CEO Diaries: Airbnb’s Founder Brian Chesky on Brutal Rejection, Great Leadership, and The Biggest Mistake Founders Make!

[0] This was one of my favourite business conversations that I've ever had on the Diary of a CEO podcast and it's frankly set the bar for every CEO or co -founder that I ever interview.

[1] Brian taught me, more so than any other guest I've ever had on the show, how important hiring, culture and team building is.

[2] The reality of running a small business is that switching off is never really an option.

[3] Even when you try, the ideas, the excitement and all the responsibility is always there.

[4] And because you're always switched on, it's only fair that your hiring partner should be too.

[5] LinkedIn Jobs, who are the sponsor of this moments episode, has been that hiring partner for me and for years because it's always working away in the background.

[6] My team can post our jobs for free, share them with our networks and reach top talent all in the same place.

[7] So let's get into today's conversation.

[8] At the very beginning, I saw this email, which I think is really important because maybe it's the most important thing because there are going to be people starting companies now that are getting a lot of emails like that.

[9] This is from August 1st, 2008.

[10] We were, by the way, so let me give the context of this email.

[11] So Joe Nate and I were trying to raise money.

[12] For everyone trying to raise money, I want you to know that Airbnb was trying to raise $150 ,000 at a $1 .5 million, I think, post -money valuation.

[13] I'll give you that right now.

[14] Exactly.

[15] And here's one of many rejection letters.

[16] Hi, Brian.

[17] Apologies for the delayed response.

[18] We've had a chance to discuss internally and unfortunately don't think that it's right.

[19] for fill -in -the -blank investment firm from an investment perspective.

[20] The potential market opportunity did not seem large enough for a required model.

[21] Now, I want you to just put this perspective.

[22] Airbnb handles nearly as much money as the entire GDP of the country of Croatia today.

[23] One in about every $1 ,500 spent in the world, about $1 spent on Airbnb.

[24] That's a pretty large market.

[25] And our business is pretty much the same idea.

[26] as the idea that we proposed that person who said our market opportunity wasn't large enough.

[27] So there's probably a myriad of lessons in that, aren't there?

[28] And I think that it's a reminder that the world doesn't just change, or at least it doesn't just transform towards our dreams, ideals, and ambitions that require certain types of people.

[29] We might call them entrepreneurs, inventors, all sorts of people in different domains.

[30] that believe the world could be a little different than the one that they live in.

[31] They have the audacity to believe that they can do it.

[32] And they have the ability to convince other people to go on that journey with them.

[33] But along that journey, everything's going to be different.

[34] You're going to get lost.

[35] You're going to be cold.

[36] You're going to have like obstacles.

[37] Things are going to attack you.

[38] You're going to fall down pits.

[39] And the question is when people are cold and they're shivering and they're not sure what to do and you're running out of resources and rations.

[40] Can you find your way up that mountain?

[41] Do you know why you're going?

[42] Can you invent all these different apparatus?

[43] Like there's a stream you can't figure out.

[44] You can build a bridge to cross the stream with the limited resources you have.

[45] Can you recruit people along the way?

[46] And can you beat the drum?

[47] And when people are tired and they say, I want to sleep, you say, yes, we're going to rest, but we got to go.

[48] Just 500 more steps.

[49] I know it's right over the edge.

[50] I think we can do a little bit better.

[51] And can you push people outside their comfort zone?

[52] Not enough to hate you, but enough to feel like a trainer.

[53] You're like three more reps and you don't want to do it.

[54] And then that very moment, they're not your friend.

[55] But at the end of the workout, you're like, thank you for pushing me that hard.

[56] This is that kind of person.

[57] And can you take divergent ideas that no one's ever seen before and just continue to reformulate them?

[58] Could you store these ideas in your head, a thousand competing ideas, and just reformulate them in your mind?

[59] It turns out this stuff is difficult, but you can work your way up there.

[60] Most people watching this have the skill set to be an entrepreneur.

