Airbnb: Nathan Blecharczyk & Their First Advisor

It was unfathomable, frankly. I mean, it was really scary when like the floor drops out from underneath you and you are sitting on three billion dollars of other people's money that you suddenly have to return, and you don't know, like, will we make it out of this thing?

Welcome to Leap Forward, a show about founders and the people who believed in them before anyone else did. I'm David Rusenko, and on today's show, we talk to Nate Blecharczyk. Nate is the co-founder and chief strategy officer of Airbnb. He's managed the company through crises that seemed insurmountable, including tackling the biggest problem of them all. How to get people to rent a room from a stranger. To understand how he did that, I also talked to Sam Angus, the lawyer who originally incorporated Airbnb and championed it from the beginning.

I reached out to a lot of different investors in the Silicon Valley. I could not, for the life of me, get these investors interested. And to this day, I mean I have more than a few of them who come up to me and say, God, I should have listened to you and invested in Airbnb.

Today, how to build trust in times of crisis with Nate Blecharczyk. Love to start just at the beginning. You know, where were you born? Where did you grow up? And what was home life like?

Yeah, uh, I was born and grew up in Boston. And uh my dad uh is an electrical engineer. And so, you know, we had a computer at home. And like this is early 90s, right? So not everybody did. Uh, but we had a computer. I was, of course, playing games on it, but at the age of 12, I was homesick from school. And I went to my dad's bookshelf and just took off a book and started flipping through it. And it was a book about the DOS operating system and how to create bash file scripts, which I thought was interesting because in order to play a game back then, it wasn't as simple as point and click. You had to type in a bunch of commands to make the sound work, to make your CD-ROM work. Uh, and so I started creating simple scripts just to help me get my games up and going. But that ignited in me a curiosity for learning how to program. And so that Christmas, a couple months later, I asked for a book on programming, which I received. And it was basically teach yourself Q Basic programming in 21 days. And it took me more than 21 days, about 30 days, but like not bad for a 12-year-old. And it began a hobby of mine coding.

I remember Q Basic. Well, I remember someone gifted me like an old 8086 laptop, and I used to like love to program in Q Basic. And we also had a computer home. I remember deleting autoexec.bat. Um, if you remember what that was, that was a disaster. Exactly. Never do that. No, never do that. Uh, but you know, kind of around that time, you know, either kind of when you were tinkering in high school, did you ever think of starting a company? Did you think of starting a side business or have much exposure to startups at that point in your life?

Well, no, but the way it all unfolded was I taught myself coding at the age of 12 through the books, and I got that one book at Christmas. And then thereafter, each month I'd be going to Barnes and Noble and buying yet another book and devouring that. And so, and I was posting my work on the internet and I was saying, if you like my work, please send me five dollars. Well, nobody ever sent me five dollars, but at the age of 14, I got a phone call. And this guy said, I saw your work on the internet and I'd like to pay you a thousand dollars to create something similar for me. And so I told my dad, hey, somebody from the internet wants to pay me a thousand dollars. And he he just laughed. Yeah. He said, son, nobody from the internet's gonna pay you a thousand dollars, especially like at that time, right? In the like 1995 or whatever. But I said, Whatever, dad, like this is my hobby. I'll just do it and I'll see what happens. And so I I did, and uh 30 days later, I got paid a thousand bucks, which was super exciting for a 14-year-old. But also, more importantly, he introduced me to other people who needed similar things. And so I met more people who needed contract programming done, and I did jobs for them, and I was making money doing contract programming. But I noticed like a lot of these folks I was being introduced to needed similar things. And I thought to myself, well, instead of doing a bunch of one-off jobs, like, why don't I try to create a software product and just simply sell licenses to it? So that's what I did, and it began a business that I ran for the next four or five years throughout high school and a little bit into college. Over this time, I made over a million dollars, so quite well. Uh, it was just me. I had no employees, and I think it was from that that I knew I wanted to be a lifelong entrepreneur.

What did your parents think about that?

I mean, obviously that's I think it was pretty surreal. I mean, I I still kind of wonder like what they were really thinking because I would basically give them financial reports like at the end of each week. And back then, these were like the early days of the internet, I couldn't even accept credit cards online. So, like the way you would receive money was by printing off checks. So like people would enter in like their checking account details, and then I would like print it onto a check. And then I would just like at the end of the week be showing them all these checks that I had printed off my printer for like $600 here, $800 here, uh, and giving them these financial reports. And like it just must have been pretty crazy because you know, being 1415 and doing this kind of stuff is is obviously unusual.

