EP135: The Airbnb Story with Leigh Gallagher

EP135: The Airbnb Story with Leigh Gallagher


Airbnb owes much of its success to the visual appeal of the site, which has been referred to as “Pinterest meets real estate porn.” But did you know that in Airbnb’s early days, Brian and Joe spent time with hosts in New York and took the pictures themselves to help upgrade the listings?

The Airbnb story is a compelling one, and you might be surprised by many moments in Airbnb history that made a significant impact.

Today Jasper chats with Leigh Gallagher, Fortune editor and author of The Airbnb Story: How Three Ordinary Guys Disrupted an Industry, Made Billions … and Created Plenty of Controversy. They discuss the company’s early struggles, pivotal moments in their growth and development as well as the ongoing controversies that plague Airbnb.

Topics Covered

The inception of Airbnb and its early struggles

  • Joe and Brian met at RISD
  • Rented out their apartment in San Francisco to pay rent
  • Each racked up $20,000 in credit card debt during development
  • Launched at SXSW but gained little traction in first year
  • Investors skeptical due to issues around safety

When Airbnb finally began to turn things around

  • Pushed to apply for Y Combinator in 2009
  • Received critical advice from Paul Graham
  • Go to your users
  • Do things that don’t scale
  • Obtained investment from VC Greg McAdoo

The major challenges of creating a company around the Airbnb product

  • German competitor Wimdu
  • Ransacking incident in June 2011
  • Building a culture
  • Hiring seasoned executives, i.e.: Chip Conley

How Airbnb shifted from technology to hospitality

  • Began as a platform with software as product
  • Realized hosts were product
  • Sought to formalize standards and teach hospitality at scale

Airbnb’s grand ambitions to expand to products outside homes

  • Experiences
  • Restaurant reservations
  • Event booking
  • Flights
  • Other services

The controversial aspects of Airbnb

  • Legal challenges
  • Neighbor issues
  • Safety incidents
  • Discrimination

Connect with Leigh

leighgallagher.com

 Resources Mentioned

The Airbnb Story on Amazon

Connect with Jasper

Email: [email protected]

Twitter: @GetPaidForUrPad

Instagram: @GetPaidForYourPad 

Facebook: www.facebook.com/getpaidforyourpad

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Complete Transcript for Get Paid for Your Pad Episode 135

Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.

Jasper: This episode is brought to you by Hostfully, a company that helps you make beautiful guidebooks for your listing. Make your own at hostfully.com/pad, and a special for Get Paid For Your Pad listeners, you’ll get a free guidebook consultation after you make your guidebook.

Welcome, everybody, to another episode of Get Paid For Your Pad, and today is a very special episode because we have somebody on the show who wrote a book about the Airbnb story. She’s also a Fortune Magazine editor, and her name is Leigh Gallagher. So, Leigh, welcome to the show.

Leigh: Thank you so much, Jasper. It’s great to be here.

Jasper: Now, the Airbnb story is, I think, one of the most fascinating and inspiring stories in the start-up world of the last 10 years, but maybe even in the history, and so I’m really excited to talk about this topic. I actually published a blog post about a year ago, where I really dug deep into the story, and I dug up all sorts of old articles and all sorts of stuff to really understand the Airbnb story well, and I thought it was absolutely fascinating.

But first, I want to ask you, why did you come up with the idea to write a book about the Airbnb story?

Leigh: Well, yeah, it’s a great question. First of all, it’s such an honor to be here because during my research, I listened to a lot of your episodes, so it’s really nice to now be here talking about my book.

So, I guess, a little bit on my background, I’m a journalist, I cover business generally at Fortune Magazine, so I’m not really a tech reporter, per se, but what I do like to cover are sort of big, broad social movements that are kind of rooted in economic data or some kind of business story. And several years ago, I mean, Airbnb had obviously come onto our radar at Fortune, it had come onto my radar. When I first heard about it, it was back in 2008 or 2009, and I write about this in the book, I actually sort of rolled my eyes and I thought, “Ugh, that’s just an old idea. I’ve used VRBO and HomeAway for years, and all these hotshot tech companies think they can just slick up the design.” So, I really thought that these tech companies are just constantly issuing new websites around old ideas, and I just said, “Ugh, this is just another one of those.” And, you know, obviously, I was wrong to dismiss them.

