Scaling Airbnb, Founder Mode, and What’s Next for Travel — with Brian Chesky

Brian Chesky, the co-founder and CEO of Airbnb, joins Scott to discuss the latest for Airbnb including their Co-Host Network, how the company views AI, and how it is a leading indicator for the broader economy. Brian also shares his thoughts on his viral moment around Founder Mode and what’s next for the platform. Follow Brian, @bchesky. Scott opens with his thoughts on private equity firms pouring millions of dollars into acquiring HVAC, plumbing, and electrical companies, per the WSJ. Algebra of Happiness™: don’t keep score. Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:30Scott Galloway?

  Episode 321. 321 is the area code serving Orlando, Florida. In 1921, the first Miss America Pageant was held in Atlantic City, New Jersey. True story: A woman who injected her eight-year-old daughter with Botox for beauty pageants has lost custody of the child. Her daughter didn't look surprised.

• 2:02Scott Galloway?

  Welcome to the 321st episode of the Prop G Pod. In today's episode, we speak with Brian Chesky, the co-founder and CEO of Airbnb. We discuss with Brian Founder Mode and how Airbnb is becoming a leading indicator for the broader economy. We also dive into how Airbnb is leveraging AI and what's next for the platform. Okay, I'm back in New York. What does that mean? I have self-care in New York. First off, my place here is very zen. No kids, no shit everywhere, no like climbing walls. I'm not sure I have a climbing wall in the kids' room, but it's more for show. It's more meant to signal like what a nice dad I am with a kids' room and I got the skateboards and everything that they don't use. But I'm mostly here for self-care. Acupuncture. I do my Botox.

• 2:46Scott Galloway?

  I'm actually, if you can't tell, I'm actually crying right now. Anyways, I'm also starting this thing called NAD. And as far as I can tell, that is something that rich people do to try and pretend we can live forever. I'm spending so much time and money on self-care and I think it's a little bit like the alternative investments universe where wealthy people like to think that they can beat the market so they pay some very credentialed person to underperform the market by the amount of their fees. I'm not sure a lot of this is worth it. I'm actually a little fed up. Also, when you get this NAD treatment, it takes two to three hours. And some lovely young woman comes over and sets up an IV and then puts basically liquid nausea into you. And I keep telling her to slow it down because I don't want to throw up in front of her.

• 3:28Scott Galloway?

  But for that nausea, I better look like fucking, you know, Macaulay Culkin in the first Home Alone. I want to look like, you know who I want to look like? I want to look like Barbra Streisand in the first Yentl, or the Yentl. Papa, can you hear me? I want to look like a young Barbra Streisand.

• 3:48Scott Galloway?

  It could happen. It could happen. Okay, what's happening? What's happening other than Babs comes to New York? A big story from the Wall Street Journal. Private equity firms are spending millions of dollars to purchase HVAC, plumbing and electrical companies. That's right, private equity is coming to a van parked outside and a guy looking to fix your heater. According to PitchBook, private equity investors have purchased nearly 800 HVAC, plumbing and electric companies since 2022. Why are they doing this? The Wall Street Journal reports that investors see the skilled trades as ripe for opportunity. Also, it's an industry with recurring predictable revenue. Air conditioners break, boilers need upgrades, et cetera. I also think probably the biggest thing here is that there are supposedly tens,

• 4:31Scott Galloway?

  if not hundreds of thousands of small businesses owned by boomers that have no succession plan. Their kids want to be baristas or go back and get their masters in philosophy or go touch Indians or whatever it is they're going to do. And they have no interest in taking over dad's air conditioning repair company despite the fact these are really good businesses. And so there's no succession plan, which means, and they're good businesses, maybe doing $1, $3, $5 million, $10 million, which means they're ripe for acquisition because someone just wants liquidity and an exit and probably says, okay. They've been doing this with dental clinics. They've been rolling them up and saying, all right, you stick around for four years. We'll bring in another dentist who we pay less. You'll get an exit, you'll get some liquidity and we get to buy a business, a solid business with a built in customer base, pretty low multiple of EBITDA.

• 5:16Scott Galloway?

  And then we can roll them up and kind of consolidate the backend, bring some efficiencies around marketing, around technology. I think this makes a lot of sense. Now, people will say, oh, no, it's private equity showing up the bad guys. I don't think that's true at all here. I think it's giving a bunch of dentists and people who own, you know, small businesses in the trades and exits. So I think it's a, I think it's a good thing. We've previously spoken about the shortage of skilled tradespeople. Labor shortages worsened by the impact of COVID-19 have increased competition for workers, driving up wages in these sectors by over 20% since Q1 of 2020. There are a lot of jobs in the Main Street economy and there's a critical need for these trade skills in the US. According to McKinsey and Company, the annual demand for critical skilled roles in the US could exceed the projected annual growth of new jobs by more than 20 times between

• 6:01Scott Galloway?

  2022 and 2032. Jesus, think about that. The US could exceed the projected annual growth in new jobs by more than 20 times for critical skilled roles. Where is the demand coming from? Infrastructure needs, a surge in real estate redevelopment, and a shift from fossil fuels to renewable energy sources. I mean, this is just such an exciting opportunity. So I'd like, I really do like to never miss an opportunity to virtue signal. I'm involved in a program that increases funding for continuing education at UCLA and Berkeley because they wouldn't let me call it vocational training. But I think there's an enormous opportunity for the two thirds of kids that don't end up with a traditional liberal arts degree. So the majority of our kids, hello, parents, aren't going to end up with a traditional

• 6:46Scott Galloway?

  college degree. And guess what? It doesn't mean you failed, it doesn't mean they failed. And there are a lot of wonderful jobs in the mainstream economy. The problem, the problem is that we shame kids and family. Have you ever been to a cocktail party or a party where all of a sudden, under hushed breath, they go, well, little Johnny dropped out of Rutgers and he's home. It's like, oh, no, Johnny's a failure and the parents have failed. No, most kids aren't cut out for the traditional liberal arts college degree. There is an enormous opportunity. Gen Z, more young people are turning to trades as they grow dissolution with the traditional college path, which is, I don't know, inspiring or encouraging. Enrollment in vocational training programs is on the rise, as it should be, while numbers at community colleges and four-year schools have dropped. According to data from the National Student Clearinghouse, vocational-focused community

• 7:30Scott Galloway?

  colleges have seen a 16% jump in enrollment since 2018. Students pursuing construction trades increased by 23%, and enrollment in HVAC and vehicle maintenance programs grew by 7%. A Harris Poll done for Intuit Credit Karma found that half of Gen Z and 42% of millennials are considering switching to blue collar jobs, jobs including welding, plumbing, or electrical work. And by the way, just free gift with purchase here, people enjoy these jobs. They like working outside, they're working with people, the day goes fast, they kind of own their own business. I mean, this is, this is just a fantastic opportunity for young people. There's an enormous, if you will,

• 8:08Scott Galloway?

