CHAPTER 6

THE WARTIME CEO

Airbnb Fights on Two Fronts

The Peacetime CEO does not resemble the Wartime CEO.

—Ben Horowitz, Ben’s Blog¹

The pall hanging over Silicon Valley from the financial crisis started to lift in 2011. Facebook led the way in January, raising half a billion dollars from an investor group headed by Goldman Sachs after announcing that it had signed up more than five hundred million users. The professional networking site LinkedIn went public in May, scoring a four-billion-dollar market capitalization. Though the term wouldn’t be coined for another few years, this was now the age of the unicorn—not Sofiane Ouali’s white 2003 Lincoln Town Car but tech startups valued at more than a billion dollars.² That year the streaming-music service Spotify, the cloud storage company Dropbox, and the payments startup Square all became charter members of a club that everyone would soon want to join.³

The smell of optimism was in the air again, along with the belief that a well-timed internet startup could ride a great wave of converging technology trends.

This change in sentiment was lubricated with capital. The bonds markets were flat and the stock market was lifeless, but venture capitalists, touting returns from the previous generation of upstarts, could still beguile investors with fantastic dreams of rapid growth and wealth creation. The Russian venture capitalist Yuri Milner of Digital Sky Technologies, or DST, had been ridiculed a few years before for investing $200 million in Facebook for a 2 percent stake. That March he bought a house in Los Altos Hills, an eighteenth-century French château–style mansion with panoramic views of the golden San Francisco Bay. In Silicon Valley, this is what passes for getting the last laugh.

To the casual observer, the home-rental site Airbnb didn’t seem like it could ride this wave, let alone come to embody it. At the start of the year, its employees were still crowded into the office on Tenth Street in SoMa (the South of Market area in San Francisco), with bad cell phone reception inside and the homeless camping on the street outside. The startup was run almost entirely by its triumvirate of co-founders, who had two college degrees in design and one in computer science among them.

Behind the scenes, though, Airbnb was booming. The activities of Nate Blecharczyk, the growth hacker, had cranked the flywheel. Ample coverage in the media, thanks to Brian Chesky and Joe Gebbia’s charismatic recounting of the company’s history, turned it ever faster. Hosts brought a variety of eclectic properties onto the site, from two-bedroom homes in newly hip Venice Beach to castles in southern France, tree houses in Northern California, and the fuselage of a retired 727 Boeing jet in Costa Rica.4 Because of the convenient fact that guests were travelers, word of mouth was rapid and global—as viral as a potent strain of the winter flu.

For Chesky, the CEO, Airbnb’s emergence was a ticket into the rarefied business elite. In March he was invited to speak at an Arizona technology conference held by the investment bank Allen and Company, where he enchanted the audience with the narrative of Airbnb’s unlikely origin, from the design conference to the cereal gambit. A few months later he was invited to the investment bank’s annual gathering of the rich and famous in Sun Valley, Idaho. Now he was rubbing shoulders with Oprah Winfrey, Warren Buffett, and Bill Gates. At one point he found himself explaining the home-sharing idea to the actress Candice Bergen; he kept thinking, “Murphy Brown came up to me. Murphy Brown knows Airbnb,” Chesky says. “It was this crescendo. It was an airplane, reaching a higher and higher elevation.”

In May, Chesky met fellow traveler Travis Kalanick for the first time. At a conference in New York City called TechCrunch Disrupt, Chesky and Kalanick were invited to appear onstage together in a panel discussion titled “Disrupting Offline Businesses.” Chesky had been an Uber fan since Ryan Graves had invited him to have coffee in 2010 to solicit advice about running a startup, and he had turned his employees into avid Uber users. Kalanick had once thought about starting his own home-sharing business, Pad Pass. So the two had plenty to talk about. The night before the conference, Kalanick e-mailed Chesky out of the blue, suggesting that they “get together and jam.” They met for dinner in midtown Manhattan. Chesky found the Uber CEO relaxed and personable.

The next day, though, a far more provocative and cocksure Kalanick showed up for their joint interview wearing pink socks. Moderator Erick Schonfeld from TechCrunch asked Chesky about reports that Airbnb was raising a massive round of funding that could value it at a billion dollars—unicorn territory. “Can’t comment on that, unfortunately,” Chesky said.

“Why would you deny a billion-dollar valuation?” interjected Kalanick, drumming his thumb against his leg. (Uber’s valuation at the time: only $60 million.) “Just roll with it.”

