# How to Start a Startup: Building company culture, Part I

**Author:** Brian Chesky, Alfred Lin
**Type:** Video
**URL:** https://www.ycombinator.com/library/JN-how-to-start-a-startup-building-company-culture-part-i
**YouTube ID:** RfWgVWGEuGE

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Brian Chesky, Founder of Airbnb, and Alfred Lin, Former COO of Zappos and Partner at Sequoia Capital discuss how to
build a great company culture.

## Transcript

Set the stage with a few
slides and some comments. But, the main stage is gonna
be with Brian. When he comes up and talks about how he built the
airbnb culture. So you're here you, I've been following the
presentations. And so, now you know how to
get started. You've built a team. You start to sort of build
your product. It's off the ground, it's
growing. People love it, you figured
out how to do that. You figured out how to
create a very special one of

a kind company with monopoly
powers that's big, and the market that you're
chasing after is slightly bigger than the
paper air plane business so you're good, right? So, now what? So, we're here to submit
that actually culture is the thing that's gonna be
very, very important for you to be able to scale the
business. As well as your team. And hopefully, after this talk you'll be
able to know what, what is culture? Why does it matter? How to sort of create your
core values and think about

elements that sort of fit
together for a core values in the culture that create a
high performance team. And get some best practices
for the culture. So, what is culture? Anybody have a, wanna take a
guess at what, how one should define this? >> A set of values
>> Yeah, that's good. Did you look that up on the, because you had a computer
and Internet connection. Did you just look it up? So these are some
definitions, that, you'll find, in, in
Webster's dictionary.

And. But that, that. We're at Stanford. This is kind of a trick
question, it's a CS class. Questions are never
straightforward. The real question is, what
is company culture gonna be? You know, culture that we
can generally talk about
society. About groups. About places or things. Here we're talking about
company culture. And so how do one define
company culture? We can take the previous
definition and modify it a little bit. And so every, this is a hint
of how we may want to define company culture. Everyday blank and blank of
each member of

the team in pursuit of our
company blank. And some people have filled
these in with different sort of things. A, the first blank could be
assumptions, beliefs, values. My favorite is core values. The second blank for the B
blank. People have said behaviors. My favorite, sort of, answer to that is real
action, how do you act? And in pursuit of goals,
that's kind of weak. in, in, in pursuit of big
and hairy audacious goals,
that's a little stronger.

But a better definition is
in pursuit of the mission. So. Now that, sort of, we have
that definition, what do we do with it and
why does it matter? This is a quote from Gandhi, your beliefs become your
thoughts. Your thoughts become your
words. Your words become your
actions. And your actions become your
habits. And your habits become your
values. Your values become your
destiny. If you don't have a good
culture in the company, you can't pursue your
destiny. Why it matters is it, it
becomes the first principles

that you sort of go back to
when you make decisions. It becomes a way to align
people on values that matter to the company. It provides a certain level
of stability to fall back on
and it provides a level of trust that people can sort
of trust each other with. It also give you a list of things that you should be
able to. Figure out what to do and
what not to do and what the more important thing
about that is what not to do And then finally the other
thing that is important is it allows you to retain the
right employees. There are people in this
world that are not gonna be

a fit for your company but
if you have good strong culture and good strong core
values you'll know who you wanna retain and who you do
not wanna retain. And if you took the, take the first words the
first letter of those it happens to help you move
faster. Another reason. You're thinking that's like
all mushy stuff. This is actually more
scientific stuff. So here are indices for, from 1997 to 2003 of stock
market index of companies.

And the S&P 500 and the
Russell 3000 and then for the Fortune 100
best companies to work for. They survey all these
companies out there and they've picked out companies
that they believe are the best
companies to work for. And, the returns, the stock
market returns of those companies happens to
be 11.8%, 11.08%, which is almost twice that
of the other two indices. And so, there's real power
in companies that treat their employees well, where
there is a lot of trust, where there is a lot of
strong culture.

So, how do you sort of
create a, a set of values, and, and sort of define the
culture et cetera. I get asked that a lot. You got to start with the
leader of the company, the founder. And, so ask yourself, what
are the personal values that are most important to you? What are those things that
are most important to the business? Who are the types of people
you like working with and what are their values? And, through that, you sort of distill together
what a set of values are. And think about all the
people that you've never liked working with,
what values they have.

Think about the opposite of
that, and maybe those should be considered values for,
for your company. And, finally, remember this, the values have to support
your mission. And, if it doesn't support
your mission, you're missing something. And, and then the last, final chapter, they have to
be credible and they have to be uniquely
tied to your mission. So, at Zappos, in terms of
uniquely applied to the mission, we're focused
on creating a culture that was gonna provide great
customer service. So the first core value we
had was to deliver.

While through service. We're very specific that we
want to deliver great customer
service. And it was gonna be a wild
experience. And then, below that, we want to sort of add a
paragraph supporting that. Talking about exactly what
we mean by that. We want it to support them,
deliver while through service, and support people,
such as our employees, our customers, and our brand
partners, and our investors. In terms of the opposite
thing, we generally didn't like working with arrogant
people. So, one of our core values
that's that was, was to be humble. So those are two examples
where we sort of

create a core values in a
way that sort of, sort of, became credible and uniquely
tied to our mission. So, you go through this
process, you come up with a few core
values. These might be some of them. Whether it's honestly, integrity, service, teamwork
and they might be a list of, you might start with three. You might end up with a list
of ten. You might list, list of 30. It's a good start. And when Zappos went through
this process we started with like, we asked all the
employees at the time,

what core values they wanna
identify with, we came up with 37. We initially, we sort of
whittled it down to about ten. And it took a year to do
this. That's a long time and you
might wanna ask why. Well, if you just come up
with the word honesty, I mean give me a break
everybody wants the culture to be honest. Now you. Nobody is going to say I
want to be lied to everyday. service. What do you mean by service?

