Photograph by Michael Lewis for Fortune Magazine
How the home-sharing site’s co-founder hacked leadership and taught himself to be a world-class CEO.
Brian Chesky is drawing intently on a napkin. We’re
sitting in the President’s Room at Airbnb’s airy, ultra-chic
headquarters in the SoMa neighborhood of San Francisco. Other meeting
spaces in the historic building, which the company moved to in 2013, are
designed to replicate an Airbnb rental in Fiji or the war room from the movie Dr. Strangelove.
With its wood-paneled walls, leather club chairs, and a model of a ship
on the coffee table, the President’s Room retains the feel of the
original executive quarters from 1917, when the building was built to
house a battery factory. After a moment of serious sketching, Chesky
holds up the napkin to show me his picture: It’s a boat. And, it must be
said, for a graduate of the Rhode Island School of Design it’s a
rudimentary-looking vessel. But the quality of the drawing is not the
point. I’ve just asked Chesky how his management style has evolved, and
the boat is his answer.
“If you think about it, Airbnb is like a
giant ship,” he says, holding up the napkin. “And as CEO I’m the captain
of the ship. But I really have two jobs: The first job is, I have to
worry about everything below the waterline; anything that can sink the
ship.” He points to the scribbled line of waves that cuts the boat in
half, and below that, two holes with water rushing in.
“Beyond that,” he continues, “I have to focus on two
to three areas that I’m deeply passionate about—that aren’t below the
waterline but that I focus on because I can add unique value, I’m truly
passionate about them, and they can truly transform the company if they
go well.” The three areas he’s picked: product, brand, and culture. “I’m
pretty hands-on with those three,” he says. “And with the others I
really try to empower leaders and get involved only when there are holes
below the waterline.”Watch: Airbnb’s founder on disrupting an industry
It’s a high-level, strategic
way of thinking about management, something that sounds more out of the
playbook of Jim Collins or Peter Drucker than a 33-year-old first-time
CEO. And in fact there is an outside source for this bit of wisdom, but
it’s not what you might expect. Chesky learned the boat theory from
George Tenet, the director of the CIA from 1997 to 2004 and now a
managing director at the investment bank Allen & Company. Chesky was
introduced to Tenet a few years ago and asked to set up a meeting.
It may seem odd for Chesky, the CEO of the company that,
along with ride-sharing giant Uber, has become the poster child for the
so-called sharing economy, to seek advice from the man who signed off on
the intelligence that led to the 2003 U.S. invasion of Iraq. But Tenet
is just one of a long list of leaders Chesky has sought out since
co-founding the home-rental website—some inside the box and some very
far outside it. Others he’s reached out to for lessons include Berkshire
Hathaway’s
BRK.A
Warren Buffett and Disney
DIS
CEO Bob Iger; a long list of tech luminaries that includes Apple’s
APPL
Jony Ive, LinkedIn’s
LNKD
Jeff Weiner, and Salesforce.com’s
CRM
Marc Benioff; and a separate group he’s taken posthumous
lessons from, including Steve Jobs, Walt Disney, George Bernard Shaw,
and Dwight D. Eisenhower. “It’s kind of like the old Robert McNamara
saying,” says Chesky, referencing a comment about nuclear weapons by the
controversial 1960s U.S. defense secretary to explain his own voracious
pursuit of management knowledge. “There’s no learning curve for people
who are in war or in startups.”
Indeed, the past seven-plus years have
been a combination of exhilarating, nerve-racking, and flat-out surreal
for Chesky. Hatched in 2008 on a whim, Airbnb is now a massive platform
that has been used by 40 million people. As this story went to press,
the company was reportedly close to raising $1 billion in a new round of
funding that will give it a valuation of $24 billion, a figure that exceeds the $21 billion market value of hotel giant Marriott
MAR
, which runs more than 4,000 hotels. Among so-called unicorns,
tech startups with valuations of more than $1 billion, Airbnb trails
only Uber (reportedly close to closing a new round of funding at a value
of $50 billion) and Chinese phone-maker Xiaomi ($46 billion). Airbnb
will reportedly bring in around $900 million in revenue this year.