I mean, they had to have like they must have gone with you to the bank to open up a bank account and like co-signed with you, like because you don't, I don't think you could open your own bank account at 14, right?

I certainly had to go to the bank. I don't remember exactly the account ownership structure, but you know, certainly yes. And then also another funny story is like back then the connection to the internet was over the phone line, right? It was a dial-up mode. So like the house had one phone line. And so, like when I was using it, which was like pretty much all day after school, like nobody could make a phone call and nobody could call the house. And uh, I remember uh, you know, sometimes like my mom would pick up the phone and it would knock me off the internet. And uh one of my clients was like, This is so crazy! Like, you need to get another phone line. And I'm like, Yeah, well, you know, my dad doesn't want to or whatever. And he's like, Put your dad on the line, I need to talk to him. And so, like, eventually we got like a second phone line for the house. Uh, and then we got a third, and you know, before we knew it, we had like 10 or 20 of these phone lines going to the house. And it was pretty funny because like they would come up to like install yet another phone line thinking it was a business, and you know, it's just a house in a neighborhood, and like all the lines ran through my neighbor's backyard. And at one point they had to like install a new telephone pole like in his yard to like hold up all the wires.

So take me through, okay. So you've had some pretty good success. I mean, really good success for that age starting this company. What were you thinking? Like you decided, am I gonna go to college? Am I gonna pursue this full time? Like, taught me through that decision.

Yeah, well I my parents, I think they were just like very supportive and open-minded. And like one of the things they said was like, hey, you know, this is clearly quite impressive, what you're doing. And if you don't want to go to college, if you just want to like lean into this, like that's okay too. Like it's up to you. So, you know, they gave me the option of like getting an RV and putting it in the in the driveway and having my own space and doing my business. But I was like, no, I, you know, I'm interested in continuing the the academic pursuits. I graduated top of my class in high school and ended up going to Harvard, studying computer science there. And at first, I tried to do both. I tried to continue my business and do school. And for the first year, that was that was fine. But by the second year, things got tougher. It got real. Uh, and I decided to shut down my business and just do the college thing. And I was confident that there would always be new entrepreneurial activities that I could get back into.

So you graduate from Harvard with a degree in computer science. Um were you thinking I'm gonna start another company? Were you like like how did you decide what to do after college?

Yeah. Well, first of all, like there wasn't much entrepreneurship happening at that time in Boston or at Harvard. So I wasn't getting that kind of inspiration or seeing those pathways all around me. But I uh through a friend of a friend get connected to an entrepreneurial opportunity out in Silicon Valley. So I I moved to San Francisco and I came out on very short notice here. So, like in two weeks' notice, I made the decision to move and I showed up in San Francisco. For the first month, I stayed actually with the parents of my college roommate. So I was kind of crashing with them. But you know, very soon I needed to find my own place. And so I went out on Craigslist looking for places to live. And I found this apartment in Soma of San Francisco. And Joe was one of the housemates who had posted the ad. And so I went and saw it and said I was interested. And Joe called me the next day and said, sorry, we gave it to somebody else. Uh, there was a another person, a designer, and yeah, we had to choose. So we chose the designer. So I was bummed out. But a couple days later, Joe called me back and said, Well, actually, that other person fell through. Like, if you're still interested, we'd love to have you.

So I said, Yeah, and I moved in with Joe. And then, so is that, I mean, that's originally how you and Joe really got to know each other at presumably at that point. And then Brian moves in at some point.