And so, a few years later, I actually had the chance to interview the CEO, Brian Chesky, at a Fortune conference, our Fortune Brainstorm Tech Conference, and that was one of the first times I really dug into this company and its growth. And this was back in 2011, 2012, and the numbers were just shocking. And, obviously, by then, it had also come under our radar in a much bigger way. Just the usage numbers were just growing very, very, very fast. It clearly had struck a chord.

And then, once I started to learn a little bit more about Brian and the company’s story, I just was fascinated. You know, nobody wanted to invest in this company in the beginning. It became wildly successful way more than anyone thought it would. It struck this chord with the consumer for a number of reasons that we can talk about. And these three guys who were kind of outsiders… I mean, Nate Blecharczyk was a very talented engineer, but Joe Gebbia and Brian Chesky were RISD guys that didn’t fit the profile of what investors were looking for in Silicon Valley, and didn’t know how to run a company, certainly not one of this size. So, their paths to becoming the leaders of this company that’s now worth $30 billion was also interesting to me.

And so, then, you add in all the opposition that they’ve faced, and all the things that can and have gone wrong on the platform, and to me, it just had all these elements of just a business story for the ages. And the hospitality industry and their reaction, and the way it’s disrupted that industry, so all of those things are what make it a really compelling story, to me.

Jasper: Absolutely. I really love the story, and let’s get into it. So, let’s start at the very beginning. So, I think it’s 2007 when Brian and Joe came up with this idea, right?

Leigh: Yeah, it was 2007. And, you know, Joe and Brian had met at RISD, and Joe was very instrumental in really pushing Brian to do this. When he was at RISD, he had been given advice by a mentor of his before going there, saying, “When you go to RISD, always have your eyes peeled for someone you can work with. That should be one thing you should be sure to do while you’re there.” So, he had kind of felt strongly that he and Brian should work together for quite some time, and in fact, when he left, when they parted ways, when Brian graduated and they were about to part ways at RISD, Joe said to him, “We’re going to start a company one day and they’re going to write a book about it.”

And then they left, and Joe kept trying to get Brian to move. Joe moved to San Francisco, and he kept trying to get Brian to move up with him, but Brian was very risk-averse at the time. He didn’t want to quit his job. Once he did, he wasn’t sure if he could take the risk to move there without a job. And, ultimately, he did, and they needed money to pay their rent. This is sort of the famous story that’s been mythologized by now, but they decided to rent out space in their apartment for this big design conference that was coming to town that had maxed out the hotel supply.

But, even from the beginning, it wasn’t just about making money from the space and being done with it. It was always about kind of creating this experience. Even that first weekend, it was about, let’s give them maps, let’s give them change for the homeless, let’s make sure everyone is from the design community. That also kept it sort of a closed environment, so they knew they would be pulling people from all who had this shared interest in design. And they were going to call it Designer’s Bed & Breakfast, and then, of course, it was AirBed & Breakfast.

And that’s what got the whole thing started. They actually thought they were going to get kind of hippy backpacker types. That’s what they expected, and they got these three people from all walks of life who were all looking for the same thing, which is, they had a real interest in being there for this conference and they couldn’t afford to stay in a hotel room. And this was a great solution, and they all became friendly and, you know, that was the deal.

The funny thing is, Joe and Brian didn’t think this was going to be the big idea. They thought that this was going to be a way to maybe pay their rent while they thought of their really big idea, which, of course, this became.

Jasper: Absolutely. And, you know, I think a lot of people sort of are aware of how they started with the AirBed & Breakfast website, the airbed in the living room.

Let’s go a little bit further into time. So, what happened next? I know that they racked up a bunch of credit card debt and they tried to get things going, but it wasn’t smooth sailing, at all, was it?

Leigh: No, the opposite. It was very, very hard. I mean, Joe has said that 2008 was the worst year of his life, and Brian has said, “People think you’re all nostalgic for those early years, but it was very, very painful.” And so, that was one of the more surprising things after I dug in and did a lot of research on this company, you know, just how hard it was to actually get it off the ground. They worked for a full year and got very, very little traction. For a full year, that’s a long time. Joe and Brian both racked up $20,000 in credit card debt each.

