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AT THE TIME OF THIS WRITING, the company was putting the final touches on its plans for the annual Airbnb Open, the three-day festival for its hosts that Airbnb puts on each year to rally and commune with its troops, drench them in the company’s mission, and sprinkle “belonging” fairy dust to thousands of its most passionate disciples. A sort of smaller-scale of mash-up of Woodstock, a TED conference, and the Berkshire Hathaway Annual Meeting for the sharing-economy set, it is a spectacle of “hostiness” and a chance for the company to preach, teach, and pay homage to its most converted. The 2016 event was set to take place in Los Angeles in mid-November. Anyone who is signed up as a host on Airbnb gets an invitation, but the event typically draws around five thousand of the most engaged in the community. Attendees fly in from all over the world on their own dime (which means airfare, lodging—on Airbnb of course—and tickets that range from $25 for a single event to $300 for the whole shebang). In 2016, Airbnb guests would be invited too, and there are always a few investors, board members, and friends and family of the founders in tow, but the Open is really for the hosts. Critics could say it is a masterful execution of a company’s celebration of its most important stakeholder group wrapped in the cozy warmth of hospitality, and they wouldn’t be wrong: Airbnb uses its megaphone at the Open to rally the audience to mobilize in support of changing laws around the country and to convey its principles of hospitality to the people who are responsible for delivering it.
This year, though, the Open would be much bigger than before. It was to be the setting for the long-planned introduction of Airbnb 2.0, a “new” direction for Airbnb marking the first second act in the disruptive, controversial company’s young life. (It would also be the first Open since the 2015 event in Paris, which was cut short by terrorist attacks.) Speakers were set to include Gwyneth Paltrow, Ashton Kutcher, Eat, Pray, Love author Elizabeth Gilbert, the movie producer Brian Grazer (A Beautiful Mind), the chef and entrepreneur Danny Meyer, and a roster of other top names. Talks and meetings would be spread out among various venues in downtown Los Angeles, and one of the highlights would be the Bélo Awards, the company’s annual Oscars of hosting—named for Airbnb’s squiggly “Bélo” logo—hosted by the comedian James Corden.
For months, close observers could glean that something new was in the works. At a launch event for the company’s “live like a local” campaign several months earlier, Chesky preached that the company’s new app would help its community of users escape the soulless emptiness of modern mass tourism and closed his remarks with a tease—“The question becomes, What if Airbnb did go beyond the home?”—before exiting with a “See you in November” and a pretty well-executed mic drop. Shortly thereafter, travelers in a few key markets were invited to beta-test a new program tentatively called City Hosts, a collection of multiday excursions with locals available to Airbnb guests in certain cities.
The Open in Los Angeles would mark the announcement of the project, code-named Magical Trips and expected to be launched as just “Trips,” that Airbnb had been working on since late 2014. By now, if Airbnb has had its way, plenty of ink will have been spilled about the new venture. But in a preview before the November event, Chesky walked me through a demo. It wasn’t yet complete—the company would still make plenty of changes after we spoke—but it would mark the launch into a whole new category of travel products, services, and experiences, all rolled into a new app that would host both the “old” and the “new” Airbnb.
As of this writing, the most significant element of the expansion was to be the City Host venture, renamed as Experiences and intended as off-the-tourism-grid activities travelers wouldn’t otherwise be able to do that would be offered by locals, curated and vetted by Airbnb, and designed to play up the unique expertise and character of the people offering them. On the beta launch, the choices included “Viktoria, the Perfumer,” a professional “nose” offering a tour of hidden perfume houses of Paris; and “Willy, Elite Runner,” who offered a four-day stay at the high-altitude training center where Kenya’s elite runners live and train. In Miami, an expert fire spinner would indoctrinate you into the world of “fire bending”; in Italy, you could go truffle hunting with a third-generation truffle hunter; and so on.
The way it was coming together, these experiences would cost around $200, would include three or four different activities spread over a few days, and would be offered to multiple people at a time, so you might show up for your truffle hunt and find a handful of other like-minded, Airbnb-user truffle enthusiasts. The hosts would keep 80 percent of the fee, so, the idea goes, they make money, the guests get a unique experience they can go back home and tell their friends about, and, if all goes as Chesky hopes, it will initiate an Airbnb viral-like spread all over again. There were also plans for a parallel marketplace for smaller, à la carte experiences, like surfing or rock climbing, that users could partake in either when traveling or in their home city.
