Brian Chesky - AI Founder Mode - [Invest Like the Best, EP.470]

Brian Chesky's Industrial Design Education at RISD

Brian Chesky, an artist, discovered industrial design at the Rhode Island School of Design (RISD), a field he knew nothing about prior. He studied the history of industrial design, learning about pioneers like Charles and Ray Eames, and Raymond Loewy, whom he credits with having a profound impact on society through products like Air Force One and various consumer goods.

Industrial design is a deeply technical field that has evolved significantly since the Industrial Revolution, moving from analog items like chairs and dishes to cars, airplanes, medical equipment such as ventilators, and modern technology like the iPhone. Unlike architecture, where awards can be detached from commercial success, industrial design success is intrinsically linked to sales. A product is considered a failure if it doesn't sell, requiring designers to consider marketing, manufacturing, and distribution from the outset.

The field is fundamentally about problem-solving and empathy, emphasizing the creation of user journeys. Designers are taught to put themselves in the user's shoes. For instance, when designing a child's ventilator, Chesky imagined being a scared six-year-old in a hospital or the concerned parents, considering how the machine's appearance impacts their emotional state, and balancing hospital goals with the pride of nurse technicians.

A design is only successful if it sells. So if you don't have a product and no one buys it, it's considered a failure.

The Transition from Founder to CEO and the Concept of Founder Mode

Founders are often born with an innate ability to learn by doing, which is crucial for starting a company. However, this approach becomes counterproductive when transitioning into the CEO role. The job of a CEO is counterintuitive, and instincts that serve a founder well can lead to poor decisions at scale, as trial and error can be extremely costly.

Brian Chesky describes his own experience at Airbnb, noting that by 2019, with 7,000 employees, he felt disconnected and unable to steer the company. He realized he had over-delegated, leading to a sprawling bureaucracy he barely recognized, feeling like he was in a car without a steering wheel.

A pivotal moment came with the pandemic, which forced Chesky into what he calls "founder mode." This involved taking deep control and being intensely involved in the details of the company, rather than excessively delegating. He found inspiration in how Steve Jobs, returning to Apple in 1997 when it was nine days from bankruptcy, adopted a similar hands-on, detail-oriented leadership style.

This shift emphasizes that while founding requires agile learning, leading a large company as CEO demands a different, more deliberate skill set that often needs to be learned, sometimes through a return to the foundational 'founder mode' during crisis.

No one is born a good CEO, and the job of CEO is completely counterintuitive, and almost all of your intuition about what to do is wrong.

Brian Chesky envisions 'AI founder mode' transforming management into a hybrid, asynchronous, and flatter structure.

Brian Chesky defines 'founder mode' as a period of intense detail-orientation, where he reviewed every aspect of Airbnb for years, moving from peacetime to wartime management. He foresees an 'AI founder mode' where leaders will operate with even more granular control due to immediate access to information, shifting from traditional meeting-based oversight to asynchronous management.

Chesky challenges the common organizational structure of multiple management layers, citing the Catholic Church's 2000-year history with only four layers. He suggests that while a completely flat organization is extreme, significantly reducing the number of management tiers would be beneficial. He is currently evaluating how AI tools will redefine roles before embarking on a fundamental redesign of Airbnb's structure.

He predicts the obsolescence of 'pure people managers' who only oversee personnel without direct involvement in the work. Instead, everyone, including managers, will need to adopt a hybrid manager-IC (individual contributor) role, maintaining hands-on contact with reality. This means engineers must code, lawyers must engage with case law, and leaders must manage people through the work itself, not just through meetings or one-on-ones.

Looking at the broader AI landscape, Chesky observes that while AI is currently an enterprise phenomenon, the next major wave will be in consumer AI. He believes that for AI tools to achieve mass adoption, they must become incredibly intuitive, departing from the complexity often seen in current enterprise-focused applications.

You manage people through the work, you don't manage the people, you manage the work. Otherwise, what are you doing?

Brian Chesky predicts a consumer AI renaissance and discusses current challenges.

Brian Chesky observes that enterprise AI currently dominates, despite historical success in consumer companies. He notes that few new consumer AI ventures have emerged, a surprising trend given the potential for disruption and creation in the consumer space.