There's gotta be a lot more
depth in this than that. And nobody, everybody talks
about teamwork. But there's a difference in
level of team work that you see in a
intramural sports team as versus a baseball team. And so how do you sort of
dive deeper into team work. What are the things that
don't work on for a team? A lot of it has to do with
communications. A lot of it has to do with things that people
have studied. And you might want to go
deeper into that. At Zappos we thought about
well there are a lot of smart people in
this room. When they're fighting with
each and

trying to figure out whose
right and whose not. It's probably not the best
use of time. And we want everybody to
sort of riff off each other and help each other make any
idea better. The result is that the
company gets a better idea, not that any individual
person is right. So we wanted to instill this
idea that it's company first, then your department, then
your team, then yourself. And how do you do that? Gonna go a, ano, a level a
little deeper than that. There's another, there's a great sort of sort
of element of

high performing teams that I
really like which is this pyramid that was created by
Patrick Lencioni and he wrote this book The Five
Dysfunctions of a Team and the reason this is
interesting is he talks about the breakdowns
of a teams. First of all if you don't. A lot of teams break down
because they don't have any trust. Then, even if you had trust,
why do you need trust? Well, then if you have trust
you can actually have debates and conflict and get
to the right answer. If you don't have conflict
and debate, people are just,

it's the blind leading the
blind. How do you know you actually
got to the right answer before you
sort of commit to something? So, people are not actually
willing to commit. They're afraid of
committing. And so let's say you get to
the next level and you are actually able to
commit. Well what, what goes wrong
then? It's usually because people
are not held accountable to things that they committed
to? And if people are not held
accountable to the things that they've committed to,
then they can't get results. And I would submit to you, if you think about the
company as a black box,

and results, whether it's
financial, whether you produce a great
product, or anything like that as the
output. One of the major inputs is
the culture of the company. So some other best practices
we're gonna actually talk about during Q and A because
I think this is gonna blend into the conversation is
that you want to incorporate your mission to values we've
talked about that. Performance, you gotta think
harder, deeper, longer about your
values than you might initially think
you need to do.

One of the things I think
that a lot of companies don't actually do
is they interview for a technical fit or skill fit
or competency in that realm. But they don't actually
interview for the culture fit, and whether someone will
actually believe and follow the mission. I think that's a big, big
no-no. Like I think you can have
the smartest engineer in the world but, if they don't
believe in their mission. They're not gonna put their,
pour their heart and soul into it. And that's one of the things
that where, if you actually sorta start thinking about
culture from the interview process to performance
reviews to making sure that

it's a daily habit, you'll
get a lot further with produ, with, making a great
culture. The finally point on making
it, a daily habit, I think. Culture, just like customer
service or fitness, is like mother had
an apple pie. Everybody wants to provide
great customer service. Every company wants to have
a great culture. What they fail to do is make
it a daily habit. You just can't be fit if
your, if you don't do it as a
daily habit. Eventually you get out of
shape,

then you get fat, and then
you're like, oh, I got to go on a crash diet
to sort of get back into shape. That doesn't quite work. And the same is true with
something like culture. So I think we checked all of
these off, so we can go into Q and A
with Brian. >> All right.
Cool. >> Yeah, that's good. >> All right.
Hello, everybody. It's quiet in here, I'll be
honest.

Now it's better. Now, I feel less on edge. Nothing worst than a room
full of people really, really quiet, staring at
you, but now I feel better. >> I'd say it for five, ten
minutes. >> Yeah.
>> You could bare for a little longer. So Brian. Talk about how the process
by which you came to understand the culture was
important. >> So Airbnb and then
building the company. Yeah, so I think one of the
things we realize is so just to give you. I won't tell the full story
of everyone being some you may
know it, but. The very short version of
this story was that,

Airbnb wasn't meant to be,
like, the company we were trying
to start. I had quit my job, I was complete, I was living
in LA. One day I drove to San
Francisco, became roommates with my,
friend from college, I went to Joe Gebia, and I
had $1,000 in the bank. And the rent was $1,150. So that weekend this
international design conference was coming to San
Francisco. All the hotels were sold
out. We had this idea, let's just turn our house
into a bed and breakfast for the
conference. I didn't have any beds. Joe had three air beds. We pulled them out of the
closets.

We called it the air bed and
breakfast. That's how the company
started. I probably told that story
10,000 times, by the way. Some version of that story. And I didn't think I'd ever
tell that a second time. when, I, I remember growing
up, I, I also went to college, and my parents were
social workers, and they had kinda been nervous about me
going to art school. They kinda worried that
maybe I would like not get a job after college,
which is I'm sure a lot of parents are worried about,
so she said, make sure you promise you get a job with
health insurance. I ended up starting Air Bed
and

Breakfast.com was the
original name. She remembered her telling
me I guess you never got that job
with health insurance. The reason I say this though
is this. Airbnb was never meant to be
the big idea. It was meant to be the thing
to pay the rent so we could think of the big
idea. And along the way by solving
our own problem,. It became the big idea. So alongside that and, and
I'm not gonna talk about like kind of how
he built the product. That's probably another
conversation that some other people were talking about. You have to build a team in
a great company. And in the early days, we
had three co-founders, Joe,

Nate and myself. And I kind of think of one
of the reasons we're successful
was I was really lucky. And I don't think I was
really lucky because we came up with the idea of
Airbnb. I don't think we're really
lucky that we became successful once we
had the team. I think we could have come
up with a lot of ideas, and been somewhat successful. I think I was lucky cuz I
found two great people that I wanted to start a company
with. People I admired, that almost intimidated me
how talented, how smart they were. And I think that's one of
the first things you got to build a team that is so
talented that they kind of almost make you slightly
uncomfortable because they know by being with them
you're going to have to raise your game to be with
them.