Nate Blecharczyk was very skeptical after they tried to launch at South by Southwest. That was the next big thing after this first weekend. They said, “Let’s get everything ready for South by Southwest.” That was a big design, a big tech hotspot, and a great place to launch. And they had two paying customers, one of which was Brian, so it was not really anything.

And then, Nate Blecharczyk was very practical about, “Listen, we’re not getting traction.” He was very, you know, I guess ‘practical’ is the right word, about what they were seeing, and at one point, he moved back to Boston. He wanted to be with his then-girlfriend, now his wife, and just became pretty checked-out, to the point that the other two put up flyers, as I say in the book, at the Moscone Center in San Francisco to try to fill his spot with somebody else. And no investors were meeting with them. The ones that did meet with them said no, or one guy just got up and walked out halfway through the conversation at a restaurant, just got up and walked out with no explanation.

So, everyone thought this was a terrible idea. The biggest reason was, they thought that it was just a safety issue written all over it. It was just, you know, “Someone’s going to get murdered. You’re talking about putting these people together. It’s crazy!” And, at the time, the business model was to only have people share their spaces while they were home. So, that was the whole business model, and so people were just fleeing from that idea left and right. So, it was very hard for them. It was very hard for them until they got into Y Combinator at the end of the year, which really is where they started to turn things around.

Jasper: And why do you think that the investors were all so negative? Because, if you think about it, there already was CouchSurfing and some other platforms. I mean, the idea of home-sharing wasn’t completely new.

Leigh: It wasn’t, but it was… CouchSurfing, I think, was seen as very niche, you know, and there wasn’t much of a business model around CouchSurfing. So, investors want to see scale, they want to see profit, they want to see the potential for growth, and minimal risk, and they just saw tons of risk here, and they didn’t see the market. And, you know, in fact, the first person who did see the market was Greg McAdoo who was at Sequoia at the time, the venture capital firm, and he happened to have spent the previous year and a half doing intense analysis of the vacation rental business. So, he knew what the market was, and he saw them as a vacation rental business. Brian and Joe and Nate did not see themselves that way.

Greg McAdoo said to them, when he started learning about them and was considering investing, “Well, do you know that the vacation rental business is like (I think he said) a $40 billion industry?” And Brian said, “Vacation rental? What do you mean, like the houses my parents used to rent during the summer at the beach? That’s not what we do!” He just hadn’t even put those two words together relative to Airbnb. He just had not connected those dots because they were coming at it from just a completely outsider’s point of view. For them, this was a cool thing to do in cities where you could build a community, and kind of make money from your house and have a cheap place to say. It was not at all about “vacations”.

Jasper: Right. And then they got into Y Combinator, which I think was run by a guy called Paul Graham at the time. Was it?

Leigh: Yes, Paul Graham is one of the co-founders. He’s also a legendary kind of advisor and venture capitalist, himself, and just thinker in the Valley, and he is very well-known for really counselling these companies as they are going through the pains of growing a start-up. And, you know, he gives tough love, tough advice, very blunt, but his very specific pieces of advice for them were critical to getting this company off the ground and to finally seeing the numbers start to turn in their favor.

Jasper: So, did Paul Graham like the idea?

Leigh: Well, it’s funny. First of all, they didn’t want to do Y Combinator. They had to be pushed to do it because it was the fall of 2008, they’d been at it for a year, and they were about to die. I mean, Michael Seibel, their first advisor, said, “You guys have to do Y Combinator. You’re dying,” as I say in the book. And Brain Chesky sort of said, “Well, what do you mean? We’ve already launched. We’ve been written up on TechCrunch.” Y Combinator was for companies that had not yet launched, that needed to be incubated. But, they needed to do it. He said, “You’re dying. You’ve got to do it.”

And they applied that night. That day, they’d just missed the deadline. They just got their application in that night, and then they did it. And, you know, the pieces of advice that they got from Paul Graham immediately…

Well, first of all, let me back up. He did not like the idea. The interview process is famously tough. You have 10 minutes, no presentations. And they practiced, and they rehearsed, and they grilled each other. And then, they got in the car, went down there, and he heard about the idea. They told him about the idea and he said, “People actually do this? What’s wrong with them?” Again, same reaction as all the other investors. “This is crazy. Why would people do this?”