Chesky cast him what seemed to be an incredulous sideways glance.

Schonfeld noted that both CEOs had survived initial tangles with local governments. The cease-and-desist against Uber in San Francisco had been dropped, though Kalanick still exaggerated it for theatrical effect. “I think I’ve got like twenty thousand years of jail time ahead of me,” he said, to significant applause. Chesky, perhaps considering the audience beyond Disrupt, insisted that “the spirit of the local governments essentially support Airbnb,”5 and he downplayed a recently passed New York state law that forbade people in New York City to rent out their homes for less than thirty days.

The two had plenty in common. Kalanick, then thirty-four, and Chesky, twenty-nine, were young CEOs at the vanguard of renewed Silicon Valley optimism; they were confident, charismatic, and unaware of the looming conflicts with rivals and regulators. As the world opened up to them, each would pursue the opportunity aggressively, occasionally ruthlessly, and with varying degrees of moral rectitude. This was a time to build empires.

Though he wouldn’t acknowledge it, Chesky was in fact wrapping up a monster financing round. He had started looking for new capital that spring and found a receptive audience. With Airbnb bookings growing 40 to 50 percent every month, TechCrunch had called it “the sleeper hit of the startup world.”⁶ Andreessen Horowitz, which passed on the Series A, beat out a crop of other top-tier venture firms in a hotly competitive fund-raising round. It led the Series B and a group that included Yuri Milner’s DST, the personal investment funds of Amazon founder Jeff Bezos, and the actor Ashton Kutcher for a total $112 million investment that valued the company at $1.3 billion.

The financing was led by Andreessen Horowitz’s Jeff Jordan, a former eBay president. Jordan had gone from thinking “this is the stupidest idea I’ve ever heard” to practically jumping out of his seat at the Allen and Company conference when he recognized the similarities between Airbnb and his old company.

“The community had taken a small idea and made it into a huge idea, just like at eBay,” says Jordan.

Despite this optimism, Jordan and his partners identified four risks to their investment:

Safety: What would happen if a guest trashed a home or apartment?

International competition: Would overseas entrepreneurs clone the site?

Regulation: Would cities allow hosts to continue to rent their homes without restrictions?

Executive recruitment: Chesky, Gebbia, and Blecharczyk were running the company as a triumvirate—a council of equals. It was an arrangement that couldn’t last. Could they find new executives they trusted?

All these critical concerns would soon prove valid. “Nothing we do is riskless. That’s why it’s called risk capital,” Jordan says. “This thing obviously had a really interesting upside but it also had some hair on it. Brian knew what the hair was.”

The most pressing question of all was whether he would be ready.

That spring, Airbnb engineers noticed unusual activity on its website and mobile apps. Automated software programs were visiting the site and collecting or “scraping” the personal data posted by hosts. Soon after, the company started hearing that hosts in Europe were being contacted by phone, e-mail, and even in person by salespeople for other home-sharing websites. It didn’t take long for Airbnb to realize what was happening. The clones were coming.

Most successful internet startups are copied by opportunistic entrepreneurs around the world. Airbnb was no exception. The first clone, called 9flats, emerged in February of 2011. It was based in Hamburg and had been founded by Stephan Uhrenbacher, who had also founded a company called Qype, a copy of the American reviews site Yelp. Uhrenbacher raised around $10 million for 9Flats (motto: “Stop being a tourist. Feel at home in the world”) and said that he too wanted to become a “global player” in the online travel industry.7

Another copycat company was launched in April and had a far larger impact back at Airbnb headquarters. Wimdu, based in Berlin, was founded, funded, and operated by the Samwers, the fearsome trio of German brothers that Brian Chesky had been warned about. Wimdu resembled Airbnb right down to the light blue color scheme and the search bar, which asked “Where do you want to go?,” only a slight variation of Airbnb’s “Where are you going?” In a brazen flourish, Wimdu advertised on the bottom of its home page that “the concept” behind the site had been featured on CNN and by the New York Times. Those outlets had written about Airbnb, not Wimdu.

Marc, Oliver, and Alexander Samwer, then all in their late thirties, had grown up in Cologne, Germany, sons of two corporate lawyers who had their own private practice. The brothers were close from an early age and searched for ways to combine and exploit their joint talents. After getting degrees in law (Marc) and management (Oliver and Alexander), they moved to Silicon Valley and took jobs among the first generation of internet companies, not to embark on careers in the U.S. technology industry but to watch and learn. After returning to Germany in 1999, they started a German-language auction site called Alando that looked and operated like eBay. Alando established a foothold in Germany and after four months, eBay bought it for $43 million, making the Samwers millionaires. It was a start.