And then when we were
working together in the early days. This is like 2008. The first thing is we, we
were like a family. You think about founders. Founders are like parents
and the company is a child. And a child will manifest in
many ways behaviors that parents have between their
relationship. If the parents are
dysfunctional. They're not working
together. Then the child's gonna be
frankly pretty fucked up. And so you don't want that. You want your culture to be
awesome. And so Joanie and I, we're like total, total
family in the beginning. We worked 18 hours a day, 7
days a week. I remember when we're white
commentator.

We like, worked together. We like, ate food together. We like, even went to the
gym together. We may as well have gotten
jump suits. We didn't go that far. But we were like. It was like we were on a
mission. I felt like we were like
special forces or something. And we had this like amazing
shared way of doing things. Amazing accountability. And then we realized that
was like the DNA of the company. And then, we started
thinking at some point you go from building the product
to phase two. Which is building the
company that builds the product. And so a lot of the talk is
about how do you build a product, how do
you get product market fit.

Once people start doing that
now you've got to build a company. And it doesn't matter how
great your original product or idea is
if you can't build a great company then your
product will not endure. As we thought about this and
one of the things he realized is we want to build
a company for the long term. The last thing is that I
want to build something, I mean, think about it this
way. If, if your company like
your child, a parent wants his child to
outlive him or her. It would be a tragedy to
outlive your child. Also, I felt it would be a
tragedy for us to outlive our company
and just watch it rise and fall. We didn't want that. We wanted a company that
would endure.

And so to do that, we
started noticing companies have
something in common. Companies that were around
for a really long time had a
clear mission. And they had a clear sense
of values. They had a shared way of
doing something that was unique to them and was
really, really special. And so, then, Joanie and I,
when we were three people, decided to look around
companies. I noticed Apple, you know, Steve Jobs talked about his
core value as that he believed people with passion
could change the world. And he said our products
change but our value never had. And we learned about Amazon. We learned about Nike. We learned about companies
in early days.

You can even use this to
talk about organizations you know even like a founding of
a, a nation has a strong values
and a declaration. Then the country might
endure longer. As we started realizing like
we need to have intention. Culture needs to be
designed. And that's kinda how we got
connected is because you know, when we were
funded by Sequoia. Alfred Lin had just joined
from Zappos Sequoia. And I was told Zappos had an
amazing culture and we went to Las Vegas and met
up with Tony and we learned about it. >> And so what did you
learn. >> Well.

>> You guys were crazy. I, the, the thing we
learned. And we were three people
with you need to have, like, if culture's a shared
way of doing things, there's really two parts. One is behaviors and those
can kinda change, and maybe 50 years from now
there will be rituals and behaviors that will change,
be different. But there has to be some
things that never change. Some principles, some ideas that endure, that
make you, you. And I think of core values
as integrity, honesty, those aren't core values, cuz they're values everyone
should have. They're, like, integrity
values. But would there have to be
like three, five,

six things that are unique
to you and you can probably think about
this in your life. What is different about you
than every single other person. If you could only tell
somebody three or four things, what do you
want them to know about you? And we realized that when
Zappos has 100 employees, they wrote down these nine
core, is it nine? >> Ten, ten.
>> Ten, ten core values. And the only thing I learned
from Tony is you said I wish I didn't wait until I
was a 100 employees- >> Yeah. >> To write down our core
values. So I think I was talking to
Sam he says he thinks we're one of
the only companies that wrote our core values down
before we hired anyone.

>> How long did it take you
to hire a first employee? >> So our first employee was
our first engineer. And I think we looked for
him for four or five months. And I probably interviewed, I probably looked through
thousands of people and interviewed hundreds of
people. >> And by then, when you
hired the pro, when did you write it? Did you write it?
Did you write it on day one or did you, was
it month three? >> I think we started
working on it around the time of like
culminator, which would have been
January 2009. And it was probably a
process that evolved over the course of six to seven
months.

We finished Y Combinator in
April 2009. I think we hired our first
engineer in July. Something like that. So it's probably like six
months. And the rea.
Cuz some people ask, like, why did you spend so much time on, like, hiring
your first engineer? And here's how we thought
about it. I kinda felt like your first
engineer was like bringing in DNA to your
company. This person was gonna, like,
there were gonna be a. If we were successful, there were gonna be 1,000
people just like him or her in the company. And so, it wasn't a matter
of like, getting somebody to build
the next three features that

we needed to ship for our
users. There was something much
more long-term and much more enduring. Which was, do I wanna work
with a 100 or a 1,000 more people like
this? Now you want diversity but you don't want, you want
diversity of like beliefs, you want diversity of like
backgrounds, age,. You don't want diversity of
values. You want a very, very
homogenous beliefs and that's the one thing that
shouldn't be diverse. >> So what, what are
Airbnb's values? >> We have six core values. I'll maybe talk about three
of them. >> Okay. >> So our first core value
that we talk about is champion
the mission.

And what it really means is
that we want to hire people that are here
for a mission. We don't want people here
because they think we've got a great valuation, they like
our office design. They need a job or they
think it's hot. We want people to be here
for the one thing that will
never change, and that's our mission. And just to tell you a quick
story about our mission. You know, Airbnb, you know, a lot of people describe it
as a way to book a room or book a house when you travel
around the world. And that's what we do. But that's not at all why we
do it. And to answer the question
of, like, what, what our mission is, I'll
just tell you a quick story.

