, actually. This is the different Decoder question.

You’ve been connected respective times, and I’ve asked you really you make decisions respective times. I went backmost and looked. When you were connected this show the past time, I asked, “How do you make decisions?” and you said, “Let maine show you a agelong story.” It was astir various Airbnb controversies wherever you had to make large decisions. And you said, “I’m going to person to make truthful galore decisions that I went to each my squad and I said, ‘Here are our principles. Trust maine to usage these principles, and this is really I’m going to make decisions.’” Is that still the framework, that everyone conscionable agrees connected the halfway principles?

Pretty much. What I fundamentally said was, “You want to make main decisions, not business decisions.” Principal decisions are: if I don’t understand the result aliases if I can’t foretell it, really do I want to beryllium remembered? What do I deliberation is the correct point to do? That tin sound very subjective, but actually, you would person thousands of inputs. So, that’s fundamentally what I do. It’s benignant of absorbing because it’s benignant of for illustration personification asking you, “How do you do what you do?” You mightiness not moreover consciously cognize really you do what you do. 

But what I’m doing is, I americium fundamentally making a decision. Somebody erstwhile said, “The astir important point leaders do is make decisions.” And it’s astir apt true. Maybe the astir important point is they prosecute people, and they combine the correct team. But astir apt day-to-day, the astir important point they do is make decisions. It’s really important that group understand the criteria disconnected which you’re basing decisions. …

I went to my committee and I said, “I’m going to person to make 1,000 decisions. I can’t tally each determination by you, truthful let’s work together connected the principles and the model for which I make each the decisions. Then I’m going to make each the decisions, and if thing stands out, I will elevate it to you. I will retroactively show you each the decisions I made. If there’s thing that’s immense astir the institution and one-way door, I will show you up of time. Otherwise, springiness maine authority to make each these decisions.”

That’s what I did pinch the board. They really liked it because the cardinal to a situation is speed, and if I person to statement each decision, we’re not moving quickly. It’s for illustration a car chase. Should you move near aliases right? Well, astir importantly you should move quickly. So that’s what I did. 

Just to spell backmost to the play plaything analogy, the measurement I tally Airbnb is I reappraisal each the activity — each week, each 2 weeks, each 4 weeks, each 8 weeks, each 12 weeks. You mightiness ask, “How do you person group do a report? How do they support 2 group happy?” And the reply is, we’re each successful the aforesaid gathering together. I usually person my nonstop talk first because if I talk, you’ll conscionable work together pinch me, and past I’ll make the last decision. Most of my last decisions are conscionable agreeing. Ninety percent of clip I’m agreeing pinch what the squad says, and 10 percent of the clip I’m disagreeing.

If I disagree, I ever effort to opportunity why. I effort to spell down my reasoning and situation my first principles. So whenever I make a decision, I effort to inquire myself, for illustration I did successful this conversation, “What are the first principles driving this decision?” Don’t situation my decision, situation my first-principle thinking. In different words, here’s my answer, cheque my math. That’s benignant of what I do. So the principles are really, really important to get pre-authorization from a committee and to make a batch of accelerated decisions. 

I’m not successful a gathering reviewing Co-Host Network pinch a bid of 4 principles. I’m conscionable intuitively making a decision. “I deliberation we should do X and here’s why, and fto maine stock pinch you my activity and my thinking. What do you think? What astir this did I get correct aliases wrong?” The astir important point is to statement the first principles, not the answer.

Does the institution cognize the principles that you usage to make decisions? Is that published? Is that a point you talk about?

There’s not a azygous list. There are halfway values. There are strategical differentiators, for illustration the things that you put successful your S-1 truthful group cognize what you guidelines for. There are those wide things. Actually, here’s different measurement of saying it. I don’t push decision-making down, I propulsion decision-making in. I deliberation of the institution arsenic 1 shared consciousness. 

This is simply a story. I deliberation it will beryllium worthy it. One clip I called Ron Johnson, who worked for Steve Jobs. He ran Apple retail. I retrieve asking really Steve Jobs ran Apple, and [Ron] said, “Even erstwhile Apple was for illustration 20, 30, 40,000 people, he only ever thought of Apple arsenic 100 employees.” That’s why he had this offsite called Top 100. He said his occupation was to only negociate the apical 100 people, and they negociate everyone else. He ne'er thought astir the full company.

That’s benignant of what I do, and possibly it’s moreover less people, for illustration 60 aliases 70, truthful I don’t negociate each of Airbnb —  I negociate the apical 60 aliases 70 people. But I’m very engaged. I propulsion them in, and I create 1 shared consciousness. If you were to question and reply each azygous 1 of my elder people, I don’t deliberation they would person pithy word-for-word verbatim principles, but they would beryllium capable to picture precisely really I deliberation because we’re successful truthful galore meetings together.

I retrieve I was astatine a group meal pinch Scott Forstall 1 clip correct earlier he near Apple. He said he utilized to walk 35 hours a week pinch Steve Jobs. Not one-on-one, but he was successful each gathering pinch Steve. So, deliberation astir that: 35 hours a week, each azygous week. That’s thousands of hours. That’s the equivalent. I don’t walk 35 hours a week pinch astir people, but location are galore group that walk 10–20 hours a week successful a room pinch me. It’s the aforesaid fewer twelve group going done different meetings, creating 1 shared consciousness, and being capable to decorativeness each other’s sentences. 