Yeah, basically, I'm living there at first from April 2007 through August 2007. And over this period of time, like two really important things happen. Like one, after work, nights and weekends, both Joe and I are working on our passion projects. You know, like we're not off socializing or hanging out, like we are hard at work doing what we're passionate about. And so I noticed that about Joe, and he notices that about me, that we have a similar work ethic. Second of all, like he's a designer, I'm an engineer. We start helping each other out on our projects. So he's creating marketing materials for me, and I'm like helping him code his website. So we start to see that our skill sets are complementary. And so I think, you know, out of that, there's a mutual respect and a realization that like we can make a good team. Then, you know, it's now like August, uh, late August 2008. Joe calls me to tell me that the rent on the apartment has been raised 25% because the landlord has realized that all the original signers of the lease are no longer living there. So he can just jack the rent. So it's going up 25%. I say, you know, frankly, that's too expensive. I'm moving out of here. This place is not worth that to me. So I bail. So does the other roommate, but Joe wants to stay. And uh Joe calls up Brian, who's living down in Los Angeles, and Joe and Brian know each other from university and convinces Brian to quit his job and come to San Francisco to be an entrepreneur. So Brian shows up, and I don't know, I guess they didn't really talk about how much the rent was going to be because the rent was too much for Brian and it was still too much for Joe. Both had quit their jobs to become entrepreneurs, also known as unemployed. So they had no money. But as designers, they knew and saw that an international design conference was coming to San Francisco. Uh, and well, they saw that all the hotels were sold out for this, and they thought to themselves, why not rent out this extra bedroom to designers who might need a place to stay during the conference? And so they set up a simple blog and emailed it out to some other bloggers, and they were just expecting guys like themselves to want to crash there. And instead, they got a father of four from Utah, a man from India, and a 35-year-old woman from Boston. So kind of an eclectic group, all different kinds of backgrounds. The guests got an affordable place to stay. I think it was like $80 a night times four nights, times three people, you know, almost a thousand bucks. So that was like meaningfully helpful with a rent for Joe and Brian. And uh, they all went to the conference together and had a great time. And Joe and Brian introduced them to their friends and they went out to dinner, and so it was like a whole social experience on top of just a place to stay. And so it was a great win-win. But funny enough, like that all happened, and that was almost the end of it because there was no aha moment that this was a bigger idea than a one-off way to earn some extra cash that weekend. And to kind of prove it, for the next two months, like at this point, I'm quitting my job. And the three of us get together trying to brainstorm startup ideas because we know we all want to work together. Like we think we're gonna make a good team, uh, having gotten to know one another. We just had to figure out what the idea was. And so for two months, we sit around in the apartment, brainstorming all kinds of ideas, like roommate finding services and other things, without ever talking about this story that I just shared with you. You know, so I tell this story, and it's like so obvious how like this one inspirational moment like leads to the founding of the company. Right. But actually, in the moment, it was not obvious, and two months elapses before in January 2008, Joe and Brian share this kind of like one-off weekend project that they had done, and how you know, maybe we could do this for other events, uh, which is what we set out to do in uh in early 2008. Had you moved back into the apartment at that point? At this point, I am living in the neighborhood, but not at the apartment. I don't move back into the apartment until much later. Actually, it gets complicated because I had been doing long distance with my girlfriend for uh three years at this point. And she was in at that time in medical school and thinking about where to apply for residency. And so she was looking for uh, you know, some commitment from me uh before making this big decision. And so I knew that I need to get serious about coming to a resolution, making a commitment. And so I go back to Boston actually, uh in spring of 2008 to be with her and figure out my personal life. Meanwhile, I'm still working on what was then Airbed and Breakfast, but you know, from afar. And this was obviously a strain on the team dynamics because you know, Joe and Brian were designing and coming up with all these things that they wanted implemented, and you know, things take time, of course. And I was wondering to myself like, should I continue with this thing? Uh, or I had a lot of other opportunities as an engineer. There were like other ideas I had, other people wanting me to do things for them. And so I was doing a bit of both, frankly, uh, for a while there.

So, you know, I just kind of want to just understand the dynamic a little bit. So obviously Joe and Brian knew each other before, but you and Joe knew kind of knew each other because you'd been roommates for a little while, right? Right. Um, did it feel like you were kind of coming into, you know, the two of them that knew each other really well, or was it kind of like you were all three, you know, what was that dynamic like?