It wasn’t so long ago that the
preparation for running a company of that size came only one way: by
working one’s way up through the ranks, demonstrating “leadership
potential,” and then embarking on a years-long process of being moved
through a series of CEO-in-waiting posts. But the current tech-industry
climate has turned that thinking on its head. Young people with a
single, powerful business idea are thrown into CEO positions by default
and not by training, and it happens very, very quickly. And while no
unicorn is without investors and other advisers offering plenty of
opinions and advice, the CEO is largely on his own, steering the
ship—and occasionally drawing it on a napkin.
Chesky, who in 2008 had never heard of an
angel investor or read TechCrunch, knows this better than anyone. “It’s
not natural for someone like myself to be at art school, to then be
unemployed, and then five or six years later have this,” he says.
“Nothing really prepares you for that.”
His solution, then, has been to hack leadership by going
far and wide in search of best practices. So far, that approach seems to
be working for Chesky, thanks in part to the fact that he has a
temperament well-suited to the quest for mastery, as we’ll see. But the
story of Chesky’s evolution as an executive also offers a window into
the way the new economy has turned conventional CEO-ing upside down—and
may offer a new playbook for leadership development.
Ask anyone who knows Chesky what he’s like, and he will say one of a few things: Intense. Focused. Really, really, really
curious. As soon as we sit down to talk for this article—the first
in-depth profile of Chesky himself, rather than the company—he starts
quizzing me about the process. He’s surprised that he is actually the
subject of an entire story. He wants to know how the day is going. I
list the half-dozen executives I’ve already interviewed. “Wow, this
feels like a 360-degree performance review,” he says. “The only
difference is the whole world will read it.” He presses on: “What are
the themes? Or do they come later?”
By now, the story of Airbnb’s origin is
lore in Silicon Valley and beyond: In October 2007, Chesky and Joe
Gebbia, two unemployed RISD graduates, were broke and staring at their
rent due date. So they came up with the idea to pull some of Gebbia’s
air mattresses out of the closet and sell sleeping space in their
apartment to attendees of a sold-out design trade show. They called it
the Air Bed and Breakfast. (The “continental breakfast” consisted of
untoasted Pop-Tarts.) Three people bunked with them that weekend, and
the idea got some attention on design blogs. A few months later their
engineer friend Nathan Blecharczyk joined Chesky and Gebbia as the third
co-founder, and in August 2008 the site debuted as
Airbedandbreakfast.com, an online platform for people to rent out space
in their homes. Chesky gravitated naturally to the role of leader, with
Gebbia focused on design and Blecharczyk on technology.
Many experts and Silicon Valley
luminaries were highly skeptical of the Airbnb concept at first. But the
idea took hold, and the following spring the founders were accepted
into the prestigious startup incubator Y Combinator, run by venture
capitalist Paul Graham. They soon shortened the name to Airbnb and
expanded from offering shared spaces to properties including entire
homes and apartments, castles, boats, and tree houses. In November 2010
the trio got their first round of VC funding. Today Airbnb has roughly
2,000 employees operating out of 21 offices worldwide, and offers its
service in 34,000 cities.
Ask Chesky what he didn’t know about management in the early days, and he barely knows where to start. “It’s kind of like, what did
I know?” he says. But he had no choice but to plunge in; the company
couldn’t wait for him. Chesky says he learned two ways: first by trial
and error (“it’s the old adage about jumping off a cliff and assembling
the airplane on the way down”), and second by teaching himself how to go
deep on subjects fast—specifically, by using a process he calls “going
to the source.”
Rather than trying to learn every single
aspect of a particular topic, Chesky found that it was more efficient to
spend his time researching and identifying the single best source in
that area, then going straight to that person. “If you pick the right
source, you can fast-forward,” he says. It’s an approach that has served
him again and again.
Chesky and his co-founders’ first
“sources” were their earliest advisers, tech entrepreneur Michael Seibel
and Y Combinator’s Graham. Reading was also an early part of the
regimen. For Chesky, a source may come in the form of a biography of a
business hero such as Steve Jobs or Walt Disney. His primary book source
on management technique is Andy Grove’s High Output Management. To learn the ins and outs of hospitality, he went to the Cornell Hospitality Quarterly, a scholarly journal published by the Cornell University School of Hotel Administration.
