Brian Chesky – Startup School 2010

The guys yearly. All right, well thank you for waiting it out and today talk by the first thousand days of air B&B and when they email from Paul Graham he arm after said our eye well, which I talk about in Paul said to talk about when you are powerless in obscure so. On the talk about when I was powerless in obscure and a lot of the thousand days I was tireless in obscure. For start 2 years ago. I went to start of school. And army was in Stanford a different auditorium and TechCrunch wrote up a post here, I do think think they this story and look at the photo, you’ll probably see if you can recognize somebody was there are. He probably still can’t recognize something but now you can. So that’s the main powerless in obscure in the audience. 2 years ago and I guess the central theme of my talk today is, I need it. I really think it’s not impossible to be on stage 2 years from now on you in your for my story. It’s not impossible. So let’s start. So the story starts back in 2004. I went to the rundown school design and I hour with my co-founder in my best friend arrestee Joe Gambia and a day of graduation Joe looks to me, says Brian, I think we’re in sort of company together. So I said. Where do the job of CIA so I went to Los Angeles in. Joe stuck back in Providence, Rhode Island. But literally a thousand days ago and it was we constructing a title. There was a 1,040 days so I took her down 7000 days ago he calls me up, he said. He’s got this apartment is roomy has moved out. He says Brian let’s start a company. And I said, okay, let’s start a company so I literally quit my job I left my house. I love all my possessions. I even wrote to my girlfriend Australia won anyways. And. I drove up to San Francisco and Joe tells me the rents $1,150 and I have a thousand dollars in the bank it out. And I said, I probably should about asked about that before and moved, so it turns out that weekend in international by Congress was coming December Cisco. In all the hotels were sold out and there is the rascals art school he really teach you that creativity can solve problems. If you are creative and you identify an everyday problem that you deal if you can actually solve that. And for us this is a problem in part of it was making rather part as we just want to solve the problem with the creative solution. In in literally 30 minutes. We built this as we’re talking, and I don’t know here to give lessons. It’s up to state you have an idea just put something out there in 20:30 men still matter don’t worry hold out a lot in our first launch our first of many. Was this and is the site that 2 designers had built looks pretty modest today we’re posting 3 people from around the world are more actually came from India Catherine with a 35 a woman from Boston in Michael that’s not like was 45 guys. Google News. I can find. I can actually find a flight photo of Michael but anyways. This this 45 father 5 and you’re just like an air in my living room. Well, we came up the idea. It would be an air bed and breakfast because you know all the hotel was sold out. One can be a designer we the originally were designed bed and breakfast but heavy furniture number right moved up there. But Jose yes in their beds and that’s where the name came through. So I decided, I’d try and 4,000 days the traffic and so this was our first launch. In a couple months later. South by Southwest was coming up. And we decided, why don’t we build a site where you can basically provide air beds for conferences all over the United States will do all we did for that conference for all over the country and it turned out that watching for South by Southwest we thought would be the best time to do it, that is basically won the preeminent tech events in the country. I asked you know I said Jones, who is the best engineer. You know, he said. Old and so in March of 2008 we did our second large and a look like that, air vents for conferences. In after traffic. So that was our second launch, you know, a few months had gone by. And 3 things happen at that conference. The first thing is I show up in, by the way we have payment for the time so I show up. In effort at. So I shot this guy’s house he lets me and we had dinner together, and then he says all race got long with a all right bitterly dollars and to make its you tomorrow and. It was really awkward and here I am the guys from stranger now sleeping in his leader and he’s like what the hell that I get myself into here. The second they happen is I met a couple people, one of the people said. Brian, I look to go use reply and on the line, but there’s no conference, he said. That’s kind of why should only be for conferences. And the 3rd thing is we met this guy right here. Michael Seibel, Michael Seibel, the CEO of Justin.TV you know before we came up here, I don’t know anything about even why commentators TechCrunch I was industrials liner working at a Los Angeles in Michael basically informally brought into the the community. I’m not sure tell you to reach out to without going through the program, but actually did worked out really well. Michael Beasley channeled his inner Paul Graham. He was basically giving us advice taught us the methodology. We called him the founder. And so in the summer of 2008. We do a lines. If I do some words you see today. You type in a city. You find a listing. The fight on them out. In fact I was a room photo you know something the person will credulous that size and we figured, well, there’s a reason they haven’t that day. I mean the people don’t want big for. We don’t know any better. And the Democratic National Convention was coming up. We built this amazing product or what I thought the time was a pretty in a product and words you the book in average person space, the way the book a hotel room you get an authentic space. Well, the problem is that no one wants to list their space if no one’s gonna book it. And I can’t bet on like I can play