The overall idea isn’t new: over the past several years, a mini cottage industry has emerged of start-ups offering peer-to-peer experiences, but none has broken out. According to Chesky, this is because the quality hasn’t been that good and the experiences have been too touristy and not unique. And none of them have a built-in platform of millions of engaged users to market to. Airbnb’s offerings are meant to be one-of-a-kind, hyperlocal excursions that give a view of a niche, expertise, or neighborhood. “These are deep, insider immersions into somebody’s world,” Chesky says. “We think this is a totally unique vertical that doesn’t exist today.”
These items were just one part of the launch: other areas of focus would include a new push into events, a way for guests to book tickets to both large events coming to town and a collection of Airbnb-exclusive pop-up concerts, salons, and the like in Airbnb hosts’ living rooms or at the corner bar; and an upgrade to the company’s guidebooks feature that would include local recommendations from influencers as well as location-enabled suggestions from Airbnb hosts. There would be a “smart itinerary,” a kind of digital calendar to corral all these new bookings that Airbnb hopes its guests will make. Another section of the app would provide routine services like rental equipment, SIM cards, connectivity, and the like. The company also expected to make a big push into travel content, because, Chesky says, “that’s the top of the funnel.” All of the new introductions would be browsable on the Internet but bookable on mobile devices only, and the various elements would be displayed with a heavy focus on video over photos. “We think travel in the future will be sold through videos and immersive experiences,” Chesky says.
Chesky’s hope is that these new offerings will turn conventional tourism on its head in the same way its rental of homes has disrupted hospitality. When Chesky wants to describe something he thinks is a truly inventive upgrade, he uses the phrase “the thing after.” The new guidebooks tool is “the thing after guidebooks”; the new Verified ID the company also has in store will be “the thing after Verified ID”; the sharing economy is “the thing after mass production.” Now, he believes Airbnb is introducing the thing after travel. “My hope is that at the end of this launch, everything you knew about travel will look different,” he says. “You might still call it a trip, you might still call it travel, but it’s going to make all the travel you knew before that look very, very different.”
In many ways, this plan is a logical extension of the company’s core business. It doubles down on its focus on “living like a local,” the “anti-Frommer’s” approach to tourism that Airbnb has homed in on in the past few years. During the iteration process, the company plucked a tourist named Ricardo out of Fisherman’s Wharf and followed him with a photographer for a few days, documenting him at Alcatraz Island, trying to gaze through a fogged-out view of the Golden Gate Bridge, and eating at Bubba Gump Shrimp Company. Airbnb tallied up his receipts and found he spent most of his money on chain franchises based in other cities. The Magical Trips team reengineered what might be a perfect trip for that same tourist, plunging him into a 1920s-themed dinner party, sending him on a walking tour of the city’s Bernal Heights neighborhood led by a local, and presenting him with instructions to show up for a spontaneous midnight “mystery” bike ride, where sixty riders outfitted their bikes in neon lights and rode all over the city until 2 or 3 a.m. “Right now, travel is oriented around being an outsider, having limited access to public places,” Chesky says. “This is going to be about being an insider and immersing in a community. And that is a profound shift.”
Beyond the travel experiences, the events and guidebooks also signal an attempt to get Airbnb users to use Airbnb in their home cities. “This is the beginning of Airbnb becoming integrated into your daily life,” Chesky tells me. “This is not just a new way to travel but it is a new way to live, in some ways.” The new venture will be called Trips, but he said that he hopes that one day the company will lose that distinction and all the products and services it offers on its platform will become known simply as Airbnb. Renting homes, he says, might ultimately represent less than half of the company’s revenue.
The business case for getting into these new enterprises is that if Airbnb can offer a range of experiences throughout a trip, it can capture additional revenue across all activities throughout the trip—and even in one’s home city—and, critically, it can significantly deepen its relationship with its customer. The new offerings also have the potential to make the platform significantly bigger—but all while doubling down on its brand mission to offer unique experiences and to bring regular people together. “The reason we’re doing this is because we think Trips is the end game,” Chesky says. “It’s kind of where our heart has been.”
