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

• Facebook
• Tweet
• Pinterest
• Reddit
• Email

Photo illustration by The Verge / Photo: Airbnb

The Airbnb cofounder discusses being ‘in the details’ and why traditional management is doing it wrong. Today, I’m talking with Airbnb cofounder and CEO Brian Chesky, who is only the second person to be on Decoder three times — the other is Meta CEO Mark Zuckerberg. It’s rare company, and what made this one particularly good is that Brian and I were together in our New York studio for the first time; it’s pretty easy to hear how much looser and more fun the conversation was because we were in the same room.
Brian made a lot of waves earlier this year when he started talking about something called “founder mode” — or at least, when well-known investor Paul Graham wrote a blog post about Brian’s approach to running Airbnb that gave it that name. Founder mode has since become a little bit of a meme, and I was excited to have Brian back on to talk about it and what specifically he thinks it means.

One of the reasons I love talking to Brian is because he spends so much time specifically obsessing over company structure and decision-making — if you listened to his previous Decoder episodes, you already had a preview of founder mode because Brian radically restructured the company after the covid-19 pandemic to get away from its previous divisional structure and transition into a more functional organization that works from a single roadmap. That allows him to have input on many more decisions.
That’s really what he’s been talking about — that good leaders need to get in the details. You’ll hear him express some disappointment in the idea that founder mode is about micromanagement or pure swagger — and of course, we went back and forth on how much good leaders delegate and trust their teams to make decisions independently of them.
If you’re a Decoder fan, this is the good stuff. Brian and I really got into it here: you’ll hear Brian talk about a wide range of management styles and explain why he still considers himself a student of Steve Jobs. Actually, Steve Jobs comes up a lot in this one — as does Jony Ive, whose new company, LoveFrom, does design work for Airbnb. Don’t worry, I asked about that, too.
On top of all that, we actually started the show by talking about some big Airbnb news — the company just launched something called the Co-Host Network — which is a directory of experienced Airbnb hosts that can run listings for people who just want to make a little extra money renting out their homes without all the hassle.
It’s a big change, effectively creating a new job description for Airbnb’s platform. It also gave me a great opportunity to ask Brian about some of the thorny issues surrounding his company’s approach to running a platform that has many of the same issues as any other platform like YouTube or TikTok but which deals in literal, physical housing.
All of that in an hour, plus more — there’s even an assessment of Tim Cook’s management of Apple in here. Talking to Brian is a ride, but I think I held my own, and I think you’ll really like this one.
Okay, Airbnb CEO Brian Chesky. Here we go.