Yeah, well, obviously they they knew each other for let's say at least five years, you know, more than I knew them. Uh so yeah, they they had a a deep friendship already and familiarity and had gone to RISD together, so had had a shared experience and done projects together at RISD. And yeah, so they knew each other deeply and and and had a lot of trust. And they're both designers too, so they got excited about a lot of the same things. You know, I was I was frankly a little apprehensive, you know, especially back then it was kind of unusual for a founding team to be like only one engineer and then two like non-engineers, and uh, you know, I just felt a little bit outnumbered. But I'll tell you what, I you know, living with Joe, I had respect over the work ethic and the passion. I remember uh, you know, having this conversation with with Michael Seibel in the summer of 2008 and also with my wife, uh, you know, about like what should I do? I'm here in Boston, like I have all these options. You know, should I double down on Joe and Brian and the Airband and Breakfast or you know, go some other way? And you know, I think one of the things that stood out was like their level of commitment. Like, you know, they were clearly going to try to go do this. And I think that really matters because like in so many cases, teams fall apart. There's different life dynamics, uh you know, spouses, partners, finances that like you know, tear the team apart. But in this case, you know, I think knowing that the team was committed to one another and committed to the idea is what what held us together. But uh if we fast forward, it wasn't until the end of 2008 when I agreed that I would come back to San Francisco and move back into the apartment and we would not have any side projects or any other distractions in our lives over the span of Y Combinator, which is a 13-week program, with the hope of really moving the needle. Because at the end of the first year, we were basically on the brink of giving up. And we said if we get into Y Combinator, then we'll give it all our best for 13 more weeks. And if the situation doesn't improve, then we'll we'll quit and we won't hold it against one another because we were all friends. We didn't want to let down the others.

More after the break. And now back to the interview. Before getting to YC, I also just want to set the stage for like what the world was like, you know. I mean, this wasn't obviously a common behavior. People weren't going, I mean, we take it for granted now to go, you know, I just stayed in Airbnb last weekend, you know, but that wasn't what people were doing back then. You know, a lot of people were saying it'd just be crazy to go stay at a stranger's house, right? Like, like tell us a little bit about what things felt like coming up with this idea and trying to convince people in the world that it was a good idea.

Yeah. Well, first of all, you know, it was all inspired by our own experience that, you know, happened very naturally, not because we wanted to build a big business, but just because we were solving our own problem one weekend. So we knew that this could happen, you know, meeting somebody new and having a place to stay and having an experience that I think was our north star amidst everybody else in our lives saying, this is crazy, like staying with a stranger, like someone's gonna get killed. Right. Like that was the the kind of common wisdom. And it's the reason why I think so many investors, you know, had zero interest, like they couldn't see themselves using this product. They probably didn't think it was a big market too as a result, right? But yeah, it was common sense that this was a bad idea. And not just a bad idea, like people had a visceral reaction, like this is terrible.

So tell yeah, so tell us tell us about the Y Combinator interview, right? This this feels really like make or break, life or death.

Well, there's like a lot of things that lead up to setting the kind of table for this moment, right? We eventually aligned on this idea to make it just as easy to book someone's home as a hotel. This idea is meant to be not just about events or conferences anymore, but we still think conferences and events are a good catalyst for like a good way to launch and get publicity. So we start thinking like, what's the biggest thing that's uh going on in the world in the summer of 2008 that's an event that we could like, you know, basically launch at. And uh it's the Democratic National Convention, and it's gonna be held at this stadium that holds 80,000 people in Denver. We look it up, and Denver has 17,000 hotel rooms, sort of like perfect. Like hotels will definitely be sold out for this thing. And so we figure this all out like three or four months beforehand. So we build it in three months. We launch like a week before the event, and uh, sure enough, like all the locals holding to get out of town, make a buck. They're posting their stuff on Craigslist, and you know, we message them and just say, look, you know, there's this site dedicated for this purpose where you can also advertise your homes within a week or two. We have like 800 homes on our website in Denver. And uh, you know, meanwhile, the newspapers and whatever are doing stories about how it's a historic event, but people have no place to stay, they're camping out in parks. Uh so we write to the newspaper and just say, look, we have a website with 800 confirmed available homes. And they say, Well, that's interesting. Like, we'll do a story. And so they do a story, and very quickly it snowballs into us being on CNN International, talking about Airbed and Breakfast and the conference and like what we're trying to do. And so get this huge publicity, hundreds of people, you know, book on Airbnb Breakfast. And actually, it's it's through Sam Angus that, you know, we got connected with one of his contacts who was working on the campaign and kind of helped clue us into like how big of a deal this was going to be.