Chesky identifies several reasons for the current enterprise focus. He highlights the difficulty in establishing viable consumer AI business models, as people are not accustomed to paying for information. Additionally, the mature state of app distribution makes it challenging for new consumer apps to gain traction, unless they offer something truly revolutionary.

He also points out Silicon Valley's trend-driven nature, which currently favors enterprise solutions. Furthermore, consumer businesses are inherently harder to build than enterprise ones; they are more hit-driven, carry higher risk, and demand excellence in design, marketing, and culture beyond just technology and sales.

Despite these hurdles, Chesky predicts a significant shift. He believes that within the next 12 to 24 months, the industry will witness a "consumer AI renaissance," where existing applications and user experiences will undergo fundamental changes driven by AI.

My prediction is that we're living in the age of enterprise AI, and I think in the next twelve to twenty-four months, you're gonna see the beginning of a consumer AI renaissance.

Project Hawaii: Mastering Small Problems for Outsized Impact

Airbnb's "Project Hawaii" aimed to replicate the early startup intensity within a larger company. Brian Chesky formed small, agile teams of 10-12 people, comprising designers, engineers, and data scientists, each tasked with mastering a single, critical problem. The first team focused on significantly improving the guest experience and conversion rates, which track users from search to booking.

This lean team adopted a "crawl, walk, run, fly" strategy, starting with fixing bugs and easy conversion issues, then developing features, reframing the user journey, and eventually reinventing the flow. This highly focused approach yielded phenomenal results, generating hundreds of millions in kernel revenue. The success demonstrated the power of dedicated, small teams, leading Airbnb to apply this model to other challenges like pricing and even launching new business verticals.

The core philosophy is to make the problem "as small as possible" and dominate a niche, rather than immediately scaling globally. This allows for intense focus on understanding the user, doing "unscalable" things by hand, and proving a model like R&D before industrializing. It's about heating up a bathtub effectively to understand the impact, instead of trying to warm an entire ocean, ensuring deep customer love and product-market fit.

It's better to have a hundred people love you than a million people sort of like you.

Brian Chesky's Evolution as CEO and the Phases of Leadership

Brian Chesky admits he was not an effective CEO in the 2010s, struggling with conflict aversion and reluctance to make difficult personnel changes. He likened it to a baseball manager waiting for a pitcher to take himself off the mound, leading to prolonged issues. This self-doubt even led him to question if he was truly meant to be a CEO before the pandemic.

The COVID-19 pandemic served as a critical turning point, described as a 'near-death experience' for Airbnb. This crisis forced Chesky to overcome his rumination and embrace the responsibilities of the CEO role, leading him to learn how to effectively do the job when it was 'do or die'.

Chesky outlines distinct phases of a CEO's journey: having an idea, achieving product-market fit, scaling to hypergrowth, and then reinvention. Airbnb has become highly profitable, generating $100 billion in sales and a 40% free cash flow margin. However, the company's stock has been flat because it primarily offers one core product, which has started to saturate its market.

The current phase for Airbnb, and a crucial test for Chesky, involves product extension and navigating the transformation brought by artificial intelligence. He believes a 'founder mode' mindset, characterized by risk-taking and a willingness to redesign the company from scratch, is essential for survival in the age of AI, contrasting it with incremental, risk-averse professional CEOs.

Founders are gonna be really well primed or set up for this age of AI because we kinda have to redesign our whole company from scratch again.

Embracing Simplicity and Craft in Product Design and Organization

Brian Chesky learned two fundamental Apple principles from Hiroki Asai, Apple's former creative director. Asai, an unsung hero known for the "Gray font and the product in front of white" aesthetic, taught Chesky about simplicity and a strong sense of craft and details. These principles became crucial for Airbnb's development, especially as the company grew.

Simplicity, as taught by Asai, is not merely removing things but fundamentally distilling something to its essence. This aligns with Steve Jobs's view of design as the soul of a creation and Elon Musk's concept of first principles in physics and design. Startups often begin with natural simplicity due to constraints, but can lose focus and simplicity after raising significant funds and expanding.

The second principle is a rigorous sense of craft and attention to detail, embodying the idea that "how you do anything is how you do everything." This concept is echoed by legendary coaches like Bill Walsh of the San Francisco 49ers and John Wooden of UCLA basketball, who emphasized perfecting every input. Wooden, for instance, spent an hour teaching his team how to properly put on socks, believing that mastering such small details contributes to overall success and winning.