This transcript has been lightly edited for length and clarity.
Brian Chesky, you’re the co-founder and CEO of Airbnb. Welcome back to Decoder.
Thank you for having me again.
You’re only our second third-time guest. The other one is Mark Zuckerberg.
Oh, wow. This is really good company.
And you are in the studio with me. If people are listening, we’re together, which is amazing.
It’s the first time I’ve been in the studio with you, so thank you for having me here.
Actually, the last time you were on it was such a good conversation. We were both in New York, and my brain reinterpreted it as we were together because it was a good conversation.
That’s a sign of a good conversation.
But we were remote.
We were remote in the same city.
But you’re here today, and it’s great. There’s a lot to talk about. Airbnb just had its Winter Release. There’s a bunch of features we should talk about. I’m actually very curious about how you were thinking about hosting, professionalizing hosting, and what that means for the platform.
If you’re a Decoder listener, you’ve got to know that I’m going to talk to Brian about “Founder Mode.” The Venn diagram with Decoder and “Founder Mode” is the thesis of our show — those ideas are basically a circle.
That’s good.
Then, I just want to talk about Airbnb generally. You’ve made some org chart changes of your own. But let’s start with the news: the Winter Release. The last time you were on, you actually talked about staggering Airbnb’s releases on one timeline for the whole company, so you get the summer release and then the winter release. What’s the big news in the Winter Release?
So two things. The first thing is we’re introducing something that we call the Co-Host Network. What is this? Let’s give some background. Airbnb is only as good as the number of homes we have, and the more homes we have, the more modulated the prices are on Airbnb, so we need to get a lot more homes. Frankly, we have more than 8 million homes today, but we’d love millions more in addition to the organic homes coming to Airbnb.
So we went out to a lot of prospective hosts, and we asked them — we do this periodically — “Why aren’t you hosting?” Number one, people first say they had no idea the amount of money they can make. It’s a very compelling amount of money you can make; you can make tens of thousands of dollars with an asset you’re already paying for. So we asked, “Well, why aren’t you hosting?” The number one answer people gave us was that they perceived it as being too much work. It’s like, “Well, I have a job, I have kids, I have this, I have that. I don’t know if I can come home, check in guests.” Or maybe it’s, “I live in New York City here, and I have a summer home in Florida, but I can’t be in Florida to check in the guests, so I need help hosting.”
We thought to ourselves, “Okay.” So now if somebody doesn’t have the time, they either make one of two decisions: they don’t host, or they go on Google and they type in “Airbnb property management company,” and they find this third-party property management company. There’s many companies that can manage your Airbnb. The challenge we’ve noticed is the average five-star rating for third-party property managers on Airbnb is about 4.62. It is significantly below the median range review score.
So we thought, “What if we basically put together a whole collection of Airbnb-certified hosts that can manage your Airbnb for you?” We could basically create a marketplace where we match people with homes but don’t have time with the best hosts in Airbnb who want to expand but don’t have a home. These would be people who only manage a few properties, so they’re not going to be managing you and 100 other homes. Maybe three, four, or five other homes. That is what we built. We built a network of co-hosts who will host your property with you, to take care of your home and your guests. The average rating of a co-host is a 4.86, 73 percent are super hosts, and we have 10,000 of them today in 10 countries, including, of course, here in the US.
If anyone’s listening, and they would like to make $20,000 a year with a house they already have and do very minimal work, you can go online. You’ll go to the Co-Host Network, and we’ll match you to the very best person for you. You’ll have some choices, with basically like 80 different factors to match you to the right co-host. Most importantly, where are you located? We want somebody near you. Then, you negotiate the rate. How do you pay them? They take a cut on your bookings, and you decide that cut or you negotiate together. It can be based on whatever service you want. They can do all the hosting for you, or they can do just some of it. It’s totally in your control.
Just to bring it all back, I think this is going to unlock hundreds of thousands, potentially even millions, of homes on Airbnb. And I think, most importantly, this is going to unlock more real people — regular people — renting the homes they live in, rather than more furnished, dedicated rentals, which is what a third-party property manager would likely do.
That’s the main thing we announced, but of course, that’s not it. As you know, twice a year, we want to make these big upgrades. We can talk a little bit more, if you want to go into it later, why we do these. Because it’s a different way. We develop software a little more like a hardware company. Instead of just doing this continuous development every hour of every day — we do some of that — we try to have these big, single moments where we bring a lot of upgrades together.
We also have more than 50 upgrades for guests. The basic idea is to make Airbnb a more personalized experience. For decades, if you went to a travel website, whether it’s Expedia, or this or that, you’d have the same exact search experience as someone else. It’s not personalized to you, and we think travel should be more personalized. We have a whole bunch of features and upgrades that really personalize the search experience based on the past bookings you’ve done and what we know about your profile.
So those are the basic things we’ve done: 70 upgrades. The final thing I’ll say is these 70 upgrades are 70 out of 430 upgrades that we’ve made over the last two years. So I think this system of launching has really accelerated product development at Airbnb.
I want to come back to the product development cycle. You do it all very differently, but I want to stay on the Co-Host Network for one second. That is professionalizing a huge portion of Airbnb. I know some professional hosts and management companies who do other properties. Their point of view is, “You’ve got to find us. We’ll market to people who own properties, and then we’ll put you on every platform.” You’re going to do all the discovery of finding a co-host, and then negotiate a cut, and then handling the splits on your platform?
Yes.
Is that to just bring a more professional class of management companies directly into Airbnb?
No. Actually, let me break this down. So, there’s a lot of third-party, professional property management companies. If you’re a third-party company, you don’t want to have a business with just managing five people, building your own website, and building your own demand for five people, for five properties. You tend to need economies of scale, so you’re going to be managing hundreds of properties, even thousands of properties.
If you manage thousands of properties, now you have a whole bunch of employees. Then, you probably have a company name, and your employees probably wear a T-shirt with a company name on the T-shirt. This is basically just a little more of an industrial hospitality experience.
Someone might argue that it’s a little more like a hotel. There can be pluses to that from a service standpoint, but for a lot of people, this is a little bit different than the original ethos of Airbnb of “living like a local.”
Number one, every single co-host is vetted by Airbnb. We go through everyone’s profile. We only allow people who have high ratings in Airbnb to be co-hosts, so these are the very best hosts in Airbnb. Additionally, we bias towards people that manage only a few properties. The reason why is we noticed that the more properties you manage, the lower the five-star rating after a certain scale. There are some property managers who are amazing and defy this, but generally speaking, hospitality is a difficult thing to industrialize. People want a local feel, as compared to Amazon, delivery, or other types of businesses where scale makes the service better. Hospitality at scale often makes the service more challenging.
I think this is maybe an alternative to the extremely professionalized third-party property managers, and in some ways, it kind of moves Airbnb a little closer toward the roots. Again, I think we’re going to bias towards more regular people putting up their real homes, rather than more dedicated rentals. So that’s where we’re going.
Now, just one caveat. If anyone’s listening and they work at or are a third-party property manager, we love the ones guests love. Although the average rating across the board isn’t as high, there are some unbelievable property managers, and we love them.
The last point I’ll just make: it is true property managers are more likely to — you might call it cross-list. They’ll cross-list their inventory on many different platforms. One of the core values of Airbnb is that you come to Airbnb to find something you can’t find anywhere else. If you can find it everywhere else, then we’re just another e-commerce platform, and we’re not adding a lot of value. So the co-hosts on Airbnb are exclusive, and those properties are exclusive to Airbnb.
One of the reasons I always like talking to you is that Airbnb has all of the challenges of… I don’t know, an internet video platform? It’s a platform of suppliers and audiences, but then you’re managing this very physical thing that seems very challenging.
Here’s the thing people don’t realize. Airbnb is a harder business to run than it appears. Apple does not appear to be an easy business because one device is like a miracle in your hand. OpenAI doesn’t appear to be an easy business. But Airbnb does. The reason Airbnb appears to be an easy business is because, at a sub-scale, it is an easy business. If you wanted to just find a home in Croatia, you don’t even need a website. You can just get a friend, and you can get a house.
The part that makes Airbnb hard is that there are 4 million people per night from nearly every country in the world — more countries than Coca-Cola operates in — living together. That’s the part that makes it hard: the scale. And the scale is the only way you can actually do this profitably, or very, very profitably, as well. That’s the part that makes it really difficult.
I remember… I think it was Doug Leone from Sequoia Capital (this was like 10 years ago). He came to my office and he said, “You have the hardest business of any of the Sequoia portfolio companies to run. First of all, you have to have a mobile app, and you need a website.” This is when Uber only had a mobile app. “So you need to be on every platform. You need to be in every country in the world, but you need supply and demand, and they’re not in the same city.” Uber could go one city at a time; they can get riders and drivers in one city. We had to get supply everywhere and demand everywhere, and perfectly match the corridors. It is highly regulated — as regulated as Uber, probably even more regulated in many ways. The hotel commissions and the hotel trade councils are significantly more powerful than the taxi unions. So this is a very, very difficult business.
We’re handling a lot of money through the platform: over $90 billion a year, which is the GDP of Croatia. We have to deal with physical safety, and more types of physical safety than even ridesharing because of a myriad of things. Obviously, there are a lot of accidental issues that can occur. You have to deal with some of the hardest customer service challenges you can imagine. Somebody checks in at 11PM in Paris. They’re from Tokyo, they don’t speak French, and the host isn’t responsive, so they have to call customer service. You start to think about how you have to manage the quality of supply that you don’t actually own or control. But you have to influence the quality, and you’re competing with an alternative supply that has a front desk. By the way, I could keep going on and on…
Or a search problem. People think that Google’s got one of the hardest search problems, and Airbnb’s got a more pedestrian search problem. I’m not saying we have search technology like Google, but here’s the difference: you type something in Google, but when’s the last time you needed to look at a third page of Google? The first five results are the only five results you need. If you’re typing in “Paris” and you need a house, we have 150,000 homes. Suddenly, this is a matching problem, not just a search relevancy problem where there’s just one right answer. So it is a harder business than meets the eye, and that’s just our core business. That doesn’t involve taking this business and expanding the model to new categories and verticals.
One of the reasons that I like the framework of “it’s a platform” when I chat with you is I can just come up with ways that I would game any other platform, and ask how you would solve those problems. So how would I game TikTok? How would I game YouTube? How do bad actors use those platforms? It seems like you have a lot of those same challenges.
It’s a cat and mouse game. It is so challenging. I’ll give you an example of something we found. There was an entire industry of companies that emerged — that we caught, and we stopped them — that were advertising that they can get your bad reviews taken down. They knew how to call customer service, and what to say to get your negative reviews taken down. That became not only a fraudulent activity, it became an industry. There were entire companies built around doing this.
Of course, that is fraudulent, so you have to stop that stuff, but the thing that makes Airbnb so difficult in this way — and probably more difficult than, say, a video platform — is its longer tail. On YouTube, people can game things, but generally, a disproportionate number of views go to certain videos. For Airbnb, that’s not possible. Only one person can stay at the house at a time, or one family can stay at a time. It’s a long tail, and it’s in nearly every country. So, there are a lot of different schemes that can occur.
The reason I brought that up in the context of Co-Host Network is that it seems like professionalizing or certifying that class of user on Airbnb goes a long way toward ending some of the gamification that occurs in the platform.
Hundred percent. To maybe oversimplify one of the trends that we’re doing at Airbnb, we are managing more of the inventory and verifying more of the users at the simplest level. It’s really important to understand the history of where it even came from.
Starting Airbnb was in the context of eBay and Craigslist. In fact, I think when I started Airbnb with my two friends, eBay’s market cap might’ve been higher than Amazon. It wasn’t obvious Amazon was going to be the winner. It kind of really pulled away, but eBay was the marketplace, and Craigslist was how most people found housing. It was completely the Wild West. It pretty much still is today. There was really no management of inventory.
We thought about how the internet is like an immune system, and what you should do is give communities tools to moderate themselves: so flags, reports of suspicious behavior, but, most importantly, a review system. We built this really powerful review system where about two out of three people, after they book an Airbnb, leave a review., and two out of three hosts leave a review. We thought, “Oh, this is great.” It turns out that is necessary, but not sufficient. So over time, we’ve been in the business of managing more and more of the quality ourselves. We’re very hands-on with quality control. Most new services we actually vet and certify ourselves. We think reviews are important, but we don’t want to put the entire burden on the user base.
Again, there’s a lot of ways to game things, so you’ve got to be very hands-on. But the more things you verify, the more things you inspect, the more things you certify, the fewer areas there will be to exploit a company.
Let me put that right next to the platforms. Forgive me, but we’re however many days away from the election, and the thing I see with all of the major social networks right now is that they’re doing less moderation.
Yes.
They’re less interested in verifying things are true or false, or even that people are real and not AI. You just see it all over the place, they’ve taken their hands off. Airbnb’s platform, you’re saying, “We’re doing more, we’re certifying more things.” When you sign up and you want to rent the room in your house while you’re gone on vacation, here’s a list of approved co-hosts. Here’s experiences that we’re designing with professional designers.” Why the difference? Why is it all the other platforms are letting go, and you’re grabbing on tighter?
I have a theory that I’ll share. In our business, it’s obvious what the customer wants. The customer wants more moderation. They just do. I never heard a customer say, “You are controlling the inventory too much. You are removing too many bad listings. You are penalizing hosts that are making me unhappy.” They actually call and say the opposite, like, “How dare you.” They get very upset and personal when a home doesn’t work out, even if it’s not our home. We’re just the platform. So we are consistently held responsible by the customer for the content on our platform. So number one, the customer is expecting this.
Number two, the economic incentives are very clear. This is not an advertising platform where the product and the business model are separate from an aligned interest standpoint — they’re completely connected. You can start to see a bad Airbnb, and people then don’t rebook on Airbnb, they don’t come back. So there’s a really clear economic incentive.
The last thing is Airbnbs are just not that politicized. People just want to have good vacations. You don’t have the myriad of political issues and baggage. I think when it comes to platforms like X, YouTube, Instagram, or TikTok, it’s not clear what the customer’s asking for. On the one hand, users want veracity of information, but on the other hand, I think they’re very skeptical of the hand that platforms are putting on the product — in our case, they’re not.
I think that we’re going to look back at history, and the platforms that are going to be most successful are going to be the ones that have the greatest truth and veracity of information. And veracity of information starts with, “Are these people real? Are they not real?” I remember emailing [Elon Musk] when he first acquired Twitter, and I gave unsolicited advice, which was that you should verify 100 percent of the users on Twitter. They decided not to do that, and I didn’t even really have a conversation with him.
They did almost the opposite, actually.
Yeah, but I would’ve done that. I would have verified 100 percent of the users. I still think a platform that verifies every single person is a really good idea, and that’s what we do right now. Now, there might be reasons not to verify, like you just want to… I don’t know, maybe people are nervous about verification if they can’t be whistleblowers on platforms?
But again, a lot of the reason people don’t want moderation is they distrust the companies. They believe the companies are politically motivated and they’re putting their thumb on a scale politically for free speech. This becomes an attack vector for politics. I think before you moderate content, you should moderate people. You should moderate not if they should be kicked off the site or allowed on the site, but are these real people? Are they who they say they are, and are they allowed to use pseudonyms or not?
I think in the speech context, there’s quite a long history of debates about anonymity. We can set that aside in the context of Airbnb, but it’s interesting how the platform is expressed in atoms for you and bits for them, which result in very different incentives.
Totally.
The part where you’re taking more control of the experience, because you think that’s perfectly aligned with the customer, at some point do you just end up with a front desk? Are you just running the hotel? It seems like that’s the farthest end of that journey.
I love how you think because it’s good to take logical steps towards that conclusion and ask, “Where do you draw the line?” I think we want to have almost all the benefits of a hotel while retaining the benefits of Airbnb. So let’s just break them down.
The benefit of an Airbnb is that every room and every home is different. There’s no SKUs. Hotels are such commodities that you never see the room you’re booking. You don’t even know the floor you’re booking. You book a hotel room, and you don’t even know the floor you’re on, let alone what view you have. By the way, it doesn’t really matter because they’re kind of all the same, or at least the hotel kind of trains you not to care. That is the definition of commodity. It’s such a commodity that you don’t even have any choice. You just choose the hotel, and you barely choose the room — maybe you choose the tier of the room.
We want every space to be unique. We want every space to be one of a kind. We want our experience to be as personal as possible. Yes, there are more professional managers today than there were 10 years ago, but generally speaking, 90 percent of our hosts are still regular people. We want to feel like when you step into an Airbnb or you travel to a city, you’re living like a local. So those are the things we want to retain.
We really want it to be their home. We don’t want to create an Airbnb aesthetic, right? I’ve been asked, “Why don’t you guys do a deal with IKEA?” Well actually, that’s not really what people want. They don’t really want a standardization of design. They really want, when they’re in Paris, to feel like they’re in Paris. They don’t want to feel the same as they do in Kansas City or somewhere else. But hotels start to feel more similar, especially chain hotels.