MP3s and the site. It’s like I said, we should have done that and the have done traffic. You know I I I can’t tell people go to this Web site no listing. It’s a chicken and egg problem. Well, it turns out that making things for press is a really good idea: Barack Obama announced he was going to speak in his 80,000-seat football arena. The Denver Broncos speak in their 27,000 hotel rooms. So we’re doing the math, and we realize there’s an opportunity here and this was going to be was gonna put us on the map so we certain noticing Fox News, CNN, MSNBC this entire on 24-7 news cycle that sets they’re looking for stories, people start ranting about the DNC housing crisis. So how do we get press we take India see housing tract housing prices in Google News in we email every single person that wrote about it. Nothing in our CNN, they’re not gonna write you back. But if you you know blogger they’ll probably right about you. And then you go to local news and the local news will then Google you and they’ll see that bloggers are talking about you so, then do a story about you then, the Denver Post and Rocky now news article you and see that all these people are talking about you and eventually CNN is going to be following their own key words, it’ll notice you and then they’ll cover you and that’s what happened. We got a hundred people list their rooms in this event in this press tactic was really the thing that got us over an initial. So. Few months later. We realize if only the report of the conventions every week we be we be views. So we’re sitting on her apartment and we realized. Well, I don’t want a 2 dozen 12 to get more reservations. And this is where the story kinda goes on a Wearside Iseman a you now we had a lot of time hands. What’s to say that. Another is when you build a product a marketplace in no one uses your marketplace. You have a lot of time. So we had a lifetime her hands in we’re sitting in the kitchen one day in, by the way we’d also provide housing for Republican National Convention. No, no to that. We. I don’t think one booking. And so we have a lot of time has run the kitchen were like what we made a series breath test that we can send to the people you know it’s like a nice exchange or not gonna send them ends is not exactly a perishable and so obviously we thought let’s send them a breakfast cereal. We just having fine, by the way ever said we had a lifetime in. We’re thinking what would Obama themes serial be call in we just are like basically joking around. And we decided we come up with its name we think whole areas is a whole there is name. But is where its name and we launch, we create this product recall Obama. The breakfast of change. We also have hope in every ball like that went through so we designed this box of mostly as they said we him. The numbers are realizing this is a really cool design we want sold it, but we need to give it to people find out about this so we made a video. And we actually got a guy to make us a jingle. Play a jingle, all right. Here’s a jingle. I know, I know you’re thinking we website now making cereal. Yeah, well, you know we’re no traffic. So you know company from Samper insists that I want to be an open platform, you don’t need very careful, you’re only doing thing for Democrats. We want people from all over the world views, he said. We make Barack Obama. We have to a John McCain’s in Syria and we’re thinking what would a John McCain through the the and we’re reading about him on Wikipedia we find out he was a captain in the. And that’s, and we came up with that McCain. A maverick in every bite. And as you can predict we got me for that as well. So we make this box of cereal, we think maybe this could be the solution to us not having any money or any traffic we still believed in air B&B but we had no traffic and we thought if we can make like a hundred thousand boxes and sell for $2 a box that would be able to fund our company we had this thing we knew people wanted it in what the website, but they won the cereal. Unfortunately, we are, I think I was 15 or $20,000 in credit card died from I had I had late 5 different part 4 different part $5,000 each. So I, we certainly can’t pay for cereal we meet this guy in Berkeley. He turns out to be an alumni everything he said I’m not gonna make you 100,000 boxes, but I’m wanting to print you. Because I like you guys and one now another one night 500 boxes, each of John McCain cereal and Barack Obama D zero to realize. Well, we’re not gonna make a lot of money in the C charge a lot to be said, what we call them. In addition, we can charge a lot. So we charge of $440 a box in we literally got half thousand boxes printed they just flat, right, you’ve got to assemble and yourself I a Joe and I assemble them in our kitchen and I’m not joking. I mean, we actually the gritty store in a thousand boxes of cereal. We would buy out. Just the look she would give us, it was the person behind me a. And like why this love honey and as you know. So. We put up this website. The jingles in CNN discovers it. In CNN runs a story about Obama those think that McCain’s and we end up selling out in late 2 days $20,000 worth of Obama. And not very many cab McCain. People all started reselling the Obama was the city that and realized Joe in charge it up. Damn it. So. Some time passes. We pay off our debt, but our website still has no traffic. This is where people make a pivot in this is working by we all want the rest her life so ready to go back to the website. We’re running out of money again, and this is a low point for me and it’s going to make a confession really talked about this before. We’re in our kitchen. We had no money. We had no food and no wake up one morning and I don’t. The kitchen. And I have no food. I have no money. And I’m like, what am I gonna do. Have to eat. Well luckily we in southern many Tomkins. Sell for 2 or 3 months we lived meeting. So this is actually from Paul Grammys that this graph on