I'm Sam Angus. I'm a partner at Fenwick and West, and I incorporated Airbnb in 2006, 2007. I helped them through a contact get invited to the Democratic National Convention where Obama was nominated. This was going way back. And they launched and they had a huge positive uh engagement with people who were staying over there because it was such an exciting time. And so at that point, I realized this thing is getting traction. Because if you think about the business R. You already had Craigslist that had millions of people renting out rooms on a short-term basis. It was just in a very disaggregated, not a user or owner-friendly way. So it was ripe for optimization. And so that was the brilliance, is they they saw that and they leveraged that in a way that created this platform that made it much easier and supercharged this activity.

So that all goes super well, but like the week after the conference, the crickets are chirping. Like there is no business, nobody books at all on our website. Like we're no longer relevant to anybody. And this is where we get really creative, or frankly, Joe and Brian get really creative. At our time, our name was Airbend at Breakfast. Somehow, don't ask me how, they start thinking about the breakfast part of our name. And they're thinking to our themselves like, how can we reach back out to all the political reporters that we met during the DNC? And so they come up with this idea to create a presidentially themed breakfast cereal. Obama owes and Captain McCain's. Um, and we uh we filled the boxes with cereal that we bought at the store and hot glue the boxes together. And we mail the first 100 of each of these boxes to uh the political reporters, and it worked. You know, sure enough, we get huge coverage again. But you know, that moment passed, and like once again, we're back at square one. And the question is like, when do you know it's time to quit?

Right.

And uh this is where a mentor of ours encourages us to apply to Y Combinator. And so we we get the interview, it's a five-minute interview. Two minutes into the interview, it goes off the rails. Paul Graham was like, What? You know, strangers staying in other people's houses? Like, that's crazy. That doesn't sound safe. Like, I wouldn't do that. And then he starts like trying to tell us about some other idea that he's excited about. So that clearly didn't go well. We're walking out of the room. And as we're walking out, Joe takes out of his bag a box of the Obama O's and gives it to Paul Graham. And Paul Graham says, like, what? What's this? Did you buy me a gift? And Joe says, No, we made this. And he's like, I don't understand. He's like, Sit, sit back down and tell me how you made this. And he's like, looking at it. So we spend five more minutes telling him the story about the serial and why we did it and how we did it. And uh, you know, later that day we get a call back saying we've we've been accepted into Y Commander. And later on, Paul Graham told us he accepted us, not because he liked our idea, he hated our idea. But he knows ideas can change, but he knows founding teams don't really change. And he said the serial story demonstrated to me that you as founders were incredibly scrappy and creative and what he called cockroaches, meaning like you just couldn't kill us because we would just never give up. We would just come up with like some wild idea to keep surviving. So he's like, that's what I wanted to fund in this kind of environment where it was a financial uh recession.

That's awesome. You know, before kind of continuing that story, you mentioned Sam Mangus. Um, you know, I'd like to kind of jump into that relationship as well. So, you know, tell me a little bit more about kind of the first impact that Sam had on the company. It sounds like he really took a bet on you guys, incorporated you, you know, even before YC or anyone else did. Yeah, totally.

I mean, we met Sam, I think it was probably around the time of like April or so of 2008, but you know, super early on, like we're just three or four months in. This is like eight months or so before Y Combinator, you know, because he seemed to like our idea and, you know, was willing to spend the time with us at a time when, you know, nobody else at that point had recognized that this was going to be anything other than a bad idea.

I remember before they joined YC, we were trying to get them funded. And I reached out to a lot of different investors in the Silicon Valley and saying, hey, listen, these guys are starting to get real traction. Look at the numbers here. The TAM is massive. I could not, for the life of me, get these investors interested because it was just a disconnect from their personal experience, right? I mean, it uh an investor living in the Silicon Valley is not going to rent a room. They're they're thinking, like, wait a minute, this just doesn't feel like a big business. And to this day, I mean, I have more than a few of them who come up to me and say, God, I should have listened to you and invested in that company. I mean, this was like pre-YC.

You know, he was all in and there for us. And then, you know, as as the company progressed, he was really the only professional person we had to talk to, right? Like we didn't know any other professionals in this industry. Um, very quickly we became, I'll say friends, you know, like uh we would host these parties at the apartment and he would always show up. And I think like we weren't normal startup founders, like the three of us are all very different. And obviously, Joe and Brian were bringing a lot of creativity and a lot of zany ideas to the table. Uh, and I think he liked that energy. And so, you know, he spent the time with us. And, you know, by spending time together, we became very much friends, and he became a trusted advisor to us.