And this, I think, describes
it. In early 2012, I met a host
named Sebastian. So we do these meet-ups
around the world where you meet with hosts. And I meet this host named
Sebastian. He's probably, like, late
50s. He lives in north London. And Sebastian looks at me. He says, Brian. There's this word you never
use in your website. And I said, what's that
word? He said that word is
friendship. I would love to tell you the
story about friendship. I said, okay. Tell me the story about
friendship. He said six months ago, the run riots broke out in
front of my home and

I was very scared. And the next day my mom
called my to make sure I was okay. He said yeah, mom. I'm okay. He said, what about the
house? And he says well yeah, the
house is okay as well. He said, here's the
interesting thing. Between the time the riots
broke out. And the time my mom called
me, was a 24 hour window of
time. And in that period of time
he said, seven of my previous Airbnb
guests called me. Just to make sure I was
okay. He said, think about that. Seven of my guests called me
before my own mother did. I don't know what that says
about our guests or his mother more but-

>> But in this summer. On a typical night or a peak night we would have
425,000 people, 25,000 people staying in
homes and living together. And they were coming from
195 countries in the world. Which is every country but North Korea, Iran, Syria and
Cuba. So when you hear that story, at our core what we're
about, that's much more than just
booking a room or traveling. What we are about is we wanna help bring the world
together. We wanna do that by giving a
sense of belonging anywhere you go. So our mission is to belong
anywhere.

So five years from now, 20
years from now, maybe we're still selling rooms and
homes but maybe we're not. But I can guarantee you what
we're always gonna be about. It's a sense of belonging
and bringing people together and that's the more enduring
idea. So when we hire people the
first thing we need to make sure is if that's our
mission you need to champion that mission. You champion the mission by
living the mission. Do you believe in it? Do you have stories about
it? Have you used the product? Would you bleed for the
product? I used to ask like, crazy
questions like, one of the, the cra-crazy question Sam
reminds me of is I used to

interview people. So, I interview the first
300 employees at Airbnb which people think
I'm like neurotic and that may also be true. But and I use to ask them a
question. Which I've now amended. I use to ask them, if you
had a year left to live, would you take this job? And actually, the people who
say yes to that, you probably don't want. Cuz that's, like, they should spend time with
your family. >> So I amended it to ten
years.' Cuz I feel like you should,
you, whatever. If you knew you had ten
years left to live. Whatever you want, you would
do in those last ten years, you should just do. And, and I really wanted
people to think about that.

That was enough time for,
like, you to do something you
really cared about. And the answer doesn't have
to be this company. I say, fine. If the you're meant to do is
to travel, or if you're meant to do is
start a company, you should just do that. Don't come here. Go do that. And so there's this old kind
of parable probably many of you heard of it. About like two men are
laying brick. Somebody comes up to the first man says what are
you doing? He says I'm building a wall. He asks the other guy what
are you doing? He says I'm building a
cathedral. There's a job and then
there's a calling. And we want to hire people that aren't just
looking for jobs. They're looking for a
calling.

And that's, that's kinda the
first value and that's to champion the
mission. I'll just, maybe, cuz I don't want to just
take all the time up. I'll, I'll talk about, I'll talk about just one
more, just so we don't talk the whole
thing up just about values. The second value relates to
being kinda creative and frugal, and I'll tell you a
story. Our company was like. By the way, all the founding
stories in your company end up becoming the things that
people repeat and talk about when you're a
1,000 people. And it kinda embodies,
right, its kinda like your
childhood. These things kinda come back
later in life. Same thing with a company. So Airbnb, I think Mark said
in the last talk that was

like the worst idea that
ever worked and. It, it, it really probably
was the worst idea, I mean, people thought we were
crazy. I remember telling people
about the idea. And I remember actually
telling Paul Graham, we have this idea, in our
interview, we have this idea, it's
called Airbnb. He goes, people actually
doing this? I go, yeah. His follow up question was,
what's wrong with them? So I knew the interview
wasn't going well, And in the, at the end of
the interview, Paul Graham, I think, wasn't going to
accept us. And, but we told him the
story of how we funded the company.

And here's how it goes. We were introduced, Michael
Siebel, who I believe he's a partner
of Y-Com. To let people know,
introduced me and Joe to like 15 investors in
the Valley, including some of the ones
that have been here. And all of them like said no
to the company. They could have bought 10%
of the company for like 100, $150,000. They all said no. They thought it was a crazy
idea. No one would ever stay in
someone's home. So we ended up just funding the company
with credit cards. And you know those binders
pe, kids use to put baseball
cards in? So we put credit cards in
those. >> Cuz we had to put them
all somewhere.

That's how many credit cards
we had. And we were completely in
debt. And in the fall of 2008 we
provided housing for the Democratic and Republican national
convention and. We had this weird crazy idea
cuz we weren't really selling a lot
of homes. So basically Airbnb launched
and a year after we launched I think we had a
hundred people a day visiting our website and we
had like two bookings. Which is generally bad. It's kinda like releasing a
song and a year later like three people
listen to it every day. Like it's probably not going
to be a very popular song. So, but I believed in it and
Joe and

Nate believed in it but And
so we were completely in debt,
we don't know what to do. And so we get this idea well
we're air bed and breakfast, we're providing housing for
the Democratic and Republican national
conventions. What if we made like a
collectible breakfast cereal for like the Democratic
national convention. And we came up with this
Obama, Barack Obama theme cereal. We called it Obama-Os the
breakfast of change. And then we came up with a
Republican theme, so for John McCain, we found out
he's a captain in the Navy, so we came up with?

