When I first heard of "the sheet," I assumed it was bogus. Word was that Airbnb CEO Brian Chesky had boiled down his strategic road map—all of Airbnb's secret plans for 2014—onto a single piece of paper.
Yet on an early evening in late January, I am sitting in a conference room at Airbnb's San Francisco headquarters across from Chesky and Chip Conley, Airbnb's recently appointed head of global hospitality, and Chesky is wondering aloud whether to show me the fabled document. Even as he's talking about it, I am still unsure whether I'm being punked.
After a second of deliberation, Chesky pulls the trigger: He sends an employee to retrieve the sheet. He then slides it in front of me, as Conley, only half-joking, declares, "The infamous paper to take over the world!"
The 8.5-by-11-inch typewritten sheet highlights the company's four major goals for 2014, each with specific objectives, product features, target launch dates, and year-end milestones. I can't reveal them all here—Chesky will debut new initiatives sometime this summer. But the document is a remarkable piece of work, an example of bold corporate strategy boiled down to its essence. Sixty people have been working for five months to distill many ideas to this core. The ever-so-earnest Chesky, who is sick and jet-lagged from a trip to Davos, Switzerland, hunkers forward in his blue rubberized chair and walks me through the details. A former hockey player and bodybuilder with 16-inch biceps, the CEO commands attention. His boomerang grin and slant nose work to sharply focus his attention on you. Rather than turn his head toward me, he physically picks up his chair and pivots it directly so we're eye to eye. "If you can't fit it on a page, you're not simplifying it enough," he says. And then he creases the paper in half for effect. "I told my team they have to put the entire plan on a page this big by next week—same size font."
That Chesky, who was previously a better crisis manager than strategic planner, can create something this targeted is a very good sign for Airbnb. It means he's catching up to his company's outrageous growth. Since he and his Rhode Island School of Design classmate Joe Gebbia started the company in 2008, Airbnb has built a fanatical global community—millions of people around the world now use its site and apps to find spare rooms or vacant apartments while traveling. Airbnb takes a small percentage from the billions of dollars worth of sales it has facilitated, a sliver that has added up quickly. In 2013, more than 10 million guests stayed at an Airbnb rental, which translated into more than $250 million in revenue, igniting rumors that it could be one of Silicon Valley's next big IPOs.
But like many out-of-the-box successes, the company's growth came at the expense of rational organization. "We launched our 2012 plan in June of that year," Chesky says. ("There was no 2011 plan," he laughs.) And in 2013, the company had more than a dozen key strategies. "When you have too many initiatives," Chesky likes to say, "it's really hard to keep your focus."
Focus, of course, is what's required to take a roaring success like Airbnb and turn it into the kind of transformational company that can justify a $2.7 billion valuation. And focus is what Conley aims to help Chesky develop. Conley built a breakthrough boutique-hotel line, Joie de Vivre, by ignoring his industry's conventional wisdom, hewing instead to a quirky aesthetic that produced accommodations unlike anything people had seen. For Airbnb to become the outfit Chesky aspires to create, it too will have to transform itself in a way that bears no resemblance to any other company in the world.
Chesky has decided that Airbnb will become nothing less than a full-blown hospitality brand, one that delivers a seamless end-to-end experience when its customers travel. "If you ask Brian now what drives Airbnb's growth, it's not that people want to get a cheaper space," says Y Combinator founder Paul Graham, an early investor. "Airbnb could've spread out horizontally into the sharing of power tools and cars and stuff like that. But Brian has decided the growth is in hospitality."
Which brings us back to that sheet created by Chesky, Conley, and those 60 other Airbnb employees. "Our business isn't [renting] the house," Chesky says. "Our business is the entire trip." His idea is to create a portfolio of new services that make the Airbnb experience more consistent from stay to stay, and that can generate lots and lots of additional revenue. One starting point: a cleaning service that will offer fresh sheets and towels to Airbnb proprietors.