  Succession problem around these businesses. These are great jobs. They pay well. This is, to a certain extent, taking advantage of a little bit of income inequality and that there are so many amazing mega mansions going up. But even, you know, every home needs a new roof. Every home is thinking about solar panels or energy efficient HVAC. We're going to need tens, if not hundreds of thousands of skilled tradespeople to build all these nuclear power plants, which are going to come back online. What do we need to do as parents and as people going to college? You haven't failed, nor have your parents failed, nor have you failed, if you decide to pursue a career in the trades. Yeah, you want to get a philosophy degree and be a barista? Fine. And maybe it works out. Maybe you teach, maybe you write scripts, whatever it is you want to do, fine.

• 8:51Scott Galloway?

  But if, in fact, you decide to work with your hands and make good money, maybe even great money, that's absolutely a fantastic career path. And we need more on-ramps. We need to be more thoughtful about the fact that 2/3 of our kids aren't going to end up with a traditional college degree. Work with your hands. Vocational jobs are an outstanding opportunity for America.

• 9:12Scott Galloway?

  We'll be right back for our conversation with Brian Chesky.

• 9:18Scott Galloway?

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• 10:18Scott Galloway?

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• 12:46Scott Galloway?

  Welcome back. Here's our conversation with Brian Chesky, the co-founder and CEO of Airbnb.

• 12:55Scott Galloway?

  Okay, here with Brian Chesky. Just upfront disclosure, Airbnb, I am a shareholder. It's one of my biggest holdings. I'm a big fan of the company. Anyways, enough of that shit. Brian, where does this podcast find you?

• 13:06Speaker 06

  I'm actually in New York, though I usually live in San Francisco. I'm in Airbnb's office here in New York.

• 13:11Scott Galloway?

  Got it. I've always thought, and I mean, we'll come back, we'll talk specifically about Airbnb, but I've always said you guys are a great forward-looking indicator of where the economy is headed and travel trends and consumer spending and what people are spending money on. What can you provide insight into in terms of the economy and travel trends as evidenced by what's happening on your platform?

• 13:32Speaker 06

  One of the things that I think is so notable in the last year was this, the year of events on Airbnb. You know, you saw the Paris Olympics. We had 500,000 people staying at Airbnb for the Paris Olympics. That's equivalent of like eight Olympic stadiums were the people. And 50,000 new homes were listed at Airbnb just for that reason. When Taylor Swift came and she did her international tour, you can literally predict her tour by looking at the rising occupancy of Airbnbs. And it was like a massive phenomenon and sure tour generated a bigger business lift than some giant international events that would be in these cities. So we're starting to see like a lot of more people want to gather for events. And why are they doing that?

• 14:15Speaker 06

  I think people are desiring connection. They want to get out of the house. They want to have a shared experience. They want to have the experience of other people. This often involves traveling. More and more people are not living in the same city as people they grew up with. And so they have to travel to see them. They do more of these annual trips together. We're seeing a huge boom in ski destinations. That's like really popular. It's like the Austrian Alps, Italian Alps, the French Alps this winter. Seeing a lot more people go to Southeast Asia. So basically the summary is that travel is going strong. I think that it's just the very beginning. You know, I think as emerging middle classes form, the first things people want to do is travel. And as the economy is strong, more people will travel. So that's what we're seeing.

• 14:59Scott Galloway?

  I've heard there was sort of this revenge travel trend after COVID. And I've actually talked to some hotel operators, saying that actually, travel has started to wane a little bit because people kind of got there at it's scratched. And now it's starting to come back a little bit. Are you seeing the same trends?

• 15:18Speaker 06

  What we're seeing is like, what I would describe as like, probably the post pandemic kind of equilibrium. So during the pandemic, there was like, basically, three things didn't happen. People didn't go to cities, they didn't cross borders, and they didn't travel for business. And so you had this different type of travel that we benefited from, that hotels didn't, which is people getting in cars and staying in big homes in more rural or like, less urban destinations. Then you had this huge boom, which I think was a little bit of a natural amount of pent up demand. I think the pent up demand has now subsided, and now we're in the new world. The new world, though, is quite a lot of travel, and I think it's going to continue to grow. But it's definitely not like the pent up demand era of like, 2021, 2022. Now, we still grow because we grow through all that.

• 16:02Scott Galloway?

  And any trends in terms of demographics around who's traveling more, who's traveling less, and what it says about the health of our economy?

• 16:09Speaker 06

  There's a lot more people are traveling in groups. You know, before the pandemic, it was a lot of like, solo travelers and couples. Now it's families. And I think there's a couple of explanations for why. I mean, one obvious demographic shift is like, Scott, I mean, I started coming, I was 26. I'm like, a millennial. And most 26 year olds don't have families, but like, essentially, there was a big question. When people are in their 30s and 40s, do they age at Airbnb, or do they keep using Airbnb? Well, luckily for us, the answer is they kept using Airbnb. And a lot of those people now have families. So there's a whole generation of people that started as single people, then they used Airbnb for like, couples' travels, and now they're using it for family travel. Additionally, I just think a lot of families are now realizing Airbnb is a better solution for a lot of travel than hotels.