Over the next decade, the Samwers founded and invested in companies that emulated Facebook, eHarmony, Twitter, Yelp, Zappos, and YouTube, then made billions by selling each one off, often to the company they’d copied. They didn’t apologize for this, noting that “BMW didn’t invent the car” and that it was the execution, how you built and operated a startup, that really mattered.8 They worked grueling hours, crisscrossing the globe, hiring and making deals with blazing speed. Stories about their peculiar work habits were legendary. When Marc Samwer took long flights, colleagues said, for exercise he would fully recline his airline seat and bicycle-kick in the air for thirty minutes. Oliver, they said, traveled the world with only a small briefcase that held exactly one pair of underwear and a clean shirt. Every morning he would wash the clothes he wasn’t wearing in the hotel bathroom and leave them there to dry.

The Samwers brought military bravado and combat terminology to the art of creating internet startups. In a 2011 e-mail to colleagues at Rocket Internet, the brothers’ startup incubator, Oliver Samwer wrote in his customarily stilted English to colleagues who were developing a furniture-selling website: “The time for the blitzkrieg must be chosen wisely, so each country tells me with blood when it is time… Now it is time to either decide we will die to win or to give up… i do not accept surprises. I want this planned confirmed by all three of you: you must sign it with your blood.”9

The e-mail was leaked to TechCrunch. Samwer apologized for the tone and for using an infamous term from German military history.

Most U.S. startups approached competition from the Samwers with fear and a sense of futility, concluding that it was easier to roll over than fight. A year before they founded Wimdu, the Samwers started a Groupon clone called CityDeal, backing it with 20 million Euros from Rocket Internet and quickly turning it into Europe’s leading daily-deal site. They competed fiercely with another European clone called DailyDeal. At one point the Samwers sent job offers to many DailyDeal employees, offering promotions and raises if they defected, according to a profile of the Samwers by Caroline Winter in Bloomberg Businessweek.¹⁰ They also spread rumors that DailyDeal was close to bankruptcy. Oliver Samwer didn’t exactly apologize for these tactics. “I think it’s all within the normal laws of competition,” he told Winter.

In 2010, Groupon acquired CityDeal for around $126 million and kept the brothers on to run it. It was an enormous mistake. After Groupon’s 2011 IPO, the European division run by the Samwers suffered from chronic technology problems and alienated customers with two daily-deal e-mails instead of one. Oliver Samwer and Andrew Mason, Groupon’s CEO, constantly argued over whether sending multiple messages a day was a good idea, according to a former Groupon executive. Two daily deals generated more revenue but diminished the novelty and quality of the deals. Mason would be fired as the CEO of Groupon in 2013, partly due to ongoing problems with its business in Europe.

So this was the magnitude of the challenge Brian Chesky was suddenly facing in 2011 when he learned of Wimdu that spring. A few weeks after noticing the new rival, he got a phone call from Guy Oseary, a co-investor with Ashton Kutcher in Airbnb and a talent manager for musicians such as Madonna and U2. Oseary told Chesky that Oliver Samwer wanted to talk and soberly suggested that Airbnb might have to do a deal.

Chesky called Samwer, who seemed nonchalant on the phone and insisted that he was eager to build Wimdu himself. Nevertheless, he offered to fly to San Francisco right away so they could meet in person.

It was all happening with disorienting speed. Chesky, Gebbia, and Blecharczyk, along with investors Greg McAdoo and Reid Hoffman, met Oliver Samwer a few days later in the offices of the law firm Fenwick and West. (The Airbnb office on Tenth Street was too unimposing, and the so-called boardroom wasn’t soundproof.) Chesky was stunned to see Samwer arriving directly from the airport carrying only a laptop bag. “I remember thinking that I had never seen a person leave a country without a change of clothes,” he says.

Samwer confidently showed off the Wimdu website, a sister site called Airizu for the Chinese market, and an aggressive plan to hire four hundred employees and managers in countries around the world. Airbnb, whose founders still interviewed and discussed each potential employee to painstakingly measure for “culture fit,” had only some twenty workers in San Francisco and another few dozen scattered around the world handling customer service and working mostly from their homes. Samwer suggested that Airbnb and Wimdu “partner.” But the subtext was clear: he was holding the loaded gun of competition to Airbnb’s head. The ransom was a merger. “We all just kind of looked at each other and said, ‘Uh-oh,’” Chesky says. “It was pretty impressive.”