But what we do want to do is match the hotel service as much as we can. There isn’t a front desk, but can we create a remote front desk? Can we have more 24/7 support? Can we use AI to level the playing field of the front desk, where AI can be immediate, it can be multilingual, it can adjudicate?
AI at least can be a frontline that can adjudicate disputes between guests and hosts better than a real person. What you can do is you can train it on the corpus of like 100 policies, and then it can look at the last 100,000 times somebody complained about this, and figure out what the most likely resolution was that led to satisfaction for both parties, You can actually train a model to spit out the right answer, and they can either directly spit out the answer as the frontline through the app to the guest and host or, if you do want to talk to a person, it can help the customer service person.
So, I think we want to manage Airbnbs more before they become ours. Not even that it would be a bad business model, but I think it would start to cut into the ethos of feeling like you’re living like a local and being truly authentic.
Where’s the last step of that? Is it just owning the property? Is it taking the booking directly?
I think that there are steps beyond this. The step beyond this that we haven’t gone to is that you have to apply to list on Airbnb. We have certain quality criteria, and if you don’t meet that, then you can’t list on Airbnb. That’s probably where we’re going within our new verticals, which we’re going to launch starting next year. Amazon had this moment where they were just selling books, and then in the late ‘90s, they decided to go just outside books. What’s adjacent to books back in the ‘90s? DVDs and CDs, and then they went further and further. So we’re going to have that Amazon moment.
For the new verticals and categories we’re launching, I believe we’re going to have an apply-to-list model where you have to apply. So we’re starting to have an opinion on quality. That is going to be the next step, and probably the final step. The step beyond that is actually owned and operated, and we don’t own or operate anything except for these promotional listings that people might know of, which are called Icons. We built a 40-foot tall Polly Pocket clamshell. Yes, we own and operate that, but that’s really marketing that generates a lot of views. We’re not really in the business of owning and operating anything.
Going back to this idea that you’ll have some set of people who will apply, I just keep coming back to the history of various platforms. YouTube, for a while, had these things called multi-channel networks, or MCNs. They were like big companies, and they would buy a bunch of popular YouTube channels. They wanted to be preferred suppliers to YouTube.
Interesting.
YouTube decided this was too big of a risk. They didn’t want anyone to have that level of control over YouTube, so they basically killed all the MCNs. There’s books about it now that you can go read. Do you ever foresee yourself as having that kind of supplier on the Airbnb platform? This would be a hosting provider that provides the kind of experience at this level that you can trust, and they’re going to own and operate the actual property.
What we’re probably going to have in the future are more standardized quality tiers. So there’s going to be a standard to list on Airbnb, and then there’s probably going to be — depending upon the vertical — different levels of certification or quality. The quality could be based on their expertise in the real world, or it could be based on what customers are saying on Airbnb. For example, we have this designation, called “guest favorite,” which are 2 million of the best homes in Airbnb based on ratings, reviews, and customer service tickets. So I think we’re going to do more of that and that’s probably where we’re going to go.
I’m interested to see how that plays out.
It’s all going to play out over the next 24 months.
I’ll give you another really dumb example. BuzzFeed designed its entire business on being the best at Facebook. And one day, Facebook was like, “Well, we don’t need you. An army of teenagers will just make Instagram for us every day.” And now, BuzzFeed is whatever business it is.
You can see whatever your tier is — call it the A tier in Nashville — then someone will be like, “We’re just going to dominate the A tier in Nashville, and Airbnb will have to deal with us.” Is that an eventuality you’ve thought about?
I think it’s a little bit different because you don’t have the consolidation of inventory in the same way. Let’s take YouTube. A MrBeast video can get 100 or 200 hundred million views. You can’t have a single Airbnb be that popular, so the entire marketplace is significantly more long tail. We’re in 100,000 cities; no one city represents even 1 percent of our business on Airbnb.
So generally, there has been this move towards a little more consolidation of inventory via professional property managers, but it’s not been that much. Again, for the last four years alone, 90 percent of our hosts are individuals, and that number has remained pretty much unchanged. I think many of the new products and features we’re launching are going to enable more people to allow more long-tail inventory onto the platform. That’s generally where we’re pushing.
Does it benefit Airbnb to have less consolidated inventory on the platform? It probably does because they’re less likely to cross-list. But it would be a bummer if we did that, and it was misaligned with a customer. There’s a chart I’ve put out before that shows the number of properties you manage in your five-star rating, and quite literally, it is a perfectly curved downward slope. The highest-rated Airbnb hosts manage one property. The second-highest manage two, and down to 1,000. There is not one single deviation from one to 1,000.
Wow.
It’s crazy. It doesn’t mean that all people managing 1,000 properties are bad. It just means that most people haven’t figured out how to industrialize hospitality. Let me give you one other argument for why regular people can sometimes work well economically.
If I’m a dedicated rental, I need to build a profit margin because I’m a business. So, I have rent, and I need to be careful about any cost I incur. If we’re in a house, I might have four books, but maybe I won’t have 20 books because books five through 20 are an additional cost I’m putting into my Airbnb. I might have six coffee mugs, but I’m not going to have 10 coffee mugs. I might not have a KitchenAid mixer. These are all costs I have to bear.
If it’s your real house, you might have all this stuff anyway because you live there. You don’t need to charge a daily rate that has a profit margin because this was unsold inventory that you weren’t monetizing, and now you’re monetizing it. It’s another one of the economic dynamics where non-professionals sometimes have an economic advantage over professionals. This is just one example. Their homes are equipped, and the fixed cost is an investment they’ve already incurred. This might be another way of saying it.
Well, I’m very interested to see how Co-Host Network plays out.
Thank you.
When it’s your fourth time [on Decoder], we’ll check in on the platform dynamics.
I cannot wait. I love these conversations, and the thing I appreciate is the depth that you go into.
Well, get ready, because it’s coming now.
Let’s do it.
I said earlier that “I think the founder mode conversation and Decoder questions have pure overlap.”
Yes.
The last time you were on the show, you described re-orging Airbnb. You restructured the company, you went onto this roadmap where you shipped twice a year in big deliveries, and you said, “I got rid of all of these middle managers, and I’m the product manager, and everyone rolls up to me.” And I thought, “Oh, this is-”
Chief product officer.
Chief product officer. And I thought, “This is great. This is what I want out of a Decoder conversation.” Then a year passes, and you give a talk, and I thought, “I’ve seen that talk before. That’s the ‘we don’t have PMs,’ right? I’ve heard this from Brian before.” Then, Paul Graham goes and writes a blog post called “Founder Mode,” and everyone reacts to it. Is there something meaningfully different than the way you have structured Airbnb and founder mode? Am I missing something? Has something changed in that chronology?
I don’t think so. Let me put it this way: it’s not like I’m suddenly running the company differently than a year ago. It’s just that now it has a label, and I think it makes sense to everyone. Let me give a little bit of background on that talk.
You gave the first version of this talk at a Figma conference, right?
Yeah, and the Figma conference was maybe a quarter of what I said. I’ll do the short version because I know we have limited time, but let me give a little background. As you know, from 2009 to 2019, I ran Airbnb the way most tech companies run their companies. I didn’t know how to run it, so I hired people from Google, Amazon, Microsoft, and other companies, and they brought their processes with them. We kind of reverted towards the way everyone runs their company. I remember that we were kind of a matrix organization with 1,000 employees, and like almost all matrix organizations, it was hard to get work done.
I’ll give you an example. There was a creative marketing department that would have to create graphics for different teams. Then, we kept hiring subteams that kept asking more and more from the graphics team. It was called the creative group. At some point, the creative group was like a deli, and they had these lines out the window. They just kind of threw their hands up. If you needed anything done, let’s say you were a team and you needed a button designed, or a graphic for a button design, it would be like a three-month waiting list because they were inundated.
So then the team said, “Well, give us our own resources. Give me a dedicated creative person,” and this could also be true for technology, finance, a legal team, any function. And this is when you start to divisionalize the company. Quite literally you’re subdividing it. This is where the general management structure comes from. It makes a lot of sense why this happens.
The problem with that, though, is that once you subdivide the company, the company starts rowing in different directions. Now, you have even more bureaucracy because the groups don’t want to work together. They’re incentivized to work on different things, and they might not be totally compatible anymore. Ten teams can have 10 different tech stacks, and they don’t actually fit together. A local decision that might make sense for your team might not make sense for the company.
The next thing is that these general managers are incentivized, typically, on output goals that you don’t usually run on P&Ls. They run on impact or growth, so they have to advocate for as many resources as possible. This is what we call politics. You’re advocating for yourself. So suddenly, groups start going in many different directions. Because the company’s going in many different directions, oversight becomes more difficult. When oversight gets more difficult, now there’s less accountability. You have people that are crappy, and there’s no consequence, so that makes people feel like it doesn’t matter. This is where complacency sets in. This is, I think, what ends up happening at big companies.
The big thing that I said about founder mode, and this is something I’ve said for four years, is it’s not about… Paul Graham coined it founder mode. I think it’s a good name, I think it’s very catchy. I could not have made something as viral as Paul Graham. But there is a downside to the name. First of all, people don’t know what founder mode is. They think it means swagger. I remember a tweet that said, “I’m going founder mode on this burrito.” I don’t know what that means. I think people think it means the founder swagger: “I don’t give a fuck. I’m going in, I’m kicking ass.” That’s kind of what it turned into, and only founders have that.
That wasn’t the message. If I could summarize founder mode in a couple sentences, it’s about being in the details. It’s that great leadership is presence, not absence. It’s about a leader being in the details. And if you as a leader aren’t in the details, guess what? Your leaders aren’t in the details, and their leaders aren’t in the details. And one day you’re going to wake up, and you have 50-year-olds managing 40-year-olds, managing 30-year-olds, managing people two years out of college doing all the work with no oversight, and you have these four unnecessary layers. You have no experts in the company.
So, the antidote to this is to try to be as functional as possible. We are a functional organization. Functional just means expertise-based, not general management-based. I’m the only non-functional person in the company; all functions roll up to me. I generally think the CEO should be the chief product officer of the company. The most important thing a company does is make a product. If the CEO is not the expert in the product, then why are they the CEO? Said differently, I should not be the CEO of SpaceX. I couldn’t be the chief product officer because I do not understand rocketry. So maybe I’m a good CEO, but I can’t be the chief product officer. There may be some exceptions, but I generally think that’s the case.
Your leaders shouldn’t just be “managers” (and I put managers in quotes), they should also be in the details. If we were a military, like a battalion, the cavalry general should know how to ride a horse. It’s crazy that they don’t. And leaders shouldn’t be fungible. So it’s really about being in the details.
Now, here’s the problem with the narrative being in the details. There’s a term for it, and it’s a pejorative. It’s called micromanager, and everyone’s afraid to be accused of being a micromanager. I had this thought because a lot of founder mode came from me studying Steve Jobs. For 10 years, I was at wit’s end. It wasn’t my first instinct to copy Steve Jobs’ leadership style, it was kind of a last resort. I didn’t copy everything, but I copied a lot of how he organized and ran the company.
A few weeks ago, I had dinner with his son, Reed Jobs, and I remember asking him what Steve’s opinion of micromanagement was. He had such an interesting perspective. He said, “Steve Jobs was in the details.” He would skip levels, many levels, to be in the details, which somebody who goes to Harvard Business School would never do. He said he never felt like he was micromanaging because he was partnering with people on the details. I asked people like Jony Ive and [Hiroki Asai], who worked for Steve, and I said, “Do you feel like Steve Jobs micromanaged you?” And they said, “No, he didn’t.”
I don’t know. Maybe I’m a micromanager, maybe I’m not. I think the distinction is that I remember one time an executive on my team asked, “Is this your decision or is this my decision?” And I remember saying, “It should never be either.” And that’s founder mode: it should never be either. It’s never your decision, it’s never my decision. We’re in it together. If you’re cofounders, whose decision is it? It’s your decision together. It’s the same thing hierarchically with the org chart.
So, that’s really what it means: great leadership is presence, not absence. It’s in the details. What a lot of founders do is they let go of the product, and they abdicate responsibility. Frank Slootman wrote a book called Amp It Up where he basically said, “To turn a company around, the CEO just needs to set the pace of the company.” You set the vision, but more important than the vision, you set the pace, you set the standards. And that’s what founder mode is really about.
By the way, you don’t need to be a founder to do that. You can apply founder mode to government, you can apply founder mode to a nonprofit, to a volunteer organization, to being a sports coach. It just means the leadership is presence in the details, and it’s not about being so-called autocratic because you’re not telling the experts what to do. But you know what they’re doing, and you’re working through, and you’re challenging them. And you should do this because, let’s say you have 10 experts. They might disagree. Finance says this is the best outcome, but that may conflict with legal, which might conflict with product marketing, which represents the customer, which might conflict with engineering, which is the schedule. So, you have to weigh all these trade-offs. That’s why you have to be in the details.
Maybe one other thing before we wrap up.
Oh, we’re far from wrapping up. I just wanted to let you know.
One tidbit I’d like to say about hiring, just as a thought. One of the most important things I do is have an executive team. You could think of them as C-level or SVPs. There’s about seven of them. Then, the next level are VPs, and there’s maybe 30 of them or 40 of them. I don’t really know how many there are.
Something I do that’s different from almost every other CEO in Silicon Valley (but I think [Nvidia CEO] Jensen Huang basically does this, Steve Jobs did this, Walt Disney did this, and Elon Musk did this) is I treat all the VPs as direct reports. Jensen got rid of the executive team. He just has 40 direct reports. That’s a little unwieldy for me. I’ve gone through that thought experiment of just having the VPs, and I can’t track everything.
But all VPs do a report. They report to me and to their executive, and I am the co-hiring manager. So instead of me hiring an executive, like a CFO who hires their people, I am the co-hiring manager. I do the kickoff, I’m the second interview, and, ultimately, I decide the final compensation for all the top people in the company, not the managers. The managers give recommendations, and I make the final decision. This is just a very practical version of founder mode, of being in the details. You don’t just hire and manage your executives, you skip-level and manage as many people as possible in a dual-reporting relationship.
So, the branding of founder mode has offered you some narrative clarity. It’s clear from the last time when we had a very similar kind of conversation that if I had to pull all of that back into what we’re really describing here, into the Decoder framework, I would say what you were describing is fundamentally “be a functional organization, not a divisional organization.” And that was the big change that you made the last time you were on the show. You’ve since made other changes, right?
Yes.
You just created this new role in the C-suite, chief business officer. You promoted your CFO into that role. Walk me through that. You’re obviously evolving how you’re thinking of the company and the roles within the company inside of this framework. How’d you make that decision?
One thing about functional, and then I’ll answer that question. I don’t think all companies should be functional, but I think they should be as functional as they can get away with. That’s the rule. [Andreessen Horowitz co-founder] Ben Horowitz had this saying: “Give ground grudgingly.” You should give ground grudgingly. All startups start as functional organizations. Steve Jobs said, “I want to be the world’s largest startup,” but he wants to still operate like a startup. So I think you should give ground grudgingly, and that’s the general philosophy.
I just want to say one thing about being a functional organization. There is one very specific downside: The downside of the functional organization is you cannot do disparate things. But here’s something I wanted to spell. It’s not true you can’t do as many things. It’s not true that it would be a slower-run organization. We’ve actually increased product development by being a functional organization, but we’re like one flywheel. We can’t create three other flywheels that are disparate. The only reason I believe a company should divisionalize is so that they could do truly disparate things that have disparate functional expertise. So, if we had a jet engine business, that’s a different functional expertise.
Now let’s go to the business organization. At most companies, there is no function called “business.” Maybe we can also call it revenue — business, revenue, commercial. There’s different names: chief commercial officer, chief business officer, chief revenue officer. They all kind of mean the same thing. The reason most companies don’t have this is because they have general managers, and the general managers play that role. The general managers are the mini-CEO and they own the business, and they usually partner with a finance person. Somewhere between the general manager and finance person, or maybe a data scientist, they’re the business function.
We found that the problem with that is, none of them are really experts in “business.” When I mean business, I mean revenue, the business model, the market size, what are the kind of dynamics of this market? Like with Co-Host, what should we charge? Should this be a free service? Do we take a commission? How does this compare to third-party property management services? Which countries do we roll this out in? What are the economics by country? Is it a standard rate? There’s just a lot of detailed questions one must answer.
So, we decided to create a chief business organization with three functions. One is supply. Supply was always a function at Airbnb, but it was kind of conflated with international and general managers. So we said, “No, no. There are experts in getting supply of homes, experiences, and other things at Airbnb.”
Then, we have a business function, which is quite literally the business counterpart to product marketing. If product marketing is nouveau product management, product marketing would be product management minus program management plus some outbound marketing, and it’s fewer people. That’s all it is. It’s outbound-inbound in one role. They are really thinking about what the customer wants and what the experience should be like, but they’re not in spreadsheets. They’re not business model people.