Reimagining "the entire trip," the $6 trillion travel industry itself, is an audacious goal. How do you strike the right mix of host and guest amenities for 550,000 disparate listings in 192 countries? How do you manage the thorny legal and regulatory hurdles raised by governments eager for new tax revenue? How do you get into those other areas of the trip, like the car ride from the airport and exploring the neighborhood where you're staying? Perhaps most important, and of most immediate concern: How do you overcome the nagging perception that staying in someone's spare bedroom is unpredictable, awkward, and a far cry from what mainstream travelers know they'll receive at traditional hotels? "Airbnb is not a lodging brand," says Bill Carroll of Cornell University's esteemed School of Hotel Administration. "It's a virtual marketplace, like eBay. It's always going to be niche, constrained by how many people want to stay in an Airbnb type of experience."
Airbnb has, in fact, garnered favorable comparisons to eBay's $212 billion marketplace, and for most startups this would be a compliment. Not for Chesky. "People went to Dell for the computers, but they go to Apple for everything," Chesky says. "That's the difference between a transactional company and a transformational one." There's a lot riding on that single sheet of paper.
Chesky gnaws his fingernails and drums his legs in meetings. The CEO's "endless energy" (everyone I spoke with referred to it in some fashion) is endlessly apparent. Since 2010, he has lived in Airbnbs at least part of each year. He sounds like a walking travel guide, rattling off details from his last half-dozen Airbnb excursions in the course of a conversation. He still rents out his couch to guests. "Staying here [with Brian] is like having Zuck personally stalk your ex or asking Larry and Sergey tons of inane questions," reads one of his 85 glowing reviews.
For a long time, Chesky's relentlessness meant he was running the company like a rhinoceros: Point him in the right direction and he'd put his head down and hammer out a solution. When a guest ransacked a host's apartment in 2011, he managed the potentially crippling PR nightmare with such fierce attention that it actually led to features that improved the service's professionalism and trust, including 24/7 customer service and comprehensive insurance coverage. When a European Airbnb clone launched seemingly overnight with $90 million in funding, Chesky, with the benefit of advice from Facebook COO Sheryl Sandberg and eBay chief John Donahoe, rapidly boosted Airbnb's international presence, opening a dozen offices overseas and expanding its service into 30 languages with reps in every global time zone.
Chesky did almost everything: design, product, legal, finance, marketing, communications, operations. "That was the easiest way to make an impact," he says of the company's early days. By the end of 2012, Airbnb had doubled its listings on the site to roughly 300,000, booked 4 million guests, and raised a whopping $200 million third round of venture capital led by the same investors who backed Facebook and SpaceX.
Then came Chesky's eureka moment about the future of Airbnb. During the winter of 2012–2013, he stumbled upon the introductory textbook on hospitality taught by Cornell's hotel school. After reading it, he thought: This is what we're missing! The story starts to sound a tad too neat when Chesky says there wasn't a specific lesson from the 500-page text that grabbed his imagination; rather it was the whole book that crystallized the simple idea that hospitality should be at the core of what his company provides. Airbnb would no longer be about where you stay, but what you do—and whom you do it with—while you're there.
In fact, Chesky had been thinking about Airbnb being more than just a place to find a room since 2012, when he commissioned a Pixar animator to storyboard the entire trip experience frame by frame. He called the project Snow White, after Disney's first feature-length film. The 30 slides now hang around Airbnb's product studio like the Stations of the Cross, each radiating empathy for each particular emotional moment in a trip: the guest's arrival at the airport, her transportation, the first interaction with the host, and more. "When we critique our designs, we literally say, 'Which frame is this helping to improve?' " says cofounder Gebbia, now the company's chief product officer. Snow White paid immediate dividends. Since it highlighted how much of the Airbnb experience happens on the go, the company quickly upgraded its mobile products. It also added new features like Verified ID, a system that removes anonymity and inspires more trust between guests and hosts.
Hospitality seemed like the right direction, but Chesky quickly understood that his management style had to change in order for the company to shift from handling one part of the trip—the room—to, hopefully, managing all parts. He knew he would have to go from managing a product to managing the company that manages the product. "The bigger the company gets, the higher leverage my moves have to be," Chesky says, comparing his struggles to a chess game. "I can't make the same 10 moves I used to make and have the same impact."