• 16:54Speaker 06

  We have this big advertising campaign. It's kind of a, almost like a references the Mac versus PC campaign. It's kind of like Airbnb versus hotels. We kind of show that for family travel, for group travel, like, people being able to stay in a house, be able to cook together, not be separate in different rooms is really compelling. So that's probably the big one. The other one we're seeing, we're seeing a couple others. People are staying longer. The length of stay is going up. And I think maybe the answer to that, the explanation is people more flexibility. Right? The fact is like 10 years ago, it would be unthinkable for you and I do an interview unless we were in the same city together. And now with Zoom and this technology, we can be able to do that. So I think there's a lot more flexibility. And then I think people are just traveling to more locations. Right?

• 17:35Speaker 06

  I think, you know, before everyone went to Rome, everyone to Paris, everyone to Vegas, everyone to Miami. They're still going to all those places, but they're also going to a lot of smaller towns and cities and different destinations. I think social media drives that because there's a lot of new destination discovery on Instagram, TikTok and others.

• 17:53Scott Galloway?

  So I follow you and I read your earnings releases and you talked about a new feature you guys are working on called the co-host network. Can you say more about that?

• 18:04Speaker 06

  Absolutely. You know, Airbnb, we're only as good as the homes we have. And, you know, one of the keys to Airbnb is we want to make sure Airbnb is affordable. Well, let's take a city. If a city doesn't build housing, what happens to the price of housing? It typically goes up. If we don't add enough Airbnbs, then the price of Airbnb goes up. So we need to add a lot more supply, literally millions and millions more homes we want to add in the coming years. The number one reason people don't list their home on Airbnb is because they perceive it as being too much work. And it is for some people. And let's say like you live in New York and you have a like a summer home in Florida, or maybe you may be using it in the winter, actually. And, uh, and you want to put on Airbnb, but you're not physically there.

• 18:48Speaker 06

  So either you can't host or you go on Google and you type like, you know, Airbnb property manager. And a third-party property management company that has nothing to Airbnb could take over custody of your property. But why that is a problem is the average five-star rating for third-party property management Airbnb is only like 4.62, which is not nearly as high a rating as individual hosts. So we thought, what if we like took a marketplace approach to this? What if we paired homeowners, people with homes that don't have time, that want to make extra money, with people that have time, they're really great hosting Airbnb and they would like to expand, but they don't have access to properties themselves. And so that's exactly what we've done. We built a network of 10,000 co-hosts. These are the best local hosts. The average rating is 4.85.

• 19:33Speaker 06

  So these are like great hosts and we'll match you with them. And the other thing is not only do we match you, Scott, but We built this really elegant in a software integration. I think if you could take your hands on it, I think you'll hopefully agree that it's a really beautiful seamless integration. So they can manage everything about your Airbnb, or just the bookings, or just the cleaning, or just the checking in of guests. You negotiate the rate with them, and so, you know, it's pretty chunky.

• 20:00Scott Galloway?

  Let's break down the economics. I own a place in SoHo, and I decided, all right, I want to monetize it, or I want to get some return on it. And let's just say, I can rent it out for 500 bucks a night. If I rent it out for 500 bucks a night, how much would I typically end up paying to Airbnb? And how much, if I totally wanted to outsource it, of that 500 bucks would go to a co-host? I'm trying to figure out the net to the owner.

• 20:24Speaker 06

  We have a blended take rate of 15%. So now, if you rent it out for $500 a night, you actually get 97% of it, because we withhold 3%, and then we add an additional, about 12% additional guest fee. But let's just keep the math really simple, and let's assume that you're saying $500 a night is what the guest pays, right? Just to keep the math simple. So it's 500 times, you know, .15, you know?

• 20:52Scott Galloway?

  Seventy-five bucks, yeah?

• 20:53Speaker 06

  Yeah, so that's $75. And then, you know, with a co-host, you'll probably negotiate between 10, 20, 30% take rate, and it's basically what you negotiate and how much they take home. So I think it's very reasonable, even with a co-host, that you could take 60, 70% home.

• 21:11Scott Galloway?

  We'll be right back.

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• 22:15Scott Galloway?

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• 23:25Scott Galloway?

  You strike me as sort of ground zero for a company that could potentially leverage AI. I want to understand how you're using AI, where you've seen real ROI, where it may have been overhyped. I'm just curious as a... As a business owner that I imagine is being pitched by, you know, I imagine you and Sam have had a lot of conversations and that there's a lot of AI companies that would love to put out a press release saying we're the exclusive AI partner. And maybe you've already done this with Airbnb. But I would like to get, one, your, how you're using AI. And two, just as a business person who has real insight into technology, where you think AI is underhyped or overhyped?

• 24:04Speaker 06

  I think AI's long-term impact on society is perhaps underhyped. I think that, you know, anyone that has a child today, the world they're going to grow up and it's going to be so fundamentally different than they can imagine because of what happens when computers can essentially think. And I think it's going to change society. But I remember in like, I don't know, mid 2010s, there was the self-driving car craze. And people were saying in 2014, 2015, that there would be very few people that would be driving cars, that driving a car would be anachronistic, like riding a horse and you'd only do it if you enjoyed it. And while that's probably the long-term truth, we're almost 10 years post the self-driving car craze. And it's still very rare to see a self-driving car on the road.

• 24:49Speaker 06

  And so I think the lesson here is that this technology is going to have a much bigger impact on society than probably think. But it's, what's that old saying? You overestimate what you can done in a year and you underestimate what's possible in 10 years? I think we still can value that all the time. We invent a technology and we think society is just going to adopt it and it's going to take a lot longer. And so I think that all of us were way too Pollyannaish when ChatGPT launched. And I think we all thought all of our businesses were going to change in three or four years. And honestly, like if I just like, I don't know, here's a good test. I open my phone, I look at the apps on my home screen and I ask, how many of these apps have fundamentally changed because of generative AI? And I really can't say very many have. Maybe the algorithms are marginally different.