Captain McCain's. A maverick in every bite. And we had 0 dollars, and
without any money, we were able to, we tried to
call, like, General Mills. And they told us to, like,
stop calling them, or they're getting restraining
orders, so that didn't work. But we found a local alumni
of RISD; he made 1,000 boxes of cereal for us. And we end up sending them
to press, and eventually, within a week, we got on
national television, national news. We made $40,000 selling
breakfast cereal. And that, the year 2008, we made $5,000 from our
website, and

we made $40,000 selling the
breakfast cereal. And I remember my mom asking
me, so are you a cereal company
now? And that wasn't the bad
part. The bad part was the oddest
answer. Which was well, but the
reason I tell that, is our second core value is
to be a serial entrepreneur. I'm sorry for the cheesy
pun. I'm sorry. But be a serentrepreneur. And we really mean that we
believe constraints bring out creativity. And when you raise like $800
million,

suddenly all that
scrappiness. It's easy to lose that
scrappiness. It's easier for people to
tell you, you know, I just need this like
$50,000 contract or I need this or I need that. And whenever somebody
just,is just being a little bit not, like frugal and not
being creative. Or they tell me they can't
do something, I'll just take a box of
cereal. And, like, even just a suggestion of
Obama knows they need to be scrappy and frugal. And so again, a lot of the
founding DNA of your company becomes these values, these
principles. And so, everyone knows, if you don't give a crap,
you shouldn't be here.

And it doesn't mean you have
to give a crap. It just means you have to,
to be here. And you also have to be
creative and be like, kinda like an
entrepreneur. Super scrappy. And these are some of the
values we learn. >> Cool. So you guys should start, start thinking about
questions. I'm gonna open up to
questions from the audience. But I have a few more
questions for you. >> Yeah.
>> So,. This all sounds nice. The stories are great. >> Yep. >> People here are a pretty
skeptical group. >> Yep.
>> It's a CS Department class. >> Yep.
>> Probably left brain focused. >> Yep.
>> Feels like a softy kinda right brain
focus. >> I'm a total softy. Sorry.

>> But how has having your
strong culture helped you make important tough
decisions? >> Well, I think that having
a, so here's the thing about
culture. There's three things they
never tell you about culture. The first thing is they
never tell you anything. In other words, no one ever
talks about culture, and no one ever tells you you
need to have strong culture. And so, like there's tons of articles about building a
great product. There's tons of articles
about like growth and adoption. And there's very few things
about culture. It's this like mystical
thing that's like kinda

soft and fuzzy. That's the first problem. The second problem is it's
hard to measure. And things that get, are hard to measure often
get discounted. And these are like two
really hard things. But the third thing is the
biggest problem. The biggest problem of
culture, is it doesn't pay off in the
short-term. In fact, if you wanted to,
in one year, build a company and sell it
as quickly as possible. The number one piece of
advice I give you is, fuck up the culture. Forget about it, just hire
people quickly. Culture makes you hire
really slowly and makes you be deliberate
about decisions that in the near term can slow
progress.

It's kinda like putting an
investment into the company short-term. And so, these are the things
people never tell you. So it, it's really about
building a company for the long-term and to endure. Now, some of the things
about culture. The first thing is you need
to like be very clear about
like. What's unique to you, that
you stand for? Once you do that, you need
to make sure you hire people
that believe in that. And so we interviewed
hundreds of people. You need to make sure that
you hire and fire based on the ideas of
these values. And, and, you know? One of the things we do is
we

constantly repeat over and
over again. So we interview. Like, when we interview, we wanna make sure they're
world class and they fit the culture. So, the first thing I used
to ask people, I had at the end of an
interview sheet. Is if you can hire. This is a functional
question. If you can hire anybody in
the world, would you hire the person
sitting accords from you. And if our, our vision if
become like the best of what we do why dont we hire
the very best in the world. So, every single person is
meant to hire a person better than
the previous people. You're constantly hiring,
raising the bar.

You're constantly hiring
world class people. Then we have separate people
called core value people. Who aren't in the function. So if you're an engineer,
the core values engineers interviewers are
never engineers. Because we don't want them
to be biased and say, oh, I know how good
they are. And they interview just for
values, to make sure that people
care about the same thing. And we've said no to a lot
of really great people. Because we just didn't feel
right about them being with us long term. So that's one of the things. I also think that maybe some
other

examples of when we kind of
had hard decisions. In mid 2011 we had this. So we were mostly in the
United States. And we had this internet
clone funded by these guys called the Samwer brothers. Has anyone heard about the
Samwer brothers? They basically, they clone. Yeah Rocket Internet, they
just went public. And they basically copy
American websites quickly, and they try to sell it back
to you. And if you don't, then they
just try to, so it's kind of like putting
a gun to your head. And so, and they had
basically done

this to Groupon. Groupon at this point was like the fastest growing
company in the world ever. First company to, fastest company to a billion
dollars in revenue. And then they stopped doing
Groupon. This is when Groupon was on
top of the world. And they cloned us. And we had 40 employees. We had raised $7 million. They cloned us, and they
raised $90 million. And, in 30 days, they hired
400 people. And they wanted to sell the
company and if they couldn't, they were gonna
destroy us around the world. And the problem with Airbnb is if we're not
everywhere around the world. Like, a travel site not
being in Europe is like

your phone not having email,
it doesn't actually work. So we were kind of in
trouble. And we had this conversation
and there was the pragmatic decision of should we
acquire them and then there was the values
decision. The pragmatic one should've
probably have said buy them because you can't risk
losing international. So just guarantee you're
gonna get international. But we ended up not buying
them. And the reason we ended up
not buying them is I just didn't like the
culture. I didn't wanna bring in this
400 people. I felt like we were
missionaries and they were mercenaries. I didn't think they were
doing it for the beliefs.