So they have a counterpart called the “business function.” With Co-Host Network, for example, we had a business person looking at the business model for Co-Host, we had a product marketing person who understands what’s the product, how are we going to market this, and why do people actually want this. Those two people have to go together. One reports to Hiroki — it’s product marketing, it’s more creative. One reports to Dave Stephenson, the former CFO now chief business officer, and they’re really the two parts of the continuum.
Then, you have a supply person. The supply person — based on the business organization, the business model, and the product marketing brief — has to now go get supply. They work with international, the third group in the chief business officer org, to then take that playbook and bring it to all the different countries. And, of course, the product marketing has their own three-legged stool with design and engineering.
But it’s different from other companies where product really directs design. I don’t like that, and I caused a bit of a storm at a Figma conference. Basically, I got taken out of context and people thought I said I fired all the product managers. What actually happened was that I got rid of the classic product management function, I reassigned the most senior product managers to be product marketers, and I reclassified most of the other product managers as program managers.
By the way, most product managers in Silicon Valley aren’t actually product managers. They’re glorified program managers, but they’re not even experts at program management. That’s all they’re doing; They’re making sure the thing ships. That’s program management, that’s not product management. So, this is what we’re doing. It’s a very simple organization, and it’s just a continuation of us being functional.
It’s funny that you say all this. If you asked my CEO, he would tell you that I scream that we should be divisional all the time because I think tech journalism is different from video game journalism and different from sports journalism, which is different from New York Magazine. At the end of the day, we all make one kind of thing, and there’s reasons to have central teams, and there’s reasons to share costs.
Do you ever find yourself thinking, “Okay, if I was in the other kind of organization, something else would be faster, I could make this tradeoff, but there would be a benefit to being in a more divisional structure?”
I think it’s really important to not be dogmatic and say functional is better than divisional, and I think it really depends on industries. In tech companies, functional is generally better because you can leverage shared technologies, everyone can row together, and you get economies of scale. I don’t know if you’re doing that in your business.
Okay, here are the two things — I said one, there’s really two. There’s two benefits to divisional. The first benefit is, you can do disparate things. We talked about that. . I’m just thinking of an absurd thing: we want to create a podcasting division. It would be really hard for the people designing the app and the marketers advertising homes to think about podcasting. Now we want to create a TV series. That’s really, really disparate, so we would struggle to do super-disparate things.
The second downside to a functional organization is that it takes longer to start. Because if you want to just get something going, you need to get everyone organized. But everyone organized has a multi-year roadmap, so they now need to make room on the roadmap. So, for disparate things that you can start quickly, a divisional structure is better. Those, to me, are the primary advantages of a divisional structure. There’s a theoretical third advantage, which is that you can hire so-called entrepreneurial-type people that don’t fit into a functional organization, but that one I don’t agree with. That’s a bit of a rabbit hole, so I won’t go there unless you want to ask about it.
That being said, once you get rowing… think about a bunch of us in a boat, and we’re rowing together. If there are 10 people in 10 boats, they can get going faster and they can go in different directions, but the 10-person boat is going to row faster than 10 one-person boats. So once you get going with the functional organization, what I basically tell people is it’s harder to get something on the roadmap, but if it gets on the roadmap, we put the weight of the company behind it.
I like that constraint. I like the constraint of anyone can’t just do anything because now we’re focused, now we’re prioritized, now we only do things that are differentiated. And the governor is that we only do as many things as I can focus on. That’s what I do. That’s what Steve Jobs did at Apple, and that’s what Walt Disney did at Disney, and that’s what Elon Musk does at Tesla. You only do as many things as the CEO can focus on and manage.
Now, this presumes the CEO is competent, intelligent —
Present.
Present. They understand the business. This doesn’t work if you come from management consulting, and now you’re a general manager who doesn’t really know the domain. That wouldn’t work as well.
You’re setting aside one topic, I’m just setting aside Elon.
Yeah.
I have a lot to say in response to that.
Exactly. Maybe Elon is a bit of a red herring because there’s all the surface-level things about him that are idiosyncratic, and I’m certainly not going to endorse everything he does because I do a lot of things differently.
But I think the commonality of him, Jensen, Steve Jobs, and [Mark Zuckerberg] kind of ebbs and flows. I know Zuck very well, and I think he would say I was a big inspiration for his year of efficiency because I talked about what we did Airbnb.I think those people are pretty close to functional, pretty in the details, they set the pace for the company, and they generally really know what’s going on at their companies.
I want to talk about micromanagement real quick, and then I want to end with decisions, which is the other big Decoder question that I always like talking to you about. You mentioned that it’s toxic, that people don’t like it. You mentioned that founder mode as a brand means people are just acting like jerks of their companies —
It means a lot of swagger, for better or worse, and I don’t think that’s really what it means.
And I actually think it is mostly for worse. I don’t think it is for better, in most cases. You’re outlining a very deep level of management thinking. You’ve thought about these companies a lot, you’ve thought about your own company a lot, and you’ve thought about these trade-offs a lot. There’s a general sense that you should be in the details, to not just hire smart people and let them do whatever they want. I talk to a lot of CEOs on the show, and they’re like, “My secret is that I hire smart people and I let them do whatever they want.”
I ask a lot of CEOs, “How do you make decisions?” I would say one of the most common answers we get is, “It would be best if I wasn’t making so many decisions, if my team was empowered, and all I was doing was breaking the hardest ties or making the biggest, riskiest investment decisions so they weren’t feeling that pressure.”
I totally disagree with that. I think I’ve heard Jeff Bezos say that more recently. He said, “My job is to make as few high-quality decisions as possible,” and I could not disagree more with that. Let’s start by saying that it’s not like I’m right and Jeff Bezos is wrong. When I say it, I’m also saying what Steve Jobs would have said. Was Steve Jobs right or Jeff Bezos right?
The truth is there’s multiple ways to do something. I’m strongly advocating for this way. Funny enough, I’ve talked to many people that were early members at Amazon, and that’s not how Jeff Bezos ran it early on. So, here’s the key thing: I believe you need to hire smart people. The paradox is that I believe most smart people want you involved, they want your partnership. They don’t want you to tell them what to do, but there’s this assumption that control is a zero-sum game. Either I have the power, or you have the power. And I think that’s the flaw.
There’s a scenario where all of us are powerless. It’s called most Fortune 500 companies. And there’s a scenario where I have more power, and therefore you have more power. It’s not like zero-sum, and I’ve wrestled control. I’ve found that the most talented people like my involvement as long as the involvement is constructive, it isn’t me telling them what to do and pushing them. It’s like, “What about this? What about that?” Steve Jobs went to Jony Ive’s design studio every 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 think this is a really, really important framework.
Let me give you one more. Somebody might ask, “Wait, you’re in all the details. How can you be in all the details forever? That seems like it’s not going to scale, and someday you’re going to get tired.” And the answer is they’re right. Here’s what most people do: They hire smart people, and they give them operating freedom. They have no idea if they’re good or not because they’re not engaged enough, and then over time, they start getting signals that the person isn’t good, and then they wrestle back control. Once they get involved, but they haven’t been involved for months or years, suddenly the executive loses their confidence because they’re only involved because they’re not doing well. That’s the beginning of the end, and then you replace them. This happens to every freaking company.
There’s an inverse, and I’ll use an analogy. I’m not a golfer. I’m terrible at golf. I don’t think I’ve ever even shot a hole. I’m terrible. But I did a couple golf lessons once, and I had a golf instructor who literally coached me on every single swing. Thank God I had the golf instructor because if I just went on the golf course on my own and I swung 1,000 times, I would have had a really screwed up swing by the time the golf instructor got involved, and it would take even more work to retrain my swing.
So the golf instructor said, “I’m going to watch you swing thousands of times, and eventually this is muscle memory, and I won’t need to watch your swing over time.” That’s my philosophy. My philosophy is you start in the details. You’re involved in every single thing. You hire great people, and you’re in all their details. Over time, once they develop muscle memory and they prove that they understand the system, then you can gradually let go.
To give you an example: Two years ago, I wanted to write perfect press releases not because I think anyone reads them, but because if you can’t put your ideas down in a clear press release, then you don’t have clear thinking. You don’t know why you’re doing something. Two or three years ago when we did press releases, we’d do as many as 70 revisions. And people said, “This is completely crazy. Are we going to — 10 years from now — do 70 revisions of press releases?” And the answer is no. The most recent press release for the Co-Host Network I probably reviewed three times.
But it was the repetition in the details, that’s how people learned. They were saying, “That’s apprenticeship, you learn.” Even if you hire experts, they’re not experts at your company, they’re not experts at collaborating, they’re not experts in your business. So, it’s about starting in the details and letting go. That’s what I think Jeff Bezos did, even though he said his job is to make only a few high-quality decisions. That’s not what he did in 1999. So that’s kind of my philosophy.
Let’s talk about decisions, actually. This is the other Decoder question.
You’ve been on several times, and I’ve asked you how you make decisions several times. I went back and looked. When you were on this show the last time, I asked, “How do you make decisions?” and you said, “Let me tell you a long story.” It was about various Airbnb controversies where you had to make big decisions. And you said, “I’m going to have to make so many decisions that I went to all my team and I said, ‘Here are our principles. Trust me to use these principles, and this is how I’m going to make decisions.’” Is that still the framework, that everyone just agrees on the core principles?
Pretty much. What I basically said was, “You want to make principal decisions, not business decisions.” Principal decisions are: if I don’t understand the outcome or if I can’t predict it, how do I want to be remembered? What do I think is the right thing to do? That can sound very subjective, but actually, you would have thousands of inputs. So, that’s essentially what I do. It’s kind of interesting because it’s kind of like somebody asking you, “How do you do what you do?” You might not even consciously know how you do what you do.
But what I’m doing is, I am basically making a decision. Somebody once said, “The most important thing leaders do is make decisions.” And it’s probably true. Maybe the most important thing is they hire people, and they assemble the right team. But probably day-to-day, the most important thing they do is make decisions. It’s really important that people understand the criteria off which you’re basing decisions. …
I went to my board and I said, “I’m going to have to make 1,000 decisions. I can’t run every decision by you, so let’s agree on the principles and the framework for which I make all the decisions. Then I’m going to make all the decisions, and if something stands out, I will elevate it to you. I will retroactively show you all the decisions I made. If there’s something that’s huge about the company and one-way door, I will tell you ahead of time. Otherwise, give me authority to make all these decisions.”
That’s what I did with the board. They really liked it because the key to a crisis is speed, and if I have to debate every decision, we’re not moving quickly. It’s like a car chase. Should you turn left or right? Well, most importantly you should turn quickly. So that’s what I did.
Just to go back to the golf swing analogy, the way I run Airbnb is I review all the work — every week, every two weeks, every four weeks, every eight weeks, every 12 weeks. You might ask, “How do you have people do a report? How do they keep two people happy?” And the answer is, we’re all in the same meeting together. I usually have my direct talk first because if I talk, you’ll just agree with me, and then I’ll make the final decision. Most of my final decisions are just agreeing. Ninety percent of time I’m agreeing with what the team says, and 10 percent of the time I’m disagreeing.
If I disagree, I always try to say why. I try to go down my thinking and challenge my first principles. So whenever I make a decision, I try to ask myself, like I did in this conversation, “What are the first principles driving this decision?” Don’t challenge my decision, challenge my first-principle thinking. In other words, here’s my answer, check my math. That’s kind of what I do. So the principles are really, really important to get pre-authorization from a board and to make a lot of fast decisions.
I’m not in a meeting reviewing Co-Host Network with a series of four principles. I’m just intuitively making a decision. “I think we should do X and here’s why, and let me share with you my work and my thinking. What do you think? What about this did I get right or wrong?” The most important thing is to debate the first principles, not the answer.
Does the company know the principles that you use to make decisions? Is that published? Is that a thing you talk about?
There’s not a single list. There are core values. There are strategic differentiators, like the things that you put in your S-1 so people know what you stand for. There are those general things. Actually, here’s another way of saying it. I don’t push decision-making down, I pull decision-making in. I think of the company as one shared consciousness.
This is a story. I think it will be worth it. One time I called Ron Johnson, who worked for Steve Jobs. He ran Apple retail. I remember asking how Steve Jobs ran Apple, and [Ron] said, “Even when Apple was like 20, 30, 40,000 people, he only ever thought of Apple as 100 employees.” That’s why he had this offsite called Top 100. He said his job was to only manage the top 100 people, and they manage everyone else. He never thought about the whole company.
That’s kind of what I do, and maybe it’s even fewer people, like 60 or 70, so I don’t manage all of Airbnb — I manage the top 60 or 70 people. But I’m very engaged. I pull them in, and I create one shared consciousness. If you were to interview every single one of my senior people, I don’t think they would have pithy word-for-word verbatim principles, but they would be able to describe exactly how I think because we’re in so many meetings together.
I remember I was at a group dinner with Scott Forstall one time right before he left Apple. He said he used to spend 35 hours a week with Steve Jobs. Not one-on-one, but he was in every meeting with Steve. So, think about that: 35 hours a week, every single week. That’s thousands of hours. That’s the equivalent. I don’t spend 35 hours a week with most people, but there are many people that spend 10–20 hours a week in a room with me. It’s the same few dozen people going through different meetings, creating one shared consciousness, and being able to finish each other’s sentences.
That’s another version of founder mode: It’s one shared consciousness. So, you can imagine, that’s not disempowering. It requires collaboration. If you want to be a lone wolf or a cowboy, that’s not going to work. If you’re willing to work with other people, you’re actually pretty empowered in this way.
We’ve got to wrap up, but I need to ask you one very important question that I’ve been thinking about this entire time. You’ve mentioned Apple, Steve Jobs, and Jony Ive a bunch of times. I know that Airbnb works closely with LoveFrom, which is Jony Ive’s company. I’m looking at a New York Times article, and it says, “The clients pay LoveFrom as much as $200 million a year.”
That is absolutely not true.
You’re not paying Jony Ive $200 million a year?
No, I’m not going to say what we pay, but that is so not true, and that’s not even close to true.
Okay. You’ve talked about Apple a lot. They don’t have Steve Jobs anymore, they don’t have Jony Ive anymore. They have started a bunch of divisions to do all kinds of other things. Do you think that’s sustainable for them?
No.
You are one of the closest watchers of this company I can think of, and I’m very curious what you think.
Okay. I’ll wrap up with my view on Apple.
I think Tim Cook has done an extraordinary job, especially given the cards he was dealt, right? What alternative was there? Steve died. I don’t know the circumstances, but I think it was that he resigned in August and died in October, only eight weeks later. So there’s only an eight-week window between resignation and he’s not even there. It’s not like Bezos retired, but he’s the executive chair. I think that Tim Cook basically took Apple from $300 million to, whatever, $3 trillion, added more than 90 percent of the market cap, and it’s done very, very well. He’s a great operator.
A couple things to say, though. Number one, just because Tim added $2.7 trillion in market cap and Steve added $300 billion doesn’t mean that Tim did most of the work. He inherited the most valuable product of all time, and there was just really continuing momentum —
The iPhone.
The iPhone, probably the most successful product in the history of capitalism. I don’t think that any other product has generated more profit — maybe not more revenue, but more profit — than the iPhone. The most successful company probably in the history of capitalism, or at least certainly the last 25 years. It’s crazy when you think about it. Then ask yourself a couple other questions. Let’s imagine Steve Jobs didn’t die in 2011, he died in 2005, right when the iPod Video had just launched. Would they have come up with the iPhone? They might have. Would it have been the most successful consumer product of all time? Maybe not. I don’t know who would have done it.
My general philosophy is that Tim was in an incredible period where what they really needed to do was maybe not invent a new product, but take the most successful product of all time and scale it, manufacture it, and make it completely ubiquitous, and he did that. But the technology industry… I mean, the word technology may as well be a synonym for the word change. We’re in the change industry, and it is very, very dangerous to not be constantly changing. If you’re a company that makes devices, the most important thing you need to do is make new tools and make new devices.
I saw a Bloomberg report that said Apple is moving away from launches, and moving more towards services. They’re going more divisional. My unsolicited advice is that whenever Tim decides to retire, the next CEO should also be the chief product officer. I asked people, “Who was the chief product officer at Apple when Steve was alive?” Everyone said, “Steve.” It wasn’t Phil Schiller. Phil Schiller was a great SVP of product marketing, but he wasn’t the chief product officer. That is a product company, and you really want to make sure long-term that a product person is driving the company.
This goes to the very awkward thing that no one wants to talk about. Succession planning is hard because the people that are great product visionaries are typically young. They’re young and they’re less mature. Who wants to put a young, not-super-mature person at the helm of a giant company? Founders are allowed to manage people older than them because they’re the founders. If you’re not the founder, people just don’t want to be managed by somebody younger than them who’s maybe a virtuoso, a wunderkind, but they’re a little immature. The companies don’t want to take that risk, so they bias towards senior, grown-up, functional experts. But typically that function is not the product, and I think that’s a problem.
Satya [Nadella, Microsoft CEO] is more technical. I think that has afforded them more, but he mostly just got them back to Bill Gates’ primacy. I think Apple should go back to having a CEO that’s the chief product officer. I think it should rein the company in and simplify how it operates, but that’s just my opinion.
Would you do that job?
I think Airbnb is the right job for me, and they definitely need somebody who has hardware experience.
Fair enough. Brian, it is always a pleasure talking to you. We’ve got to have you back sooner than a year.
Thank you, Nilay. I love this.