• 25:31Speaker 06

  There's some interesting kind of on the margins filters that are possible because of AI, but their experience is not that different than a pre-I AI startup. So I would say if you think about the stack, you've got the model, sorry, you've got the chips. There's a lot of development there, mostly just Nvidia. Now there's a huge amount of development at the model level. Obviously, OpenAI was the kind of, was the frontier model, but there's so many others. But there's been very little innovation on the app front. And I think all of us are trying to basically figure out like, what is the application interface paradigm in a like AI world? One of the comments that Johnny Ive made, he's a designer that I work very closely with. He designed, you know, almost all the products between iMac and, you know, iPad.

• 26:16Speaker 06

  Beyond was he noticed that there was a user interface paradigm of the graphical user interface formed in the 1970s, popularized in 1980s, basically a mouse and a point and click. And then you had multi-touch introduced in 2007 with the iPhone. So a lot of startups are starting to work on these new layers, but you know, mostly what these startups are doing is scraping data, the kind of same data that OpenAI would scrape or the data that Google would scrape. And they're just trying to do marginally different interfaces by doing these kind of pseudo, you know, assistants, but assistants are very chatbot. And I think a chatbot is just, you know, you know why I don't think a chatbot's the right interface? For the same reason that like I have a messaging app, but I don't want to use that to do

• 27:00Speaker 06

  the calculate, to, to, to do a computation. I want to open a calculator and have a different interface for the calculator. So in other words, I think every job wants a different interface. And I don't think we can revert to that, like the universal chatbot interface to be able to handle all these different tasks. It actually is very inefficient for things like travel. I don't think a chatbot is the way to book travel. So that's like my general commentary. Now let's take Airbnb. I think the thing that will first get revolutionized through AI by Airbnb is customer service. Just to give you a sense, we have a very, Scott, very difficult customer service challenge. We get more than 10 million calls in chats a year. They come from people in every country in the world and a lot of the calls are urgent, like I'm locked out, there's a problem.

• 27:43Speaker 06

  And we often have to adjudicate disputes between a guest and a host that don't even speak the same language. And, you know, because we're travel, we have a lot of seasonal workers, right? Like, and so the seasonal workers is a lot of turnover. And so you, you'll often call a customer service agent that is seasonal and a lot of them are new and they're trying to handle like adjudication between guests and hosts. And there's like a hundred different policies. And the policies can be like a hundred pages of documentation. And so AI can be the frontline. It can basically speak like speak every language. It can be 24 seven. It can read the corpus of all your policies. It can also look the last million times something happened and say, based on that, this is the best predicted resolution.

• 28:27Speaker 06

  And of course, it can be a tool for customer service agents to provide better service. So I think customer service is the first thing that's going to be reinvented, at least in the e-commerce space because of AI. And then I think the question is, can you bring that customer service paradigm to search? In other words, can search be not a chatbot, but a slightly more conversational experience where it's not like the Amazon paradigm where it's a search box and filters? But it's a little bit more of this app that's getting to know you, understanding you. It's more personalized and that would probably be phase two.

• 29:00Scott Galloway?

  I've sort of, and I might have this wrong, but I was really just fascinated by the meta earnings call. I think it was earnings calls ago where he said, and I've never seen this before, we've increased our revenues 23% year on year while decreasing our headcount 20%. And what I've generally found, the analogy I would use is that AI is a little bit like corporate Ozempic and that it is, it turns off the signal we have as managers, CEOs and directors that just because we're growing doesn't need, we need to eat more, or in this case, we don't need to hire more. Have you thought, and I realize this is a difficult conversation for CEOs to have, but has AI given you the sense to maybe rethink if you need more employees and to

• 29:44Scott Galloway?

  see how technology can make you more efficient and all? What's happened to your employee headcount over the last 12 months?

• 29:50Speaker 06

  I went through one of the first big layoffs in Silicon Valley, you know, since the pandemic, we were like of a well-known layoff. It was, we had to cut 25% employees, but actually we lost like almost half the employees because we also had to cut 10% of contingent workers. And then when you're a travel company, a pandemic, like people tend to leave you for other hotter fields, so or other, other industries. So we ran the experiment of having significantly fewer employees against our will. We weren't looking to do this and something remarkable happened. The remarkable thing happened is that we actually started getting more work done with fewer people.

• 30:23Speaker 06

  And it was partly because there was a massive communication tax and that like people are in meetings all day and there are meetings all day because people create meetings and you can try to impose things, but it was just, it turned out we had too many people probably and we, we never would have realized that until we kind of ran the experiment of having fewer people and we actually started getting a lot more done. So then I, you know, mentioned this to Mark Zuckerberg and, uh, you know, I'm close to him and, um, you know, I, I think he kind of realized that, um, you know, there were a lot of efficiencies to be gained and, um, you know, obviously he made his decisions with his year of efficiency. I think he found that there was a huge communication tax and that they probably had way too many people.

• 31:05Speaker 06

  Now, it's hard for a CEO because you don't want to always be on the side against hiring people. I'll say this, I think that most startups raise too much money, that hire too many people. I don't think that has to be against workers. I think that they can just be redistributed to other companies, that we should fund more companies, there should be more startups built, but the startups should probably not hire so many people. I think that's a general view I have. AI, I think is making people marginally more efficient, but I've not seen, um, yet a massive displacement of workers because of AI. Um, you know, whether it's customer service, we still have mostly agents doing it. And then software engineering, you know, it, it can, it can make software developers a lot more efficient, but it is not reducing our workforce.

• 31:50Speaker 06

  And actually, the way this would probably work is we'd probably, if AI made everyone more efficient, instead of, um, downscaling the employee base, we'd probably try to get more revenue per employee. So we wouldn't be doing, we wouldn't be eliminating jobs. We would hope that the revenue per employee would increase so they have more leverage. And we're starting to see this, we're starting to see that, that like what we're seeing is our headcount is only growing in low, single-digit percentages year over year. And our revenue is growing faster, our headcount, and I'd like that to continue. And so a metric of revenue per employee or free cash flow per employee, hopefully will massively increase. We won't have fewer employees, we'll just do more revenue.

• 32:29Scott Galloway?

  So you had a bit of a viral moment. You probably weren't planning this. And I just want to say, I thought your comments were sort of taken out of context around founder mode. Talk a little bit about what you meant. And it kind of, it kind of went wild. Everyone, my favorite meme was, I'm gonna go founder mode on this breakfast burrito. Founder mode, question mark?