After the meeting and a coffee with Samwer at Starbucks, the founders sat down alone to discuss the possibility of doing the deal. Chesky asked for Gebbia’s and Blecharczyk’s opinions; he was looking for consensus, but they were torn. They knew that a truly dominant home-sharing service would have to be global, offering the largest variety of lodging options to travelers, wherever they wanted to roam. They also knew that Samwer didn’t share their values, their design sensibilities, or their desire to build a close-knit community. Samwer was so hard core and ruthless, the founders privately nicknamed him “the General.”

To gather more information about their formidable adversary, a few weeks later the founders and board member Greg McAdoo flew to Berlin to visit Wimdu’s offices. Chesky was astounded by what he saw inside a rehabbed factory in the city’s Mitte District: Row after row of employees, most in their early twenties, sitting shoulder to shoulder at desks in the sweltering heat. There were no fans; it was literally a sweatshop.

Samwer gave the founders a tour. On many PCs they saw both the Wimdu and Airbnb websites in adjacent web browsers. “This is what we do,” he told them unapologetically. “You Americans innovate. Me and my army of ants, we go fast and build great operations.” He also told them that Wimdu had raised $90 million from Rocket Internet and other European venture capital firms and was already nine times larger than Airbnb in Germany.11

The founders and McAdoo went to dinner afterward and then stayed up all night in their nearby Airbnb, debating their options. Again Chesky pursued an elusive consensus among his colleagues, and reassurance that everything would turn out all right. But they were in a bind. They couldn’t partner with the Samwers and stay true to their own values, and they couldn’t fight the brothers without going on a rapid hiring spree in Europe to build a local operation and embracing some of the same ferocity. And they couldn’t sit by idly either. “We are going to leave Berlin doing something that we weren’t planning on doing before we started down on this journey,” McAdoo recalls telling them.

One option was to find a local leader who could quickly spin up a European business to counter Wimdu and the other clones. The next day, they met one candidate at a café in the Berlin airport: a German entrepreneur named Oliver Jung, who had been referred to them by talent manager Guy Oseary.

Jung was tall and bespectacled and had the same spotty history of cloning companies as the Samwers. Over the previous few years, he had backed a LinkedIn knockoff called Xing; a members-only shopping site called Beyond the Rack, which looked remarkably like Gilt; and a Swiss deals site called DeinDeal. He was also just as intense as the General. When the founders told him about their predicament, he started pacing back and forth in the coffee shop, a Bluetooth earpiece in his ear, and ordering colleagues in Barcelona, Paris, and elsewhere to get on planes and begin coordinating a response. He knew the Samwers well—they had invested together in several startups. “I knew how insane Oliver Samwer is,” Jung says. “I had so much respect for him that I was scared.”

By the time the founders returned to San Francisco, Chesky was reasonably certain that Airbnb was not going to work with the Samwers. But he didn’t yet know whether they could work with Oliver Jung, who seemed just as mercenary. It was also unclear who at Airbnb would lead the response to the company’s greatest challenge yet. Over dinner with Chesky at a Thai restaurant that week, McAdoo was adamant—it had to be Chesky himself. Even though the twenty-nine-year-old CEO had barely traveled outside the country, and even though he knew next to nothing about how to build a large global organization, how to manage a company, or, frankly, how to make decisions without pursuing time-consuming unanimity among his co-founders, Chesky would have to rise to the occasion and finally embrace the responsibility of his job title.

“You among the founding team are the only one with the intuitive sense of what this needs to look like and the drive and passion to be able to lead it,” McAdoo told him. “So, yes, let’s hire Oliver Jung, and, yes, we have to bring in senior people. But you will spend a lot of time on airplanes learning how to build and run a large-scale global organization. Are you up for that challenge?”

Chesky had barely had a chance to answer the question before, a few weeks later, a completely new and unrelated crisis erupted.

Three difficult days ago, I returned home from an exhausting week of business travel to an apartment that I no longer recognized. To an apartment that had been ransacked.