why common and he says basically after your launch if they didn’t they get and then you crash and you’ve got this long trough of sorrows and that’s what happened with that and there was a few months later, I’m sitting with Michael Seibel in Michael Seibel of course is channeling his inner Paul Graham is like you guys would you doing you should do I come later. And I said Michael. We’ve already launched, you don’t see why launch, he said. You guys are dying. Do I. So we meet with. The hearing is that by the way, I’m gonna give you some insight, things are poor grammar now so. So we, with Paul Graham and I don’t know how much he liked the have. Black. He to us and I don’t know if you would like us he like this very specific reason. In November of 2008. Yes, that that thing and TechCrunch parity good times, it was basically an investment new pure winter the wasn’t clear that anybody would be finding people so he was looking for people that wouldn’t die that program says you guys won’t die like cockroaches. And so I think that’s funded. So we decided, let’s get a 3 more months and by the way, at the time are poor engineer like ready to cereal company humans back to Boston is they guys good luck with the whole cereal thing so he’s in Boston need consulting. Nick comes that we do common here and you know it knee and 46 foot 5 and he sleeps on this tiny Arabella because they’re there for children actually. And it was in our, in our bedroom and we would be late into the night Paul Graham says you need to be properly day we don’t even know it was going to be active and investors I, it was a very different environment only 2 years ago. So what we did, and this is how we succeeded, we realize whatever you focus on the debt. We should focus only on one thing and that’s being profitable, so he took printed out an imaginary revenue we pay to the brat bathroom here we said this is the first thing we’re gonna look at we wake up in the morning and is the last thing real look at before we go to bed a binge reading about revenue and we really did, we put it up on the wall and the battle here. And we’re literally up late at night, and this is do icon there we knew Paul again and he gives us another meeting advice he says you’re users are meeting in person. In your here and now view. What he’s still doing here. And I was like, what do you mean when I still doing here, he says it again here. Users are in New York there in DC there in LA. Your users, and we said, but that doesn’t scale, we can’t do that he says don’t worry do things that don’t scale it will teach you. So that’s exactly we did we start a gun in New York City, who went to Washington DC, with the Denver we literally door to door basically signing people up for a website I would is not, I mean we we knock on some doors and said hey, you know how much of were. Not really. Go on, we basically were saying things like that would be in coffee shops in conversation. And as one player this listing right here what’s notable is before this, we were a marketplace for people to list their bedrooms on our website. And this guy David basically changed our business forever. You know David is your family can musician, doesn’t it. So David is burying analysts drummer. Barry medalist drummer for ever change our business when he decided that he was going to rent his entire apartment on his website. While he was on tour of the area. And before that we had this rule, you had to be in a place with them you can provide breakfast otherwise. Seems so silly now either. In this opened up a whole new market, but how do we know as we met him, I had no idea until I find out and by the way was amazing wanna get a call couple weeks later his backstage on tour. I very very he’s been playing they log into his account. I just thought this was. Amazing. So this is our 5th once I demo day. And we started getting Paul Graham calls wiggles hope. And we finally reach profitability Ron and profitable, we look at that graph every day and we did it a couple weeks early. And over the next couple months. People start a list of places all over the world in today Rhapsody in 8002 hundred cities in 156 countries in the Rev the traffic, I only so traffic, but everything has been taking off, you know, but very recently only last 3, 4, 5 months, so it looks like it you know maybe an overnight success story literally 1,000 days ago. And we now have a really interesting spaces we have this amazing apartment in Paris. This is pretty similar to what we are expecting, but we also things like a treehouse. This is actually one most populous on our website. We have igloo. You can actually stay in a single. We have both 23 people have stayed in boat this summer. We have water villas. We have castles and in fact amazing part this council is people are actually throwing events here is Iraq and it is running out for to your friends. But if you have a will need you well. So because my. You know people have lettings here. So we’re now facilitating not just to stay, but space is to do activities to experience. And this was pretty amazing. We actually are now being tried islands and people are booking we have an entire collection of private island IR website. So basically what we are today is a Kimmie marketplace for space. It’s a really big idea, but if we back in 2007 said we’re gonna create that it would’ve been impossible, so basically it started with an air vent in our living room to solve their own problems, he and now people are listing all types of spaces all over the world. Into big party tonight selfishly. When you have 50 users. It’s pretty easy to know where to go. Right, right, right. So what we would do is we would find people are already on the website. We figured we just need to find, if you want people like you and so we basically leak that we we we win just got a people would meet the few people that were on our website and we want to know that you have friends whose like you have. Likely yes the