Airbnb’s Way to Innovation:
Trust-building in a Global Community
Airbnb CEO & Co-founder
March 21, 2017
Xie Xide Auditorium
Center for American Studies
First of all, thank you for inviting me here, I am so excited to be back in China.
I want to talk today about a few things, I want to talk a high level about building trust and sharing economy. I want to start by talking about the Airbnb story, and talk about where sharing economy is going, and also about Airbnb in China.
Raise your hand if you have heard of the story of how Airbnb started. Does anyone know the story？Most people do not, this is good! So now raise your hand if you want to one day be an entrepreneur. More hands, good!
I grew up in the United States in New York, a small town called Niskayuna. Anyone has heard this before? Don’t Worry! Niskayuna is a very small town, and my parents are social workers.
One day, my mom told me: “I chose a job because I love being a social worker, but I didn’t make a lot of money, so you should choose a job with a piece of money!”
And one day I told my mom: “I want to be an artist.”
She said: “Oh god, you pick the one job that is gonna pay less than a social worker, in fact, you are managed to make 0 dollar.”
I said: “No, I will get a job one day.”
She said: “Promise me one thing.”
I said: “What is that?”
She said: “Promise me that if you get a job, and that job has health insurance.”
I had that “pressure” from my family, and I went to college. In my college, I had some teachers and they said a variation of this: “Brian, you are a designer. Things around you are designed by designers. You can redesign those things. You can design the world you live in”. This is a totally different notion for me.
When I graduated from Rhode Island School of Design, I moved to Los Angeles, California. I got a job as an industrial designer in LA. I had a friend named Joe who I went to RISD with, and Joe lives in San Francisco. One day, Joe tells me, “Brian, come to San Francisco, we have to start a company together.”
I have spent lots of time getting this job, and now Joe asked me to quit this job and start a company! And I decided about a year later that I would just quit my job, and I would start a company. My life is like the road in front of me, looking exactly like the road behind me. At that moment, it terrified me. Because I knew I could do more than just having a job at this company. I thought I could do something different.
So one day, in October 2007, I quitted my job with only 1000 dollars at bank, very low planning. I packed everything in the back of an old Honda civic. It was a great old Honda civic and I had this old foam mattress, and I rolled up the foam mattress in the back seat of my car, and I get the car and drive to San Francisco.
I get there, and there is just one problem. The problem is that my rent is 1150 dollars, and I have 1000 dollars in the bank, so I realized that probably I should start up before I moved to San Francisco. But I am there, and it turns out that weekend, this international design conference is coming to San Francisco, and we went on this conference website, and on the conference website, all the hotels are sold out.
At that moment, we had an idea– What if we just turn our house into a “bed and breakfast” for this design conference? Unfortunately, I don’t have any beds, but Joe had three airbeds, so we pulled the airbeds out of the closet, and we inflated the three airbeds and we called it “airbed and breakfast.com”. That’s what Airbnb stands for.
If you had asked me that day, that I will be here at Fudan University, telling that story for probably 1000 or more times. I would have thought you were crazy. I did not think we were going to start a company. I thought, that moment, we would pay rent. Three people stayed with us though—a 30-year-old from India, a 35-year-old woman from Boston, and a 45-year-old father from Utah.
We made enough money to pay the rent, but something more important happened, we developed a close sense of friendship. Amur, was the first guest from India, years later, he invited us to his wedding. Catherine, the 35-year-old from Boston, became so close to us in design community in San Francisco. She ends up moving from Boston to San Francisco. When is the last time you stayed in a hotel, and you invited the people of the hotel to your wedding? Or did your parents do that?
In early 2012, I met a host in London. His name was Sebastian. He comes up to me and he said,” Brian, there is a word that you never use in your website.” I said, “What is that word?” He said: “That word is friendship. I would love to tell you a story about friendship.” I said, “OK, tell me a story about friendship.” He said, “Six months ago, the London riots broke outside my home in North London, and I was very scared. And the next day, my mom calls me to make sure I am ok. I said, yeah, I am OK. And she goes, what about the house, and I said, yes, the house is OK as well.” He says, “Here is an interesting thing. Between the time that my mom called me and the time that riots had broken out, it was a 24-hour period of time, and in that period of time, seven of my previous Airbnb guests called me, just to make sure I was OK.”