• 32:50Speaker 06

  Let me say this. I'm not sure anyone really knows what founder mode is, because Paul Graham wrote an essay about it, but he never described exactly what it was. So let me just give a little backstory. I was asked to go to see a Y Combinator alumni event. It was the first time they got basically 100 startups that are, you know, like around a billion dollar market cap or higher, later stage companies. They did a basically like the quote of a conference, they had different speakers. I joined last minute. It was off the record. I remember they'd tell you, like, you're gonna do this talk, and no one's ever gonna know you did this talk. It's off the record. There'll be no knowledge of it. So I do this talk off the record. And I basically described my experience from 2009 to 2019, going through

• 33:33Speaker 06

  hypergrowth. But the problem was, I was told a certain philosophy of leadership, which is you hire, you know, hire great people and entrust them and empower them to do their job. And that sounds great. But there was a big missing piece of the puzzle, which was being in the details and being close. And I had let go. And I've noticed this paradox, that the more I let go, the more dysfunctional the company got, the more people thought it was leadership meddling. And so the further I got from the details of the company. And I would hire these people, and I thought they were doing a good job. And I would find out years later, they weren't doing the job I thought they were doing, because I wasn't close enough to the job. So I think Paul Graham wrote this essay. It was a very compelling essay. I think the theory is a really great way he framed it, that there's this orientation

• 34:16Speaker 06

  that is germane to founders, which is being in the details, having real ownership of your company, which is different than the classic manager mode. But to be clear, I never said this was something exclusive to founders. Basically, the general principle is being in the details and in being very, very hands on. And it's this basic idea that great leadership is not absence. Great leadership is presence. And then the counterpoint is, well, what about, like, isn't this sound like micromanagement? Isn't this micromanagement? And no one wants to work for a micromanager. And Here are my two thoughts on micromanagement. Number one, I actually think like a lot of people are afraid to get in the details because be accused of being a micromanager. And I actually think a lot more leaders would benefit from being in the details

• 35:00Speaker 06

  and model more hands-on leadership. But the other thing is what Steve Jobs said. Because what I took from Founder Mode, a lot of it was what I learned observing Steve Jobs. And Steve Jobs said, he didn't believe as a man of a manager manager. He said that what I do is I'm in the details, but I'm partnering with the people. And if you ask Johnny Ive, I don't think Johnny Ive thought like Steve Jobs is a micromanager. But Steve Jobs visited design studio every single day. They had lunch every single day together. They were talking. Steve was steeped in every detail of the design of the iPhone. But he wasn't telling Johnny what to do. They were having discussions. They were partnering. And I think that's the key. I remember one time I had employee and they asked me, is this your decision? Or is this my decision? And I said, that's exactly the problem.

• 35:45Speaker 06

  Every decision should be our decision. This, this notion of this black and white, like decision-making authority between owner and worker, manager and employee is, I think, the problem. That you're kind of partnering with people in the details, working with them. And so that was probably the single most important philosophy. That as a founder or as a leader, you set the pace of the organization. You set the standards of, of, of equality. You set the standard of how much you care. You identify excellence, that you work with the leaders on the ground and you don't defer to them, but you don't tell them what to do. You're constantly partnering with them. And the one reason you shouldn't defer to your leaders is because oftentimes you'll have different leaders, come from different functions with different interests and they'll

• 36:30Speaker 06

  conflict. And you're the only leader, or maybe if you're a general manager, you're one of the ones that can actually consolidate and have the most global view and make the most macro decision based on all the different inputs.

• 36:44Scott Galloway?

  So let's talk a little bit about the company and the stock. And you're a public company CEO, so you can plead the fifth on anything here or just say you can't comment. But your revenue is two and three quarter billion most recent quarter. That's up double digits. That's up 11% year on year. Net income over half a billion, 555 million, representing a net income margin of 20%, which is very healthy. Adjusted EBITDA of about 894 million, up 9% year on year, and represented an adjusted EBITDA margin of 33%. These are solid numbers. Airbnb generated a billion of free cash flow in Q2 and 4.3 billion of free cash flow over the trailing 12 months, which is, I think, the most you've ever done. Now, the bad news.

• 37:29Scott Galloway?

  Since the company went public, its first trade to retail investors, I forget when it went public, four or five years ago, it's effectively flat. If you've purchased a stock, you're effectively flat. I mean, there's been some bumps and some ups, some downs. But is this a case of where, quite frankly, you went public in a market that was very frothy and the company is growing into that valuation? At some point, investors are going to get, or shareholders are going to get restless and say, this is a great company that's growing. How come it's not reflected in the stock price? What is it, as a CEO, is it you're going to continue to block and tackle and just continue to stay the course? Do you think it might involve acquisitions moving forward? But what would you say to a shareholder who's been in the stock the last four years and, quite frankly, it's underperformed the rest of the market?

• 38:14Speaker 06

  I think there's a couple of things going on. I think that beginning of 2020, we had a private market valuation of 30 billion. Then the pandemic hit and we raised debt and the warrants were priced at 18 billion. So that might be the best proxy for a valuation. In May of 20, April 2020, we were 18 billion. Then we, our goal in the summer was to go public at 30 billion. Like, we don't want the last round investors to be underwater, so we would like to clear 30 billion. And then by the time we priced the stock, we priced it at 50 billion. And then the first day of closing went to 100 billion. And it was crazy and it was not what we expected. I did not think the stock would pop and double.