A host using only the initials EJ had written on her WordPress blog that her San Francisco home had been burglarized and trashed by a guest who had rented it for a week via Airbnb.12

They smashed a hole through a locked closet door, and found the passport, cash, credit card and grandmother’s jewelry I had hidden inside… They rifled through all my drawers, wore my shoes and clothes, and left my clothing crumpled up in a pile of wet, mildewing towels on the closet floor… Despite the heat wave, they used my fireplace and multiple Duraflame logs to reduce mounds of stuff (my stuff??) to ash… The kitchen was a disaster—the sink piled high with filthy dishes, pots and pans burnt out and ruined… The death-like smell emanating from the bathroom was frightening.¹³

EJ had lost everything.

She tore into Airbnb for presenting the illusion of mutual trust between hosts and guests when apparently its faith in humanity was grossly misplaced. She faintly praised the company for eventually responding to her entreaties, writing that the customer-service team had been “wonderful, giving this crime their full attention.” But she would soon change her tune.

EJ’s blog post remained largely unnoticed for a month. Then, in late July, after the financing from Andreessen Horowitz had been made public, the incident became a hot topic of discussion on Hacker News, a popular online bulletin-board site run by Airbnb’s first benefactor, Y Combinator. The site’s users offered their own thoughts about the incident and began a lengthy debate over the honesty of the common man.14 Then, Michael Arrington, the imperious founder and chief blogger of TechCrunch, noticed the thread and wrote an article about the incident titled “The Moment of Truth for Airbnb As User’s Home Is Utterly Trashed.”¹⁵

Arrington spoke with Chesky for the article, and Chesky told him that the company knew about the incident and had offered to financially assist EJ, help her find new housing, and do “anything else she can think of to make her life easier.” Moving swiftly to further contain the damage, Chesky then wrote his own article for the tech-news site, emphasizing that the Airbnb execs were “devastated” by the incident but had been “in close contact” with EJ since the beginning.

That’s when the shit really hit the fan.

The day after Chesky’s article appeared, EJ returned to her blog, full of fury. It turned out that Airbnb had not, in fact, sent the promised compensation or come through with any alternative accommodations. (According to multiple, conflicting conversations I had with current and former employees from the time, the payment was either never authorized or never sent.) The primary person she had talked to from Airbnb was the brainy Blecharczyk, who was filling in for a recently departed head of customer service while Chesky interviewed numerous potential replacements. Blecharczyk, EJ wrote, spoke of “his concerns about my blog post, and the potentially negative impact it could have on his company’s growth and current round of funding.” The CTO then suggested, EJ wrote, that she shut down her blog or update it with a “twist” of good news.16

EJ described herself as basically homeless, terrified, and “broken” by the situation. Some readers offered to send her money, but she told them to keep it and “book yourself into a nice, safe hotel room the next time you travel.”¹⁷

It was a devastating rebuke. For the next five days, a nonstop Twitter-fueled media storm drew Airbnb into its torrential winds and refused to subside. The tech-news sites piled on—Airbnb was bringing strangers together in homes without ensuring a safe experience. If this host’s home had been vulnerable to such methodical destruction, what could be in store for other people? Commenters on blogs suggested protesting at the founders’ residences; #Ransackgate became a trending topic on Twitter, and the story was covered by major outlets such as CNN, USA Today, and the San Francisco Chronicle. Chesky, Gebbia, and Blecharczyk had given Silicon Valley critics a new reason to think tech startups were just as rapacious and careless as every billion-dollar business before them.

Just a year ago, the startup had consisted of its three founders and a handful of employees sitting around a table inside the apartment on Rausch Street. “We were getting treated like an adult but we hadn’t truly grown up yet,” Chesky says. But that was an inadequate excuse and he knew it. Every savvy investor that he had ever pitched had raised burglaries or other crimes as one possible result of home-sharing. Yet Airbnb hadn’t been ready and had made negligent mistakes that were unacceptable for a company recently valued at $1.3 billion. “There were a lot of good questions, like how in the hell could a billion-dollar company not have its shit together,” Chesky says.

EJ had also raised fundamental questions about the safety of users on its site and Airbnb’s role as an arbiter between hosts and guests. Until that incident, Chesky had subscribed to the purist’s view of online marketplaces: Users were supposed to police one another by rating their experiences. Untrustworthy actors would be drummed off the platform by bad reviews, rejected by the web’s natural immune system.

It was a libertarian view of the internet and had the whiff of Silicon Valley snake oil. The prospect of a negative review is of little use after a serious breach of etiquette—or a criminal act. But because of their shared faith in the power of self-policing marketplaces, Chesky and his colleagues hadn’t made serious investments in customer service or customer safety. The fact that Blecharczyk, as well as the company’s controller, Stanley Kong, had been put in charge of customer service at a company now with over 130 employees while the other founders looked for an executive to run the department was telling. “We viewed ourselves as a product and technology company, and customer support didn’t feel like product and tech,” Chesky says.