The reason I told you these stories is because of a simple reason, when you look at Airbnb, you often see photos of homes and spaces. But what Airbnb offers and what the sharing economy offers, is the promise of something much deeper, it is the promise of human connection. It is the promise that people can be brought together, from different countries and different cultures, and exchange money, and commerce, and services, and goods, and experiences, but also ideas, and maybe friendships.
When we started Airbnb, we didn’t think we were helping to start something called sharing economy. We were just trying to pay rent. But there is now something happening in the real world and it is pretty big. On Airbnb, we have more than 3 million homes, and we have guests from 191 countries, and we have more than 60 million of guest arrivals since we started Airbnb. Our biggest night ever, was this past New Year’s Eve. On that single night, 2 million people came from 191 countries and they lived together on our platform. Never to my knowledge in history, would that have been possible before the power of sharing economy and the Internet to bring people together.
The core invention behind the sharing economy is this idea of trust. Because we used to live in a world where people were strangers, except your friends, everyone else was a stranger. Because they are strangers, you may have assumed the worst of them. How you know that? Would you want a stranger in your home? Would you hitchhike? Would you stop a stranger and talk to them, ask them how the day is? No! We do not talk to strangers! What the sharing economy did? It says that there are no longer strangers, because every single person has a profile, I can know where they are from, I can verify their identity, and when they book something, they can leave me a review and I can leave them a review —there is a whole reputation system that happened.
The moment, buyers, guests have reputation, suddenly, what they have accessed to increases. So, as reputation trust increases, access also increases. As the access increases, suddenly, 68,000 cities are on Airbnb today. You used to go to those cities, and almost all the doors in those cities were locked. I would come to Shanghai or you come to San Francisco. And unless it was a hotel, or a restaurant or a museum, you cannot go into those doors. And if you came to a city like here in Shanghai or you came to my city, San Francisco, the only people you would talk to are taxi drivers, waiters, bellmen, and they will call you Ma’am or Sir, and they smile and you will never keep in touch with them again.
The other thing happened was on the supply side, because the moment that people have identities– it means that anybody can be a brand and anybody can produce nascence. Brands exist because hundred years ago, people would make beverages like a beer, and you wanted to know that beverage wasn’t gonna get you sick, you wanted to know that was good beverage, so having a logo and a label said this is trusted, you drink this before, and you can drink it again. And overtime, the brand developed a reputation.
But what happening was, until recently, that meant only a few brands would produce everything—so you have a few companies making computers, a few companies making drinks and a few companies making cars. Many many people worked for very few companies, and those few companies sold the exact same product to everybody, because everybody was anonymous, so there was no personalization. When everyone was anonymous, you have a few companies making the exact same products for everyone, and we call this mass production.
But what happen with sharing economy is suddenly people on both (supply and demand) sides have identity. When the supplier is a person and they have a brand, they can now make something personal for you. And this is the promise of people-powered economy, where buyers have identities, sellers are people, not just corporations, and people are brought together peer to peer.
What this means is that we have a couple millions host entrepreneurs on Airbnb today, but I imagine the next economic movement in the world is gonna lead to a proliferation of entrepreneurs—in the United States, in China and nearly every country around the world.
Let me say one another thing. There is a lot of economic uncertainty in a lot of countries right now. In the United States, there are so much economic uncertainty that a new president was elected that not everyone loves; in the United Kingdom, they voted to leave European Union. A lot of economic anxieties came from people believing that the future would not be better for them. And many of those people blamed the thing called globalization—other countries taking their jobs.
And the fact of the matter is that there is actually something much bigger in globalization that is about to happen. Globalization happened about 50 years, and maybe a little longer, and something is going to happen for next 10 or 15 years and is called automation. “Made in America” would soon means “made by the robots in America” for a lot of things that we bought. It would also happen in many other countries as well. This has a lot of people nervous, wondering, if half the jobs today robots can do, what would people do in the future? And would this be worse than globalization? And if it would happen faster than globalization, what would we do?