I thought they were doing it
to make a lot of money very quickly. And I believe in a war on missionaries would outlast
and out-endure mercenaries. And I also felt like the
best revenge against an Internet
startup, Internet clone was just to make them run the
company long term. It's like you have the baby,
now you gotta raise it. >> So. >> That's what we ended up
dong. And that was a very
controversial decision. A lot of people are telling
me, you should buy this company. We didn't. And I think it worked out. >> Let's see, the last part
being how. What percentage of revenue
comes from Europe? >> More than 50%.

>> I think it worked out. >> Yeah. >> All right, anybody have
any questions? I can keep going. Yeah, so one other question,
one other statement we had at Zappos was that culture
and brand were two sides of the
same coin. >> Yes. >> Airbnb has a great
culture and also a great brand. You wanna talk a little bit
about branding, since that's actually a kind of a weak
thing in Silicon Valley. We don't tend to focus on
this, on culture and brand. >> Yeah.
Yeah, that's what I actually just said that to
Sam Altman. I think Silicon Valley is not historically really
strong, or

we don't talk about culture
and brand very much. They are two sides of the
same coin. So cultural like the
principles and the beliefs you have inside the company
that you want people to be aligned with long term. And whatever happens inside the company eventually comes
out. You can't hold it in. And brand is really the
promise outside the company that everyone identifies
with. And so I think, having a
clear mission, and making sure that you know
that mission, and making sure that mission
comes through the company is probably the most important
thing you can do for both culture and values.

And then, the second thing
you need to know is that your brand, the way
people think about you as a company, is often
decided by your, you know, your brand evangelists are
your employees. And so you have a weak
culture. And we often think that
companies that hire employees or people that are
deeply passionate, create companies that
customers are really, really passionate about. And those are the companies
that have strong brands. And so, Zappos had a really
strong brand because they have strong culture. And a lot of companies, Google, they care deeply
about the culture. They actually have a
question,

is this person googly? And it's meant to be like, a
catchall for do they fit the Google
culture. Google's a very strong
culture. It's unique to Google. And, by the way, there's no
such thing as a good or bad culture. It's either a strong or weak
culture. And a good culture for somebody else may not be a
good culture for you. So, I think brand is incredibly important as
well. And brand is really the
connection of you with your customers. And so, if you have an
incredibly strong culture that can be a whole
talk and brand. But if you have a fairly
strong culture, then the brand will come
through.

The final thing to say about
brand is, a lot of people when they
talk about their brand, they talk about what they
sell. So if you're Apple, one way
of doing it is to say, we sell computers. And like, our new screens
are larger and it's faster. And they talk about bits and
bytes. And I remember Steve Jobs
had this really important talk where he says the way
to win, this is 1997 when he first came back, wasn't to
talk about bits and bytes. The way to win is to talk
about what we value. And our core value is we
believe people with passion can change the
world. And that was how we introduced the Think
Different campaign.

And so Apple before they had
this huge renaissance, which became the most valuable
company in the world. They did the Think Different
campaign, which is basically saying,
this is what we believe in. And if you buy an Apple
computer, you're also saying, I
believe in this, too. And there would have to be, I think, a deeper core
belief and if that doesn't happen,
you're a utility. And the utilities get sold
at commodity prices. >> Go ahead. >> How did you know how to
communicate this idea? >> How? The question is how do you
know how to communicate this

to the company? The culture or the core
values. >> To the employees. To the outside world. >> The culture? The values. The brand? >> How to communicate what
Airbnb does >> Well, so the question is how do we communicate what Airbnb
does early in the days? Well, we learned a lot
because in the early days, we communicate like a
utility. We actually said Airbnb is a
cheap, affordable alternative to
hotels. And we had a tagline of
forget hotels, save money with Airbnb. And over time we felt like
that was,

I mean this was in really
early days. And we felt like that was
way too limiting. That undercut the idea. And so, we then eventually
changed our tag line to travel like a human. Which we haven't kept. But it was basically meant
to say that we believe in a certain kind of world and we really feel like travel
is mass produced. You feel isolated, you feel
like a stranger. And we want to bring the
world back to the place where it's a little bit like
a village again. Where the service is coming
from other people.

You have this feeling like
you belong and you're actually treated like
a human. You know, no matter how
successful you are in life, often travelling will remind
you, you're not that successful. Go through TSA, stay in a
typical hotel. Sometimes you'll have some
problems. And so we really want to
make people feel special. And this was kind of some of
the stuff we did in the early days and we did a
lot of storytelling. I mean, I probably told the
story of Airbnb like 10,000 times. And this is something that's
kind of related to culture. But one, somebody asked me the other day like what's
the job of the CEO. And there's a number of
things a CEO does.

But what you mostly do is
articulate the vision. So you articulate the
vision, you gotta develop a strategy
and you gotta hire people to fit
the culture. If you do those three things
you basically have a company. And that company will
hopefully be successful. If you have the right
vision, the right strategy and good
people. So what we end up doing is articulating the vision over
and over and over again. Whether you're hiring people
or recruiting them, talking to
investors to raise money, doing PR interviews, if
you're speaking at a class. You're always reinforcing
the values. You're doing it in email to
a customer. And so you just do it
thousands of times. And if you do something
thousands of

times it will change and get
better every time. So it's just kind of,
evolved. >> Yeah, question.
>> So you are interacting with the
host, somehow you're in charge of
the host and reinforcing the parts of
Airbnb? >> Very, very good question. How do we make sure the hosts are reinforcing
the culture of Airbnb? So when, the answer to that
is, we do a pretty good job but not yet an amazing
job at it. When we first started
Airbnb, I kinda took the Craig
Newmark school of thought.