As the company became more prominent, so did Chesky’s sources. Soon came meetings with Facebook’s
FB
Mark Zuckerberg, Amazon’s
AMZN
Jeff Bezos, and eBay
EBAY
CEO John Donahoe. He went to Bob Iger and Marc Benioff to ask
how they push their executive teams to do more. From Facebook’s Sheryl
Sandberg he picked up tips about efficiency in scaling internationally.
A key aspect of Chesky’s sourcing theory is what he calls
“synthesizing divergent ideas”—basically, going to unexpected sources
for insight. To learn how to become an elite recruiter, for example,
Chesky might skip talking to an HR exec and instead seek out a sports
agent, whose business lives and dies by attracting talent.
Similarly, Chesky reached out to Tenet
not for tips on global security, but for corporate culture: How do you
create an open and transparent atmosphere when you’re in the business of
secrets? From their conversation, he took away the importance of
“walking the park,” Walt Disney’s theory of being a visible manager.
Tenet told Chesky he would eat lunch in the cafeteria every day and sit
at a different seat. Chesky says Tenet also taught him the importance of
sending handwritten notes to employees. The former CIA chief told him
that some of the most meaningful moments in his job were when he’d see a
card he wrote an employee years ago still tacked on to his or her wall.
And, of course, he gave Chesky the boat theory.
One of Chesky’s biggest source triumphs was his audience
with Buffett. A little over a year ago, Chesky reached out and asked if
he could travel to Omaha to have lunch, in part to talk about how Airbnb
might help expand the number of rooms available in town during
Berkshire’s annual meeting weekend. The discussion ended up lasting 4½
hours. Chesky’s biggest takeaway: the value of not getting caught up in
the noise. “He’s literally in the center of Omaha,” Chesky says.
“There’s no TVs anywhere. He spends all day reading. He takes maybe one
meeting a day, and he thinks so deeply.” The experience made such an
impact on Chesky that he went to the airport, and, afraid he would
forget the conversation, immediately wrote a 3,600-word report and sent
it to his team. For his part, Buffett says he sensed in Chesky a genuine
passion for building his company: “I think he would be doing what he’s
doing if he didn’t get paid a dime for it.” Buffett’s take on Airbnb? “I
wish I’d thought of it.”
Communicating the various pieces of
wisdom he picks up as he learns them is a key part of Chesky’s
management style. Earlier this year he started a “Sunday night series,” a
weekly all-company email summarizing a principle or lesson he’d
learned. A recent three-part series focused on—fittingly—how to learn.
Chesky has been obsessive about his pursuits
since childhood. “From a very young age, you could see that he didn’t
just dabble in something,” says his mother, Deb Chesky. Brian grew up in
Niskayuna, N.Y., outside Albany, the son of two social workers. (His
sister Allison, five years his junior, is a fashion editor at Real Simple, which is owned by Fortune’s
parent, Time Inc.) Chesky’s first passion was hockey. After he got a
full set of gear for Christmas one year, he insisted on sleeping in
it—pads, skates, stick, and helmet. Later a hobby of drawing and
redesigning Nike sneakers grew into a passion for art. He would
disappear to the local museum for hours to draw replicas of the
paintings.
His natural leadership potential surfaced
at RISD, where he served as the captain of the hockey team and was
eventually selected to be the commencement speaker at his graduation.
Chesky threw himself into the task, studying every commencement speech
he could find; to make the experience less intimidating, the night
before his address he stood at the podium and watched as the staff set
up 6,000 chairs one by one. “Who does that?” muses Deb Chesky.
After graduation, Chesky’s friend and classmate Gebbia
told him that he had a premonition they were going to launch a business
together. “I said, ‘Before you get on the plane, there’s something I
need to tell you,’ ” says Gebbia. “ ‘We’re going to start a company one
day, and they’re going to write a book about it.’ ” Chesky first moved
to L.A. to become an industrial designer, but soon decided to join
Gebbia in San Francisco. Eventually, they ran short of rent money, and
inspiration struck.