[61] Not everyone has a skill set or the desire to run a giant company.

[62] I don't think everyone needs to do that.

[63] But a lot of people have the skill set to do something, to start something.

[64] This is what you need to get up the mountain.

[65] And the problem is, imagine we got up the mountain and then somebody was dropped from a helicopter.

[66] having never walked up the mountain and you tell them, okay, now you lead this group up the next mountain.

[67] Can you imagine how hard it'd be for that person to drop from the sky?

[68] Or maybe they joined a third of the way up the mountain, but they weren't there at the very beginning.

[69] You see, a founder brings three things that a professional manager doesn't have.

[70] The first thing a founder has is they're the biological parent.

[71] So you can love something, but when you're the biological parent of something, like it came from you, it is you.

[72] There is a deep passion in love.

[73] The second thing a founder has is they have the permission.

[74] I can't tell another child what to do, but if they were my child, I probably could.

[75] I have the permission.

[76] And so you have a permission.

[77] I could rebrand the company and a professional manager would probably come and say, I can't do that.

[78] But I know how we named it.

[79] I know how we branded it.

[80] So you know what you can change.

[81] And the third thing that a founder brings is you built it so you know how to rebuild it.

[82] You know the freezing temperature of a company.

[83] You know what temperature it melts.

[84] You know like what this looked like before it was tooled, where it came from, the alloys, where they were sourced from.

[85] You're not just managing it.

[86] You're building it.

[87] And the problem is professional managers typically don't have any of those three, at least not in the abundance of founders.

[88] But the problem with founders, there's two problems.

[89] The first is most of them cannot scale to run a giant company.

[90] And even if they do.

[91] The last problem is they don't live forever.

[92] And companies, great companies, usually want to live longer than humans do.

[93] And so therefore, you end up with the inevitable challenge that Disney and Steve Jobs had, which is succession planning.

[94] Actually, both of them died prematurely and didn't maybe Steve prepared more than than Walt did.

[95] And that's the last step of the journey.

[96] But I think there's something really special.

[97] about founders and founder -led companies.

[98] And I think that if you want the world to change, we need more entrepreneurs.

[99] We need more founders.

[100] If you want to empower more women, you should make more women entrepreneurs.

[101] If you want to lift up more economies around the world, you should lift up entrepreneurs in those economies.

[102] It's one of the greatest ways to create wealth, to change the world, and to just change the trajectory of society.

[103] So powerful, Brian.

[104] It made me think about what Steve Jobs did leave behind.

[105] And that's maybe where the word culture comes in.

[106] Because I would have bet against Apple surviving and flourishing in the wake of Steve Jobs' passing because Steve was so, so special.

[107] But he clearly left a set of enduring principles behind culture.

[108] You know, I spoke to Daniel Ek, as you said, as a friend of yours.

[109] He said to me, 20 years old, didn't care about culture.

[110] 30 years old, didn't know what it was.

[111] At 40 years old, I think company culture and team culture is the most important thing.

[112] When you think about culture...

[113] How important is that?

[114] What is it?

[115] How does one go about creating it?

[116] It's funny you ask this question.

[117] Because last week, I sent an email to the entire company, to all 6 ,000 people.

[118] And my email was about culture and why it's important and what it is.

[119] Can I read you a portion of it?

[120] What a privilege.

[121] For the context of emails, I hired a head of people in culture, like a different name for HR.

[122] Joni and I have always believed.

[123] that you must design the culture you want.

[124] Otherwise, it will be designed for you and you might not like what emerges.

[125] The people and the culture they create at the heart of Airbnb.

[126] Simply put, culture is what creates the foundation for all future innovation.

[127] In the long run, the culture is the most important thing you will ever design.

[128] Because it's the engine that designs everything else.

[129] All good designs start with a vision.

[130] And I want working at Airbnb to feel like working at the world's largest startup.

[131] I believe we can grow into one of the largest companies in the world without feeling large.

[132] A company that's still run like a startup.