That’s, of course, assuming the new venture takes off. As magical and inventive as it is, it may be a heavy ask for some people to spend most of their weekend away on an activity that’s directed by someone else, with other strangers tagging along, and to pay a few hundred dollars for it. Airbnb is putting its unique spin on travel, but it’s entering a crowded market and taking on a variety of existing players across the spectrum: traditional tour operators, Yelp, Foursquare, TripAdvisor, and even Lonely Planet and Condé Nast Traveler all at once. When Airbnb blazed its disruptive trail in shared accommodations, it did so by accident, tapping into something unexpectedly wondrous and huge and viral. With this launch, it is attempting the exact opposite of that: it is an idea that was conceived, engineered, tested, and tweaked by Airbnb’s team of specialists, and then formally introduced to the market. Success may not be as easy as it was the first time around. It begs an interesting question: Can true disruptions be planned and strategized, or are they more powerful when they’re accidental?
This is also a significant new foray for a company whose core business is still growing so fast. But Chesky has been antsy to pivot for a while. He and the founders have been well aware of the ability of once-mighty tech giants to stick too close to their core product and become irrelevant over time. (BlackBerry, Blockbuster, TiVo—the annals of tech history are filled with such examples.) Chesky studied some of the big and lasting tech companies, like Google, Apple, and Amazon, and came to two conclusions: the survival of a tech company depends on a willingness to branch into new categories; and the CEO has to have the discipline to put the new venture ahead of the existing business and to take the new project on personally. For close to two years, Magical Trips has been Chesky’s main focus, taking up one-third to one-half of his time.
To figure out how Airbnb would make this leap, Chesky found inspiration in companies that had done something similar and succeeded—in particular, Disney. He modeled the operating processes for Magical Trips on Walt Disney’s creation of Walt Elias Disney Enterprises, WED, the separate company that was established in the 1950s to create Disneyland (and that was ultimately acquired by the parent company and renamed Walt Disney Imagineering). “No one saw Disneyland coming,” Chesky says. “Disneyland saved the company in the ’80s. There would be no Disney without Disneyland.” He met with Disney CEO Bob Iger but also brought in Jay Rasulo, the former Disney CFO who later ran all its theme parks; and the company’s former chairman for theme parks and resorts, Paul Pressler (who later served as CEO of Gap Inc.). “This product was designed around the principles of Disneyland,” Chesky says. He also met with his sources at other companies that had branched out: Jony Ive at Apple, and in probably the best, if aspirational, model for what Chesky is trying to do, Jeff Bezos, who had turned Amazon from an online bookseller into a mega-retailer.
Chesky also says he took some advice from Elon Musk of Tesla. Musk cautioned him against becoming a company that gets so big that it enters what he calls the “administration era”: a phase of 10 or 20 percent growth that a company settles into after the “creation era” and then the “building era” and signals a mature business. “Airbnb will never be in an administration era,” Chesky vows. “It will always be in a building era. It will always be in a phase 1, phase 2 era. And this is why we’re going to be launching a lot of stuff in November—and then many, many things after that.”
“This launch is going to mean something profoundly different for Airbnb,” he says.
There is something else profoundly different for Airbnb coming sometime soon: an initial public offering. As of this writing, Chesky and the company still deny that an IPO is in the works anytime soon. In the spring of 2016, Chesky told Bloomberg West that it did not have plans to go public over the next two years and that it didn’t need capital, and again when I asked him in the fall he said there were no plans for an IPO in the near future. He said the company had plenty of money: as of this writing, it has raised $4 billion, including $555 million in September 2016, and has taken specific steps that remove pressures to go public, taking on $1 billion in debt financing and including in its most recent round of funding a $200 million secondary offering to provide liquidity to early employees. Chesky has reiterated that Airbnb’s investors are patient; many of them invested early on and have already seen a significant upside. (Since making its first investment, in 2009, Sequoia has participated in every fund-raising round except the latest, and only then because the company wanted to focus on strategic investors. Its 15 percent of the company is worth roughly $4.5 billion today.) Even if it wanted to go public, Airbnb likely would need to wait until its legislative and regulatory issues in New York and San Francisco are cleared up. But whenever it chooses to do so, an IPO is where the company is ultimately headed. In 2015 it hired Laurence Tosi, former CFO of the private equity firm Blackstone Group, as CFO.
Chesky says there is less pressure on him from his investors to enter the public markets than people would think, because the company is founder-controlled and has carefully chosen investors who share the founders’ vision for their company. “You choose, at the end of the day, who you listen to and the kind of courage you’re going to have,” Chesky says. “And it’s up to us to build the kind of company we want. We’re very transparent. We say we’re going to build a long-term company. There’s risk involved.” He says that during meetings with investors in the company’s biggest funding round in 2015, he spent ninety minutes explaining the company’s vision and culture and its commitment to a long-term horizon. “A bunch of people passed,” he said. “That wasn’t the kind of company they wanted. They wanted to know we were going to go public in a couple of years. I couldn’t give them that view.” He says he’s doing a lot of things that will actually slow the company down, like spending much of 2016 re-architecting its mobile apps instead of optimizing its website, and incubating the Magical Trips project for two years at considerable investment.