The three founders describe the week following EJ’s second blog post as the most difficult of their careers. They had told everyone, and themselves, that Airbnb was bringing people together and making the world a better place. Now the company had abetted a serious crime and bungled the fallout. One night during the madness, the founders drove forty-five minutes south to the home of their first mentor, Paul Graham. He had never seen them more forlorn. “They just want to see you suffer,” Graham told them in his kitchen. “They want an ounce of blood. Just fall on the sword, accept responsibility, and everyone will move on.”

Over the next few days, Chesky drew his investors and advisers close around him and fashioned a suitably contrite response. The company would introduce a twenty-four-hour customer-service hotline, double the size of its customer-support staff, and form an in-house trust and safety department, separate from customer service, that focused on fighting fraud and addressing poor experiences on the service. The startup also began working on ways to verify users’ identities; for example, by making it clearer when customers had manually confirmed their phone numbers or connected their Facebook accounts to Airbnb.

The plan’s centerpiece offering was dubbed the Airbnb Guarantee. Jeff Jordan, the partner at Andreessen Horowitz who had joined Airbnb’s board of directors, had introduced a similar program at eBay, called Buyer Protection, that adjudicated disputes between buyers and sellers and gave refunds to aggrieved customers. Jordan suggested it could work here as well. Chesky intended to set the guarantee at a modest five thousand dollars. Then Marc Andreessen visited the Airbnb office one night to support the beleaguered founders and suggested they should add a zero to their announcement and reimburse hosts for up to fifty thousand dollars. It was a significant risk at the time, since the company didn’t have insurance and would have to cover any costs itself.

Airbnb was effectively betting its enormous haul of venture capital on the premise that tragedies like the one that had beset EJ would be rare. (The following year the Airbnb Guarantee would grow to a million dollars, insured by Lloyd’s of London.)18 “There was an element of Butch and Sundance jumping off the cliff at that point,” says Jeff Jordan. “They had this belief that people are basically good and that almost all trips were positive trips.”

Airbnb also hired Brunswick, a crisis communications firm, which recommended that Chesky write a letter to his customers. They proposed a draft, but Chesky thought it sounded jargonish and evasive. He felt beset by conflicting advice and unsure of his own instincts, since what he had done previously had only made things worse. Eventually, he decided to speak frankly to his customers himself, and he rewrote the letter with Ligaya Tichy, an early Airbnb marketing exec.

In the spirit of Graham’s advice, Chesky impaled himself fully on his sword. “Over the last four weeks, we have really screwed things up,” he wrote. “I hope this can be a valuable lesson to other businesses about what not to do in a time of crisis, and why you should always uphold your values and trust your instincts.”19 He appended his personal e-mail address to the letter—another recommendation from Andreessen.

Chesky talked to his board of directors over the phone that weekend and announced these moves. On the morning of August 1, the letter was e-mailed to Airbnb’s one million users and widely dissected by the press. As Paul Graham had predicted, the internet storm was quelled; the mob moved on. Some observers expressed disappointment at this, since watching a newly anointed startup crash and burn was heady entertainment.

The EJ saga receded from public view but still played out behind closed doors. EJ’s destructive guest, nineteen-year-old Faith Clifton, was arrested that summer in San Francisco on charges of possession of stolen property and methamphetamine, fraud, and an outstanding warrant in a nearby city.²⁰

EJ, an event planner in her late thirties named Emily, continued to press her case against the company. According to a former Airbnb employee, the parties entered into mediation that year and Airbnb agreed to pay her a hefty settlement, sealing the entire episode up with a nondisclosure agreement. She later declined to talk to me, writing in an e-mail, “That is a chapter in my life I have long since buried and do not wish to revisit.” Chesky and Airbnb also declined to discuss the outcome of the EJ affair.

The company had quieted the furor, survived one of its greatest challenges, and added new protections for its customers. But in the end, it couldn’t change human nature. The private payment to EJ, says the former Airbnb employee, was among the first of many the company would make to customers whose experiences went horribly, and sometimes tragically, awry.