Simplicity is distilling something so fundamentally that you understand its essence.

Using the Eleven-Star Experience to Find Product-Market Fit

The Eleven-Star Experience is an exercise designed to push creative boundaries in customer service. A typical 5-star rating means everything went as planned, but due to 'review compression', it doesn't capture truly exceptional service. This exercise prompts participants to imagine service levels far beyond 5 stars, such as a 6-star experience with a personalized welcome, or a 7-star experience involving a limousine, a surfboard, and a city tour.

The exercise escalates to increasingly absurd scenarios, like an 8-star experience with an elephant parade in your honor, a 9-star 'Beatles check-in' with a press conference, or even a 10-star experience where Elon Musk takes you to space. This process intentionally pushes the imagination to its limits, breaking through 'imagination atrophy'.

The core purpose of this absurd brainstorming is to make a 6 or 7-star experience seem entirely achievable. Achieving product-market fit often requires delivering this level of service—something significantly better than just a 5-star baseline. By thinking so far beyond, the practical, yet exceptional, 6 or 7-star innovations become clear.

The difference between a 5-star and a 6-star experience can be a key differentiator from competitors. If founders can find a way to industrialize and scale these 6 or 7-star ideas, they can achieve product-market fit and create something truly special. The act of designing and writing out these ideas is crucial for generating them, rather than abstractly thinking.

It's an exercise in the absurd. You keep pushing to go so absurd, to 10 stars, that suddenly 6 or 7 stars doesn't seem crazy at all.

AI Will Spark a New Creative Renaissance

Brian Chesky believes that artificial intelligence will initiate a new creative renaissance, likening it to everyone suddenly having a paintbrush and a canvas. Many people possess inherent creativity but lack the practical skills or tools required to express their ideas effectively.

AI aims to bridge this gap, providing accessible means for individuals to manifest their creativity. This shift will likely reveal that far more people are creative than commonly assumed, challenging the traditional view that creativity belongs only to those already skilled in artistic expression.

This new accessibility enables an iterative approach to idea development. Individuals can experiment, refine, and evolve concepts in a continuous journey of discovery. This process supports what Chesky describes as "expeditionary" founders, who develop ideas step-by-step rather than relying on a fully formed initial vision.

So many of us have this creativity inside of us, but we don't have the craftsmanship or tools to express it. And suddenly what AI is gonna do is gonna give us the ability to express it.

Shift from external validation to intrinsic love for creative work

Early success can transform the intrinsic joy of creation into a pursuit of status and people-pleasing. This shift, often unconscious, can lead to seeking adulation as a proxy for love or validation, turning success into a mere scorecard.

The pursuit of adulation creates an "adulation trap," akin to a cup with a hole at the bottom that never truly fills. This was evident after Airbnb's IPO and a $100 billion valuation, where the day after felt empty and meaningless, revealing that external accolades do not provide lasting fulfillment.

To escape this trap, it is crucial to detach from external approval, status, and worrying about how successful one appears. Returning to a "heads down" approach, focusing on the pure love of the work itself, like creating as a child, allows for genuine engagement and satisfaction.

A key insight is to focus on "what you want to do" rather than "who you want to be." This means concentrating on making things you love, putting your heart and soul into the process, rather than striving for a specific identity or level of success.

Adulation is like a cup with a hole at the bottom, and you keep filling it in, thinking it's love, except it just keeps coming out the bottom.

The Paradox of Founder-Led Enduring Businesses

Brian Chesky addresses the "ham sandwich paradox," Warren Buffett's idea that one should invest in businesses so elegantly designed that anyone could run them. Chesky argues that for a business to truly endure, it often requires extensive founder leadership to institutionalize its unique "magic" and build a deep reservoir of intellectual property, creating a company that can eventually thrive for decades, even after the founder's direct involvement lessens.

Walt Disney provides a clear example: unlike other film studios whose founders are largely forgotten, Disney's spirit remains omnipresent over 50 years after his death in 1966. His foundational work in feature-length animated films, television, and theme parks like Magic Kingdom created an enduring playbook and such significant momentum that subsequent leaders have largely built upon Walt's initial vision.