Citing a theory he learned from Reid Hoffman, Chesky says he wants Airbnb to become a “Tier 1” tech company—a company with a multi-hundred-billion-dollar market value, like Apple, Google, Facebook, and Amazon—rather than a “Tier 2” company, those companies with a valuarion of $10 billion to $80 billion, which Airbnb is now. “I think it’s hard to be a 2” in the public markets, he says. “You want to grow into a Tier 1.” So he wants to grow big enough to become that kind of company. “And I would say that almost all of our investors would say that my ambitions are significantly higher for the company than theirs.” Investors familiar with the company say that it has a ten-year goal to become the first online travel company with a $100 billion market value.
But venture capitalists and public markets are different animals, and the latter will care a lot more about the company’s ability to continue to sustain its high growth levels and might not want to think in ten-year cycles. They will also likely care a lot more about the regulatory risk, which its venture investors seem less concerned about. Other risks include competition: while Airbnb is dominant, HomeAway has more than 1.2 million listings and a new deep-pocketed owner in Expedia. In 2015, HomeAway announced a push into urban markets—Airbnb’s core—with a new Cities Initiative, complete with a collection of city guidebooks with local recommendations. “Airbnb has helped create the market for alternative accommodations, but that doesn’t mean they win most of the economics of that market,” says RBC Capital Markets analyst Mark Mahaney. “There are two very good operators in Priceline and Expedia and they already have a hell of a lot of traffic.”
But the general consensus is that there is plenty of runway for Airbnb. For all its growth, the company has yet to register significant awareness among the general public. Surveys from research firms like Cowen and Goldman Sachs found that fewer than half of respondents had heard of Airbnb; Cowen found that fewer than 10 percent had used it, suggesting that Airbnb could grow two to three times bigger from brand awareness alone. The firm also found that of those who knew of Airbnb but had never used it, more than 80 percent said they would be willing to try it, and 66 percent said they planned to do so within the next year. “We expect Airbnb to become many times larger than it is today and to become one of the largest two to three players in the global lodging industry,” the Cowen researchers said. There is also significant opportunity in China among both domestic and outbound Chinese travelers, a group that grew 700 percent on Airbnb in 2015. Smaller U.S. cities and vacation markets are also an important area for growth. “Obviously all companies hit some kind of saturation point,” says Reid Hoffman. “And to go and rent an apartment from a different person isn’t for everybody. But nominally it could get many orders of magnitude larger than it currently is.”
That saturation point is still looking far away: as of this writing, the company was said to be adding 1.4 million guests and forty-five thousand listings per week. Its figure of 140 million total guest arrivals from late 2016 was projected to hit 160 million by February 2017 and to climb past that number soon after. Airbnb doesn’t release its financials, but investor estimates put revenue at $1.6 billion for 2016, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $156 million; $2.8 billion in 2017, with EBITDA of $450 million; and as much as $8.5 billion in revenue and $3.5 billion in EBITDA by 2020.
It is the combination of these numbers, along with the company’s efficient business model, its lead in a category with high barriers to entry, its strong founding and management team, and the size of the travel industry—$7.2 trillion—that has kept investors coming back. “What makes [Airbnb] interesting right now is they’ll probably be the most successful of this whole crop,” says Max Wolff, market strategist for 55 Capital Partners. He says the company is “smarter and more grown up [than some of its tech brethren] and has the potential to be an absolutely transformative killer in hospitality.”
The “Stock-Sharing” Economy?
Whenever Airbnb does choose to make its entry into the public markets, there’s one group of people outside of Wall Street that will be paying close attention: some of Airbnb’s hosts. There’s no doubt that many of the millions of Airbnb hosts will see the occasion as a victory and an important milestone for the company that has afforded them an income stream. But some are starting to feel that they should get some shares, too. They helped build the business, after all, and they control the product and experience that makes the platform possible.