• 38:58Speaker 06

  If I did, I probably would have increased the issue price. And we probably at that point had a valuation that was a little ahead of our numbers. We were not generating a huge amount of free cash flow. We were not profitable on an EBITDA basis in 2020. The market was super frothy. So now, you know, there's this old saying, you know, you're never as good as they seem. You're never as bad as they seem. Were we as good as they seem in 2020? I don't know. Maybe we got a little frothy, but we're certainly not as bad as people say now. You know, those that are that are a little bit cynical of the company. I mean, you know, you mentioned we do like over four billion free cash flow. We have one of the highest free cash flow margins in all of Silicon Valley. You know, we put out a little bit softer guidance for a quarter and that like really

• 39:43Speaker 06

  made it had a huge impact on the stock price because investors they'll like kind of forecast a subtle change in growth rate over the next five or 10 years and it massively changed your valuation. What I would just say is the following, I'm 43. I intend to, you know, continue to run this company for the coming decades. I want to build one of the great defining generational companies. And I'm spending a lot of energy taking Airbnb, which was basically a noun and a verb. That's one vertical and trying to do what Amazon did in the late nineties, which was take a platform, an e-commerce platform that's designed for books and bring it to everything. And I think that there's going to be a massive amount of category expansion for Airbnb beyond short-term rentals. So you're going to start to see that next year.

• 40:26Speaker 06

  We have some really exciting ideas that we're working on. But beyond that, there's a huge amount of growth in our core business. And I would just point to a few things. Number one, quality control. We are now bumping up against the growth rate of what Airbnb can kind of grow its growth rate without better quality control because we are now an alternative to hotels. A lot of hotel travelers comparing Airbnbs and they want the similar level of consistency and quality. For every person who stays in Airbnb, nine people stay in hotel. If we can get one of those people to stay in Airbnb, we double the size of our business. And then you've got international markets. You know, most of our business is in like six or seven countries. So we're in 230 countries, but most of our business is in US, Canada, Australia, UK, France.

• 41:09Speaker 06

  So there's so many opportunities in Asia. I mean, there's many countries in Europe, Latin America, where there's huge growth expansion. So that's the next frontier.

• 41:20Scott Galloway?

  Okay, so without revealing your corporate plans, I think of Airbnb loosely as you're great at monetizing fallow assets and creating community. And that might be the wrong description, but that's how I think of it. So what are the most monetizable assets? People's homes, you're kind of in that. Next would be commercial real estate. I could see, I don't like apparel, people have tried that, it isn't working. I could see private jets, I could see, you know, just what am I missing? What are, in your view, without giving?

• 41:52Speaker 06

  Oh, you're, you're missing the biggest one of all people's time.

• 41:55Scott Galloway?

  So like Skillshare? Tell us what you mean by that.

• 41:59Speaker 06

  Well, what do I say without saying it? There's a lot of services that are available that we could go into. So imagine Amazon, they had books, but they went initially into DVDs and CDs when those existed, and then all these different retail categories. So we're looking at, let me just break it down for you. So you have short-term rentals, which are corporate. You have long-term rentals, long-term rentals will be defined as 30 days or longer. So that's the same asset, but for longer stays. And seasonal, that's huge. Then, yes, you do have like car rentals and boats and other large assets. They're not as big as your house, but those are your next biggest assets in your life. But again, the biggest asset are people's time. So services and experiences would be a big opportunity for us.

• 42:41Speaker 06

  But as far as like going down the list of those categories, there are dozens and dozens of categories, but I'll kind of start to accidentally talk and reveal our new product if I do that.

• 42:51Scott Galloway?

  But just to double click on that, I'm outstanding at installing energy-efficient HVAC. And I'm in Delray Beach. And I'm very good at installing solar panels or installing Soapstone kitchen counters in homes that need this. My problem is new business. Can I see an environment where I put my services and pictures and photos, similar to the way you would advertise an apartment, on your platform and you bring them a bunch of business and assure a certain level of quality in exchange for that 15% fee everybody wins? Is that, is that a logical extension?

• 43:25Speaker 06

  That's a logical extension. It wouldn't be the first extension. We would probably start with things a little more adjacent to travel and to hosting an Airbnb. But down the road, almost any type of service, I mean, I don't want to say almost any type of service, but many services, including building, maintenance, cleaning, interior design, you know, upkeep your property. You know, we built the Coz platform, this Coz network we built. We took lessons from Amazon. And the lesson from Amazon is don't build a book marketplace based on ISBNs. Build an abstracted marketplace where you can sell diapers and books and a number of things on the same platform. So that's what we've done. We basically re-architected the entire platform. And so there's many services that could use the Coz network.

• 44:09Speaker 06

  And then on the demand side, there, we're, you know, I'll probably stop there because there's, you know, but you'll see, there'll be more things coming.

• 44:17Scott Galloway?

  And when you're thinking is, is kind of 2025 the year where you start rolling out and testing?

• 44:22Speaker 06

  Every year, I made a statement on the earnings call. I, I believe I can stick with it, which is every year from now on, we're going to launch two to three new businesses or verticals that we believe will one day generate an incremental billion dollars of revenue or more. So you're going to start to see those next year.

• 44:38Scott Galloway?

  And will you do this organically or will you make small tuck-in acquisitions to give you a head start in these categories?

• 44:43Speaker 06

  Primarily organically. And the reason why is because similar to Apple, when Steve ran it, we're a functional organization. And so it's kind of difficult organization to plug in like businesses because then you become divisions. But, you know, if they're small acquisitions or if it's extremely compelling, we'll always take a look at it. And I mean, I would just say like, a lot of entrepreneurs really want to work with Airbnb. They're very motivated. I think we have a very entrepreneurial culture, especially for an S and P 500 company. So it is a very appealing place for an acquisition candidate.

• 45:13Scott Galloway?

  Well, let me just ask you this. You've got a $85 billion market cap, I'm sorry, 84, $85 billion market cap. Lyft, the number two, has a $6 billion market cap. So you'd have to pay a premium of $8 billion. For 10% dilution, why wouldn't you take a flyer and become the number two and then maybe the number one in terms of sharing or monetizing people's cars?

• 45:37Speaker 06

  I mean, these are like, there's, I think there's a lot of opportunities. One of the, one of the frameworks that Jeff Bezos had, I think, is this idea of perishable, non-perishable opportunities. And I think doing an acquisition, most of his acquisitions are not perishable. I mean, maybe someone else could take them out, but we generally think that we want to get a little more momentum in the core business, get to a little bit larger scale before we tried to absorb large companies and large acquisitions. So that's kind of why we've tried to build our muscle. Having done acquisitions in the past, they're very, very time consuming. I think acquisitions benefit larger corporations because they can absorb the acquisition, right? I think a smaller company struggles with just the administrative.