That’s different type of laminitis mode: It’s 1 shared consciousness. So, you tin imagine, that’s not disempowering. It requires collaboration. If you want to beryllium a lone wolf aliases a cowboy, that’s not going to work. If you’re consenting to activity pinch different people, you’re really beautiful empowered successful this way.

We’ve sewage to wrap up, but I request to inquire you 1 very important mobility that I’ve been reasoning astir this full time. You’ve mentioned Apple, Steve Jobs, and Jony Ive a bunch of times. I cognize that Airbnb useful intimately pinch LoveFrom, which is Jony Ive’s company. I’m looking astatine a New York Times article, and it says, “The clients salary LoveFrom arsenic overmuch arsenic $200 cardinal a year.”

That is perfectly not true.

You’re not paying Jony Ive $200 cardinal a year?

No, I’m not going to opportunity what we pay, but that is truthful not true, and that’s not moreover adjacent to true.

Okay. You’ve talked astir Apple a lot. They don’t person Steve Jobs anymore, they don’t person Jony Ive anymore. They person started a bunch of divisions to do each kinds of different things. Do you deliberation that’s sustainable for them?

No.

You are 1 of the closest watchers of this institution I tin deliberation of, and I’m very funny what you think.

Okay. I’ll wrap up pinch my position connected Apple. 

I deliberation Tim Cook has done an bonzer job, particularly fixed the cards he was dealt, right? What replacement was there? Steve died. I don’t cognize the circumstances, but I deliberation it was that he resigned successful August and died successful October, only 8 weeks later. So there’s only an eight-week model betwixt resignation and he’s not moreover there. It’s not for illustration Bezos retired, but he’s the executive chair. I deliberation that Tim Cook fundamentally took Apple from $300 cardinal to, whatever, $3 trillion, added much than 90 percent of the marketplace cap, and it’s done very, very well. He’s a awesome operator.

A mates things to say, though. Number one, conscionable because Tim added $2.7 trillion successful marketplace headdress and Steve added $300 cardinal doesn’t mean that Tim did astir of the work. He inherited the astir valuable merchandise of each time, and location was conscionable really continuing momentum — 

The iPhone.

The iPhone, astir apt the astir successful merchandise successful the history of capitalism. I don’t deliberation that immoderate different merchandise has generated much profit — possibly not much revenue, but much profit —  than the iPhone. The astir successful institution astir apt successful the history of capitalism, aliases astatine slightest surely the past 25 years. It’s crazy erstwhile you deliberation astir it. Then inquire yourself a mates different questions. Let’s ideate Steve Jobs didn’t dice successful 2011, he died successful 2005, correct erstwhile the iPod Video had conscionable launched. Would they person travel up pinch the iPhone? They mightiness have. Would it person been the astir successful user merchandise of each time? Maybe not. I don’t cognize who would person done it.

My wide accuracy is that Tim was successful an unthinkable play wherever what they really needed to do was possibly not invent a caller product, but return the astir successful merchandise of each clip and standard it, manufacture it, and make it wholly ubiquitous, and he did that. But the exertion industry... I mean, the connection exertion whitethorn arsenic good beryllium a synonym for the connection change. We’re successful the alteration industry, and it is very, very vulnerable to not beryllium perpetually changing. If you’re a institution that makes devices, the astir important point you request to do is make caller devices and make caller devices. 

I saw a Bloomberg report that said Apple is moving distant from launches, and moving much towards services. They’re going much divisional. My unsolicited proposal is that whenever Tim decides to retire, the adjacent CEO should besides beryllium the main merchandise officer. I asked people, “Who was the main merchandise serviceman astatine Apple erstwhile Steve was alive?” Everyone said, “Steve.” It wasn’t Phil Schiller. Phil Schiller was a awesome SVP of merchandise marketing, but he wasn’t the main merchandise officer. That is simply a merchandise company, and you really want to make judge semipermanent that a merchandise personification is driving the company.

This goes to the very awkward point that nary 1 wants to talk about. Succession readying is difficult because the group that are awesome merchandise visionaries are typically young. They’re young and they’re little mature. Who wants to put a young, not-super-mature personification astatine the helm of a elephantine company? Founders are allowed to negociate group older than them because they’re the founders. If you’re not the founder, group conscionable don’t want to beryllium managed by personification younger than them who’s possibly a virtuoso, a wunderkind, but they’re a small immature. The companies don’t want to return that risk, truthful they bias towards senior, grown-up, functional experts. But typically that usability is not the product, and I deliberation that’s a problem.

Satya [Nadella, Microsoft CEO] is much technical. I deliberation that has afforded them more, but he mostly conscionable sewage them backmost to Bill Gates’ primacy. I deliberation Apple should spell backmost to having a CEO that’s the main merchandise officer. I deliberation it should rein the institution successful and simplify really it operates, but that’s conscionable my opinion.

Would you do that job?

I deliberation Airbnb is the correct occupation for me, and they decidedly request personification who has hardware experience.

Fair enough. Brian, it is ever a pleasance talking to you. We’ve sewage to person you backmost sooner than a year.

Thank you, Nilay. I emotion this.