And so, they didn’t think the interview went very well, and they were about to pack up and leave, and Joe Gebbia handed Paul Graham one of their boxes of cereal. It’s kind of been famously recounted that one of their kind of high jinks they did when they were trying to get attention was, they made this cereal, a fictitious cereal based on the 2008 presidential campaign in the U.S. around Obama – Obama O’s, and John McCain – Cap’n McCain’s. They gave him a box of this. He didn’t understand what it was at first, and then they explained, “No, we made this. We sold this for $40 a box as collector editions, and sold tons of them.” And he said, “You got people to pay $40 for cereal?” He thought, “You guys are just like cockroaches. You won’t die. And if you can get people to pay that much for cereal, you can probably get people to stay on air mattresses in other people’s houses while they’re still there.”

So, that kind of is what did it, but no, he didn’t like the idea at first.

Jasper: But what I understand from the whole start-up scene and the investors is that they don’t actually look at the idea as much. They look at the team and if they trust the team, because ideas can change, right. Like, when you start a start-up, it might actually evolve. The original idea might evolve into something completely different. I can kind of imagine that, even if you didn’t believe in the idea, if you look at how much effort these guys had put in, I would say, 99.9% of people who would have started this idea would have given up already, right?

Leigh: Absolutely. So, he liked that, and that’s a really good point. In fact, Paul Graham, he did like the three of them, and he liked the three of them very much. And, actually, I didn’t put this in the book, but he sort of had in mind that he was looking for some founders to start an online bank, an online payments platform, and he thought, “Oh, maybe these three can do that.” And so, he liked them, he saw the potential in them, but the idea itself, he thought, was kind of kooky and crazy. You know, that’s absolutely true. And a lot of people say that one of the strengths is the founding team, Brian and Joe, the combination of them, the hustle they have, the way they kind of stuck through it in that first year, the talents that they bring, and just the combination of them. They each, they’re very different, and they have different skills, and people really like that whole package about them.

Jasper: When I was younger, I always thought that if you have a great idea, it’s all about the idea, right, that you have to come up with a great idea to become successful, to become an entrepreneur, etc. But now that I realize it’s completely the other way around, you know, I was thinking, imagine that 100 people were given this idea, I’m pretty sure 99 would have given up at some point, because if you look at the struggles that they had to go through, it’s just, I can imagine that Joe said it was the worst year of his life.

Leigh: Yeah, because you don’t know that you’re going to make it. You know, you don’t know that a huge success, a life-changing success is right around the corner. I mean, you just don’t know, and it was a long, long slog. I mean, they were living on that cereal at one point, and Brian Chesky’s mom called them at one point and said, “So, wait, are you a cereal company now?” because they had made so much more money on the cereal than they had made on their core business. And even worse than her having to ask that was that he didn’t quite know how to answer that question because, technically, they were selling cereal and that was their main source of revenue.

So, you know, I think it was a combination – the idea, and the team, and then finally seeing someone who saw potential in them.

Jasper: And then, Paul Graham gave them some really good advice. Do you know what the advice was?

Leigh: Yeah, he gave them two or three really important pieces of advice. One of them was, when they first got there, he said, “Well, okay, let’s start at square one. Where are your users? Tell me about your users.” And they didn’t have many users at the time, but the ones that they did have were largely in New York City, some in Washington, D.C., some in Denver. But there was a nice little core of them in New York City, and he said, “Your users are in New York, but you’re here in Mountain View. And they said, “Yeah.” And he said, “What are you still doing here? Go to your users.”

So, that was one critical thing, and they hadn’t thought of doing that, but over those first few weeks of Y Combinator, Brian and Joe would get on a plane and go and spend the weekends in New York, just going around meeting with hosts, and they would come back to Y Combinator and give Nate the changes they wanted to make to the site from the feedback. But, getting that feedback was really critical, and they learned a couple of important things, probably the biggest being that the hosts were not very good at displaying their properties.

I mean, back in 2009, this was now, people didn’t have the digital photography skills that they have now. A lot of people didn’t even know how to upload, properly, photos, and so the photos didn’t look good, people were having trouble with them. And so, as a result, the places didn’t look good on the website, and that’s everything.