One of Chesky's strengths is his humility in recognizing his own deficiencies as a leader, and his willingness to look to others for wisdom. In addition to seeking help from Donahoe and Sandberg, he also spoke to Amazon CEO Jeff Bezos, who recently told him, "This company is going to be massively successful as long as you don't fuck it up." Chesky has consulted with Groupon cofounder Andrew Mason on international expansion, former CIA director George Tenet on corporate culture, and even Apple design SVP Jony Ive on product design. But none of those heavyweights could give Chesky the deeper education he needed on how to run a hospitality company. He wanted a mentor who could have more impact on Airbnb than on himself. In early 2013, Chesky and his senior executives met with people from traditional hotel groups. "[They didn't] inspire us or fit with our culture," Chesky says. "That's what led us to Chip."
Chip Conley, along with fellow innovators Ian Schrager and Bill Kimpton, was the one who first introduced the boutique-hotel aesthetic. In 1987, Conley, a then-26-year-old Stanford business-school graduate with no hotel experience, raised $1 million to purchase and reinvent a seedy 1950s-era motor lodge in San Francisco's Tenderloin district. "When I walked in, my first reaction was, 'What a great place to throw a party,' " recalls Conley in the pool area of that very hotel, the Phoenix, where he used to hobnob with the likes of Johnny Depp and David Bowie.
Using his funky Phoenix as a model, Conley created more than 50 other unique and uncompromisingly authentic experiences, mostly in the Bay Area, under the umbrella of his Joie de Vivre brand. Younger leisure travelers gravitated toward Conley's refreshing departures from more staid business hotels and family-friendly motels that didn't speak to their needs.
By the time Chesky came calling in early 2013, Conley was semiretired, having stepped away from managing Joie de Vivre and selling his stake in many of its properties for a healthy sum. Chesky had been a fan ever since reading Conley's book, Peak, which details his experimentation in the travel industry. Conley succeeded by getting to the heart of why people traveled—for escapism, for emotional self-renewal. He deepened a guest's connection to his eclectic lodging experiences with above-and-beyond hospitality. I see this firsthand when a guest at the Phoenix stops in the lounge to complain that the ice machine is broken, and Conley reflexively (and perhaps for my benefit) makes a show of calling the front desk to have them buy a bag of ice across the street and deliver it to the guest's room.
Last March, Airbnb invited Conley to give a fireside chat on hospitality innovation at the company. Chesky and Conley hit it off beforehand, and during the talk, says Chesky, he found himself thinking, "Wow, there's a lot of things he's done that we should apply at Airbnb."
The two stayed in touch last spring, and by June, Chesky had made up his mind: This was the guy. The rhino had a target in sight. He offered Conley a full-time job, yet Conley declined. He was pretty happy living a sun-kissed life trotting the globe in search of the next Burning Man. But Chesky kept up his charm offensive. "I'll never forget it," recalls Laura Hughes, Airbnb's global hospitality lead. "Brian was like, 'I'm going to dinner tonight with Chip, and when I come back, he's going to be an employee.' " Chesky had hoped to get Conley to agree to consult eight hours a week. Before dinner was over, he had persuaded him to commit to 15 hours.
The "15 hours" part of the agreement turned out to be a joke. Chesky just kept piling on responsibilities. "Within a month, it was clear that nobody does anything part-time at Airbnb," Conley laughs. Conley describes himself as the black sheep of the hotel industry. He now decided to become an even "blacker sheep" in the eyes of his peers, he jokes, by coming out of retirement to join Airbnb full time.
The fact is, Conley didn't need that much convincing. In Chesky, he saw a version of himself, the young CEO embarking on a crazy idea that's likely the next leg of innovation to consume a traditional industry. And Airbnb is already operating at a scale that Conley could only dream of in his entrepreneurial adventures. "I've always liked rebellious business people, so this was a natural fit," Conley says, citing a quote attributed to Gandhi that hangs above his bathroom mirror and that has inspired him throughout his career: " 'First they ignore you, then they ridicule you, then they fight you, and then you win.' Airbnb is the new disrupter."