That same summer, as if the whole wrenching saga hadn’t even happened, Airbnb moved to a new office at 99 Rhode Island Street, at the foot of San Francisco’s tony Potrero Hill District. For the first time, Chesky and Gebbia got to stamp their design sensibilities on their workspace. There were long stylish desks, Eames chairs, beanbags, a tree house where employees could take naps, and an antelope head on the wall in the bathroom. Three conference rooms were modeled after rooms available for rent on the site, and inspirational sayings like Life is lovely were printed on the walls.21

In August, Airbnb had a party to celebrate the new digs. MC Hammer DJ’d on the rooftop while guests danced, played Skee Ball, and sipped cocktails. At one point the founders stood on chairs and addressed the crowd. Joe Gebbia wore a white tuxedo shirt with white and blue ruffles down the front and a panama hat. The technology press uniformly interpreted the exuberant affair as evidence of another doomed tech bubble. But this was only the summer of 2011. They hadn’t seen anything yet.²²

Despite the playful façade, Airbnb was still at war. Oliver Jung didn’t hear from Brian Chesky for a month after the whirlwind meeting at the Berlin airport. There was a good reason—Chesky was consumed with the EJ saga. Over those weeks, while Jung grew more pessimistic about his chances of working with the startup, he got more enthusiastic about its prospects. By chance, he had coffee with an old friend from Madrid who had rented out his apartment through Airbnb for six months and financed his travels with the proceeds. Airbnb hadn’t even advertised to lure the friend to the service—he had just seen news articles. Jung saw the possibility of a business with global reach and little in the way of customer-acquisition costs.

Finally, in late summer, Jung called Chesky to check in, and Chesky delivered the news: He had decided not to partner with the Samwer brothers and their clone Wimdu. Summoning up his resolve, Chesky had told his co-founders, employees, and investors that “he would rather not negotiate with a terrorist and go fight and lose than give in,” according to Alfred Lin, a partner at Sequoia. In a curt phone call, Chesky had bluntly informed a stoic and nearly wordless Oliver Samwer of his decision. Chesky was now ready to coordinate the response, and he invited Jung to come to America to discuss it.

Jung flew to San Francisco the next day and was thunderstruck when he arrived at the Rhode Island Street office and witnessed its quirky rituals, like lunchtime yoga and a weekly company-wide kickball game. He had heard about the frenetic offices of Wimdu and its “army of ants.” This was the opposite. “It felt to me like only thirty people were there and everyone was very relaxed,” Jung says. “Some people were playing table tennis. Then someone brought a dog out, and it was its birthday. Everyone celebrated the birthday of the dog.”

Jung’s initial reaction was panic. Oh my God, Wimdu is going to kill them, he thought. Then Chesky came out to greet him and introduced him to every employee at the company. Jung spent the day in a succession of interviews, eventually getting on the phone with McAdoo, who peppered him with questions about who he would hire as country managers and how he would build a global team. By early evening, Chesky and his partners seemed satisfied. When Jung signed a contract to make a personal investment in Airbnb and serve as the head of its international expansion, Chesky told him, “This is going to be the best deal of your life.” Jung had already made millions investing in startups in Europe and Israel, but Chesky was right, by an order of magnitude.

Chesky wrote the business plan for the international expansion. Each new regional office that Oliver Jung set up would take charge of cultivating the supply of rental properties and supporting the community of hosts. The San Francisco team would produce the underlying technology and coordinate marketing and publicity to generate demand. The goal was to export the things Wimdu didn’t have and didn’t care to replicate—Airbnb’s sense of mission and the way it cultivated an intimate community among its users. Chesky assigned Lisa Dubost, one of his earliest employees, to work with Jung and chose Martin Reiter, a new head of international operations, to vet the new hires and ensure all the new country leaders embodied Airbnb’s corporate values and fit the profile of its employees.

That fall, after putting pins on a wall map and considering the best way to halt the Samwers’ momentum, Jung opened new offices in Berlin, London, Barcelona, Copenhagen, Milan, Moscow, Paris, Delhi, India, and São Paulo, Brazil. In June, the company bought one of the smaller German clones, Accoleo, and opened an office in Hamburg.23 Jung traveled throughout Europe and Asia and had dozens of interviews each day with prospective country managers; it was like speed-dating. At the end of every interview he asked the candidate: “How do you feel [about it]?” If the individual was energized by the opportunity and likable, Jung sent him or her to San Francisco, where Chesky had the final say.