[133] With the best people in every discipline collaborating at high speeds with intense focus.

[134] All while maintaining mental bureaucracy and communication layers.

[135] And to make this happen, we're going to reimagine HR function.

[136] Because too many companies have lost sight of what HR was originally designed to do, reducing it to merely an administrative function.

[137] Yet at its core, HR is about people and culture.

[138] And it's one of the most strategic functions within a company.

[139] That's why we don't call it HR.

[140] Because it should be about bringing out the very best in people.

[141] Most of all, I want us to feel like we're building one of the most creative places on earth.

[142] A company that brings together some of the best people of our generation to dream up new products and services that capture the world's imagination.

[143] A place where years from now, people would say, if I was alive during that time, that's where I would have wanted to work.

[144] I literally wrote that email last week about culture.

[145] It's so incredible.

[146] It's so incredible because...

[147] Yeah, the greatest leaders that I've met all arrive at the same conclusion about culture.

[148] Even if it takes them 10 years or 20 years or whatever, they arrive there.

[149] The question though, because so many CEOs could send that email, right?

[150] Everyone could just, you know, they just heard Brian say it, so they copy and paste and send it to their team.

[151] The question is, how do you actually create that?

[152] It's so great.

[153] So big, huge insight here, okay?

[154] I used to think you talk about the culture and you talk about how important it is and you write out a list of, well, what is your culture?

[155] Well, our culture are a bunch of principles or values we live by.

[156] So what makes us most unique?

[157] Let's do a session.

[158] Let's write out a list of our values.

[159] Now let's tell everyone the values.

[160] Let's print them on the walls.

[161] Let's have people repeat them.

[162] Let's keep telling people culture is important.

[163] And that stuff can help.

[164] a little bit, but it's not how you build culture.

[165] So let me give you a few thoughts.

[166] Your culture is the shared way you do things.

[167] And often they're based on lessons you've learned.

[168] And the lessons you tend to remember the most are the ones that are seared in you.

[169] They come from trials and tribulations from your most difficult times.

[170] It's the way you rise the occasion in the face of adversity.

[171] Your culture is the behaviors of the leaders that get mimicked all the way down every single person.

[172] Your culture is every time you choose to hire someone, every time you choose to fire someone, every time you choose to promote somebody.

[173] It's the way everyone does everything.

[174] And the way a leader designs the culture is not by writing out a list of values.

[175] It's by basically leading by example every single day and taking a survey of every single thing happening and constantly shaping it, pruning it like a gardener.

[176] You know, you don't just allow the culture to happen.

[177] You design the culture.

[178] You have an idea of what you want to do.

[179] And you're just constantly getting this group together.

[180] You know, you might have a culture of excellence.

[181] And a culture of excellence means I review all the work and I say not good enough.

[182] Not good enough.

[183] Not good enough.

[184] And eventually, I could not join the meeting, but people know what I'd say.

[185] They'd say it's not good enough.

[186] This is our standard.

[187] And the moment I cannot be in the room and the same action happens as if I was in the room, that's the moment it goes from management to culture.

[188] So it's like a golf swing.

[189] To teach a golf swing, you've got to like probably I don't play golf, but the instructor has to watch the person.

[190] And at some point, the person learns how to swing a golf swing without the instructor there.

[191] That's the difference between management and culture.

[192] And culture is something that people learn to develop these shared instincts.

[193] And it's so important because it's your ultimate intellectual property, not your technology, not your recipes, not your exclusive contract vendor relationships, the way you know how to do something.

[194] That is the most important thing a company has because all a company is, is a bunch of people, a bunch of money and a direction that those people are using those resources to go towards.

[195] People, resources, strategy.

[196] And the culture is a thing that bonds those things together.

[197] I hope you found today's conversation helpful and insightful.

[198] If you're ready to join two and a half million other small businesses already using LinkedIn for hiring, head over to linkedin .com slash DOAC now.

[199] That's linkedin .com slash DOAC to find your next exceptional hire.