Hans Penz and his wife rent out two rooms in their house in Staten Island, New York. Penz, thirty-eight, is a baker and originally started hosting as a way to raise money to grow his business; now, the couple do it because they like the extra income and having people from all over the world stay with them. Penz loves hosting and is one of those people who genuinely believes Airbnb “is making the world a better place.” He also feels that hosts, or at least the most engaged hosts, should be able to get pre-IPO shares. “The hosts are the company,” he says. He says he’s talked about this with other hosts and with the company. He says that if he were one of the company’s existing investors, “I would definitely ask the company how they’re going to make sure hosts stay with Airbnb and don’t decide to start their own business.”
When I ask Chesky about this issue, he says the company has looked into it and talked about it internally. He says it’s hard to give a million people equity in the private market, where every investor must be given access to the company’s financials. “It’s not without its complications.” This same issue came up way back when eBay went public, but that company in the end did not end up granting shares to its sellers. There are many potential problems with the idea, among them that hosts could wind up unhappy if the stock doesn’t perform. That said, if Airbnb doesn’t find a way to reward hosts, it could turn the spectacle and celebration of an IPO into a potential moment of resentment for some in the company’s most important stakeholder group.
Much bigger questions are these: What happens to the company’s soul should it become a public company? What happens to the mission of “belonging”? What happens to changing the world? What happens to “the United Nations at the kitchen table”? Can you have a social mission and be a big behemoth on Wall Street? Plenty of tech-industry giants, of course, claim they have missions. Facebook’s is “Make the world more open and connected.” Google had “Don’t be evil” until its new parent, Alphabet, changed it to “Do the right thing.” But balancing mission and Wall Street expectations is a tricky thing.
“I really like these guys—they are genuine,” says Jessi Hempel, head of editorial for the online technology publication Backchannel, about the Airbnb founders. “But the bigger question is, is an Internet company that has to scale a flawed endeavor? If you believe in a mission, start a nonprofit. Be a Wikipedia, or a Craigslist,” she says, referring to Wikipedia’s nonprofit model and what Craigslist refers to as its noncommercial, public-service nature (it is a for-profit company but did not take venture funding). Hempel’s point is that the moment a technology company takes its first dollar of venture capital, it becomes hostage to investors’ desire to maximize returns. “The peculiar parameters of venture-based start-ups are that the demand for growth is so important that it takes precedence over everything,” she says.
Chesky recognizes this conflict. (For a fleeting moment in 2008, back when he knew nothing about business, Chesky himself felt that a nonprofit was the right direction.) But he says that as a private company that is founder-controlled and -run, “if you control the board, it’s your decision.” Being public is another matter entirely. “I do think there’s an issue with being public that I haven’t sorted out,” he says. “The mandate of a public company is to act in the best interest of your shareholders. But the problem is, you don’t pick your shareholders.” Their interests might just be short-term returns. “It’s hard to reconcile,” he says. He points to strong-willed CEOs like Steve Jobs and Jeff Bezos: “I don’t think Steve ever listened to an investor. And maybe Bezos has been able to, like, just drown them out. But a lot of CEOs haven’t.”
Airbnb investor and board member Jeff Jordan takes a stronger view. “People think it’s evil [to go public or to take venture funding], but to build an enduring long-term company where your invention will last for long periods of time, almost all of them are public companies,” he says. “Google, Facebook, Alibaba—these are the companies that are changing the world. If you want to build something that will last and you want to control your own destiny, going public is the way you do it.”
Clearly, Airbnb has grown by leaps and bounds. No one would confuse it with a nonprofit these days. But as any company gets to the size of Airbnb, it inevitably reaches a point of backlash, where its early users start to complain that it has grown too large and has lost the essence of what made it so special in the early days. Some of Airbnb’s earliest users, who prided themselves at being in the forefront of a new paradigm and part of a counterculture movement of sorts, take issue with the fact that the company’s platform has gotten so big and gone so mainstream.
Rochelle Short, a host in Seattle, started using the site in 2013, became a Superhost, and started a popular blog, Letting People In—but, as she recounted in an article on the web outlet The Verge, she stopped hosting in 2015, because the people using it had, in her view, become too conventional. “I think the demographic started to change.” In 2013, she said, it felt like a true social experiment, “pioneering new territory, attracting people who were open-minded, easygoing, don’t worry if there’s a fleck on the mirror in the bathroom.” She said that by 2016, it “became the vanilla tourist who wanted the Super 8 motel experience. I don’t like these travelers as much as [in] the early days.” Phil Morris, a host in Barcelona who created the host website Ourbnb, expressed similar sentiment in an oral history of Airbnb published by the producers of the Get Paid for Your Pad podcast. “We do feel from time to time that the old Airbnb was much more fun and personable,” he said.