Photo illustration by The Verge / Photo: Airbnb

The Airbnb cofounder discusses being ‘in the details’ and why traditional management is doing it wrong.

Today, I’m talking with Airbnb cofounder and CEO Brian Chesky, who is only the second person to be on Decoder three times — the other is Meta CEO Mark Zuckerberg. It’s rare company, and what made this one particularly good is that Brian and I were together in our New York studio for the first time; it’s pretty easy to hear how much looser and more fun the conversation was because we were in the same room.

Brian made a lot of waves earlier this year when he started talking about something called “founder mode” — or at least, when well-known investor Paul Graham wrote a blog post about Brian’s approach to running Airbnb that gave it that name. Founder mode has since become a little bit of a meme, and I was excited to have Brian back on to talk about it and what specifically he thinks it means.

One of the reasons I love talking to Brian is because he spends so much time specifically obsessing over company structure and decision-making — if you listened to his previous Decoder episodes, you already had a preview of founder mode because Brian radically restructured the company after the covid-19 pandemic to get away from its previous divisional structure and transition into a more functional organization that works from a single roadmap. That allows him to have input on many more decisions.

That’s really what he’s been talking about — that good leaders need to get in the details. You’ll hear him express some disappointment in the idea that founder mode is about micromanagement or pure swagger — and of course, we went back and forth on how much good leaders delegate and trust their teams to make decisions independently of them.

If you’re a Decoder fan, this is the good stuff. Brian and I really got into it here: you’ll hear Brian talk about a wide range of management styles and explain why he still considers himself a student of Steve Jobs. Actually, Steve Jobs comes up a lot in this one — as does Jony Ive, whose new company, LoveFrom, does design work for Airbnb. Don’t worry, I asked about that, too.

On top of all that, we actually started the show by talking about some big Airbnb news — the company just launched something called the Co-Host Network — which is a directory of experienced Airbnb hosts that can run listings for people who just want to make a little extra money renting out their homes without all the hassle.

It’s a big change, effectively creating a new job description for Airbnb’s platform. It also gave me a great opportunity to ask Brian about some of the thorny issues surrounding his company’s approach to running a platform that has many of the same issues as any other platform like YouTube or TikTok but which deals in literal, physical housing.

All of that in an hour, plus more — there’s even an assessment of Tim Cook’s management of Apple in here. Talking to Brian is a ride, but I think I held my own, and I think you’ll really like this one.

Okay, Airbnb CEO Brian Chesky. Here we go.

This transcript has been lightly edited for length and clarity.

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

Thank you for having me again.

You’re only our second third-time guest. The other one is Mark Zuckerberg.

Oh, wow. This is really good company.

And you are in the studio with me. If people are listening, we’re together, which is amazing.

It’s the first time I’ve been in the studio with you, so thank you for having me here.

Actually, the last time you were on it was such a good conversation. We were both in New York, and my brain reinterpreted it as we were together because it was a good conversation.

That’s a sign of a good conversation.

But we were remote.

We were remote in the same city.

But you’re here today, and it’s great. There’s a lot to talk about. Airbnb just had its Winter Release. There’s a bunch of features we should talk about. I’m actually very curious about how you were thinking about hosting, professionalizing hosting, and what that means for the platform.

If you’re a Decoder listener, you’ve got to know that I’m going to talk to Brian about “Founder Mode.” The Venn diagram with Decoder and “Founder Mode” is the thesis of our show — those ideas are basically a circle.

That’s good.

Then, I just want to talk about Airbnb generally. You’ve made some org chart changes of your own. But let’s start with the news: the Winter Release. The last time you were on, you actually talked about staggering Airbnb’s releases on one timeline for the whole company, so you get the summer release and then the winter release. What’s the big news in the Winter Release?

So two things. The first thing is we’re introducing something that we call the Co-Host Network. What is this? Let’s give some background. Airbnb is only as good as the number of homes we have, and the more homes we have, the more modulated the prices are on Airbnb, so we need to get a lot more homes. Frankly, we have more than 8 million homes today, but we’d love millions more in addition to the organic homes coming to Airbnb.

So we went out to a lot of prospective hosts, and we asked them — we do this periodically — “Why aren’t you hosting?” Number one, people first say they had no idea the amount of money they can make. It’s a very compelling amount of money you can make; you can make tens of thousands of dollars with an asset you’re already paying for. So we asked, “Well, why aren’t you hosting?” The number one answer people gave us was that they perceived it as being too much work. It’s like, “Well, I have a job, I have kids, I have this, I have that. I don’t know if I can come home, check in guests.” Or maybe it’s, “I live in New York City here, and I have a summer home in Florida, but I can’t be in Florida to check in the guests, so I need help hosting.”

We thought to ourselves, “Okay.” So now if somebody doesn’t have the time, they either make one of two decisions: they don’t host, or they go on Google and they type in “Airbnb property management company,” and they find this third-party property management company. There’s many companies that can manage your Airbnb. The challenge we’ve noticed is the average five-star rating for third-party property managers on Airbnb is about 4.62. It is significantly below the median range review score.

So we thought, “What if we basically put together a whole collection of Airbnb-certified hosts that can manage your Airbnb for you?” We could basically create a marketplace where we match people with homes but don’t have time with the best hosts in Airbnb who want to expand but don’t have a home. These would be people who only manage a few properties, so they’re not going to be managing you and 100 other homes. Maybe three, four, or five other homes. That is what we built. We built a network of co-hosts who will host your property with you, to take care of your home and your guests. The average rating of a co-host is a 4.86, 73 percent are super hosts, and we have 10,000 of them today in 10 countries, including, of course, here in the US.

If anyone’s listening, and they would like to make $20,000 a year with a house they already have and do very minimal work, you can go online. You’ll go to the Co-Host Network, and we’ll match you to the very best person for you. You’ll have some choices, with basically like 80 different factors to match you to the right co-host. Most importantly, where are you located? We want somebody near you. Then, you negotiate the rate. How do you pay them? They take a cut on your bookings, and you decide that cut or you negotiate together. It can be based on whatever service you want. They can do all the hosting for you, or they can do just some of it. It’s totally in your control.

Just to bring it all back, I think this is going to unlock hundreds of thousands, potentially even millions, of homes on Airbnb. And I think, most importantly, this is going to unlock more real people — regular people — renting the homes they live in, rather than more furnished, dedicated rentals, which is what a third-party property manager would likely do.

That’s the main thing we announced, but of course, that’s not it. As you know, twice a year, we want to make these big upgrades. We can talk a little bit more, if you want to go into it later, why we do these. Because it’s a different way. We develop software a little more like a hardware company. Instead of just doing this continuous development every hour of every day — we do some of that — we try to have these big, single moments where we bring a lot of upgrades together.

We also have more than 50 upgrades for guests. The basic idea is to make Airbnb a more personalized experience. For decades, if you went to a travel website, whether it’s Expedia, or this or that, you’d have the same exact search experience as someone else. It’s not personalized to you, and we think travel should be more personalized. We have a whole bunch of features and upgrades that really personalize the search experience based on the past bookings you’ve done and what we know about your profile.

So those are the basic things we’ve done: 70 upgrades. The final thing I’ll say is these 70 upgrades are 70 out of 430 upgrades that we’ve made over the last two years. So I think this system of launching has really accelerated product development at Airbnb.

I want to come back to the product development cycle. You do it all very differently, but I want to stay on the Co-Host Network for one second. That is professionalizing a huge portion of Airbnb. I know some professional hosts and management companies who do other properties. Their point of view is, “You’ve got to find us. We’ll market to people who own properties, and then we’ll put you on every platform.” You’re going to do all the discovery of finding a co-host, and then negotiate a cut, and then handling the splits on your platform?

Yes.

Is that to just bring a more professional class of management companies directly into Airbnb?

No. Actually, let me break this down. So, there’s a lot of third-party, professional property management companies. If you’re a third-party company, you don’t want to have a business with just managing five people, building your own website, and building your own demand for five people, for five properties. You tend to need economies of scale, so you’re going to be managing hundreds of properties, even thousands of properties.

If you manage thousands of properties, now you have a whole bunch of employees. Then, you probably have a company name, and your employees probably wear a T-shirt with a company name on the T-shirt. This is basically just a little more of an industrial hospitality experience.

Someone might argue that it’s a little more like a hotel. There can be pluses to that from a service standpoint, but for a lot of people, this is a little bit different than the original ethos of Airbnb of “living like a local.”

Number one, every single co-host is vetted by Airbnb. We go through everyone’s profile. We only allow people who have high ratings in Airbnb to be co-hosts, so these are the very best hosts in Airbnb. Additionally, we bias towards people that manage only a few properties. The reason why is we noticed that the more properties you manage, the lower the five-star rating after a certain scale. There are some property managers who are amazing and defy this, but generally speaking, hospitality is a difficult thing to industrialize. People want a local feel, as compared to Amazon, delivery, or other types of businesses where scale makes the service better. Hospitality at scale often makes the service more challenging.

I think this is maybe an alternative to the extremely professionalized third-party property managers, and in some ways, it kind of moves Airbnb a little closer toward the roots. Again, I think we’re going to bias towards more regular people putting up their real homes, rather than more dedicated rentals. So that’s where we’re going.

Now, just one caveat. If anyone’s listening and they work at or are a third-party property manager, we love the ones guests love. Although the average rating across the board isn’t as high, there are some unbelievable property managers, and we love them.

The last point I’ll just make: it is true property managers are more likely to — you might call it cross-list. They’ll cross-list their inventory on many different platforms. One of the core values of Airbnb is that you come to Airbnb to find something you can’t find anywhere else. If you can find it everywhere else, then we’re just another e-commerce platform, and we’re not adding a lot of value. So the co-hosts on Airbnb are exclusive, and those properties are exclusive to Airbnb.

One of the reasons I always like talking to you is that Airbnb has all of the challenges of… I don’t know, an internet video platform? It’s a platform of suppliers and audiences, but then you’re managing this very physical thing that seems very challenging.

Here’s the thing people don’t realize. Airbnb is a harder business to run than it appears. Apple does not appear to be an easy business because one device is like a miracle in your hand. OpenAI doesn’t appear to be an easy business. But Airbnb does. The reason Airbnb appears to be an easy business is because, at a sub-scale, it is an easy business. If you wanted to just find a home in Croatia, you don’t even need a website. You can just get a friend, and you can get a house.

The part that makes Airbnb hard is that there are 4 million people per night from nearly every country in the world — more countries than Coca-Cola operates in — living together. That’s the part that makes it hard: the scale. And the scale is the only way you can actually do this profitably, or very, very profitably, as well. That’s the part that makes it really difficult.

I remember… I think it was Doug Leone from Sequoia Capital (this was like 10 years ago). He came to my office and he said, “You have the hardest business of any of the Sequoia portfolio companies to run. First of all, you have to have a mobile app, and you need a website.” This is when Uber only had a mobile app. “So you need to be on every platform. You need to be in every country in the world, but you need supply and demand, and they’re not in the same city.” Uber could go one city at a time; they can get riders and drivers in one city. We had to get supply everywhere and demand everywhere, and perfectly match the corridors. It is highly regulated — as regulated as Uber, probably even more regulated in many ways. The hotel commissions and the hotel trade councils are significantly more powerful than the taxi unions. So this is a very, very difficult business.

We’re handling a lot of money through the platform: over $90 billion a year, which is the GDP of Croatia. We have to deal with physical safety, and more types of physical safety than even ridesharing because of a myriad of things. Obviously, there are a lot of accidental issues that can occur. You have to deal with some of the hardest customer service challenges you can imagine. Somebody checks in at 11PM in Paris. They’re from Tokyo, they don’t speak French, and the host isn’t responsive, so they have to call customer service. You start to think about how you have to manage the quality of supply that you don’t actually own or control. But you have to influence the quality, and you’re competing with an alternative supply that has a front desk. By the way, I could keep going on and on…

Or a search problem. People think that Google’s got one of the hardest search problems, and Airbnb’s got a more pedestrian search problem. I’m not saying we have search technology like Google, but here’s the difference: you type something in Google, but when’s the last time you needed to look at a third page of Google? The first five results are the only five results you need. If you’re typing in “Paris” and you need a house, we have 150,000 homes. Suddenly, this is a matching problem, not just a search relevancy problem where there’s just one right answer. So it is a harder business than meets the eye, and that’s just our core business. That doesn’t involve taking this business and expanding the model to new categories and verticals.

One of the reasons that I like the framework of “it’s a platform” when I chat with you is I can just come up with ways that I would game any other platform, and ask how you would solve those problems. So how would I game TikTok? How would I game YouTube? How do bad actors use those platforms? It seems like you have a lot of those same challenges.

It’s a cat and mouse game. It is so challenging. I’ll give you an example of something we found. There was an entire industry of companies that emerged — that we caught, and we stopped them — that were advertising that they can get your bad reviews taken down. They knew how to call customer service, and what to say to get your negative reviews taken down. That became not only a fraudulent activity, it became an industry. There were entire companies built around doing this.

Of course, that is fraudulent, so you have to stop that stuff, but the thing that makes Airbnb so difficult in this way — and probably more difficult than, say, a video platform — is its longer tail. On YouTube, people can game things, but generally, a disproportionate number of views go to certain videos. For Airbnb, that’s not possible. Only one person can stay at the house at a time, or one family can stay at a time. It’s a long tail, and it’s in nearly every country. So, there are a lot of different schemes that can occur.