Craig Newmark's the founder
of Craigslist. And I said, anybody should
be able to use Airbnb. You didn't have to apply. If you wanted to rent your
place, you could rent your place. And it turned out that many
of the people believed in our
values because we talked about it and we
tracked them. But there were people who
rented on Airbnb not because they believed in
values, but because they realized they can make a lot
of money renting their home. And not everyone really was
a great culture fit. And these people actually
did cause us a lot of problems. So, that was actually a bit
of a lesson for me. And I didn't think our host
had to, it didn't really occur to me
in the early days.

The host had to completely
fit the values, that we met them, we attract
people like us. And so, over time, we've
realized host or partners, and so they need to believe
in the same values we do. And so now we have a program
called the Superhost program where they have to
demonstrate values to reach this kind of badge,
which gets them kind of priority customer support
and distribution. We are having this host
convention where you bring all the hosts in. We're gonna be talking about
and reinforcing the values. We're moving towards the
place where they have to

apply to list. And we don't test them the
way we test an employee but we're starting to get more
rigorous about it. So the answer is, the answer
is we were really late but we now do it by gradually
moving towards apply to list and reinforcing it every
step of the way. >> Go ahead. >> When Airbnb has made some
great contributions to the open source community. Do you have any thoughts on
how that contributes to the culture of your
development team? >> Yeah. I think, just in general,
and

it may be related to two
things about Airbnb. We tend to be a pretty open
culture, just in general. We communicate a lot. And we generally believe in
the idea of like, a shared world where people
are giving back and contributing, making
communities and industries stronger. So, just my one philosophy
on communication is, we basically communicate and talk about everything
internally except for things that relate to employee or
customer privacy. So, if it doesn't relate to
those two things,

we'll basically talk about
it. As far as open source
culture and engineering, we wanted to
make sure that we had a really strong
identification of the team. And so we really felt like a
lot of source codes shouldn't be, you know, we felt like every
company needs a moat. Some kind of moat that protects you from
your competition. We thought some technology
would be, but we also felt like we wanted
to be able to get back from a
technology standpoint. And we preferred our moat to
be that we provide the very best experience in the world
when you use Airbnb.

We have the biggest network
effects. And we thought that kind of
took precedent over having certain technology
that only we could use. And so we decided to try to
share some of that out to people. And I think, again, it does
relate to the values. Now one other thing is I
never one day recommended. Hopefully, if you have a
strong culture, I didn't recommend we do any
of that. We hired engineers that we
felt like fit the values. And it just independently
occurred to them they should do that. They felt like that was the
right thing to do. >> All the way in the back.

>> You talked about how
during the conventions you didn't have any money and only a couple people visited
your site. What did you do to increase
the number of users that came to your
site? How did you scale that out? >> So the question was,
Brian had talked about that there weren't that many
visitors to the site when they were trying to
sort of get off the ground. How did they get users to
the site? >> So this is actually not
about culture but I will answer it anyway. So, you know a lot of
people, this is not even a culture
question, but the best

advice I ever got was
probably from Paul Graham. And Paul Graham basically
said, I remember he had this line. He said it's better, he may
have even talked about this at a talk, he said it's
better to have 100 people that love you than to have a
million people that just kinda sorta like you. It's literally better to
have 100 people love you. And the reason why, if you
have a million costumers or a million users and they just kinda don't care
about you but they kinda use your app and
you're okay. To get them to care is a
really, really hard thing.

In fact, I don't know how to
get a million people to all of a sudden care. What I do know is if you get
100 people that love you, those people if they feel
incredibly passionate, each of them will tell 100
people. And in fact all movements
typically start, or companies or ideas that are
really powerful, start with just 100 people. So the reason this is so critical is he gave us
another lesson. Which is if all you need to
do is get 100 people to love
you. Then what you need to do is
things that don't scale. So it's hard if you have a
million people you can't meet all of them.

But you can meet 100 people. You can spend time with
them. So that's exactly what we
did. Joanie and I, we would go door to door in
New York City or in Denver where the Democratic
National Convention was. Literally meeting with,
staying with and living with our users. I use to joke that when you
buy an iPhone Steve Jobs didn't come and sleep on
your couch but I did. And that, that was really
critical, living with your users. And by living with our users
and spending time with them, all we had to do is give
them enough time, attention. And get them to get to the point where they were
deeply passionate.

And if you work backwards
from 100 people or even one person. Without even technology, imagine what would be an
amazing experience for just this one person. And walk through the journey
from the time they, whatever your service is,
right? And make it perfect for that
one person. Once you make a service
perfect for one person, it's actually
really easy to make almost anything perfect
for a person. It's not actually that hard. The hard thing is then how
do we scale this to millions of people. Where everyone gets in
trouble is they try to solve both at the same time. So, the first thing we do is get the perfect
experience for one person.