And so, with a little help, they actually went to the camera, and they went around and took pictures of everyone’s place for free, and also just kind of taught them how to sell their places a little bit more, even with the language and stuff. And just by getting them to sort of upgrade their listings a little bit, that had a pretty big effect on the numbers. Within a few weeks, they saw the numbers start to turn around quite quickly. So, that was a hugely beneficial thing to them.

And I think an important thing to note there is that they didn’t just go and sit on the sofa in the user’s living room and interview them about the product. They actually sat there and watched them use it, and one of the lessons they told me is that you can just learn a lot more by just observing, and that’s just as important, if not more important, than interviewing your users because sometimes people can’t really say what they don’t like about something or what’s not working for them. So, that was a really important thing.

Another thing was, another piece of advice that they had told a lot, the three founders, is that Paul Graham had told them to do things that don’t scale. So, taking those pictures is a great example of that. In Silicon Valley, everything is about, whatever you do, you need to make sure that you can make one move and it can have a huge, tremendous amount of leverage and really have a mass impact. You know, going around door to door and taking professional pictures very meticulously is not exactly scalable. It’s also pretty expensive. But, doing that is really what turned it around, so that they felt they had the blessing to do that because Paul Graham was encouraging them to do that.

Jasper: Right. I think that’s so important because I remember when I started with Airbnb, there wasn’t very much information about how to create a good listing. So, I can only imagine that in 2009, that people really didn’t know how to do it because, even in 2012, what I did is I just looked at some other listings in my neighborhood. And, you know, for me, I was going to use my apartment to fund my travels, so I really wanted to sort of squeeze every dollar out of it. And I remember looking at listings, and I was just thinking, “You know what? I don’t think these listings are really good.” And I couldn’t really find many that were really good, and this is in 2012, so I can only imagine what it must have been like in 2009.

Leigh: Yeah. Yeah, and it’s everything. That was one of the more original aspects about Airbnb compared to those other sites I mentioned, was that the photography ended up being a real source of strength for why people were really drawn to Airbnb. You know, it was the quirky inventory, the treehouses, but it was also the design of the site and that it was really looking like, on the best photographed listing, it’s almost like looking at a magazine, like a real estate magazine or something. And it’s fun. You get to look at all these people, inside their homes. Somebody described it as ‘Pinterest reads Real Estate porn’ at some point.

Jasper: That’s funny. And when they made that trip to New York, was that when they decided to launch the photography service for Airbnb hosts?

Leigh: Yes. Well, I mean, I think that came a little later, once it grew, to offer it for everyone. It took a while for them to sort of really put in place the systems and the resources to offer it to every host, but that’s where the idea came from, absolutely.

Jasper: Hosts, I can’t emphasize how important it is to share recommendations of things to do or eat near your listing beforehand. Your guests won’t have to go through TripAdvisor, Foursquare, or Yelp. They won’t have to scratch their head and think about possible places right in the moment. I’ve been using Hostfully to create an online and printable guidebook to show my guests my favorite coffee places in Amsterdam. They use my recommendations, and I’m getting fewer questions from my guests as a result. I’ve also included screenshots of my guidebook on my Airbnb listing as a way to differentiate my listing from others. So, make your own guidebook at hostfully.com/pad.

Jasper: Awesome. So, let’s move on a little bit. What are the most memorable events that came after that?

Leigh: Oh, my gosh, there’ve been so many. I mean, let’s see, that was 2009…

One of the most memorable events was when the investor, Greg McAdoo, said he would invest in them. And Sequoia is one of the most prestigious venture capital funds in Silicon Valley, and after so many people said time in their idea was terrible, to have this person from this fund come and say, “I believe in you, I want to invest in you…” He ended up investing $585,000, along with another VC firm that invested a little bit on top of that, and that was really the game-changing moment for them.

So, that was a really important point, and Brian Chesky says in the book, he told me, “You know, almost more than the money, it was the stamp of confidence.” And he says, “The biggest enemy to a start-up founder is your own confidence and your own resolve.” And he just said, “This just changed everything,” and gave them confidence that, yes, they really were onto something and that, yes, someone big believed in them. So, that was a really critical moment.

