Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: The thing that you've said historically that had the largest impact on me was this notion of the eleven-star experience, the exercise of going from not a five-star, but a six-star, and actually forcing yourself to write it. And I have this idea in mind because of this idea of simplicity and distillation. And it's a beautiful thing, right? It's ultimately empathetic with the customer. But why is that idea in practice so powerful? What happens as you go up the star count to eleven stars?
· Brian Chesky
[00:00:00] S1: Let me do a one-minute on what it is. Basically, when you book an Airbnb, most people leave a five-star. And if you leave a four-star, it's a bad experience. Five-star, everything went as planned. So it's called review compression, similar to Uber. You always leave a five-star. And if you leave anything other than a five-star, something really went wrong. But what if the driver was really amazing? You can only leave a five-star. So I started imagining, what if we could give a six-star? And I did this exercise from six to like ten or eleven stars. So a five-star, let's say take one moment, checking into an Airbnb. Five-star check-in is you get there and the host greets you, or there's a door code and it works. In other words, nothing went wrong and you give a five-star. Anything went wrong, you give a four-star or less. That's review compression. What if you went above and beyond? So what would a six-star look like? A six-star would look like, you basically get to the Airbnb and there's your favorite wine on the table and there's fruit and there's snacks there and there's a handwritten card. Okay, that's better than just letting me in the house. So what's a seven-star experience? Seven-star experience, there's like a limousine or something waiting for me at the airport. They know I like surfing. There's a surfboard waiting for me and they're like showing me around the city, there's all this stuff. So what's an eight-star experience? An eight-star experience, I get to the airport, there's an elephant. I go on the elephant. I go on a parade in my honor. I'm like, wow, I feel really special. What's a nine-star experience? I call it the Beatles check-in. I get off the plane, and like the 1964 Beatles, there's 5,000 teenage girls screaming my name with cards, making me feel like I'm a pop star. I get to the front lawn of the Airbnb and there's a press conference in my name. So what's a ten-star experience? Ten-star experience, Elon Musk greets me and takes me to space. It's an exercise, it's an exercise in the absurd. You keep pushing to go so absurd – to ten stars – that suddenly six or seven stars doesn't seem crazy at all. And the way to get to product market fit is to just create a six or seven-star experience. But you can't create a six or seven-star experience without going beyond.
· Brian Chesky, Patrick O'Shaughnessy
In other words, go beyond the edge of reality and work backwards. And so it's kind of a fun exercise. What would be the craziest possible way to blow someone's mind, one person's mind, one customer? And maybe try that, and maybe you can't scale that, because that's like an eight-star experience. But you can probably scale a six-star. That difference between the five and six-star is probably different between you and a competitor. And if you can find a way to industrialize it and scale it, you might have product-market fit and something special. [00:00:00] S0: One of the things that I think about when you give the absurd examples at the high end of the range is this feeling that I've experienced with AI that my imagination had almost atrophied. That by using these tools, I realized how hard it was. Like, oh, I can make anything. And I sit down, I'm like – I have no fucking idea what to make. And then as I started making little things, like all of a sudden my imagination got rebooted. And it feels like this exercise is like an imagination exercise.
· Brian Chesky
[00:00:00] S1: It is. One of the sayings is, great writing is great thinking. But I find that – I don't know about you – some people have ideas and they think of the ideas and they write them down. Sometimes I figure out the ideas through the act of writing. The act of writing is the act of coming up with ideas. The act of designing is the act of coming up with ideas. It's really hard to sit in a room and abstractly think of ideas. You need to do something. And so I think what was happening was we didn't have enough tools to express ourselves. I think a lot of the tools were very passive tools. I think increasingly we were spending more and more time on a sit-back experience like social media. What I like about AI is I think AI shifts our attention from consumption to creation. Social media, a lot of us spend our time on it, and the only type of creation is giving your opinion. But you're mostly consuming. What I love about AI is it's not about opinions, it's about testing the hypothesis you're making. I love what's happening right now. Suddenly all of us have a paintbrush and a canvas to make stuff. I think that AI is going to lead to a renaissance in creativity. I was an artist growing up, I was a pretty good artist, so I had the ability to express ideas. Here's an analogy. You ever meet a person – I can probably think of musicians, like Prince – name a musician that probably, in words, couldn't express themselves. But then through music, there's like this dimension you never knew. An artist, they seem really reserved but their art is really emotional. 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 going to do is going to give us the ability to express it. We're going to realize there are a lot more creative people than we thought. Because we typically think of creative people as people that know how to express their creativity. It turns out, what if everyone can express it? Pablo Picasso once said, all children are born artists, the problems is how to remain an artist as one grows up. Every child's creative. If every child's creative, that means every adult could be creative. I think that every human on this planet is creative. You ask the average person, are you creative? About one in two says they're not. That's my experience. That's not true.
· Brian Chesky, Patrick O'Shaughnessy
It's just that they haven't exercised the muscle. And I think that the magic of AI is what's in our head can manifest. But also, as you said, we can develop new ideas in our head because it's a relationship. We maybe have a small idea, we try something, it gives us another idea, and you go on this journey. A lot of people call founders visionaries. We're more expeditionaries. We're on these expeditions. We only call it visions later. We're really just one foot in front of the other. [00:00:00] S0: Can you talk about the difference between the act of creation in pursuit of – you said people-pleasing earlier, achievement, notches on the belt. Versus just for the raw, pure joy of it, which seems to be more the mode you're in now?
· Brian Chesky
[00:00:00] S1: I think when I started Airbnb, I don't think we were totally trying to be successful. I like to joke that if I was trying to make money, I would have come up with a better idea than air bed and breakfast. I truly did it for the love and the fun. And somewhere along the way, I got really successful. And that almost became a curse because the success became a scorecard. And then I wanted to get even more successful. It stopped being intrinsic, and it started being a version of status and people-pleasing. It took me a little while to realize what I was doing. What I really wanted was love. I think that I learned growing up as a child, the way to get love is to be special. The way to be special is to do special things. And if I do special things, I get praise and I feel love. And I think that translated into – if I'm really successful, I will get adulation. And if I get adulation, I'll feel that feeling that I'm always seeking. But I didn't do this consciously. I'm not just saying this. It took me many years to realize this is what I was doing. By the way, adulation is kind of like seeking status. So many people seek status. Anyone who's on social media and posting all the time is probably somewhat seeking status. There's nothing wrong with it. But the problem is that's not where great products and great companies come from. See, 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. And at some point, you have to confront, who am I doing this for? Am I doing it for other people, for them to briefly love me and commend me to then move on? And either way, that's a drug. And it's a drug that, like real drugs, you need a greater hit to get the high. And eventually, it stops working. Eventually, you reach a peak, and it gets really meaningless and empty. And that happened to me. And at some point around the pandemic, we go public. We have a $100 billion valuation. It's one of the best days of my life. And the next day, I wake up, I put on sweatpants, I go on a Zoom meeting. It was like it never happened. And it became the saddest day of my life, because I realized, OK, what now? I got all this adulation, and I don't feel any different. And that made me reevaluate what I'm doing this for.