• 46:17Scott Galloway?

  You think of yourself as a small, you're $84 billion market cap. You're by far and away the largest hotel company in the world by number of rooms, growth, you have solid EBITDA. It's just funny that you think that way. I would think that-

• 46:31Speaker 06

  We're a baby compared to what we're going to become. And by the way, we only have 7,000 employees or so. I think Uber has like 30,000. So yeah, maybe today they're double the market cap, but they also have like four to five times the number of employees. So we're actually a smaller company from an employee base than people realize. We tried to build like this, not a Navy, but like the Navy SEALs, this lean elite group. But I think this is just the very beginning. Like, I gotta tell you, Scott, I'm 43, but I have more energy, more motivation and more passion than I was when I was 26 and I was running this company. And I just see endless opportunity for this company. I think we've done a lot of the hard work to rebuild our company from the ground up, to be prepared for this next phase where we can take Airbnb and bring it to more business models around the world. So I mean, yeah, it's just, maybe it's a mindset, you know?

• 47:15Speaker 06

  Jeff, like Steve, Steve Jobs said, "Apple's the world's biggest startup." And he, you know, I think you know what he means by that. Jeff Bezos had his version. He called it day one. It's all basically is the road in front of you longer than the road behind you. And for us, it is.

• 47:31Scott Galloway?

  So I pitched you on this idea privately 18 months ago and the statute of limitations are over, so I can pitch it to you publicly. But Airbnb Plus, or whatever we call it, and I pay 50 bucks a month, and it does a few things. One, when I'm in a city, I have access to cool gyms like an Equinox or whatever. I have access to concierge services. But more than anything, it's a thinly veiled aspirational community slash dating site. And that is, I travel so much, and when I'm in a town, I'm almost always alone. And I find myself at 5:00 or 6:00 or 7:00 PM thinking, I don't know what to do. And if there were other entrepreneurs, if there were other academics, if there were

• 48:11Scott Galloway?

  other people from New York or just locals, what about some sort of Airbnb Plus community offering?

• 48:19Speaker 06

  I think it's incredibly compelling. I think you sold me. I'm in. Listen, 18 months ago, I was in when you told me. And the only reason we haven't done it is because we had really foundational things. People were complaining about Airbnbs aren't affordable. They were complaining about our customer service. They were complaining about, like, there were a lot of things. There were a lot of complaints. And so I felt like, well, we got, we got to get our house in order. We still have to grow into this valuation. We have to generate a real consistent profit on a free cash flow basis. And we have to address a lot of these issues that customers have brought up. And over the last two years, we made 430 upgrades and improvements. So yes, we are now looking for this expansion. I've always believed that there was some type of Airbnb membership model, not necessarily a points program, but where you get access.

• 49:03Speaker 06

  And I, I guess my only question back to you is, are you available as an advisor?

• 49:07Scott Galloway?

  Oh, Jesus Christ, Brian. You're so full of shit. I'm always available. I'm always, you know, I love this company.

• 49:14Speaker 06

  We're going to talk privately after this.

• 49:15Scott Galloway?

  Yeah, anyways.

• 49:16Speaker 06

  But I think it's a great idea. And I generally do see Airbnb as a community. I mean, like, in, in, you know, Berlin tonight, there are tens of thousands of Airbnb people that are staying there. We can match them together. They can do variety of things. Those local businesses would love to have specific travelers, and they could tell us which travelers they want, and we could target just those travelers.

• 49:37Scott Galloway?

  I think there's a social overlay here and that is I think that there's a crisis or an epidemic in loneliness.

• 49:43Speaker 06

  A hundred percent.

• 49:43Scott Galloway?

  And young people aren't connecting in a safe environment where they they want to know each other and want to want to establish professional and personal relationships. There's a lack of third spaces, you know, people aren't going into work, they aren't going to church, they aren't participating in organized athletics as much. And I think that you guys are in a position to provide third spaces on a on a pretty big scale. Look, and now I'm going to sound like your mother here. Last time you were on the show, you spoke about feeling like a sixty one year old and a you were forty one there, so forty three year old's body. Working eighteen hours a day, essentially living like a monk during the pandemic to scale Airbnb from eighteen to eighty five billion.

• 50:23Scott Galloway?

  So over a year later, have you been able to make strides in reconnecting with your the personal side of your life? Do you found as if you found more balance or is this still kind of an ongoing journey?

• 50:33Speaker 06

  No, it's been a major change for me, kind of three changes. The first change is I've gotten much healthier. I was always into exercise, but I've I think a lot of entrepreneurs, we glamorize sleep deprivation. And I think until recently, no one was talking about the benefits of sleep. I think only like five last five or ten years. But in the two, when I started, like, it was a badge of honor to never sleep and I do that for years. And, you know, we didn't really like, we weren't that healthy and I'm I'm much more healthy now. I'm sleeping more, exercising. And I think I think that's a good trend to soak in valley that like people seem to be much more mindful of health and fitness. That's the first thing. Second thing is I'm spending a lot more time with friends and I one of the things I do with friends is I travel.

• 51:16Speaker 06

  You and I talked about like one of the great ways to have a shared experience is to travel with people. And like, that's a great form of memories and I do that. And then I've started to, the third category is like, I'm single and I'm forty three. And then I waited longer than I ever thought I would to meet someone and have a family, but I do desire to have a family. And so I've been dating a little bit and, you know, hopefully I meet someone.

• 51:39Scott Galloway?

  And you also said on the professional front, you talked about your desire for Airbnb to have a next act, your Disneyland, your AWS, your iPhone moment. Give me a moonshot crazy idea that you wouldn't, people wouldn't expect from Airbnb or Brian Chesky.

• 51:54Speaker 06

  There's so many, but I'll just pick one based on the conversations we've had. Loneliness. People are lonely. I think there's a massive way that we can facilitate people meeting one another. So I'll give you an example. If you travel by yourself, you ever go to a restaurant? You gotta eat at the bar by yourself and sometimes-

• 52:10Scott Galloway?