So, then, you know, you think life is easy after that, but it wasn’t. Once they kind of had the funding, then they encountered all these other problems. Then, they went from trying to build the product to trying to build a company around that product. So, that was a whole other set of challenges, and everything from hiring their first employees, building the culture. Very quickly, they encountered their first crises in 2011. A couple things happened at once that were really, Brian Chesky describes in the book, as a couple punches right in the face. And it was really in 2011, they had just gotten their second biggest round of funding, their next biggest round, which was let by Andreessen Horowitz, and they had to deal with a couple really big challenges.

One was the German competitor Wimdu, which was founded by the Samwer brothers, and which was famous for kind of cloning companies, and then going to them and saying, “You know, you have to acquire us or we’re just going to get so big and kill your business.” And that was a real crisis for the company, of how to deal with that. They ended up not acquiring them, and deciding to double down and build Airbnb’s international focus themselves internally, which was a very big decision for them to make.

And then, they had a very terrible ransacking incident, their first big safety malfunction, in August of 2011. Actually, it happened in June of 2011 and it became a huge PR crisis from the way they dealt with it, and this eventually led them to create their Trust & Safety Division and really build in these policies for how to deal with things like this when they happened, but they were not prepared for it. It sort of validated every person’s worst fear about what could happen on this platform, and they were still so new at the time that this really could have destroyed all the trust anyone had in this company. So, it was very serious. It was very serious, and they ended up kind of coming out of it, but that was a big challenge.

So, you know, once they got the funding, it was then like, “Welcome to the grownup world. Now you have to deal with all these big grownup problems.”

Jasper: Right. I’ve actually used Wimdu, myself. I think they’re not really big in the U.S., but they’re quite big here in Europe, and I remember thinking it was pretty much exactly a clone. I mean, it was so similar. And isn’t that company called Rocket or something?

Leigh: Yup, yup, it’s Rocket. Rocket Internet, yeah.

Jasper: I think they’re a German company, no?

Leigh: Mm-hm, a German company, and this was their strategy. This is what they did. And they had done this with Groupon and several other companies, and Airbnb was the first to kind of stand up to them in this way and not go along with what they had expected, and instead, try to build up organically, almost overnight, a full international presence to sort of stave them off.

Jasper: Right. I was actually watching TV yesterday, here in Amsterdam, and I saw an ad for Wimdu on television here, so I guess they’re still trying to gain more market share.

Leigh: Yeah, they still exist. They were actually sold, I think last fall, but the brand still exists. But, you know, it never became the global player that they were hoping to because it’s definitely not significant here in the U.S.

Jasper: Yeah, and their platform wasn’t as good. I mean, I remember using it and I was thinking, “This is like Airbnb, but then, it’s not as good.”

All right, let’s continue with the story. So, we’re now in 2011, they’ve overcome two challenges, Wimdu and also the bad PR stuff that happened. What was next?

Leigh: What was next? I mean, this was really when the huge growth started to kick in, so they were just growing by leaps and bounds. The business has pretty much doubled every year, but in those years, it was growing by 200%, 300%, 400%, 500%. Usage growth was just absolutely taking off, and so they were just, you know, everything was urgent all the time. So, they kind of entered this phase of hyper-growth that they really haven’t actually gotten out of yet. It’s very unusual for a company to have been around for nine years now and to still be growing as fast as Airbnb is growing. That growth is slowing down a little bit, but it’s still almost doubling every year.

So, that was just sort of adjusting to that. Building a culture, hiring executives, and really seasoned executives, that took several years, but that’s been one big shift. I mean, you know, it’s still, Brian, Nate and Joe are still very much running the company, but they have brought on really pretty seasoned executives to help execute their vision, so that, as a sort of process to go through, especially for Brian, to kind of learn how to find the right kind of executive talent, and how to interview them, and how to bring them in and build this culture around them, with them.

Jasper: Right. And I think one important moment was also when they hired Chip Conley because I think that, before they hired him, they considered themselves a tech company, right. Their product was their website, their software, but they started realizing that the hosts are actually the people who represent Airbnb. These are the products, and the host is the product more, and so that they had to educate the host, which I think is why they hired Chip Conley.

Leigh: Yeah, that’s true. I mean, in the beginning, you know, they were a tech company. They were in Silicon Valley, and it very much is a tech company. Some people say, “Oh, but it’s rooms and spaces. That’s not technology.” But, it is very sophisticated technology that powers that, and they are a Silicon Valley start-up, absolutely.