We went door-to-door to do
this, we won over their love. Then we use a separate part
of our brain to imagine, now how would we achieve
that at scale? And I'll give you one
example before I stop talking about this. Right now on Airbnb you can, if you put your home on
Airbnb, you can click a button and
it kinda works like UBER. And we did this before UBER, a professional photographer
comes to your house and they'll photograph your
homes for free. We have 5000 photographers
around the world, and we photographed hundreds of
thousands of homes. So it's probably one of the
largest on-demand photography networks, if
there was such a thing,

I guess probably the only
one in the world. And that started with Joe
and I. We were living, we were
staying not living, staying with this one host
in New York City. And her house is amazing,
but her photos were terrible. And we said, why don't you
just put up better photos? And this is before, you
know, iPhones had great cameras,
this was 2008. And she said, well, I can't figure out how to
get photos from this camera, onto this computer. She wasn't very technically
savvy. And we just said well, we'll
just take photos for you. Or actually I said, what if
you can press a button and

somebody just showed up at
your door and took professional
photographs. She said, that would be
magic. So next day, I knocked on
her door and said I'm here. And I photographed her home. And then we sent emails to
people saying, we have this new magical
photography service. And if you want you can
press this button and a professional photographer
will show up at your home. Somewhere just press this
button and just send me an alert or Joe
an alert. And we'd rent a camera in
Brooklyn. In January of 2009 walking
through snow, photographing people's
homes. We did this by hand without
any technology. We managed it with just
spreadsheets.

I wasn't gonna burden Nate
with trying to build something we designed
before we had photography. Then we started hiring
contract photographers. Then eventually we got a intern to manage all
the contract photographers. Then we got a intern to
become a full-time employee
managing other interns to manage the contract
employees. >> And at some point, this
is before we built anything. And at some point there were
too many, like people to manage. Like, there were like
hundreds of photographers. And then we finally built
all of the tools to manage all the
photography. But we did it only after we
knew exactly what the perfect service was.

>> How about one more
question? >> One more question. >> So a lot of people say
that when, when the hardest part isn't
the technology. Here the marketing, the communication is the
hardest part there would be. And a lot of people say it's
not the technology
>> So do you wanna repeat the
question? >> So the question is a lot
of peop in this particular situation with Airbnb, a lot
of people think that this is not necessarily a technology
company, but it's more of a marketing
company.

>> Good question. So I'll, well, I'll tell
you, I'll answer the question
with a story. >> Okay, let me, let me, let
me, let me just, let me preface that question
by a set of questions. Do you have, do you today
have proprietary technology? >> Yes. >> Do you have a moat? >> Yes. >> Do you have network
effects? >> Yes. >> Do you have pricing
power? >> Yes. >> Do you have a good brand? >> I think so. >> Are are you a monopoly?

>> I'm not gonna answer
that. >> But, but I think similar
to the question just forgetting about all of
that. It, companies that have
network affects and sort of get off the ground
based on. >> Yeah.
>> The fly wheel is going. >> Yep.
>> People just think that you're lucky. >> Yeah, let me, let me. It's a totally fair
question. And people have said it. So, I wanna answer it. You guy that runs the
Sequoia Capital now, his name is Doug Leoni. >> Yep. >> One day, I think it was a
year, year and a half ago, Doug Leoni says,
your job sucks.

>> And I was like, what the
hell does that mean? Like this is like, you've got the worst job of
an CEO in my portfolio. And I said, tell me why. And this is what he said. He says, well, let me,
here's how I think about it. First of all, you're a
technology company. And he thought we were a
technology company and I would say, at our heart, in many ways we are a
technology company. And so, we have all the
challenges of all my other portfolio companies. But beyond that, you are in
190 countries. And so, you have to figure
out how to be international. We have to hire people in countries all over the
world. We're literally in every
country but

North Korea, Rio, Syria, and
Cuba. You're a, basically a
payments company. We handle billions of dollars through our system
every year. And we had to get money transmitter licenses
in the state of California. So we actually are a
payments company, and we have serious fraud and
risk to, to, to warrant, and needs to be locked down like
Fort Knox. He said, that's, that's
usually where companies end. But you've gotta worry about
all the other crap. And he says, trust in
safety. You know we have 425,000
people staying in other people's, under, in
other people's beds, in their sheets. >> Think about a woman from
Texas staying in

the Middle East or vice
versa. The cultural conflicts that
could happen and misunderstandings and, you know, you have 425,000
people a night. It's like being the mayor of
Oakland. Now, imagine if you're the
mayor of Oakland, all these things happen in
Oakland tonight. >> So you've got trust in
safety. Now, we have regulatory
problems. You know, we are in 34,000
cities. Every city has a different
law, different rules. And many of them were
written in a different century, before you had any
of this technology. So you've got to deal with
that. Then you've got issues like
search and discovery.

So, Google's got this brand
about being really important about search. The thing about search, though, is usually if I have
a question, if Google can give me 40,000 results, but
it's probably clear that there's like one or two best
options for everybody. So if I wanna know a
question to an answer, these are usually my best
answer. We have 40,000 homes in
Paris. There is no best home in
Paris for anybody in this room. So we have to be really, really great at matching
people and technology. We have to be a company
that's just, you know, another example. Facebook, for example, is a
digital product.

Their product is their
website. Our product are these
experiences you have in the real world. So, we're not just an online
product. We have to be an offline
product. And we need to transition
from when you're in your app, through cities. And these are just some of
the examples why technology, design. So basically, the long and short of it is we have to be
world class at technology. We have to be world class at
design. We have to be world class at
branding, because we've got to convince people this
isn't crazy. You're not gonna die when
you use it. We had to convince
governments, this is good for
neighborhood. What happens if the internet
moves into

your neighborhood? That's what people call it. It's a good thing,
hopefully. And you've got to make sure
trust in safety is really world class, that we handle
all these payments and not have problems with risk. And I can kind of go
through, and this is not even to do with
culture. I didn't even mention
culture. So, that's how I describe it
is like, I think great companies are
companies that are probably really strong at everything. But you know, we have, we try to hire the very best
engineers and technical talent in the
world and I definitely don't see us as
a marketing company. >> Thank you. >> Thank you.
>> Thank you, guys.

>> All right, thank you sir.