And my answer is that I am optimistic, because we are not the first generation in the history of humanity that is just gonna like lose the sense of purpose and wondering what we are going to do. We are all gonna have a purpose in the future, and humans will do only humans can do, that robots cannot do. What humans can do is provide creativity, provide a sense of carrying and a sense of belonging.
I think that, over the next generation, we are going to see hundreds of millions of entrepreneurs. My prediction is the next wave of the economy, is going to be automation and entrepreneurship, and the two would probably happen in parallel, because certain things will become commodities and be automatic, and robots will do that and some people will manage the robots. But there would be other things that need very peer-to-peer, and these two economic realities will co-exist—just like today everyone can have a blog, can have a voice, can be on WeChat. Tomorrow everyone can have their own products, their own goods, and they can make anything, and this is the promise of the sharing economy, and that leads me here today to China.
Why am I in China? One reason that I am in China is because Airbnb is a travel company. For Airbnb, not to be in China, it would be like a phone having no email. We want you to go travel in China, and anyone in China want to travel around the world.
But more importantly, our mission is propagating an idea that people are not just citizens of their own country, but we are also in a sense of global citizens. Almost many problems around here are global, global warming and global terrorism, if we are solving these problems, we probably have to solve them together.
I think that diplomacy between the United States and China started in the 60s with governments, is now happening from business and more importantly from citizens. I think some of the most important diplomacy is going to happen through citizens, and is gonna happen through travel. It is why both the United States government, the Chinese government, and other governments encourage travel. Because through travel, you get to see how other people live, you walk through their shoes, and you get a sense of how they wear. It would be a better way to get a sense of how somebody lives until lives with them—in their homes, to have their experiences.
Airbnb provides homes, but we are also allowing experiences now–“Trips”. You can come here on Airbnb and book your entire trip. We think that China is going to be one of the most important countries for Airbnb in the future. It already is one of the fast-growing markets and China already is one of our fastest and largest countries in the world. But it is very possible that it will be one of the biggest, more rival than the United States, so it will be our biggest country around in the future.
That is partly because there are 400 million millennials, people in your age, that want to travel. They want to experience something, and they want to share something in the world. It all this is possible because our parents live in a world where strangers were bad, and brands were made in huge corporations, and everything we bought was mass produced. And tomorrow, we live in a world where there aren’t strangers, people have identities, and we can exchange things with other people, we can care for other people.
The biggest lesson that I think I have learned since I started Airbnb is the following. When we started Airbnb, people thought we were absolutely crazy. In fact, I remembered one person saying, “Brian, I hope that’s not the only idea you are working on.” I said, “Why?” He said, “Strangers are never gonna stay in other strangers’ homes.” I said: “Yeah, they will.” He said, “Yeah, what happens if something goes wrong? This idea is gonna to be over, and thing are gonna go wrong all the time.”
And 60 million guest arrivals later, I have learnt, statistically speaking, people are fundamentally good. It is true. You just have to get people a reputation. You have to take a stranger out of the equation, If you do that, you will block a massive amount of the economy.
I think that Airbnb is only one example of the sharing economy, and there are many more companies. Maybe you in the audience, if you have already, can start a company, because imagine if you give two people identity, and you empower them entrepreneurs and you connect them, what else is possible? Anything is possible!
I think you in China do not have to only start a Chinese company. You can start a global company, because in the future, companies will be global, because we are so connected citizens. Which brings to my very last point, which is this, I have travelled on this trip for the last two and half weeks, I flew from San Francisco to London. From London, I went to Oxford. From Oxford, I went to Washington DC, and from DC, I went to New York. From New York, I take a 22-hour flight to Cape Town, South Africa, and from Cape Town, South Africa, I took a 14-hour flight to Delhi, and from Delhi, I took a 6-hour flight here.
What I learnt through my time in Airbnb, what I do remind of the last two weeks being in the community, is I am surprised how different we are, but actually how similar we are. The difference might be a language, might be a surface, but the more I travel, the more I meet people, the more I saw how many of the very same conversations, but people have many of same ideas.
That’s something that I was deeply surprised by, people are fundamentally good, and we are not actually that different around the world. And if you believe those two things, I guess my question to you, as future entrepreneurs in the world, is what else isn’t possible?