Similarly, Steve Jobs left Apple with the iPhone, a product that has fueled the company's growth from a few hundred billion to a multi-trillion dollar enterprise. Chesky suggests that the paradox is this: the longer a company is intensely founder-led and stays in "founder mode," the more equity and institutionalized "magic" it creates, making it capable of enduring for a hundred years and beyond.

The irony is, the longer a company is run by founders in founder mode, the more I think it can let go and anyone can run it.

Airbnb's Strategy to Shift from Homes to People as Its Core Unit

Airbnb plans a fundamental strategic shift, re-envisioning its "atomic unit" from just homes to individual people. This evolution means focusing on developing robust user identities, detailed preference profiles, a real-world social graph, and a membership program. The goal is to deeply understand users to offer more personalized and expanded services.

The company aims to industrialize its platform to offer a much wider range of services, expanding from its current three core offerings to potentially fifty or even a hundred different functionalities. This ambitious expansion goes hand-in-hand with an imperative to disrupt its own business model using artificial intelligence.

Innovating as a public company presents a unique challenge, as changes can directly impact the livelihoods of hosts who depend on the platform. To navigate this "innovator's dilemma" cautiously, Airbnb is exploring "sandboxes" or separate app concepts. These independent initiatives allow for radical experimentation with AI and new models without jeopardizing the existing business or its stakeholders.

How do we disrupt ourselves before someone else does with AI without screwing over our investors and our hosts who depend on us?

Reinventing Oneself and Addressing the Ephemeral Nature of Software

The speaker stresses the importance of staying

young,

curious, and continuously reinventing oneself, drawing inspiration from Pablo Picasso's quote about the wind getting stronger with age. This mindset is crucial for navigating the rapid pace of technological change and avoiding obsolescence, especially in the fast-evolving tech industry.

He notes the dramatic acceleration of software development feedback loops, from slow and lossy processes to near-instant, high-fidelity iterations with new tools. This increased speed contributes to a fundamental anxiety about the longevity of digital assets and traditional

The older you get, the stronger the wind gets, and it's always in your face. You gotta stay light on your feet, you gotta stay young, you gotta keep reinventing yourself, you gotta have curiosity.

Software Is Ephemeral, But Community Endures

Brian Chesky observes that software, unlike physical environments or hardware, has an extremely ephemeral nature. He notes that looking at an app interface from ten years ago makes it "look like crap," regardless of its quality at the time. This rapid obsolescence creates a challenge for creators who aspire to build things that will last.

In contrast to the fleeting nature of software, physical worlds like Paris demonstrate immense endurance. This stark difference highlights the anxiety of creating lasting value in a hyper-fast digital landscape where even good software quickly appears dated.

To resolve this, Chesky shifts his focus from the transient app to the enduring aspects of Airbnb. He emphasizes that the company's ideas, principles, mission, organization, brand, identity, logo, voice, and especially its community, are what will truly withstand the test of time.

He articulates a core belief: "We're not building an app, we're not building a service, we're building a community, because that's the only thing that will last." He even speculates that traditional apps may eventually be replaced by agents, reinforcing the importance of an enduring community over specific technological formats.

We're not building an app, we're not building a service, we're building a community, because that's the only thing that will last.

Bodybuilding's Lessons on Self-Change and Consistent Improvement

Brian Chesky, starting at 135 pounds, aimed to become a top bodybuilder by 19, which he achieved by competing at the national level. This experience taught him a profound lesson: if you can change your body, you can change your life. This internal transformation serves as a metaphor for empowerment, suggesting that by changing oneself first, one gains the ability to change their environment and ultimately the world.

Bodybuilding also teaches the principle of progressive overload, where the body adapts and strengthens over time through consistent stress. The process isn't about instant results but about getting "one percent better every single day." Compounding these small, daily improvements leads to significant long-term gains, highlighting the importance of sustained effort.

The sport demands a highly analytical and metrics-driven approach. Participants must precisely weigh food, manage caloric deficits, and meticulously record training details and weights. This scientific rigor fosters discipline, consistency, and a data-driven mindset, which are crucial qualities for entrepreneurs who might otherwise be tempted to give up prematurely.

If you can change your body, you can change your life.

