Brian Chesky, co-founder and CEO of Airbnb, discusses the early days of the company, the impact of the pandemic, running a company with attention to detail, resilience during challenging times, the importance of determination, and the origins of Airbnb.
Transitioning from renting airbeds to entire apartments was a crucial strategic shift for Airbnb's growth.
Adopting a functional structure with a core team facilitated quicker decision-making and a unified vision.
By embracing a lean and efficient business model, Airbnb turned a profit despite the challenges posed by the pandemic.
Deep dives
Transitioning from Airbeds to Entire Apartments
Initially, the founders of Airbnb started by renting out airbeds in their own apartment. However, they realized that they could expand their offering by allowing hosts to rent out their entire apartments. This shift in strategy opened up new possibilities and attracted a larger audience. The decision to evolve from airbeds to entire apartments was a pivotal moment for Airbnb's growth and success.
The Importance of Shared Consciousness
To streamline and accelerate decision-making processes, Airbnb transitioned from a divisional structure to a functional structure. This meant that instead of dividing the company into various divisions, they brought together a core team of 30 individuals who worked collaboratively on every aspect of the company. This shared consciousness allowed for faster decision-making, a greater sense of ownership, and a cohesive vision.
The Journey to Profitability
Prior to the pandemic, Airbnb was operating at a loss of $250 million annually. However, through rigorous efficiency measures and a focus on financial discipline, the company successfully turned a profit, generating $3.8 billion in free cash flow in the last year. By embracing a lean and efficient business model, Airbnb emerged from the crisis as one of the few highly profitable unicorns, setting a new standard for success in the industry.
The Pandemic Strikes and Airbnb's Business Plummets
When the pandemic hit, Airbnb experienced an unprecedented 80% drop in business within eight weeks. As a result, the company faced the daunting challenge of navigating through a crisis of such magnitude. The CEO, Brian Chesky, recalls the intense period, describing it as a time when everything seemed to come to a halt. However, he emphasized the importance of maintaining optimism and resilience, both for himself and for his team. Despite the immense pressure, Chesky and his team refused to give up, working tirelessly to adapt and find new ways forward.
Leadership and the Power of Resilience
During the crisis, Chesky realized the critical role of leadership and the importance of managing his own psychology. He took charge by stepping up communication, providing transparency about the challenges and uncertainties the company faced. Chesky and his executive team held daily meetings, fostering a sense of unity and shared purpose. They made decisions based on principles rather than relying on data, as the crisis rendered traditional metrics unreliable. Chesky believed that, in a crisis, leadership must be proactive, present, and optimistic to inspire and motivate the team to keep going. Through their collective efforts, Airbnb managed to weather the storm, emerging as a stronger company with a renewed focus on their core mission and values.
In today's episode, we're talking once again with Brian Chesky, co-founder and CEO of Airbnb. YC funded Airbnb in 2009, when the company was at death's door. During YC we watched the founders work frantically to get growth started and turn Airbnb into the rocketship that it is today. Today we pick up where we left off in Brian's incredible story of startup survival.
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