Chesky hopes the new foray into trips will help bring back some of that early-adopter sense of social experimentation. The company’s Trips product, he says, will allow it to get closer to the company’s roots. By better segmenting its business, he hopes that different parts of the site can appeal to different kinds of travelers at the same time. Blecharczyk, too, feels that this is an opportunity for innovation: “How do we make sure we have the right experience for an early community member who loves personal hospitality a host might provide, and also provide it for the person who wants to have a luxury experience? That’s the challenge and the opportunity.” But the company still has to walk a fine line without seeming too corporate or “vanilla.” The Airbnb Open in 2016 had a “presenting partner” for the first time, American Express, as well as secondary sponsors, including Delta.
In fact, the move into Trips may come as a surprise to Airbnb’s critics. It lends no further evidence to the argument that the company is secretly seeking the biggest-spending corporate customers at all costs as it races toward an IPO. It’s not an evil land grab for more homes or more commercial properties. Chesky says that if the company wanted to be big at all costs, it could have easily done so with its existing platform. “We have such low penetration of housing and hospitality that if we just wanted to be big, we could be big,” he says. Instead, the expansion into the trips business is a move that doubles down on the “uniqueness” element of Airbnb, at least for now. (While the company may eventually face a similar issue of professional tour operators seeking to offer their experiences on the Trips platform, for now all experiences are approved and vetted by Airbnb.) If this is the future of Airbnb, it is one that seems to lend itself to less pushback from entrenched industries.
Still, opposition to Airbnb has only grown stronger. When I spoke to a number of parties engaged on the opposition effort as this book was heading to the printer, they told me they believe Airbnb continues to mask the true numbers of dedicated rentals and so-called illegal hotels on its site. Airbnb continues to say the data that’s been put out there is misleading, it wants nothing to do with that business, and it’s doing everything it can to stop it, including releasing more of its own data. Chesky says he believes he will be proved right over time. “I think the truth is going to come out,” he says. “History has a way of being more wise and more truthful than the present, because the present is cloudy and foggy.” But as the company and its platform base continue to get bigger, the issues around the way Airbnb has impacted some communities will likely intensify, too. “Even for those who love Airbnb, what’s going on in Reykjavik feels kind of devastating,” says Backchannel’s Hempel, speaking of the housing challenges brought on by the rapid rise of short-term rentals in that market that the company and its peers have enabled.
Chesky has taken one big lesson away from the experience: he planned the next chapter of Airbnb’s business assuming it would face enemies. When the founders started Airbnb, they had no assumption that it would become so big or so polarizing and so detested. This time around, Chesky says he has been designing the new Trips business with that assumption baked in—and with “eyes wide open” to all possible consequences the business could have on neighborhoods and established players. “Having lived through eight years in homes, and all the protests and the criticisms, this is not going to be without its critics,” he says. Now, with access to the top legal and policy minds, he designed against possible backlash. “Social-good” experiences, conceived in concert with local nonprofits, represent 10 percent of the experiences Airbnb will offer. The company has an ambitious partnership with the Make-A-Wish Foundation to host “wish trips” and help build experiences. And Chesky and his team deliberately chose cities to launch Airbnb’s experiences business in by picking those they felt would most benefit and most welcome it, like Nairobi, Detroit, Havana, and Cape Town. “We’re not launching in New York,” he says. (He says they included San Francisco, one of its conflict markets, in the launch only because the company needed to be able to test the product in its own backyard.)
The regulatory uncertainty around Airbnb’s core product has not stopped businesses from planning for a future with the home-rental giant in it. In some markets, landlords have already begun pricing the expectation of an Airbnb revenue stream into the rents they charge. Builders are designing apartment complexes with shareable layouts and fewer parking spaces (not to mention landing pads for Amazon drones on the roof). KB Home, one of the nation’s biggest home builders, has designed a new prototype with “Airbnb-inspired” bedrooms, with beds and desks that fold up and moveable walls that can convert, say, half of a living room into a spare bedroom. Subscribers to home-design catalogs may have noticed increasing space given to the display of products like sleeper sofas designed to make it easier to host “guests.”