The reason I brought that up in the context of Co-Host Network is that it seems like professionalizing or certifying that class of user on Airbnb goes a long way toward ending some of the gamification that occurs in the platform.

Hundred percent. To maybe oversimplify one of the trends that we’re doing at Airbnb, we are managing more of the inventory and verifying more of the users at the simplest level. It’s really important to understand the history of where it even came from.

Starting Airbnb was in the context of eBay and Craigslist. In fact, I think when I started Airbnb with my two friends, eBay’s market cap might’ve been higher than Amazon. It wasn’t obvious Amazon was going to be the winner. It kind of really pulled away, but eBay was the marketplace, and Craigslist was how most people found housing. It was completely the Wild West. It pretty much still is today. There was really no management of inventory.

We thought about how the internet is like an immune system, and what you should do is give communities tools to moderate themselves: so flags, reports of suspicious behavior, but, most importantly, a review system. We built this really powerful review system where about two out of three people, after they book an Airbnb, leave a review., and two out of three hosts leave a review. We thought, “Oh, this is great.” It turns out that is necessary, but not sufficient. So over time, we’ve been in the business of managing more and more of the quality ourselves. We’re very hands-on with quality control. Most new services we actually vet and certify ourselves. We think reviews are important, but we don’t want to put the entire burden on the user base.

Again, there’s a lot of ways to game things, so you’ve got to be very hands-on. But the more things you verify, the more things you inspect, the more things you certify, the fewer areas there will be to exploit a company.

Let me put that right next to the platforms. Forgive me, but we’re however many days away from the election, and the thing I see with all of the major social networks right now is that they’re doing less moderation.

Yes.

They’re less interested in verifying things are true or false, or even that people are real and not AI. You just see it all over the place, they’ve taken their hands off. Airbnb’s platform, you’re saying, “We’re doing more, we’re certifying more things.” When you sign up and you want to rent the room in your house while you’re gone on vacation, here’s a list of approved co-hosts. Here’s experiences that we’re designing with professional designers.” Why the difference? Why is it all the other platforms are letting go, and you’re grabbing on tighter?

I have a theory that I’ll share. In our business, it’s obvious what the customer wants. The customer wants more moderation. They just do. I never heard a customer say, “You are controlling the inventory too much. You are removing too many bad listings. You are penalizing hosts that are making me unhappy.” They actually call and say the opposite, like, “How dare you.” They get very upset and personal when a home doesn’t work out, even if it’s not our home. We’re just the platform. So we are consistently held responsible by the customer for the content on our platform. So number one, the customer is expecting this.

Number two, the economic incentives are very clear. This is not an advertising platform where the product and the business model are separate from an aligned interest standpoint — they’re completely connected. You can start to see a bad Airbnb, and people then don’t rebook on Airbnb, they don’t come back. So there’s a really clear economic incentive.

The last thing is Airbnbs are just not that politicized. People just want to have good vacations. You don’t have the myriad of political issues and baggage. I think when it comes to platforms like X, YouTube, Instagram, or TikTok, it’s not clear what the customer’s asking for. On the one hand, users want veracity of information, but on the other hand, I think they’re very skeptical of the hand that platforms are putting on the product — in our case, they’re not.

I think that we’re going to look back at history, and the platforms that are going to be most successful are going to be the ones that have the greatest truth and veracity of information. And veracity of information starts with, “Are these people real? Are they not real?” I remember emailing [Elon Musk] when he first acquired Twitter, and I gave unsolicited advice, which was that you should verify 100 percent of the users on Twitter. They decided not to do that, and I didn’t even really have a conversation with him.

They did almost the opposite, actually.

Yeah, but I would’ve done that. I would have verified 100 percent of the users. I still think a platform that verifies every single person is a really good idea, and that’s what we do right now. Now, there might be reasons not to verify, like you just want to… I don’t know, maybe people are nervous about verification if they can’t be whistleblowers on platforms?

But again, a lot of the reason people don’t want moderation is they distrust the companies. They believe the companies are politically motivated and they’re putting their thumb on a scale politically for free speech. This becomes an attack vector for politics. I think before you moderate content, you should moderate people. You should moderate not if they should be kicked off the site or allowed on the site, but are these real people? Are they who they say they are, and are they allowed to use pseudonyms or not?

I think in the speech context, there’s quite a long history of debates about anonymity. We can set that aside in the context of Airbnb, but it’s interesting how the platform is expressed in atoms for you and bits for them, which result in very different incentives.

Totally.

The part where you’re taking more control of the experience, because you think that’s perfectly aligned with the customer, at some point do you just end up with a front desk? Are you just running the hotel? It seems like that’s the farthest end of that journey.

I love how you think because it’s good to take logical steps towards that conclusion and ask, “Where do you draw the line?” I think we want to have almost all the benefits of a hotel while retaining the benefits of Airbnb. So let’s just break them down.

The benefit of an Airbnb is that every room and every home is different. There’s no SKUs. Hotels are such commodities that you never see the room you’re booking. You don’t even know the floor you’re booking. You book a hotel room, and you don’t even know the floor you’re on, let alone what view you have. By the way, it doesn’t really matter because they’re kind of all the same, or at least the hotel kind of trains you not to care. That is the definition of commodity. It’s such a commodity that you don’t even have any choice. You just choose the hotel, and you barely choose the room — maybe you choose the tier of the room.

We want every space to be unique. We want every space to be one of a kind. We want our experience to be as personal as possible. Yes, there are more professional managers today than there were 10 years ago, but generally speaking, 90 percent of our hosts are still regular people. We want to feel like when you step into an Airbnb or you travel to a city, you’re living like a local. So those are the things we want to retain.

We really want it to be their home. We don’t want to create an Airbnb aesthetic, right? I’ve been asked, “Why don’t you guys do a deal with IKEA?” Well actually, that’s not really what people want. They don’t really want a standardization of design. They really want, when they’re in Paris, to feel like they’re in Paris. They don’t want to feel the same as they do in Kansas City or somewhere else. But hotels start to feel more similar, especially chain hotels.

But what we do want to do is match the hotel service as much as we can. There isn’t a front desk, but can we create a remote front desk? Can we have more 24/7 support? Can we use AI to level the playing field of the front desk, where AI can be immediate, it can be multilingual, it can adjudicate?

AI at least can be a frontline that can adjudicate disputes between guests and hosts better than a real person. What you can do is you can train it on the corpus of like 100 policies, and then it can look at the last 100,000 times somebody complained about this, and figure out what the most likely resolution was that led to satisfaction for both parties, You can actually train a model to spit out the right answer, and they can either directly spit out the answer as the frontline through the app to the guest and host or, if you do want to talk to a person, it can help the customer service person.

So, I think we want to manage Airbnbs more before they become ours. Not even that it would be a bad business model, but I think it would start to cut into the ethos of feeling like you’re living like a local and being truly authentic.

Where’s the last step of that? Is it just owning the property? Is it taking the booking directly?

I think that there are steps beyond this. The step beyond this that we haven’t gone to is that you have to apply to list on Airbnb. We have certain quality criteria, and if you don’t meet that, then you can’t list on Airbnb. That’s probably where we’re going within our new verticals, which we’re going to launch starting next year. Amazon had this moment where they were just selling books, and then in the late ‘90s, they decided to go just outside books. What’s adjacent to books back in the ‘90s? DVDs and CDs, and then they went further and further. So we’re going to have that Amazon moment.

For the new verticals and categories we’re launching, I believe we’re going to have an apply-to-list model where you have to apply. So we’re starting to have an opinion on quality. That is going to be the next step, and probably the final step. The step beyond that is actually owned and operated, and we don’t own or operate anything except for these promotional listings that people might know of, which are called Icons. We built a 40-foot tall Polly Pocket clamshell. Yes, we own and operate that, but that’s really marketing that generates a lot of views. We’re not really in the business of owning and operating anything.

Going back to this idea that you’ll have some set of people who will apply, I just keep coming back to the history of various platforms. YouTube, for a while, had these things called multi-channel networks, or MCNs. They were like big companies, and they would buy a bunch of popular YouTube channels. They wanted to be preferred suppliers to YouTube.

Interesting.

YouTube decided this was too big of a risk. They didn’t want anyone to have that level of control over YouTube, so they basically killed all the MCNs. There’s books about it now that you can go read. Do you ever foresee yourself as having that kind of supplier on the Airbnb platform? This would be a hosting provider that provides the kind of experience at this level that you can trust, and they’re going to own and operate the actual property.

What we’re probably going to have in the future are more standardized quality tiers. So there’s going to be a standard to list on Airbnb, and then there’s probably going to be — depending upon the vertical — different levels of certification or quality. The quality could be based on their expertise in the real world, or it could be based on what customers are saying on Airbnb. For example, we have this designation, called “guest favorite,” which are 2 million of the best homes in Airbnb based on ratings, reviews, and customer service tickets. So I think we’re going to do more of that and that’s probably where we’re going to go.

I’m interested to see how that plays out.

It’s all going to play out over the next 24 months.

I’ll give you another really dumb example. BuzzFeed designed its entire business on being the best at Facebook. And one day, Facebook was like, “Well, we don’t need you. An army of teenagers will just make Instagram for us every day.” And now, BuzzFeed is whatever business it is.

You can see whatever your tier is — call it the A tier in Nashville — then someone will be like, “We’re just going to dominate the A tier in Nashville, and Airbnb will have to deal with us.” Is that an eventuality you’ve thought about?

I think it’s a little bit different because you don’t have the consolidation of inventory in the same way. Let’s take YouTube. A MrBeast video can get 100 or 200 hundred million views. You can’t have a single Airbnb be that popular, so the entire marketplace is significantly more long tail. We’re in 100,000 cities; no one city represents even 1 percent of our business on Airbnb.

So generally, there has been this move towards a little more consolidation of inventory via professional property managers, but it’s not been that much. Again, for the last four years alone, 90 percent of our hosts are individuals, and that number has remained pretty much unchanged. I think many of the new products and features we’re launching are going to enable more people to allow more long-tail inventory onto the platform. That’s generally where we’re pushing.

Does it benefit Airbnb to have less consolidated inventory on the platform? It probably does because they’re less likely to cross-list. But it would be a bummer if we did that, and it was misaligned with a customer. There’s a chart I’ve put out before that shows the number of properties you manage in your five-star rating, and quite literally, it is a perfectly curved downward slope. The highest-rated Airbnb hosts manage one property. The second-highest manage two, and down to 1,000. There is not one single deviation from one to 1,000.

Wow.

It’s crazy. It doesn’t mean that all people managing 1,000 properties are bad. It just means that most people haven’t figured out how to industrialize hospitality. Let me give you one other argument for why regular people can sometimes work well economically.

If I’m a dedicated rental, I need to build a profit margin because I’m a business. So, I have rent, and I need to be careful about any cost I incur. If we’re in a house, I might have four books, but maybe I won’t have 20 books because books five through 20 are an additional cost I’m putting into my Airbnb. I might have six coffee mugs, but I’m not going to have 10 coffee mugs. I might not have a KitchenAid mixer. These are all costs I have to bear.

If it’s your real house, you might have all this stuff anyway because you live there. You don’t need to charge a daily rate that has a profit margin because this was unsold inventory that you weren’t monetizing, and now you’re monetizing it. It’s another one of the economic dynamics where non-professionals sometimes have an economic advantage over professionals. This is just one example. Their homes are equipped, and the fixed cost is an investment they’ve already incurred. This might be another way of saying it.

Well, I’m very interested to see how Co-Host Network plays out.

Thank you.

When it’s your fourth time [on Decoder], we’ll check in on the platform dynamics.

I cannot wait. I love these conversations, and the thing I appreciate is the depth that you go into.

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

Let’s do it.

I said earlier that “I think the founder mode conversation and Decoder questions have pure overlap.”

Yes.

The last time you were on the show, you described re-orging Airbnb. You restructured the company, you went onto this roadmap where you shipped twice a year in big deliveries, and you said, “I got rid of all of these middle managers, and I’m the product manager, and everyone rolls up to me.” And I thought, “Oh, this is-”

Chief product officer.

Chief product officer. And I thought, “This is great. This is what I want out of a Decoder conversation.” Then a year passes, and you give a talk, and I thought, “I’ve seen that talk before. That’s the ‘we don’t have PMs,’ right? I’ve heard this from Brian before.” Then, Paul Graham goes and writes a blog post called “Founder Mode,” and everyone reacts to it. Is there something meaningfully different than the way you have structured Airbnb and founder mode? Am I missing something? Has something changed in that chronology?

I don’t think so. Let me put it this way: it’s not like I’m suddenly running the company differently than a year ago. It’s just that now it has a label, and I think it makes sense to everyone. Let me give a little bit of background on that talk.

You gave the first version of this talk at a Figma conference, right?

Yeah, and the Figma conference was maybe a quarter of what I said. I’ll do the short version because I know we have limited time, but let me give a little background. As you know, from 2009 to 2019, I ran Airbnb the way most tech companies run their companies. I didn’t know how to run it, so I hired people from Google, Amazon, Microsoft, and other companies, and they brought their processes with them. We kind of reverted towards the way everyone runs their company. I remember that we were kind of a matrix organization with 1,000 employees, and like almost all matrix organizations, it was hard to get work done.