You know, we we were talking with the company on almost a daily basis during those years. And then throughout that time and even through today, I've had a personal relationship with Nate. You know, we go grab dinner, we hang out together, we go work out. So I've had I I consider him a friend, really, more than a client. It's a very special relationship.

Yeah. And so, like, I kind of want to connect the dots there because, you know, one of the things that Sam talked to us about also is is the famous kind of EJ incident where like kind of the first big incident where there's an apartment, you know, something went wrong. You know, there's an apartment that was trash and and and there was an owner that was maybe, let's say, being a little bit less than collaborative about the whole situation. And, you know, to hear Sam describe it, you really swooped in and you were calm and level-headed and you kind of ran into that burning building. Like, how how did you guys decide during that moment? Like, did you pick straws? How do you decide kind of who was going to go in and help work that situation?

Yeah, I think as a as a company, the most important thing we did was realize that this was a true crisis and not just try to manage it away, but actually use it as an opportunity to make us into a better company.

There was a situation, without disclosing too much, where there was some claims being made against the company by some people who had rented an Airbnb, and the person who owned the Airbnb wasn't representing what the accommodation was really all about. And they threatened to go to the press. You know, and that that was at a very vulnerable point for the company because this was early on when they were starting to scale up.

And so, like what we famously did was basically stop everything and tell everybody, stop what you're doing, and start thinking about like ways to make the site more trustworthy, more safe. And we do this epic brainstorm, come up with all these projects, and over the course of two weeks, we implement about 40 of them. And that's powerful because like while this PR crisis was playing out, two weeks later, we were able to come back and say, hey, look, we acknowledge this thing happened and like we made some mistakes and like we're incredibly sorry for what happened here. But we also are excited to share that there's 40 new trust and safety features that we're launching. And that was probably more than what anyone would have expected us to be able to do or do in the situation. And so, you know, I think uh at the end of the day, like we were scrappy once again and creative and seize the moment and and we're all in.

Do you remember? Like, I'm sure you must have gone back and forth, back and forth around like, hey, is this really our liability? Or, you know, how are we gonna deal with this? Right. And like, you know, famously you decided to create this program and you decided to do the right thing and you know, stand behind the guests and stand behind the hosts. I think that's kind of a recurring theme for the company is that you've done that over and over again. But like, were there any differing opinions of like this is gonna cost too much money or we don't want to take on this liability? Like, how did you finally decide like we're going to set up this program?

Oh, for sure. Yeah. I think in a crisis, you get so many opinions and like, you know, a lot of people are acting out of fear and telling you, oh, you know, be careful, don't do that. Like it could create a new problem. Right. And so there's a lot of people telling you what you shouldn't do and can't do. Not a lot of people saying what you actually can do to make the situation better. You know, I think one example of this that's noteworthy, we we came up with this idea of a host guarantee. You know, if anything went wrong, Airbnb would cover the damages up to a certain amount. And we were thinking that we would make it $5,000. That seemed like a lot of money at the time, or, you know, enough money to replace a piece of furniture or or whatever. Like we were scared though, right? Because we, you know, this would be coming out of our pocket and we weren't sure how many people might file complaints. And maybe they were illegitimate complaints, maybe they weren't, right? And then Mark Andreessen came over to our office and he had just funded the company and he was the lead investor in our $100 million round. And he said, you should add a zero to that. So the $5,000 instantly overnight became $50,000. And we decided, well, you know, like if our lead investor is comfortable with us making this offer, well, frankly, it's it's kind of his money. He just gave it to us. That's where the money's gonna come from. So let's go with it. You know, he kind of gave us permission to think boldly and you know, fast forward later on, that eventually became a million dollar guarantee. And I think it might even be three million now these days. But like that was the catalytic moment. And, you know, ultimately, I can't say it's right in every situation, but you know, like the human thing to do is usually the best thing to do from a PR perspective, and like the other stuff will work itself out. And if if you do right by the people, then I think some of the other risks kind of evaporate.