  All the time.

• 52:11Speaker 06

  Okay.

• 52:11Scott Galloway?

  It's literally one of my favorite things and it's pathetic.

• 52:14Speaker 06

  Yeah, yeah. And I do it too, actually. You know, I do go to the bar and sometimes by myself, get food and I like it. But I have no alternative. Like if I'm traveling by myself, that's the only choice. So what if we could basically pair Airbnb travelers together at restaurants, pre-book reservations and bring travelers together? Taylor Swift, number two. She like, obviously had this incredibly unprecedentedly successful concert tour. And we noticed in Europe where her concert was, we saw this massive rise in Airbnb bookings. And what if you could pair, what if you could sell concert tickets on Airbnb, but not just sell concert tickets, but you could actually pair people together to go to the concerts, they can meet one another.

• 52:56Speaker 06

  And we could go down the list of other types of things like pickup sports. So there are kind of things you might not think of as Airbnb, but if we're talking about difficulty in meeting one another, there's a lot of ways we can pair people together. So I think the most not obvious, biggest idea would be Airbnb becoming like a social network in the physical world. Not an online social network, but essentially a physical social network where we're matching people together in real life around events and shared experiences.

• 53:23Scott Galloway?

  God, I just thought of it. You should take on Live Nation. And by the way, I love the idea of you sitting alone at a bar and everybody being like, isn't that Brian Chesky? By the way, you know what I call, when I, see, I'm not young nor a billionaire and not as good looking as you. You know what I call eye contact at a bar when I'm meeting alone?

• 53:39Speaker 06

  What?

• 53:40Scott Galloway?

  A prostitute.

• 53:41Speaker 06

  Ah.

• 53:41Scott Galloway?

  Anyways, there you go. All right, Brian. Brian's literally turning beet red.

• 53:47Speaker 06

  Yeah, what a great way to land this interview. This is great.

• 53:50Scott Galloway?

  He's literally turning beet red here. Brian Chesky is the co-founder and CEO of Airbnb. Since launching in 2007, the firm has grown to a community of over 5 million hosts who have welcomed more than 2 billion guests in almost every country across the globe. He joins us from New York. Brian, you know, I'm an enormous fan of you. I think you're not only a baller professionally in the world of tech, but I think you're just generally speaking, a good person and think about the Commonwealth and what's good for society. And we don't always have that peanut butter and chocolate combination. So, thanks for your time.

• 54:22Speaker 06

  Well, thank you so much, Scott. Thanks for having me.

• 54:36Scott Galloway?

  Algebra of happiness. My sister and I have put my father into hospice, and hospice is a scary sounding word. Jimmy Carter's been in hospice for five years. It's basically saying, we're not going to continue to shuttle him to the hospital. If something goes wrong, we're just going to try and make him as comfortable as possible. And my father's 94 and has declined pretty significantly in the last two and a half months. He had a series of very weird bladder infections and UTIs that just took it out of him. And the last time I went down there, I knew it was coming. He didn't recognize me. And I saw him about two months ago, and we had a conversation. And then two months later, he's like a baby and he doesn't recognize me, which is obviously very much prepared for, but you can't really prepare for. Just a couple of takeaways. Something I'm really

• 55:17Scott Galloway?

  happy about is I knew the end or that end where I would no longer have my father or he would have me in terms of consciousness was coming. And I said a lot of nice things to my father, and I made sure that he felt loved. And I've also, about 25 years ago, one of the best decisions I ever made is that I've always thought of relationships as transactions. And my father wasn't very involved in my life, and I resented him for it. And then I decided across all my relationships that I was just going to decide, okay, don't keep score. What kind of partner, what kind of father, what kind of son do you want to be? And I decided I wanted to be a generous and loving son, distinct of what I thought

• 55:58Scott Galloway?

  his contribution was. And also, I was a little bit hard on my father. I think when you're the child of divorce and you live with your mother, you have a tendency to Sanctify or deify your mother because she's taking care of you and making your breakfast. And demonize a little bit dad because it was his fault. My dad, divorce really was his fault. But look, the thing you gotta think about your parents, what I've come to realize is that their number one job is to be a better dad to you than their dad was to them. And I found out at a much older age, my dad never said this to me, that my father was abused, physically abused.

• 56:39Scott Galloway?

  His father was an alcoholic and used to come home and get this, wake him up, start yelling at him and beat him. And I just think about, Jesus Christ, talk about trauma that might not make you a wonderful dad. And my dad did try. He wasn't always there, but he did try. And so I forgave my dad 25 years ago and said, I'm just gonna be a generous, loving son. And I've been that. I'm really glad I was that. That gives me a great deal of comfort. The other takeaway is that it's so wonderful to have siblings in this situation. My sister handles all the logistics and makes the millions of decisions you need to make every day when your father's not doing well. And it's actually brought us closer.

• 57:20Scott Galloway?

  And I can't imagine how difficult it can be for siblings that don't get along, or one contributes more than the other, and the resentment and the martyrdom. And some people just don't show up. And I handle the money side of things because I'm blessed on that end, which is important. And it's a sad reality here. It is just so goddamn expensive. And so if you're in a position where you're making some money and you have aging parents, you may want to think about the costs that are gonna be involved there. And if you can't, otherwise they're gonna have to live with you. But let me just try and land this plane. I didn't know where this was gonna go. I decided to put the scorecard away and be a generous, loving son. And that was the right call.

• 58:04Scott Galloway?

  This episode was produced by Jennifer Sanchez and Caroline Chagrin, and Drew Burrows is our technical director. Thank you for listening to the PropG Pod on the Vox Media Podcast Network. We will catch you on Saturday for No Mercy No Malice, as read by George Hahn, and please follow our PropG Markets pod wherever you get your pods for new episodes every Monday and Thursday.

• 58:24Speaker 09

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• 58:55Speaker 10

  A single click, a ransomware attack, a business lockdown, a demand for Bitcoin. These are real threats financial advisors are facing today. Hear how AI is transforming cybercrime, why these attacks are accelerating, and what advisors can do to protect their business, their clients, and their future. Tune in to If You Could for what's next.