I’ll give you an example. There was a creative marketing department that would have to create graphics for different teams. Then, we kept hiring subteams that kept asking more and more from the graphics team. It was called the creative group. At some point, the creative group was like a deli, and they had these lines out the window. They just kind of threw their hands up. If you needed anything done, let’s say you were a team and you needed a button designed, or a graphic for a button design, it would be like a three-month waiting list because they were inundated.

So then the team said, “Well, give us our own resources. Give me a dedicated creative person,” and this could also be true for technology, finance, a legal team, any function. And this is when you start to divisionalize the company. Quite literally you’re subdividing it. This is where the general management structure comes from. It makes a lot of sense why this happens.

The problem with that, though, is that once you subdivide the company, the company starts rowing in different directions. Now, you have even more bureaucracy because the groups don’t want to work together. They’re incentivized to work on different things, and they might not be totally compatible anymore. Ten teams can have 10 different tech stacks, and they don’t actually fit together. A local decision that might make sense for your team might not make sense for the company.

The next thing is that these general managers are incentivized, typically, on output goals that you don’t usually run on P&Ls. They run on impact or growth, so they have to advocate for as many resources as possible. This is what we call politics. You’re advocating for yourself. So suddenly, groups start going in many different directions. Because the company’s going in many different directions, oversight becomes more difficult. When oversight gets more difficult, now there’s less accountability. You have people that are crappy, and there’s no consequence, so that makes people feel like it doesn’t matter. This is where complacency sets in. This is, I think, what ends up happening at big companies.

The big thing that I said about founder mode, and this is something I’ve said for four years, is it’s not about… Paul Graham coined it founder mode. I think it’s a good name, I think it’s very catchy. I could not have made something as viral as Paul Graham. But there is a downside to the name. First of all, people don’t know what founder mode is. They think it means swagger. I remember a tweet that said, “I’m going founder mode on this burrito.” I don’t know what that means. I think people think it means the founder swagger: “I don’t give a fuck. I’m going in, I’m kicking ass.” That’s kind of what it turned into, and only founders have that.

That wasn’t the message. If I could summarize founder mode in a couple sentences, it’s about being in the details. It’s that great leadership is presence, not absence. It’s about a leader being in the details. And if you as a leader aren’t in the details, guess what? Your leaders aren’t in the details, and their leaders aren’t in the details. And one day you’re going to wake up, and you have 50-year-olds managing 40-year-olds, managing 30-year-olds, managing people two years out of college doing all the work with no oversight, and you have these four unnecessary layers. You have no experts in the company.

So, the antidote to this is to try to be as functional as possible. We are a functional organization. Functional just means expertise-based, not general management-based. I’m the only non-functional person in the company; all functions roll up to me. I generally think the CEO should be the chief product officer of the company. The most important thing a company does is make a product. If the CEO is not the expert in the product, then why are they the CEO? Said differently, I should not be the CEO of SpaceX. I couldn’t be the chief product officer because I do not understand rocketry. So maybe I’m a good CEO, but I can’t be the chief product officer. There may be some exceptions, but I generally think that’s the case.

Your leaders shouldn’t just be “managers” (and I put managers in quotes), they should also be in the details. If we were a military, like a battalion, the cavalry general should know how to ride a horse. It’s crazy that they don’t. And leaders shouldn’t be fungible. So it’s really about being in the details.

Now, here’s the problem with the narrative being in the details. There’s a term for it, and it’s a pejorative. It’s called micromanager, and everyone’s afraid to be accused of being a micromanager. I had this thought because a lot of founder mode came from me studying Steve Jobs. For 10 years, I was at wit’s end. It wasn’t my first instinct to copy Steve Jobs’ leadership style, it was kind of a last resort. I didn’t copy everything, but I copied a lot of how he organized and ran the company.

A few weeks ago, I had dinner with his son, Reed Jobs, and I remember asking him what Steve’s opinion of micromanagement was. He had such an interesting perspective. He said, “Steve Jobs was in the details.” He would skip levels, many levels, to be in the details, which somebody who goes to Harvard Business School would never do. He said he never felt like he was micromanaging because he was partnering with people on the details. I asked people like Jony Ive and [Hiroki Asai], who worked for Steve, and I said, “Do you feel like Steve Jobs micromanaged you?” And they said, “No, he didn’t.”

I don’t know. Maybe I’m a micromanager, maybe I’m not. I think the distinction is that I remember one time an executive on my team asked, “Is this your decision or is this my decision?” And I remember saying, “It should never be either.” And that’s founder mode: it should never be either. It’s never your decision, it’s never my decision. We’re in it together. If you’re cofounders, whose decision is it? It’s your decision together. It’s the same thing hierarchically with the org chart.

So, that’s really what it means: great leadership is presence, not absence. It’s in the details. What a lot of founders do is they let go of the product, and they abdicate responsibility. Frank Slootman wrote a book called Amp It Up where he basically said, “To turn a company around, the CEO just needs to set the pace of the company.” You set the vision, but more important than the vision, you set the pace, you set the standards. And that’s what founder mode is really about.

By the way, you don’t need to be a founder to do that. You can apply founder mode to government, you can apply founder mode to a nonprofit, to a volunteer organization, to being a sports coach. It just means the leadership is presence in the details, and it’s not about being so-called autocratic because you’re not telling the experts what to do. But you know what they’re doing, and you’re working through, and you’re challenging them. And you should do this because, let’s say you have 10 experts. They might disagree. Finance says this is the best outcome, but that may conflict with legal, which might conflict with product marketing, which represents the customer, which might conflict with engineering, which is the schedule. So, you have to weigh all these trade-offs. That’s why you have to be in the details.

Maybe one other thing before we wrap up.

Oh, we’re far from wrapping up. I just wanted to let you know.

One tidbit I’d like to say about hiring, just as a thought. One of the most important things I do is have an executive team. You could think of them as C-level or SVPs. There’s about seven of them. Then, the next level are VPs, and there’s maybe 30 of them or 40 of them. I don’t really know how many there are.

Something I do that’s different from almost every other CEO in Silicon Valley (but I think [Nvidia CEO] Jensen Huang basically does this, Steve Jobs did this, Walt Disney did this, and Elon Musk did this) is I treat all the VPs as direct reports. Jensen got rid of the executive team. He just has 40 direct reports. That’s a little unwieldy for me. I’ve gone through that thought experiment of just having the VPs, and I can’t track everything.

But all VPs do a report. They report to me and to their executive, and I am the co-hiring manager. So instead of me hiring an executive, like a CFO who hires their people, I am the co-hiring manager. I do the kickoff, I’m the second interview, and, ultimately, I decide the final compensation for all the top people in the company, not the managers. The managers give recommendations, and I make the final decision. This is just a very practical version of founder mode, of being in the details. You don’t just hire and manage your executives, you skip-level and manage as many people as possible in a dual-reporting relationship.

So, the branding of founder mode has offered you some narrative clarity. It’s clear from the last time when we had a very similar kind of conversation that if I had to pull all of that back into what we’re really describing here, into the Decoder framework, I would say what you were describing is fundamentally “be a functional organization, not a divisional organization.” And that was the big change that you made the last time you were on the show. You’ve since made other changes, right?

Yes.

You just created this new role in the C-suite, chief business officer. You promoted your CFO into that role. Walk me through that. You’re obviously evolving how you’re thinking of the company and the roles within the company inside of this framework. How’d you make that decision?

One thing about functional, and then I’ll answer that question. I don’t think all companies should be functional, but I think they should be as functional as they can get away with. That’s the rule. [Andreessen Horowitz co-founder] Ben Horowitz had this saying: “Give ground grudgingly.” You should give ground grudgingly. All startups start as functional organizations. Steve Jobs said, “I want to be the world’s largest startup,” but he wants to still operate like a startup. So I think you should give ground grudgingly, and that’s the general philosophy.

I just want to say one thing about being a functional organization. There is one very specific downside: The downside of the functional organization is you cannot do disparate things. But here’s something I wanted to spell. It’s not true you can’t do as many things. It’s not true that it would be a slower-run organization. We’ve actually increased product development by being a functional organization, but we’re like one flywheel. We can’t create three other flywheels that are disparate. The only reason I believe a company should divisionalize is so that they could do truly disparate things that have disparate functional expertise. So, if we had a jet engine business, that’s a different functional expertise.

Now let’s go to the business organization. At most companies, there is no function called “business.” Maybe we can also call it revenue — business, revenue, commercial. There’s different names: chief commercial officer, chief business officer, chief revenue officer. They all kind of mean the same thing. The reason most companies don’t have this is because they have general managers, and the general managers play that role. The general managers are the mini-CEO and they own the business, and they usually partner with a finance person. Somewhere between the general manager and finance person, or maybe a data scientist, they’re the business function.

We found that the problem with that is, none of them are really experts in “business.” When I mean business, I mean revenue, the business model, the market size, what are the kind of dynamics of this market? Like with Co-Host, what should we charge? Should this be a free service? Do we take a commission? How does this compare to third-party property management services? Which countries do we roll this out in? What are the economics by country? Is it a standard rate? There’s just a lot of detailed questions one must answer.

So, we decided to create a chief business organization with three functions. One is supply. Supply was always a function at Airbnb, but it was kind of conflated with international and general managers. So we said, “No, no. There are experts in getting supply of homes, experiences, and other things at Airbnb.”

Then, we have a business function, which is quite literally the business counterpart to product marketing. If product marketing is nouveau product management, product marketing would be product management minus program management plus some outbound marketing, and it’s fewer people. That’s all it is. It’s outbound-inbound in one role. They are really thinking about what the customer wants and what the experience should be like, but they’re not in spreadsheets. They’re not business model people.

So they have a counterpart called the “business function.” With Co-Host Network, for example, we had a business person looking at the business model for Co-Host, we had a product marketing person who understands what’s the product, how are we going to market this, and why do people actually want this. Those two people have to go together. One reports to Hiroki — it’s product marketing, it’s more creative. One reports to Dave Stephenson, the former CFO now chief business officer, and they’re really the two parts of the continuum.

Then, you have a supply person. The supply person — based on the business organization, the business model, and the product marketing brief — has to now go get supply. They work with international, the third group in the chief business officer org, to then take that playbook and bring it to all the different countries. And, of course, the product marketing has their own three-legged stool with design and engineering.

But it’s different from other companies where product really directs design. I don’t like that, and I caused a bit of a storm at a Figma conference. Basically, I got taken out of context and people thought I said I fired all the product managers. What actually happened was that I got rid of the classic product management function, I reassigned the most senior product managers to be product marketers, and I reclassified most of the other product managers as program managers.

By the way, most product managers in Silicon Valley aren’t actually product managers. They’re glorified program managers, but they’re not even experts at program management. That’s all they’re doing; They’re making sure the thing ships. That’s program management, that’s not product management. So, this is what we’re doing. It’s a very simple organization, and it’s just a continuation of us being functional.

It’s funny that you say all this. If you asked my CEO, he would tell you that I scream that we should be divisional all the time because I think tech journalism is different from video game journalism and different from sports journalism, which is different from New York Magazine. At the end of the day, we all make one kind of thing, and there’s reasons to have central teams, and there’s reasons to share costs.

Do you ever find yourself thinking, “Okay, if I was in the other kind of organization, something else would be faster, I could make this tradeoff, but there would be a benefit to being in a more divisional structure?”

I think it’s really important to not be dogmatic and say functional is better than divisional, and I think it really depends on industries. In tech companies, functional is generally better because you can leverage shared technologies, everyone can row together, and you get economies of scale. I don’t know if you’re doing that in your business.

Okay, here are the two things — I said one, there’s really two. There’s two benefits to divisional. The first benefit is, you can do disparate things. We talked about that. . I’m just thinking of an absurd thing: we want to create a podcasting division. It would be really hard for the people designing the app and the marketers advertising homes to think about podcasting. Now we want to create a TV series. That’s really, really disparate, so we would struggle to do super-disparate things.

The second downside to a functional organization is that it takes longer to start. Because if you want to just get something going, you need to get everyone organized. But everyone organized has a multi-year roadmap, so they now need to make room on the roadmap. So, for disparate things that you can start quickly, a divisional structure is better. Those, to me, are the primary advantages of a divisional structure. There’s a theoretical third advantage, which is that you can hire so-called entrepreneurial-type people that don’t fit into a functional organization, but that one I don’t agree with. That’s a bit of a rabbit hole, so I won’t go there unless you want to ask about it.

That being said, once you get rowing… think about a bunch of us in a boat, and we’re rowing together. If there are 10 people in 10 boats, they can get going faster and they can go in different directions, but the 10-person boat is going to row faster than 10 one-person boats. So once you get going with the functional organization, what I basically tell people is it’s harder to get something on the roadmap, but if it gets on the roadmap, we put the weight of the company behind it.

I like that constraint. I like the constraint of anyone can’t just do anything because now we’re focused, now we’re prioritized, now we only do things that are differentiated. And the governor is that we only do as many things as I can focus on. That’s what I do. That’s what Steve Jobs did at Apple, and that’s what Walt Disney did at Disney, and that’s what Elon Musk does at Tesla. You only do as many things as the CEO can focus on and manage.

Now, this presumes the CEO is competent, intelligent —

Present.

Present. They understand the business. This doesn’t work if you come from management consulting, and now you’re a general manager who doesn’t really know the domain. That wouldn’t work as well.

You’re setting aside one topic, I’m just setting aside Elon.

Yeah.

I have a lot to say in response to that.

Exactly. Maybe Elon is a bit of a red herring because there’s all the surface-level things about him that are idiosyncratic, and I’m certainly not going to endorse everything he does because I do a lot of things differently.