Aaron Powell He was the one who sort of parachuted in and helped try and manage that situation. That was something I was very impressed with because he had to deal with a lot of different constituents in that situation. Uh angry people who were, you know, who were gypped out of stain, the owner of the property who was trying to leverage the company, and he was the perfect person. Because if you had somebody come in who was really aggressive, that could have backfired. And there's also he understands really well, and I think all of them do, uh forced from the trees. There's no ego here. This isn't like they're going to do something because they want to get back at somebody or because almost uh always they looked at the bigger picture. And it's easy to forget that when you're when you're in the middle of a very intense uh adversarial situation. I think it comes down to emotional maturity, really. It's a very mature decision to say it's not worth fighting this. You know, the money's not existential to the company. What's more important is a reputation.

And now a short break. And we're back. One of the things that Sam talked to us about also is how you're able to both have really good, strong technical talent, but also swoop in sometimes to chaos or to problems and just have this like kind of you know calm demeanor. Like, do you have any sense for where that comes from?

Uh in my teenage years when I had the business and I was also like top of my class and I was also running track, like I I had a lot going on and I had to be very disciplined about time management, but also just like balancing all this stuff. And so, you know, I think I got just very good at staying calm and taking one thing at a time and working through like what needed to be done, whether it was solving a problem or just load balancing across a lot of chaos. Um, that's one thing. I think second, like in running my business back in high school, I was dealing with a lot of people. Um, I had probably a thousand clients and you know, I was doing customer service and everything, right? Like if they were upset, they would call me up on the phone and I would talk to them. And so here I am, like as a 15-year-old, you know, talking to someone who's probably like three times my age, four times my age, who's like super unhappy, and you know, trying to calm them down and you know, commit to them that I was gonna make the situation right or whatever. And so I think I I got a lot of practice, you know, working it out with people. And, you know, like my demeanor at that time was, you know, in my first business was like the customer is always right. So, you know, I was always trying to, you know, lean into whatever their emotional state was and you know, figure out how to work with them to get them to a better place.

I want to talk about another moment where you basically bigger stakes, same kind of decision, right? And that's the pandemic. So, like before getting to the pandemic, uh, you know, can you kind of set the stage for us? Like, what did the company look like? You know, let's call it like 2019, you know, how many guests or you know, how many employees, like just kind of how you want to describe where you'd gotten to at that point?

Yeah, well, uh 2019, I think we'd probably raise like roughly $3 billion up at that point, like a lot of money. Things were going pretty well. Yeah, like we had had basically a decade of growth, right? Because like the growth took off in 2009 and 10 years later, like and we were now ubiquitous in every country of the world, and things seemed pretty good for the most part. I think there were some challenges underneath the surface. I think the fact that we had had access to easy money uh and had $3 billion in the bank account meant that like we hadn't needed to be very um rigorous with our PL and our investment choices and managing people. We were also in the midst of writing our S1 for the IPO. So we were planning to go public in March. And so at the end of 2019, we clearly had a draft of that ready to go and you know, very real plans to go public. And then the pandemic starts to happen, right? And you know, by the beginning of March, you know, it's a worldwide pandemic, and our business drops 80% in the span of just a few weeks. All these people were canceling their reservations. So, like to navigate all this, we we came up with a bunch of principles. One of them was, for example, this is a public health emergency, so we should do like what's right by public health, like forget about like the business or whatever. Like, let's acknowledge the reality, which is this is a public health crisis for the world. You know, two, we were gonna be bold, we weren't gonna take half steps. There are a lot of companies that were playing this like a couple weeks at a time and you know, doing small layoffs over and over again and things like that. You know, three, like we were still going to, when we made trade-offs, think with like a long-term mindset about what's like most important in the long term and try to preserve that. So, like these principles were helpful because like there was a lot of decisions we were gonna have to make really quickly. Also, we these decisions were gonna be controversial, and so we needed to communicate them effectively to our employees. And so it was easier to start with the principles and educate them about the principles and the why behind the principles, and then use that to segue into the hard decisions versus just dropping a hard decision on them. And so we ended up refunding the guests because we didn't want them to be financially incentivized to have to travel when it wasn't in the best interest of public health. Uh, we had to cut a lot of expenses, lay off 1800 people, which was one of the hardest things we've ever had to do. But by a few months later, you know, in in the summer, it turned out like people were eager to get out of their houses and they still wanted to travel, even though they couldn't get on airplanes and they were traveling to rural areas and creating their own like bubbles. Um and uh it turns out like staying in a home was great for that. So our business ended up bouncing back sooner than we would have thought and sooner than the rest of travel. And uh later that year, we were actually able to resume our IPO and go public uh in December. So kind of remarkable in retrospect how quickly we worked through that period, and it was just a financially much more fit company.