Back at the Airbnb mother ship, employees are working on the company’s next big iterations. The engineering and product teams are doubling down on improving the company’s matching technology, using machine learning and artificial intelligence to better help predict not only hosts’ and guests’ behavior patterns, based on prior booking behavior on the site, but also their individual personal and aesthetic preferences (whether you prefer ultramodern or classical architecture, whether your music tastes trend toward Rachmaninoff or The Weeknd). There is a new tool that lets hosts enlist a “co-host” to help run their listing and share revenue. Gebbia’s innovation teams, meanwhile, are focused on creating more new concepts within the Samara unit, like a current project to try to develop a nonnetworked method of communication designed for large migrating groups of people such as refugees, who have phones but who lose access to power.
Chesky and Gebbia are also working on creating new metrics for the company’s performance. Currently, its “North Star” is how many nights it has booked, but because the quality of those nights is all over the map, they are hoping to get at something that’s a better measure for, yes, belonging. When I asked how the Trips product fits in with the company’s business goals, Chesky turned to me and said, “The end business goal, our mission, is to create a world where you can belong anywhere.”
There hasn’t been a company quite like Airbnb. It has grown from zero to $30 billion in value in nine years. It has taken an old idea and popularized it on a scale not really seen since eBay first came up with an online version of the flea market. Few leaders have zoomed to the top of the business world with as little prior management experience as Chesky, Gebbia, and Blecharczyk. And all while growing a business that is far more complex than it seems on the surface: there’s a reason Sequoia’s Doug Leone told Chesky he has the hardest job of any CEO in the firm’s portfolio. While many other disruptive technology companies have blazed polarizing paths, it’s hard to think of a modern conflict between business and regulators, or between old industry and new industry, that has gotten as emotional and as heated as the fight over Airbnb. All for a business built around a concept that, at first blush, most people thought was really weird.
The business has had ripple effects beyond its own business. CEOs with a design background are now considered desirable by venture funds looking for the next hot thing, much in the same way that two PhDs from Stanford or a social-networking entrepreneur from Harvard had become the de facto model in the wake of the successes of Google and Facebook. Many of the investors who said no or almost said no have reformatted the way they evaluate pitches.
By every account, Airbnb should never have happened. It was three guys who came up with a business idea quite accidentally, while looking for something else they hoped would be the next big thing. They had little business experience and remain self-taught. They did things that, by conventional business standards, would be counterintuitive: instead of focusing on growing their business as fast as they could in the early days, they showered all of their attention and resources on a tiny number of users three thousand miles away. They invested in the expensive, cumbersome service of providing individual professional photography to every customer who wanted it. They made something that was seen as odd and strange and fraught with all kinds of risks into something not only acceptable but viral. It is a rags-to-riches story on a major scale.
They did all these things with a rare combination of skills that enabled them to overcome huge obstacles and to conquer issues that might have been too complex for another trio: creating a global payments platform, building a search-and-matching methodology, sketching out systems that would, if not eliminate risk, then foster as much safety as they could—all innovations that were later incorporated as standards on other similar platforms. Their quirky idea paired with a smooth, fast, friendly, and easy-to-navigate site quickly found a hungry audience. And then they took all this and scaled. It is often overlooked how Airbnb was and remains an execution machine.
The three founders had hustle, of course, which is why they didn’t give up when the business failed to take off after three launches, and why they ambushed early advisers like Michael Seibel and Paul Graham for time, advice, and feedback. And they had plenty of moxie and nerve, whether it was smooth-talking their way into the design conference in 2007 by saying they were bloggers; or entering markets where their business was illegal; or standing up to forces others might have found too threatening by saying no to the Samwer brothers’ request to buy them; or resisting the New York State attorney general when he issued them with a subpoena.
They made plenty of mistakes along the way and in eight years have probably learned a lifetime of lessons. More mistakes, and bigger lessons, are no doubt still to come. More bad things will happen on Airbnb. At the same time, the competition is closing in: HomeAway is inching into Airbnb’s core market, the traditional hotel industry is slowly moving in on the “alternative accommodations” category that it once mocked, and a new crop of upstarts is coming up with ideas for experimental hybrids and twists on the idea. Lots and lots can happen from here.