But I think the commonality of him, Jensen, Steve Jobs, and [Mark Zuckerberg] kind of ebbs and flows. I know Zuck very well, and I think he would say I was a big inspiration for his year of efficiency because I talked about what we did Airbnb.I think those people are pretty close to functional, pretty in the details, they set the pace for the company, and they generally really know what’s going on at their companies.

I want to talk about micromanagement real quick, and then I want to end with decisions, which is the other big Decoder question that I always like talking to you about. You mentioned that it’s toxic, that people don’t like it. You mentioned that founder mode as a brand means people are just acting like jerks of their companies —

It means a lot of swagger, for better or worse, and I don’t think that’s really what it means.

And I actually think it is mostly for worse. I don’t think it is for better, in most cases. You’re outlining a very deep level of management thinking. You’ve thought about these companies a lot, you’ve thought about your own company a lot, and you’ve thought about these trade-offs a lot. There’s a general sense that you should be in the details, to not just hire smart people and let them do whatever they want. I talk to a lot of CEOs on the show, and they’re like, “My secret is that I hire smart people and I let them do whatever they want.”

I ask a lot of CEOs, “How do you make decisions?” I would say one of the most common answers we get is, “It would be best if I wasn’t making so many decisions, if my team was empowered, and all I was doing was breaking the hardest ties or making the biggest, riskiest investment decisions so they weren’t feeling that pressure.”

I totally disagree with that. I think I’ve heard Jeff Bezos say that more recently. He said, “My job is to make as few high-quality decisions as possible,” and I could not disagree more with that. Let’s start by saying that it’s not like I’m right and Jeff Bezos is wrong. When I say it, I’m also saying what Steve Jobs would have said. Was Steve Jobs right or Jeff Bezos right?

The truth is there’s multiple ways to do something. I’m strongly advocating for this way. Funny enough, I’ve talked to many people that were early members at Amazon, and that’s not how Jeff Bezos ran it early on. So, here’s the key thing: I believe you need to hire smart people. The paradox is that I believe most smart people want you involved, they want your partnership. They don’t want you to tell them what to do, but there’s this assumption that control is a zero-sum game. Either I have the power, or you have the power. And I think that’s the flaw.

There’s a scenario where all of us are powerless. It’s called most Fortune 500 companies. And there’s a scenario where I have more power, and therefore you have more power. It’s not like zero-sum, and I’ve wrestled control. I’ve found that the most talented people like my involvement as long as the involvement is constructive, it isn’t me telling them what to do and pushing them. It’s like, “What about this? What about that?” Steve Jobs went to Jony Ive’s design studio every 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 think this is a really, really important framework.

Let me give you one more. Somebody might ask, “Wait, you’re in all the details. How can you be in all the details forever? That seems like it’s not going to scale, and someday you’re going to get tired.” And the answer is they’re right. Here’s what most people do: They hire smart people, and they give them operating freedom. They have no idea if they’re good or not because they’re not engaged enough, and then over time, they start getting signals that the person isn’t good, and then they wrestle back control. Once they get involved, but they haven’t been involved for months or years, suddenly the executive loses their confidence because they’re only involved because they’re not doing well. That’s the beginning of the end, and then you replace them. This happens to every freaking company.

There’s an inverse, and I’ll use an analogy. I’m not a golfer. I’m terrible at golf. I don’t think I’ve ever even shot a hole. I’m terrible. But I did a couple golf lessons once, and I had a golf instructor who literally coached me on every single swing. Thank God I had the golf instructor because if I just went on the golf course on my own and I swung 1,000 times, I would have had a really screwed up swing by the time the golf instructor got involved, and it would take even more work to retrain my swing.

So the golf instructor said, “I’m going to watch you swing thousands of times, and eventually this is muscle memory, and I won’t need to watch your swing over time.” That’s my philosophy. My philosophy is you start in the details. You’re involved in every single thing. You hire great people, and you’re in all their details. Over time, once they develop muscle memory and they prove that they understand the system, then you can gradually let go.

To give you an example: Two years ago, I wanted to write perfect press releases not because I think anyone reads them, but because if you can’t put your ideas down in a clear press release, then you don’t have clear thinking. You don’t know why you’re doing something. Two or three years ago when we did press releases, we’d do as many as 70 revisions. And people said, “This is completely crazy. Are we going to — 10 years from now — do 70 revisions of press releases?” And the answer is no. The most recent press release for the Co-Host Network I probably reviewed three times.

But it was the repetition in the details, that’s how people learned. They were saying, “That’s apprenticeship, you learn.” Even if you hire experts, they’re not experts at your company, they’re not experts at collaborating, they’re not experts in your business. So, it’s about starting in the details and letting go. That’s what I think Jeff Bezos did, even though he said his job is to make only a few high-quality decisions. That’s not what he did in 1999. So that’s kind of my philosophy.

Let’s talk about decisions, actually. This is the other Decoder question.

You’ve been on several times, and I’ve asked you how you make decisions several times. I went back and looked. When you were on this show the last time, I asked, “How do you make decisions?” and you said, “Let me tell you a long story.” It was about various Airbnb controversies where you had to make big decisions. And you said, “I’m going to have to make so many decisions that I went to all my team and I said, ‘Here are our principles. Trust me to use these principles, and this is how I’m going to make decisions.’” Is that still the framework, that everyone just agrees on the core principles?

Pretty much. What I basically said was, “You want to make principal decisions, not business decisions.” Principal decisions are: if I don’t understand the outcome or if I can’t predict it, how do I want to be remembered? What do I think is the right thing to do? That can sound very subjective, but actually, you would have thousands of inputs. So, that’s essentially what I do. It’s kind of interesting because it’s kind of like somebody asking you, “How do you do what you do?” You might not even consciously know how you do what you do.

But what I’m doing is, I am basically making a decision. Somebody once said, “The most important thing leaders do is make decisions.” And it’s probably true. Maybe the most important thing is they hire people, and they assemble the right team. But probably day-to-day, the most important thing they do is make decisions. It’s really important that people understand the criteria off which you’re basing decisions. …

I went to my board and I said, “I’m going to have to make 1,000 decisions. I can’t run every decision by you, so let’s agree on the principles and the framework for which I make all the decisions. Then I’m going to make all the decisions, and if something stands out, I will elevate it to you. I will retroactively show you all the decisions I made. If there’s something that’s huge about the company and one-way door, I will tell you ahead of time. Otherwise, give me authority to make all these decisions.”

That’s what I did with the board. They really liked it because the key to a crisis is speed, and if I have to debate every decision, we’re not moving quickly. It’s like a car chase. Should you turn left or right? Well, most importantly you should turn quickly. So that’s what I did.

Just to go back to the golf swing analogy, the way I run Airbnb is I review all the work — every week, every two weeks, every four weeks, every eight weeks, every 12 weeks. You might ask, “How do you have people do a report? How do they keep two people happy?” And the answer is, we’re all in the same meeting together. I usually have my direct talk first because if I talk, you’ll just agree with me, and then I’ll make the final decision. Most of my final decisions are just agreeing. Ninety percent of time I’m agreeing with what the team says, and 10 percent of the time I’m disagreeing.

If I disagree, I always try to say why. I try to go down my thinking and challenge my first principles. So whenever I make a decision, I try to ask myself, like I did in this conversation, “What are the first principles driving this decision?” Don’t challenge my decision, challenge my first-principle thinking. In other words, here’s my answer, check my math. That’s kind of what I do. So the principles are really, really important to get pre-authorization from a board and to make a lot of fast decisions.

I’m not in a meeting reviewing Co-Host Network with a series of four principles. I’m just intuitively making a decision. “I think we should do X and here’s why, and let me share with you my work and my thinking. What do you think? What about this did I get right or wrong?” The most important thing is to debate the first principles, not the answer.

Does the company know the principles that you use to make decisions? Is that published? Is that a thing you talk about?

There’s not a single list. There are core values. There are strategic differentiators, like the things that you put in your S-1 so people know what you stand for. There are those general things. Actually, here’s another way of saying it. I don’t push decision-making down, I pull decision-making in. I think of the company as one shared consciousness.

This is a story. I think it will be worth it. One time I called Ron Johnson, who worked for Steve Jobs. He ran Apple retail. I remember asking how Steve Jobs ran Apple, and [Ron] said, “Even when Apple was like 20, 30, 40,000 people, he only ever thought of Apple as 100 employees.” That’s why he had this offsite called Top 100. He said his job was to only manage the top 100 people, and they manage everyone else. He never thought about the whole company.

That’s kind of what I do, and maybe it’s even fewer people, like 60 or 70, so I don’t manage all of Airbnb — I manage the top 60 or 70 people. But I’m very engaged. I pull them in, and I create one shared consciousness. If you were to interview every single one of my senior people, I don’t think they would have pithy word-for-word verbatim principles, but they would be able to describe exactly how I think because we’re in so many meetings together.

I remember I was at a group dinner with Scott Forstall one time right before he left Apple. He said he used to spend 35 hours a week with Steve Jobs. Not one-on-one, but he was in every meeting with Steve. So, think about that: 35 hours a week, every single week. That’s thousands of hours. That’s the equivalent. I don’t spend 35 hours a week with most people, but there are many people that spend 10–20 hours a week in a room with me. It’s the same few dozen people going through different meetings, creating one shared consciousness, and being able to finish each other’s sentences.

That’s another version of founder mode: It’s one shared consciousness. So, you can imagine, that’s not disempowering. It requires collaboration. If you want to be a lone wolf or a cowboy, that’s not going to work. If you’re willing to work with other people, you’re actually pretty empowered in this way.

We’ve got to wrap up, but I need to ask you one very important question that I’ve been thinking about this entire time. You’ve mentioned Apple, Steve Jobs, and Jony Ive a bunch of times. I know that Airbnb works closely with LoveFrom, which is Jony Ive’s company. I’m looking at a New York Times article, and it says, “The clients pay LoveFrom as much as $200 million a year.”

That is absolutely not true.

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

No, I’m not going to say what we pay, but that is so not true, and that’s not even close to true.

Okay. You’ve talked about Apple a lot. They don’t have Steve Jobs anymore, they don’t have Jony Ive anymore. They have started a bunch of divisions to do all kinds of other things. Do you think that’s sustainable for them?

No.

You are one of the closest watchers of this company I can think of, and I’m very curious what you think.

Okay. I’ll wrap up with my view on Apple.

I think Tim Cook has done an extraordinary job, especially given the cards he was dealt, right? What alternative was there? Steve died. I don’t know the circumstances, but I think it was that he resigned in August and died in October, only eight weeks later. So there’s only an eight-week window between resignation and he’s not even there. It’s not like Bezos retired, but he’s the executive chair. I think that Tim Cook basically took Apple from $300 million to, whatever, $3 trillion, added more than 90 percent of the market cap, and it’s done very, very well. He’s a great operator.

A couple things to say, though. Number one, just because Tim added $2.7 trillion in market cap and Steve added $300 billion doesn’t mean that Tim did most of the work. He inherited the most valuable product of all time, and there was just really continuing momentum —

The iPhone.

The iPhone, probably the most successful product in the history of capitalism. I don’t think that any other product has generated more profit — maybe not more revenue, but more profit — than the iPhone. The most successful company probably in the history of capitalism, or at least certainly the last 25 years. It’s crazy when you think about it. Then ask yourself a couple other questions. Let’s imagine Steve Jobs didn’t die in 2011, he died in 2005, right when the iPod Video had just launched. Would they have come up with the iPhone? They might have. Would it have been the most successful consumer product of all time? Maybe not. I don’t know who would have done it.

My general philosophy is that Tim was in an incredible period where what they really needed to do was maybe not invent a new product, but take the most successful product of all time and scale it, manufacture it, and make it completely ubiquitous, and he did that. But the technology industry… I mean, the word technology may as well be a synonym for the word change. We’re in the change industry, and it is very, very dangerous to not be constantly changing. If you’re a company that makes devices, the most important thing you need to do is make new tools and make new devices.

I saw a Bloomberg report that said Apple is moving away from launches, and moving more towards services. They’re going more divisional. My unsolicited advice is that whenever Tim decides to retire, the next CEO should also be the chief product officer. I asked people, “Who was the chief product officer at Apple when Steve was alive?” Everyone said, “Steve.” It wasn’t Phil Schiller. Phil Schiller was a great SVP of product marketing, but he wasn’t the chief product officer. That is a product company, and you really want to make sure long-term that a product person is driving the company.

This goes to the very awkward thing that no one wants to talk about. Succession planning is hard because the people that are great product visionaries are typically young. They’re young and they’re less mature. Who wants to put a young, not-super-mature person at the helm of a giant company? Founders are allowed to manage people older than them because they’re the founders. If you’re not the founder, people just don’t want to be managed by somebody younger than them who’s maybe a virtuoso, a wunderkind, but they’re a little immature. The companies don’t want to take that risk, so they bias towards senior, grown-up, functional experts. But typically that function is not the product, and I think that’s a problem.

Satya [Nadella, Microsoft CEO] is more technical. I think that has afforded them more, but he mostly just got them back to Bill Gates’ primacy. I think Apple should go back to having a CEO that’s the chief product officer. I think it should rein the company in and simplify how it operates, but that’s just my opinion.

Would you do that job?

I think Airbnb is the right job for me, and they definitely need somebody who has hardware experience.

Fair enough. Brian, it is always a pleasure talking to you. We’ve got to have you back sooner than a year.

Thank you, Nilay. I love this.

Read More