How did it feel to go public in December of 2020 after going through such a hard experience that year?

I mean, it was unfathomable, frankly. I mean, it was really scary when like the floor drops out from underneath you and you are sitting on three billion dollars of other people's money that you suddenly have to give out uh return and you don't know like how that's gonna go down, and you have to let go 20% of your employees. I'm like, these are like really scary, sad things. They're like emotional. So that part was like, you know, really terrifying. You're just kind of wondering like, will the world ever go back to the way it was? Will we make it out of this thing? Um, or are we forever going to be, you know, like one tenth or one one hundredth our original size? Um, but it was a very successful IPO, right? The stock price, I think we were supposed to open up at like between 60 and 80, something like that. But you know, it ended up closing out at like 135, I believe, or something like that. So it basically doubled over the course of that day. And it was that was a huge validation that like the market saw that Airbnb was going to be an exciting company in the future, despite you know, all that had happened over the last 12 months.

You know, so much of this is trust building and in responding to crises. You know, the one of the last things I really want to cover is this program you have Airbnb.org around natural disasters, right? I think, you know, if I have it right, the idea first came out of Hurricane Sandy and and a host wanting to donate their home. But could you tell us a little bit? You know, I know most recently with the LA fires, you guys did a lot with helping people out with emergency housing there.

Yeah, yeah. Yeah, right. So, I mean, again, like a lot of things, we sort of stumbled into the idea. It wasn't meant to be anything big. Uh, it was a one-off. Uh, we saw on Twitter one of our users during Hurricane Sandy was offering her home for free. And we thought, like, that's so generous, so kind-hearted. You know what? Actually, I bet there's other hosts who are just like her, right? And so over 24 hours we made this functionality where people could opt in and offer their home for free. And like a thousand people pressed that button or more to offer their home for free. And we were just like blown away by people's how like a disaster could be a way to galvanize generosity. And so that was completely inspiring. And so when that was all over, we made sure we saved the functionality. And when things came up in the future, we rolled that functionality out again and we started to make it really easy to roll this stuff out on short notice, like 30 minutes notice, we could get it up and running, have a landing page, and activate the host community. So we continue to refine this muscle and challenge ourselves. Like, well, how big can it get? Because like the Airbnb community is pretty big. And then, you know, most recently for the fires down in LA, we were able to host 25,000 people who were displaced, whose homes had burned down. And so I think it's a really unique capability. Like, there's no other lodging provider that can rapidly scale up accommodations that quickly. I think it's something we can we can uniquely do. And, you know, we should strive to use technology to do good in the world.

Yeah, it's kind of remarkable to think about. You know, you go from like uh we shouldn't be connecting strangers because it's dangerous to we're connecting strangers in this natural disaster who can all help each other, kind of, you know, really proving out in a lot of ways, you know, how, you know, kind of the good in people and how they can be helping each other through this kind of platform is really kind of remarkable.

Yeah.

And once again, you know, finding the opportunity within what is otherwise a terrible situation, right? Which is that these tragedies in some ways bring people together because of our humanity, because you know, people want to help when they see others suffering. And with technology and creativity, like we can actually orchestrate that. So, you know, I think we can do more around connecting people and creating the trust necessary to connect people, uh, which is really the mission of the company, uh, is to create a connection and belonging, whether it be between people or people and discovering places.

Awesome. Nate, this was really great. Really appreciate you coming on. It's a lot of fun. This podcast is brought to you by Leapforward Ventures, an investor in early stage startups. If you like the show, the number one thing you'll want to do is sign up to get notified when we release new episodes that includes transcripts and key takeaways from each story. Head to leapforward.fm to sign up. I'd also love to hear your feedback on the episode and who you want to hear from next. Just shoot us a text at 415-915-3050 to get in touch. This episode was produced by Theo Balcom and Kim Naderfane Petersa. Craig Ellie is our engineer. Reese Lodano made our cover art. Music is by Jim Brumberg and Ben Landsberg of Wonderly. I'm David Rosenko, and this is the Leaf Forward Podcast. See you next episode.