The Chesky-Conley alliance has been entertaining to watch. Conley calls to mind an aging San Francisco hippie, right down to his graying chin-puff beard, a sharp contrast to Chesky's youthful exuberance. But they are both right-brain thinkers with a healthy appetite for radical ideas. They share a mutual respect, but aren't afraid to criticize each other. When Conley had the temerity to suggest a partnership with Expedia, for example, his sharing-economy partner let him have it. "For Brian, it was almost blasphemous. I was like, 'Okay, we're not doing that!' "
"The two push back on each other a lot," says Hughes, the hospitality manager. "If Chip is proposing something that requires a lot of resources, Brian will be quick to say, 'This is not a priority.' Or Chip will say to Brian, 'This might increase conversion, but it's not supporting the hospitality experience.' They feed off each other. They're so high-energy. It's exhausting."
In the course of our conversations, I witness the duo's high energy but also their best behavior. They go out of their way to defer to, if not heap praise upon, one another. My transcripts are filled with such phrases as "so to Chip's point" and "to Brian's credit." I half-expect the pair to claim they've started to finish each other's sentences, and Chesky, in fact, comes close, telling me, "A lot of Chip's language has worked its way into my vocabulary."
In a very short time, Conley has become one of Chesky's most trusted advisers, offering him an "intuitive hit" on a new hire or crazy idea, such as when Chesky proposed that the company send an employee to every one of its listings to ensure its hosts were abiding by the company's hospitality standards. (Not to worry, Airbnb hosts, this isn't happening.) "There are times when Brian frustrates the hell out of me," Conley acknowledges. "But he's one of the rawest talents of executive leadership."
Their dynamic has already produced tangible results. Chesky's first directive to Conley was to create a set of hospitality standards that could make the Airbnb guest experience more reliable. The aim was to figure out which baseline comforts Airbnb ought to offer guests, while embracing the unique, local, and often unpredictable charms its hosts provide on their own. In November, Conley rolled out nine such standards for hosts to follow. Some, like pledging that a listing is accurate, are general to the point of blather. But others specifically address cleanliness and appropriate ways to interact with guests. Chesky and Conley even built out a "hospitality lab" in Dublin, where users can get free training on standards and where the company can learn from seeing hosts and guests together in a physical space.
The effort has led to some important new tools. In response to the constant complaint that Airbnb hosts are too slow to respond to inquiries, Airbnb made it easier for them to approve booking requests via its mobile apps. Previously those management features mostly lived on Airbnb's website. "Can you imagine if every Uber driver had to go home first to check their laptop in order to find their next ride?" Chesky asks. And in an effort to make an Airbnb listing as easy to book as a hotel room, Chesky and Conley have ramped up "instant booking," which enables guests to "book someone's room with the click of a button," says Chesky. More than 41,000 properties already offer the service, and Chesky's ultimate goal is to make every listing instantly bookable.
It's all a big change for a company where, employees tell me, the word hospitality was once shunned as a relic of Old World grand hotels. Now, the word is used so often that it's become a running joke. You hear it in the halls: Whenever an employee holds a door open for fellow coworkers or offers to clear their plates in the cafeteria, others tease, "Oh, so hospitable!"
Veterans of the hotel industry don't see a new brand of hospitality; they just see an enemy. "Our guests don't want the Airbnb feel and scent," says Christopher Norton, EVP of global product and operations at the Four Seasons. Norton doesn't think Airbnb could ever match the service he offers, in much the same way that he thinks the "buzzy" boutique hotel chains couldn't. The ones that Conley ushered in, as it so happens, "with their glowing lobbies with flowing curtains, cool uniforms, and restaurants that served mixtures of Cuban and French food," as Norton puts it. He fails to note that most industry players now have their own successful boutique chains, such as Starwood's W Hotels.
Truth is, travel and hospitality execs are generally impressed with how Airbnb has wooed the millennial traveler. But they have a strong ally in their fight against the upstart. New York City and San Francisco officials are currently sparring with Airbnb over whether it ought to be regulated and taxed in the same way as hotels; similar debates are happening around the world. "If they're selling themselves as this big brand that's going to be bigger than Hilton and InterContinental Hotels, they ought to be thinking about regulation and leveling the playing field," contends Richard Solomons, CEO of InterContinental Hotels Group.
In case hoteliers can't win a war against Airbnb, they're also trying to co-opt it. In January, Starwood introduced keyless doors that enable guests to enter with their smartphone, while Marriott has partnered with Ian Schrager to revitalize its boutique Edition hotel chain and ramp up its "individuality, authenticity, and unique ethos." Marriott has even rolled out "workspace on demand," a service that allows guests to rent conference rooms, dining areas, and even hotel suites on an hourly basis via mobile apps or the web.