Brian Chesky's Strategic Approach to Building a World-Class Team

Brian Chesky emphasizes that hiring is a leader's single most important job, directly impacting a company's overall quality. He notes that the more time invested in recruiting the right people, the less time is needed for management, as truly excellent hires are self-managing. Chesky personally dedicates several hours daily to this, even recruiting executives two to three layers deep.

A key strategy is 'pipeline recruiting,' which involves continuously meeting top professionals and building a network of talent rather than conducting reactive searches when a role opens. This referral-based approach creates 'mafias' or ecosystems of highly skilled individuals, where each new contact can lead to several more.

To find the best people, Chesky advises working backward from exceptional results. Instead of looking at resumes or companies known for good work, one should identify specific outstanding achievements, like a memorable advertisement, and then determine who was responsible for creating it. This ensures talent is evaluated based on concrete impact.

Chesky also believes CEOs should be deeply involved in hiring beyond their immediate executive team. He serves as a co-hiring manager for the top 200 people, aiming to recruit talent so exceptional that they might be beyond the direct reach of their future managers without the CEO's active participation, ensuring the company always 'reaches' for the very best.

Start with the results, work backwards to the people, don't start with the resume.

Challenges activate founder potential and intrinsic motivation

Brian Chesky believes that while raw talent is essential, it's often a significant challenge that activates a founder's true potential. He likens it to the "Bruce Banner gamma rays" effect, where an event unleashes capabilities. His own experience with Airbnb, where he couldn't afford rent, serves as a key example of how a critical problem can ignite unprecedented action, building on a lifetime of making things.

For Chesky, the key to activating someone is to present them with a problem or an opportunity. He notes that individuals with a high level of agency will naturally step up. He also questions whether true motivation can be taught, suggesting that entrepreneurs possess an inherent drive, and the role is really to give them a challenge and see if they rise to it.

Chesky supports this by highlighting his heroes: Leonardo da Vinci, Vincent Van Gogh, Walt Disney, and Steve Jobs. A common thread among them, he observes, is that they were still working passionately until their final days. Da Vinci carried the Mona Lisa, Van Gogh continued painting despite selling only one, Disney imagined Disney World from his deathbed, and Jobs was still involved in marketing near the end of his life.

I don't know how to teach motivation. I don't know if you can teach, I think you can motivate people, but I don't think you can make a person who's not motivated motivated.

Brian Chesky identifies as an artist driven by the intrinsic desire to create great things.

Brian Chesky explains that his core motivation is that of an artist: to create something great for its own sake. While he desires success for shareholders and employees, and aims to make a huge impact, these outcomes are secondary to his fundamental drive to make incredible things.

He views himself more as a designer than a CEO, acknowledging he has been afforded an enormous canvas with vast resources at Airbnb. He describes this opportunity as an accidental "glitch in the system" that he was not supposed to get, and he intends to fully leverage this unique position.

Chesky draws inspiration from historical figures like Vincent Van Gogh, Steve Jobs, and Walt Disney, who he believes worked on their craft until their last days not out of sadness, but because they loved what they did. He sees this dedication to creation as a beautiful purpose.

My motivation is the motivation of an artist. My motivation is to create something great.

The Power of Belief and Self-Belief

Brian Chesky attributes much of his success to the foundational belief shown by others early in his life. His high school art teacher told his parents he would be a famous artist, which instilled confidence. Later, Michael Seibel and Paul Graham at Y Combinator believed in him, even funding him as a non-engineer despite Paul Graham's initial skepticism about the Airbnb idea. This generosity of belief from key figures set him on his entrepreneurial path.

Chesky now seeks to pay this forward by believing in others. He adopted a management philosophy inspired by John Wooden, who saw potential in his players that they didn't see in themselves. For Chesky, telling someone their work isn't good enough isn't a dismissal, but a statement that he sees greater potential in them than they currently realize, which he finds to be incredibly motivating.

Ultimately, the most crucial form of belief is self-belief. Many entrepreneurs are driven by insecurity or a need to prove something, leading to imposter syndrome even after achieving success. Chesky emphasizes that learning to believe in oneself is a direct path to happiness and overcoming these internal struggles, stating that he only truly believed in himself long after others did.

The most important person ever that you can believe in is yourself.