What I Learned Building Airbnb Into The World's Most Valuable Hospitality Company - Chip Conley

Chip: I was Darth Vader. I went to the "dark side!" Just a background on that for a second. So when I joined Airbnb, for the first six months, we didn't tell anybody. My friends knew, et cetera, but we didn't tell the press or anything like that, because to have a guy who's a boutique hotelier and a CEO and a pretty high profile boutique hotelier joining this company that was meant to disrupt the hotel industry, was going to be weird. We had to be prepared for it once we got the word out. And I don't know if Brian, who I was mentoring as the CEO and co-founder, I don't know that he and I were clear in the first month how attached at the hip we had to be. Quite frankly, once it became public that I was actually doing this, there were going to be a lot of people, some confused, because at that point, a lot of hoteliers thought Airbnb was just a stupid idea. But others are thinking like, uh-oh, let's keep an eye on Airbnb. Where are they going if they've hired this former CEO and boutique hotelier? So, the good news is that in those first six months, Brian and I found a really great working relationship, and I learned as much from him as he did from me. In terms of what I learned about hospitality, I would just say a couple of things. Number one is when I joined Airbnb, I struggled with the idea. I was in charge of all the hosts globally. I was in charge of strategy. I was in charge of a lot of things. But the thing I was most in charge of was how do we help our hosts around the world? be as good as they can be? And how can we improve quality experiences? And that was a hard one because I was like, oh, but when you have a hotel, these are your employees. But in fact, the people who are actually providing the service, other than when there's a customer service problem and we're dealing with it at the headquarters, generally we're dealing with hosts who are entrepreneurs. They're not our employees. We are not allowed to actually train them because we didn't want them to become our employees. So if there was some limitations to what we technically could do in order for them to not be employees. But what I actually tapped into, which has been a big part of my success, I think, is psychology. And I've written a bunch of books on psychology in business. And in this case, I just thought about what are the motivations of these hosts? And so I spent a lot of time understanding why people become Airbnb hosts. Because if I could understand what it was that led them to doing this, it would be easier for me to understand how I could influence them to want to create a great hospitality experience. So I used psychology, and then it was a variety of things. It was the carrot and the stick. The carrot being, how do we take this dormant program called Superhost, which was had only 200 of them around the globe, and they hadn't added one in two years, and they were about to sunset the program. How do we take Superhost and rev it up so that now there's 800,000 Superhosts in the world? And how do we get clear about what are the five qualities we look for from a Superhost? If you don't have all five from your scores, then it's a problem. That was the carrot. And then the stick was, okay, someone's not doing a good job. We can see it over and over again. How do we remove them from the platform or force them to actually do a little bit of education? Which we could do education if it was a remedial case. So long story short is the fact that 70% of our hosts and guests review each other, Whereas in a normal hotel, maybe 2% of our hotel guests actually fill out an online survey. We had a feedback mechanism that allowed us to make changes quickly and to be able to get very clear. Imagine if you had a hotel where the check-in process and the housekeeping process, in real-time, you're getting feedback about whether someone's doing a great job at the front desk or not. You don't have that. We don't have real-time feedback like that. We have a survey at the end. We were able to look at all that and then look at what trend lines were for hosts and then help them get better at what they did. And then I understood that for a lot of hosts, this is an entrepreneurial venture. So I needed to speak to them as a fellow entrepreneur and a fellow hospitality entrepreneur. And so I was lucky. I really became beloved in the Airbnb host community because the fact that this was a hotelier helping them learn how to do things better. gave Airbnb a halo. And we ended up creating something called the Airbnb Open, which we did 1,500 hosts from around the world, from 40 countries came to San Francisco. And then the next year we did it in Paris, and we had 6,500 hosts from 110 countries. And then the third year we did it, we did it in LA, and we had 20,000 hosts from over 110 countries. come for a three-day festival of learning and experiencing and sharing stories. Because what I found was that a lot of the Airbnb host experience could be shared with each other. So the wisdom could be shared and people could actually share best practices. So that's a long-winded answer. Someday I might write a book on this topic because it was a fascinating journey to see. I'm taking over the hospitality component of a tech company that doesn't have great scores for its hosts, and we're going to grow very fast, and I'm supposed to actually make it better. And so growing fast makes it usually worse. But in fact, we did grow really fast. Ultimately, our net promoter scores, or NPS scores, grew to 50% higher than those of the hotel industry. And I think it's only because we tapped into the entrepreneurial instincts of our hosts and use psychology to do that.

Josiah: To the psychology piece, I really encourage all of our listeners to read Peak. I remember when it came out in 2007, I read it. There's applications across any business, certainly in hospitality is key. But I think just to underscore the other point you made around community, I remember talking to a number of folks that were working on your community teams during that time. and how passionate they were about connecting people, bringing them together. They were obsessed with this. And it really stood out to me, working more with traditional hotels at the time, how this was such a big unlock. And the results, as you mentioned, speak from the cells, from an NPS score, from becoming the most valuable hospitality company.

Chip: Yeah, the community was really critical. And one of the things I did a month after I joined is we did an offsite with the founders and the top leaders. It was only a small group of us, maybe eight or about 10 of us. And we did an exercise that Peter Drucker suggests, which is what business are we in? Because he says that Peter Drucker, the management theorist, says that's the most important question we need to ask ourselves as a leader. What business are we in? So we did an exercise where imagine Brian Chesky and I sitting across from each other. And I would ask Brian, Brian, what business are we in? And Brian would say, well, we're in the home sharing business. And I'd say, thank you, Brian. Let me ask you again. And this time you can't answer the same way twice. What business are we in? So he would say like, well, we're in the business of turning strangers into friends. Okay, Brian, thank you. So we did that exercise pairing off in one-on-one with people. and we asked the question five times. By the end of that exercise, we came to realize that as a company, we were in the belong anywhere business. We were not in the home-sharing business. We were in the business of belonging anywhere. And so the community, what you saw from our community team, And what you saw from my host team and the hospitality team was the idea of how do we infuse belong anywhere into everything we do, including our advertising and our promotions and our operating strategy, of course. So I'm proud of that because that was really influenced by something I did a month after I joined.