And, before then, there was a lot of talk, I mean, their investors, advisors, and the founders were, you know, “What do we do with this?” There were a number of ways you could take Airbnb once it clearly had all of this traction. You could expand it horizontally and say, “Does this become a platform to share anything, any extra assets that are unused? Like, if I have a StairMaster, should I list that and have somebody use that, if they want to monetize that?” You know, go horizontally or go into office space, or other kinds of spaces.

So, a very critical moment in the company’s history was when they decided, and Brian Chesky says that it was after he read an issue of Cornell Hospitality Quarterly, (Cornell has a highly regarded hotel school), and it just really, all of a sudden, he had an epiphany that, “Wait a minute. No. We have to be a hospitality company. This is hospitality. We just doubled down on this. This will serve us well.” And so, that’s when he really decided. I mean, I’m sure there were other things that went into it too, but that’s what led him on the quest to kind of ultimately find Chip Conley. He brought him in to give a fireside chat to employees, which is how a lot of the executives kind of start. They come in to give a chat and then Brian just kind of wooed them to come on board.

And Chip joined, and Chip was a really lifelong hotelier. He had founded a company called Joie de Vivre, which is a chain of hotels that were very boutiquey, whimsical, really kind of just inventive, and you know, obviously, knew a lot about the hotel industry, and really came in and helped, for the first time, kind of formalize the hospitality standards and really kind of dealt with the hosts and created a way to kind of engage the hosts and help teach hospitality at scale to the people that were delivering it on behalf of Airbnb, who has, really, no control over what the end product is. So, trying to kind of get their arms around that, that really fell on Chip, and he did quite a lot to do that.

Jasper: Right. And we’re getting to the end of the interview, but I…

Leigh: But we’re only at 2013!

Jasper: I know, right. I mean, we could probably talk about this for another couple hours, but I did want to ask you to at least share sort of the most interesting insights of the period that came after that until now.

Leigh: The most interesting insights… Well, one thing to look at is where the company is going in the future. And so, you know, it’s funny. When I first asked Brian Chesky if he would cooperate with me and talk to me for this book, the first thing he said was, “Well, you know, most people don’t understand Airbnb. Where the media thinks Airbnb is now is really where we were two years ago. And so, if you write a book about where we are now, by the time it comes out, it’s going to be outdated, and we’re doing so much more.” And I just thought, “Okay, well, you know, he’s too close to the story. I think the story’s really cool and I can tell it.”

But, finally, towards the end of my recording, I started to see what he meant, and you know, this company has very grand ambitions, as I think you probably saw, and anybody who follows the company saw last November when they announced the first big expansion into products outside homes, and that was a very big deal, you know, with experiences and restaurant reservations, and event booking, and teasing things involving flights and services, and all sorts of other kinds of things.

So, it was a very pivotal moment for the company, and that’s just the beginning. I mean, if you talk to Brian, and I talked to him in the book about this, where he sees Airbnb going is much bigger, much broader, and he says that, ultimately, accommodations will be less than half of the revenue. So, I think that’s the most interesting thing to watch now, where Airbnb goes.

Jasper: Yeah, I totally agree. I remember when they launched the trips and experiences part in November at the Airbnb Open in Los Angeles. I think there’s so much opportunity, especially with the experiences, because now you don’t need a space anymore. You don’t need a house to partake in the Airbnb experience.

I was joking to somebody that, you know, there was a lot of homeless people in Los Angeles, and I remember I was doing a presentation with Susan, and she’s from Airbnb Expert, she’s from Los Angeles, and she kept telling me that she was so embarrassed that they were holding this conference in downtown L.A. And so, we saw a lot of homeless people, and I was joking to her that now, with experiences, they can sign up and they can show people what the life of a homeless person looks like.

Leigh: Oh, my God. Well, actually, I mean, they are doing something in Jordan. They’re piloting a program where people who are living in refugee camps can actually give walking tours to people who are visiting Jordan, and kind of pilot that with a map.

But, the other thing I will say, since we’re coming to the end here, we didn’t really touch on the negatives and the controversies, and there have been a lot of those, as well, and I spend a lot of time in the book going over all of those, and they’re still significant. Even as big as this company gets, we know that users love it, we know that it’s here to stay, but the legal challenges and the safety incidents, and seeing the discrimination we saw rear its head last spring and summer, you know, there are still challenges that face this company. And, so far, they have dealt with them pretty well over the years, but I think that, certainly, a lot of people would say that they haven’t, and I think that that’s something that they’re constantly working at, and that’s something to definitely keep following.