yet on it, and that’s very dear. So we’ve got a very maelstrom and we realized, okay that’s needs as a whole bunch musicians where they talk and I would give us an idea, there’s almost musicians and there are we like things like that. But oh my god. We had no idea it is seems so scary. The time and you know it’s kind of like that that that dogma. It’s like you live with the results of your thinking keep everyone said be insane to process payments through your website you can block a normal person space N for Ohio. I think it proves right we try Amazon payments, and that was a nightmare. We want essentially do something where we could split the transaction in weeding we only clocked at our 10% fee and other money would go straight to the user eventually we decided to bite the boy in a quite a hundred percent money and in a time now, it seems a great idea. You know when you play at the time, like when you’re a couple guys we’re gonna part I think it really really scary and we essentially started with PayPal and now we work Chase and other banks. Or use my. So we did, we did a number of things, I think. I think doing kind of things. Leveraging press was on this, our best strategy so noticeably levers a conference where there is already a block so that original design conference the reason designers knew about it is we put up this will logo that they they would post about it, the DNC. We put the way we work for the DNC is we launch this website, and then we wrote. We started the Denver gliders we don’t wanna get national needed the listings first the Denver by they now there’s a new site to list your place you always focus on supply first in you get press where you get people talking about the supply. Once that is out of touch certain threshold. Then you shift the press to the demand and so on it, you know, Denver, that’s all we did inauguration, same thing. That’s funny on is demographic. Well you know 3 people to stay with me. I had a 30 of them in the 35 a woman in a 45-year-old father 5 from Utah, there is this: I think you can call it a misconception that it’s young kind of. People in their mid-20s who don’t have a lot of money and use 13 years an affordable alternative tells them say those people adjust our site but you know we have a 3rd ever uses region 40. On AARP did a huge story that’s, there’s a lot of retirees like that, you know, once they retire the baby boomers and retire and they want to travel and you know it’s had to drag me going always tells you know the kind of done that and new adventure. So I would say the demographic is pretty expansive. I would say the demographic a common theme is a pretty open minded, they’re wanting to try something new. Absolutely, absolutely. So you know, we the spirit of the bill in New York in the spirit of the arm of of what’s happening in New York is that they want a bill to protect travelers and this is a big to happen in 2003 well before us, and the idea was that if there is no big hotel brands, how do you know the family’s legitimate how you know provided good experience and that’s fundamentally the open question and we believe that through things like reputation on wine. You can actually do that and it’s funny. Asked by New York because you know the bill only it the the situation happen in York once we actually met with the bill sponsors there, she said. No, this isn’t, you were not the intended target in actually now looking for to be on the work with them to figure a way to we can both live together, I think we will, because ultimately, I think we’re good for the community. And you know most Israeli 44 going after the professional property so they don’t like our people there are buying up entire buildings, it could be up, and in a residence and that’s really not the culture of every day. Okay, so I’ll have another really good question on how do we scale were in 8000 children cities and we basically made a decision early on. You can either provide a really good focus user experience in one city, or you can decide to be global from day one. If you’re global from day one. You could have about his experience and he did for a while what happens we search bar homepage. The problem is anything you search for we’ve hardly had anything that I wasn’t so super so the classic I theory would be just stark city by city and limit what you can post too. At the time, a couple other companies try to do that and I think it looked like that was the winning strategy, but once he got enough critical now us it was we just show it turned out that we the racetrack in had. We do it. We allow you to list any space of ones you find on a Google map. Ness simple. E. So is literally PR and viral tests because this is a really cool thing about starting a travel company. So we have a to so my complacency so Mark was is really, really difficult they said buyers wanted always sellers are sellers wanna go where buyers are the other good thing about being in that business as you have a natural milk. It’s really hard to get started, but is other thing that happened was when your travel site the ideas tend to spread right a lot easier is a natural spreading by people traveling some we focus and see what happened was, people came to Denver literally from all over the world and it was just Unite States. They actually came the DNC from all the world. Same thing with inauguration at inauguration we focus and you are. So basically we focus on international destinations like New York travelers come from all over the world to come to New York then when he left and went back home. We were focused in we targeted and say hey, now you can list your space it’s free. There is no friction had we focus on Lake Tahoe. He probably only would be popular California or wherever key were coming from setting being and international destinations were now we’re very popular in even Tokyo coming in your memories you market and when they go back.

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