The biggest leadership lesson for
Chesky so far came from the company’s most significant crisis to date.
It started when a San Francisco host’s home was burglarized and
ransacked by renters in June 2011. The company initially put forth a
lackluster response from Chesky, but the host—a woman known as
“EJ”—rebutted in a blog post his claims that the company had done
everything it could to help her. Then Airbnb went silent, and the story
got louder.
Inside Airbnb everyone had a different opinion on how to
handle it. Some argued that taking responsibility would just open the
door to more complaints; others said to put the truth out there; still
others said the company should stay totally quiet. The situation dragged
on for weeks. “I finally had this really dark moment and I got to the
point where I wouldn’t say I stopped caring, but my priorities
completely changed,” says Chesky. “And I basically said I should stop
managing for the outcome and just manage to the principle.” He needed to
apologize, Chesky felt, even if it might hurt the company.
Chesky composed a strongly worded letter
accepting responsibility. “Over the last four weeks, we have really
screwed things up,” he wrote. He not only said he was sorry but also
announced that the company would be implementing a $50,000 guarantee.
“All of this was against advice,” Chesky says. “People were like, ‘We
need to discuss this, we need to do testing,’ and I said, ‘No, we’re
doing this.’ ” He did have a key assist from one major source. Marc
Andreessen, co-founder of VC firm Andreessen Horowitz and an investor in
Airbnb, added a zero to the amount of the guarantee, which Chesky had
first set at $5,000.
Chesky’s primary takeaway from the experience was to stop
making decisions by consensus. “A consensus decision in a moment of
crisis is very often going to be the middle of the road, and they’re
usually the worst decisions,” he says. “Usually in a crisis you have to
go left or right.”
For his team, it was a defining moment in
their confidence in him as a leader. “That’s when I really saw what
Brian was made of,” says Joe Zadeh, head of product management. “That
was the turning point where I had 100% confidence in this company’s
leadership and was ready to take any challenge the world threw at us.”
Despite its rapid growth, Airbnb has endured plenty of challenges. The service runs afoul of local laws and regulations in many cities
in which it operates. In its hometown of San Francisco, until recently,
all short-term residential rentals without a permit were banned.
Landlords, co-op boards, and urban neighbors are often hostile.
New York, which passed a bill in 2010 saying that owners
or tenants can’t legally rent their apartment out for less than 30 days
unless they’re living in the same space, has been a particularly tough
battleground. The attacks on Airbnb got so bad in 2013 that Chesky went
on a charm tour, meeting with dozens of politicians, hoteliers, real
estate moguls, and influential members of the press. The tenor of the
conversation in New York changed after the tour, but the city hasn’t
budged on the law. Other markets, though, have been opening up: A new
law in San Francisco legalizing short-term rentals went into effect in
February. Nashville, Philadelphia, and San Jose have announced similar
legislation, as have London and France. “I think we’re moving away from
the divisive era into the more mainstream era,” Chesky says.
Airbnb is often seen as a competitor to the major hotel
chains. Chesky challenges that view and insists that hotels have
continued to thrive even as Airbnb has grown. He says that these days
Airbnb has a “pretty healthy relationship” with the likes of Marriott,
Hilton
HLT
, and Starwood
HOT
. In 2013, Chesky recruited Chip Conley, founder of the Joie
de Vivre hotel chain and a respected figure in the industry, to focus on
hospitality. Conley says executives from four of the six biggest hotel
chains have come to the Airbnb headquarters for a day of “immersion.”
But the more Airbnb grows, the more it has the capacity to
take business from hotels. Last year the company launched Instant Book,
a new category of listings that don’t require approval from the host
and allow for immediate, hotel-like booking. Now Airbnb is making a push
into business travel, including a partnership with travel management
company Concur that has seen Airbnb land some 150 corporate accounts so
far. It’s likely that the mainstream era will be just as competitive as
the one Airbnb is leaving behind.