Jasper: That’s right. And I actually am interviewing someone who’s kind of an Airbnb critic soon, so I’ll be talking all about the challenges with Airbnb and the things that people don’t like about Airbnb.

Leigh: Yeah. I mean, I think the legal pushback is significant, the housing issues are significant, and I actually think, maybe because I live in New York where people live on top of each other, but the neighbor issues are really important, and unrelated to whatever the law says, a lot of people do not like having their neighbors renting out their space on Airbnb. A lot of people do not like that, and so I think that’s going to be an ongoing challenge. And the bigger Airbnb gets, and the more people are using it, if someone has a problem with that, that problem is going to intensify, the more users there are. So, I think the company is noticing this and working on solutions, and workarounds, and tools to try to help these things, but I think they’re important to pay attention to.

Jasper: Awesome. Well, to finalize this episode, can you let the listeners know how they can get a hold of a copy of your book?

Leigh: Sure, absolutely. You can buy it wherever you buy books – amazon.com, barnesandnoble.com, any bookstore. You can also go to my website, leighgallagher.com, and there are a bunch of links there, as well as some more information on the book.

Jasper: Awesome. And, you know, as much as I love the Airbnb story, I do have a little bit of mixed feeling because I always used to have the top book on Airbnb. Like, when you put ‘Airbnb’ in Amazon, my book would always be on the top, and now yours is on the top, so that’s kind of the end of a cool era for me.

Leigh: Aww! I’m sorry. But, I hope that we can co-exist, and I hope that, you know, it’s kind of like when companies headquarter near each other, it’s like everybody benefits. That’s my hope.

Jasper: And one interesting little funny fact is that, in 2014, when I went to the Airbnb Open in San Francisco, I actually gave a copy of my book to Brian Chesky, and at the time, when you put ‘Airbnb’ in Amazon, it would actually put my book above the Airbnb app. And I mentioned that to him because I thought it was kind of funny, but that was also the end of it because, a few days later, miraculously, Amazon had swapped it, too, so then they would mention the Airbnb app first.

Leigh: You gave away your secret to him.

Jasper: I know, right. So, maybe that wasn’t so smart of me to mention that. But now, they’ve put all sorts of gift cards and stuff on top, so it’s completely changed now.

But, I have one last question for you before I’ll let you go, because I know you’ve interviewed Brian for this book and I obviously want to interview him on the podcast, and he told me he’d be down in 2014 when I met him, but then, since then, I’ve been dealing with his personal assistant, which, as you can imagine, I haven’t been successful at it. So, how do I get Brian Chesky on the podcast? That’s my last question.

Leigh: Oh, my goodness. It’s hard. You know, he’s gotten a lot busier since 2014, and he was very generous with his time for me, but it’s challenging. I mean, prioritizing that stuff for him has become a lot more difficult, but I think he’s aware, and I think if you just keep at it and tap into your own entrepreneurial hustle, I think that, hopefully, you’ll be able to get him. But, you know, the great thing is that there’s, you know, Joe Gebbia is fascinating to talk to, Nate Blecharczyk is fascinating to talk to, and they are as important as Brian in this whole story. In fact, Joe had a hand in really getting this off the ground in many, many, many different ways, and I think that’s a really fascinating part of the story.

Jasper: Awesome. Well, I’ll just keep trying, and hopefully it will happen at some point.

Leigh: There you go.

Jasper: All right, Leigh, well, thanks a lot for taking the time and coming on the show. I’m definitely very excited to read your book. I haven’t read it yet. I’m supposed to get it in the mail pretty soon. Thanks for coming on the show. It’s been super-interesting to talk to you, and I wish you all the best with the book.

Leigh: Thanks so much for having me, Jasper. It was great to talk to you, too.

Jasper: All right. Bye-bye.

Leigh: Bye.

Jasper: And for everybody, all the listeners, this was a little bit longer episode because this was so interesting. Next week, on Monday, we’ll obviously be back with another episode, so I hope to see you then.

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