Airbnb furnished each new manager with a set of online tools to monitor the health of the business and with something Chesky called an “office in a box.” It contained a guidebook to setting up an Airbnb-like working environment and included various props, like a portable Ping-Pong table and the books Delivering Happiness by Zappos founder Tony Hsieh and Oh, the Places You’ll Go by Dr. Seuss. “Brian was always worried about how do we scale our culture—how does every Airbnb office feel?” says Dubost, who joined Airbnb’s business travel team and left the company in 2016.

Some of the new regional managers modeled themselves after Chesky. In Moscow, Jung hired Eugen Miropolski, a former Groupon exec, who promptly rented out his home and started living in Airbnbs around town, just as Chesky had done in San Francisco. In Paris, Olivier Grémillon, a former McKinsey and Company consultant, planned community meet-ups to greet hosts and instituted a 24/7 customer-support line manned by French speakers so hosts and guests always had someone to call.

In January 2012, Airbnb publicly announced the opening of its international offices. The three founders hit the road, each attending a launch party in a different city and coming together for blowouts in Paris and Berlin. Chesky recalls hardly sleeping for eighteen days. They trained their new employees, gave speeches about the warmth and potential of the Airbnb community, met hundreds of hosts, and doled out countless hugs. “It gave you a feeling that it was not business oriented,” said Nalin Jha, one of the earliest hosts in Delhi, India, who joined the service that year after attending the company’s first local meet-up and recalls being immediately embraced by the general manager Jung had hired. “It was just a small hug, but it suggested there was a soul in the business. That was a very attractive thing, that I was becoming part of a community.”

Oliver Jung figured that the Samwers had a year’s head start outside the United States. But Wimdu didn’t last. Like the brothers’ Groupon clone, Wimdu was a hollow company whose momentum was based on a deluge of impersonal sales calls—not on meet-ups and certainly not on hugs. Airbnb had more robust technology tools, furnished by Blecharczyk and his team of engineers in San Francisco, and the benefit of a global network. U.S. travelers to Europe didn’t seem to care about Wimdu’s early dominance, and European travelers to the United States who sought alternative accommodations had to turn to Airbnb.

Wimdu stuck around but would become an inconsequential player in the home-sharing market. In 2013 it shuttered Airizu, the Chinese subsidiary, and pared back its ambitions outside Europe. Airbnb had shown Silicon Valley that it was better to fight cloners than to accommodate them. “The worst thing you can do to a cloner is to let him keep his baby,” Chesky joked to Oliver Jung. “The cloner doesn’t want his baby. They build the baby to get rid of it.” Meanwhile Airbnb continued to gain altitude. In January 2012 it announced that it had booked a cumulative five million nights since opening for business, and by June it had already updated that figure to ten million.24

The international expansion was a success. That year Jung added offices in Singapore and Hong Kong, and by the end of 2012, Europe already was Airbnb’s largest market and Paris its largest city.

Yet the effort wasn’t perfect. There was high turnover in the new offices, and Jung ended up quitting the company in early 2013. Some of the offices were consolidated; some leaned too heavily on hosts with multiple listings, which the company was trying to discourage in favor of people who were sharing their own primary homes. And in the U.S. headquarters, the rapid overseas expansion generated waves of anxiety. Employees of the small company, where everyone knew everyone else, were offended by the idea that there were now hundreds of new colleagues around the world that they had never met. “Everyone seemed to know everything that was going on and suddenly they didn’t know anything,” Chesky recalls. “It was very controversial. People did not like it.”

Chesky wasn’t happy about the internal discord but was learning to live with it. Amid the turmoil of 2011, he had found his footing and embraced his job as the company’s top decision maker. He had laid out a course of action to deal with the EJ mess and chosen to battle the Samwers rather than take the easier path of working with them. He still listened to colleagues and his co-founders, but after that year, he no longer tried to seek consensus. Instead, he surveyed opinions and trusted his own instincts to make a decision.

“This is when I became CEO in a meaningful way,” he told me years later. “I changed my style. I hope jerk isn’t the first word they use. But 2011 was the year I really had to become a CEO, to become a champion of Airbnb, to get people to want to believe in it, to raise money, and to get us out of a true crisis. We came out of EJ and the Samwers stronger than when we came into it.”

With cities waking up to the problems posed by people turning their homes into ad hoc hotels, Chesky’s mettle would soon be tested further. He would have to prove to suspicious lawmakers and regulators that Airbnb’s intentions were pure and that its impact on cities was constructive. It would be his most serious challenge yet and one that Travis Kalanick, Chesky’s new friend and a peer in the proliferating movement called the sharing economy, was about to face in an even more potent form.