Chesky, Gebbia, and Blecharczyk also got a giant assist from entering the market at the right time—and from a consuming public that was ready for an unorthodox idea like Airbnb to take off. The Great Recession had weakened the spending power of consumers on a global level just as cities were becoming increasingly expensive places to live. The surge of millennials and their dramatically different value system represented a fertile consumer base, with their preference for authentic experiences over things, their anticorporate and antiestablishment leanings, their hunger for anything that claimed to have a purpose or mission, and their desire to seek out community wherever they could find it. The chance to connect, the spirit of adventure, the quirky product, and the low prices that Airbnb offered were a no-brainer. And, thanks to social media and this generation’s having grown up conditioned to believe that anyone can instantly be a “friend,” they also were already accustomed to instant intimacy; it wasn’t that odd for them to use those same platforms to reserve a room inside someone’s home.
There are specific reasons that Airbnb took off among the rest of us nonmillennials, too—namely, a long, slow, general decline of human connection in today’s complicated world. A growing separation of society had already pushed people into solitary boxes, whether in big suburban homes, in cars on grinding daily commutes, or, increasingly, into our own solitary smartphone trances. This goes even deeper: as Sebastian Junger points out in his book Tribe, we are the first modern society in human history where people live alone in apartments and where children have their own bedrooms. The gradual decline of trust in societal institutions over the years, meanwhile, from business to government, accelerated in the wake of the Great Recession, making people more receptive to a “fringe” idea than they might otherwise have been (see Bernie Sanders and President Donald Trump). Add on a growing sense of unease over geopolitical risk and the sense that horrible and unpredictable things are happening in the world, and the urge to connect with others becomes an unarticulated desire in all of us. Whatever you think about “belonging,” these forces really were a large part of what made people more open to trying this new, quirky, affordable travel experience. Airbnb touched on so many different things at once that it’s hard to imagine its taking off in the same way at any other time.
As odd as this whole crazy story is, and for everything they’ve been through, the founders don’t really get very nostalgic. “Who has time?” Gebbia said to me when I asked him the question. Chesky has little time for reflection either, though one moment that he has said stands out for him was when his parents visited the Rausch Street apartment for the first time after they’d started the business and saw that what their son had been talking about for so long was an actual company, with multiple chairs around a table. Chesky’s father, who had not been convinced this was a good move, saw the first proof that they had a real business. “It was a pretty moving moment,” Chesky said, recounting the moment to a group of new Airbnb hires.
In the present day, there is too much to keep busy with. The founders are settling into their new roles and getting ready for the next leg of the wild ride they’ve been on, with the company’s big pivot. They have started to come to terms with the kind of responsibility that comes with the wealth they have amassed (each of the three is said to be worth $3.3 billion). They have all joined the elite group of billionaires who have signed the Giving Pledge, the campaign created by Warren Buffett and Bill and Melinda Gates to encourage the überwealthy to commit to giving away the majority of their wealth in their lifetimes. In addition to his new role at the company, Blecharczyk has another responsibility, as a father; he and his wife have a toddler. In addition to starting Samara and the experimental lab, Gebbia has been spending a lot of time on the company’s involvement with solutions to the global refugee crisis. That includes providing accommodations to relief workers in Greece and Serbia and launching a “livelihood” program in Jordan that helps refugees living in camps earn income by giving tours and providing other “local experiences” to travelers visiting Jordan. In the fall of 2016, Gebbia joined a group of private-sector leaders—including George and Amal Clooney—in a roundtable discussion with President Obama to discuss solutions to the crisis. (Gebbia still occasionally gets an order for his CritBuns seat cushions, and in those moments he goes into his garage, where he pulls out a roll of packing tape, carefully assembles a box, and ships them off.)
In recent years, Chesky says he has learned to step back and try to find more balance. A lot of that is due to his relationship with Elissa Patel, his girlfriend of four years. The two met on Tinder in 2013—their first date almost didn’t happen because of an iMessage glitch—and he says that she has gotten him to change some of his habits; for example, his compulsion with answering e-mails. (She has told him that his behavior with e-mail resembles the way a dog is with dog food: “She tells me, ‘You would eat the whole bag if you could,’” he says.)
Chesky, Gebbia, and Blecharczyk are all fully aware that what happened to them happened against all odds. “We weren’t visionaries,” as Chesky told me in one of our earliest conversations. “We are ordinary guys. And this isn’t that crazy of an idea.”
But it’s also true that not just any three ordinary guys could have pulled off what they pulled off. “We had instincts and we had courage,” Chesky says. But he thinks one of their biggest strengths was precisely how little they knew. “I think if we knew better, we probably would have known better than to do this,” he says. “Because in hindsight, everything had to click. Like, it was kind of a weird million-to-one shot. And if we lived another thousand lives, it would be hard to imagine if everything were to click in the same way.”