Chesky doesn't take the bait when challenged by folks like Solomons. "We are not seeking to go to war," he says. He even huddled with industry executives while in Davos, and says, "I left those meetings imagining that I will be able to have a cordial relationship with some of the leaders of those companies." There may be more to Chesky's diplomacy than just high-road rhetoric. When Gebbia gives me a tour of the company's stunning new offices, we stop by one developer's desk to ask what he is working on. He tells us that he's building an engine to handle transient occupancy taxes for a place like New York City. Gebbia hurries me along, but it may be just another sign of Chesky's maturity.
Inside Thayer, Airbnb's design lab named for the main street near the RISD campus in Providence, Rhode Island, there's a Post-it Note with a small doodle of a sharp knife, along with the words airbnb killer. An employee jotted that down on the sticky and glued it to a large black poster board that details the next-generation prototype of the service—one that Chesky says would "disrupt Airbnb" if a competitor were to introduce it today. He wants his team to beat rivals to innovations.
That's why Chesky can barely contain his eagerness to unleash the four horsemen of his paper sheet, to release the next version of Airbnb so he can further gnaw into the hotel industry's business. A slew of services for its hosts and guests will be introduced, streamlining the trip experience, says Chesky.
He is particularly excited about the cleaning services that Airbnb has tested in preparation for a summer launch. "It's full-service cleaning," Chesky reveals, "with stocking, which means leaving towels, bed sheets, mints, and a welcome package, like Vitaminwater in the fridge. And also staging, which is making sure the heating and lights are on." The Airbnb team overseeing the project has been studying the workflow at the Phoenix and Hotel Vitale, another of Conley's Joie de Vivre locations. The service, which is meant to ease the host's burden, will likely cost around $60 per session. The fee, inevitably, will be passed on to the guest.
When I press Chesky and his senior executives for additional specifics, only Conley is more forthcoming, telling me of a New York City test of "alternative ways to help with the key exchange." This would streamline the awkward system of hosts having to physically hand off their keys to guests. There will also be new ways for hosts to classify their listings, to say, for example, "I'm a business-ready listing." That could make it easier for Airbnb to woo corporate travelers, who represent roughly 40% of the market, as will its late-February announcement requiring hosts to install smoke detectors by year's end.
While the company isn't likely to offer continental breakfasts and spa bathrobes with an Airbnb logo handstitched on the breast, Chesky does hint that "there might be an opportunity to democratize a lot of the services that the Four Seasons provides." To that end, a source familiar with the company's plans indicates that Airbnb has tested an airport-transportation service similar to Uber. One top industry researcher, who asked to remain anonymous so as not to alienate any traditional hotels, said that it's not a stretch to imagine what might come next. "Once the guest has made a decision where to stay, [he or she] may need a dry cleaner, or a restaurant in the neighborhood, or transportation service to and from there. Airbnb could become a travel agent for the people who are staying with its hosts."
These initiatives would be a promising start. But, says Conley, "we're too strange to be uniform." Conley built a hotel brand that was celebrated for being "delightfully schizophrenic"—no two hotels are alike; the underlying care for guests is the connecting thread. Airbnb is by design schizophrenic, and wants to maintain the delight in the variety and surprise it offers customers who may want a basic room in a decent apartment one stay but an exotic adventure in an igloo or a tree house the next. Conley and Chesky believe that Airbnb will win by delivering local experiences chock-full of personality and idiosyncrasies, all supported by the best hospitality its hosts can deliver. "Apple has a consistent UI on every phone, but the content is unique every single time," Chesky says. "That's what we want."
There's that Apple comparison again. Chesky is increasingly fond of the metaphor. Of course, it was not that long ago that Apple was a design-centric outlier. Then it came to dominate its industry, after being able to deliver remarkable innovations at a global scale. Chesky and Conley like to think that way. Together, they're storyboarding a grander future together than either could have accomplished on his own. Just so long as it fits on a single sheet of paper.
Airbnb's Brian Chesky has Chip Conley. We asked eight of his CEO peers to tell us what they've learned from their mentors.
Walker & Company