It’s a Wednesday in
early February, and Chesky is standing on a stage at Pier 48 in San
Francisco. This is One Airbnb, the company’s weeklong annual all-hands
confab, and more than 1,800 employees are packed into the venue for
Chesky’s keynote address. He talks about the importance of being
“crazy”—of not “editing your imagination,” not listening to the voices
that say something’s not possible. Safety questions, legal challenges,
competitors—none of those things can destroy Airbnb. “The thing that
will destroy Airbnb,” he says to thunderous applause, “is if we stop
being crazy.”
Chesky is particularly obsessive when it
comes to culture. In 2012, he asked another key source—the iconoclastic
investor Peter Thiel—for the best advice he could offer. Thiel’s
immediate answer: “Don’t fuck up the culture.” Thiel said it was almost
inevitable that the culture would go awry once a company reached a
certain size. So Chesky doubled down on his focus. “If you break the
culture, you break the machine that creates your products,” he wrote
shortly thereafter in a missive to employees. He welcomes new hires each
week with an hour-long Q&A session in which he encourages them to
be bold and to be “crazy.” His passion for his product occasionally
verges on evangelism, such as when he tells employees they are there to
“design the future world we want to live in.”
After years of his own executive
education, Chesky has collected a cabinet full of philosophies,
opinions, truisms—and a healthy dose of jargon. Chesky talks a lot about
“up-leveling,” or pushing himself and others to think bigger. That’s
not to be confused with “skip-leveling”—the process of talking to people
at all levels of the organization. Chesky is also fond of discussing
“step changes,” or single moves that have a great effect.
But Chesky is quick to acknowledge that he still has weak
points. He takes too long to hire executives, he says, and also too long
to acknowledge when things aren’t working out. Another skill he’s still
perfecting: the art of listening. Chesky says that when he was 6 years
old his parents had his hearing tested. “They thought I had a hearing
problem,” he says. “Apparently I just had a listening problem.” Chesky
is working on it, but says that he has so much energy and is so
“action-oriented” that it can appear that he isn’t listening when he is.
Investor Graham says Chesky’s approach may not be out of the Harvard
Business School playbook, but it’s effective. “He’s sort of missing all
the stuff they teach at HBS,” says Graham. “But he’s the kind of leader
who leads people to do things that he himself believes in.”
In Andreessen’s view, Chesky’s biggest
challenge is the sheer amount of information he has to process while
growing such a fast-moving organization. “Some people lean into that,”
says Andreessen. “Brian loves it. One of the things that makes him
distinctive is he’s up for the challenge.” Andreessen says he views him
as “one of the best new CEOs since Mark Zuckerberg.”
This has been something of a breakout year for Chesky. In April, he was on the Time 100, and his presence at the White House Correspondents’ Dinner (seated at Fortune’s
table) made headlines as a symbol of Silicon Valley’s growing presence
in Washington. In May, President Obama appointed Chesky a presidential
ambassador for global entrepreneurship.
Even as his profile rises, however, Chesky has been
working on a new project: finding balance. He has learned that if he is
going to stay in his job for the long run, he must develop techniques to
“refill the reservoir.” The key source in that effort is Elissa Patel,
his girlfriend of two years (they met on Tinder), who recently left
photo app Frontback to start her own venture. They do yoga together
every Thursday morning. And since Chesky’s apartment is still listed on
Airbnb—yes, you can Airbnb the CEO’s pad—the occasional guest joins in.
He and Elissa often do “staycations,” booking an Airbnb in a different
neighborhood just to experience it.
Looking to the future, Chesky says that
not a single one of Airbnb’s investors has pressured him to take the
company public anytime soon. But he’s well aware of the expectation that
an IPO will happen eventually. And he does offer a little hint on
timing. “If we decided we wanted to go public, we’d want to give
ourselves a couple years to really prepare, to have that runway,” he
explains. “I always thought of it as a two-year project. And we won’t
start thinking of that for at least a year, and maybe two years.”
That should give him plenty of time to get his sources lined up.
A version of this article appears in the July 1, 2015
issue of Fortune magazine with the headline “The Education of Brian
Chesky.”
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