Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy
[00:00:00] S0: There are two very different ideas I'm curious for you to react to. The first was made famous by Warren Buffett, who said you want to buy, as an investor, businesses that a ham sandwich could run, because eventually one will. Not to pick on anyone, but think about the card payment processors like Visa or MasterCard – just extremely elegant business models. Actually, network-effect businesses like Airbnb tend to be in this category. And then you've got this opposite end of the spectrum which is, one of my favorite early-stage investors said, he tells every founder that they should think about the company as a platform or a vehicle for their own personal growth. And their ability to grow will set the ceiling for the company. These are sort of opposite ideas. And we've been talking a lot more about leadership in this second bucket. I'm curious how you think about whether or not you'd care if eventually a ham sandwich ran Airbnb, like the business model would be so perfected that it wouldn't matter in the Warren Buffett sense. And just like in general, how you think about if that's true, that your ceiling is the company's ceiling as its leader.
· Brian Chesky
[00:00:00] S1: I think they're both true. Let me try to square those with one example. I agree with both sentiments. Okay, here's an example. Walt Disney. People watching, I want them to try to name a Paramount Pictures film. I want you to name a Warner Brothers film. Maybe you'll think of Batman. I want you to name a Universal Pictures film. I want you to name something from the MGM library. Pretty hard, right? I bet you can name a lot of Disney films, and probably Pixar during their golden age. There's a big difference between those two. One is that Disney was very founder led, and that Disney was all about a personal expression of one man. The irony is the longer a company is run by founders in the founder mode, the more I think it can let go and anyone can run it. I think Disney – not to take away from the CEO of Disney – this new guy Josh is really great. I've met him, he's great, and I think they've had a lot of good CEOs. But I generally think the CEO of Disney has the bases loaded. You've got this incredible theme park that people are going to visit no matter how well it's run. It's like a city – as many people visit Disneyland every year as San Francisco. It's crazy. They've got this incredible IP. It's not that it's an easy job, but Walt left so much. I remember I was speaking to the former CFO of Disney once. This was like 10 years ago. And he said, Disney hasn't really done anything new since Walt died. Walt died in 1966. Since 1966, we still make feature and animated films, TV and magic kingdoms. And of course, yeah, they do new things, but fundamentally that's the same playbook. So I do think that that's an example where the founder reinventing the company and their expression created such a reservoir of IP, of momentum. He died 50 years ago. 50 years later, Walt Disney's spirit seems very omnipresent. Whereas Louis B. Mayer, I don't know if most people can tell you which studio he was. See what I'm saying? There's a huge difference. So I generally think this is a paradox. The ham sandwich, you have a business so good anybody can run it because sooner or later they will. The best businesses are ones that founders run and they reinvent, and they create so much equity in such a great moat, that then when they hand it off, they will endure and grow after them. I think Apple is very similar.
· Brian Chesky
They've had not had to invent new products for the most part. They're still running the iPhone. I mean, what a gift Steve left them. They were a few hundred-billion-dollar company when he died. They're a multi-trillion dollar company now. I think the one caveat is I think tech companies are different. Warren Buffett generally didn't invest in tech companies, with the exception of Apple. Coca-Cola was a big investment of his, or like See's Candies. These are things that don't get disrupted. I think technology is a synonym for change. If we're in the change industry, you kind of need to be more in founder mode more time. But I think that's how I square it. The company is the upper bound of the founder's potential. The longer you're in founder mode, the more it will endure. I remember one founder told me, I want this company to last a hundred years, so therefore I can't be in all the details. And so therefore I need to empower people. And I remember saying, if you want this to be around for a hundred years, you want to control it as long as possible, and keep it in founder mode as long as possible. Like Disney. I think that's counterintuitive. And I think people say, oh, but the company is gonna get very dependent on you. Well, yeah, but the alternative is you're going to have so institutionalized this magic it can endure after you.
· Patrick O'Shaughnessy
[00:00:00] S0: Edwin Land, the founder of Polaroid, was very famous for using Ansel Adams as his ultimate tester of his equipment. And so he cared about – the most important, maybe best photographer of all time – what he thought of his device. It comes to mind when you talk about Disney, because I have this visual of Walt just continuing to drill down to some sort of bedrock or something. And that's the mission that you're on as a founder, it's like bedrock. What is that for you from this point forward? As you keep drilling, what do you think you're still after? Where is there still room for your ceiling to raise so that the business's can?
· Brian Chesky
[00:00:00] S1: A few things come to mind. When people think of Airbnb, if you close your eyes and say, I want you to think of a picture of Airbnb, you probably think of a house. We're a noun and a verb like Kleenex, which is amazing and not amazing. It's amazing in that we're kind of the category leader. It's also tough because when you're Kleenex and you want to sell shampoo, they're like, wait a second, I'm not putting Kleenex on my head. So it's a double edged sword, our brand. The bedrock for me is, how do I change the atomic unit of Airbnb from a home to a person? I do not want Airbnb to be about homes. I want it to be about people. And I want the people to be the atomic unit. And on Airbnb, you get a home, you get an experience, you get a service, eventually a flight. Imagine a person in the center with a ring with like 50 things around, these are the things you can get. That is the thing. The bedrock of Airbnb is going to be identity, profile, the person's preferences. I want to develop the most authenticated identity on the internet. Proof of personhood is going to be really, really important in the age of AI – artificial. I want to develop the most robust profile on the internet. I mean, it used to be Facebook. They've kind of abandoned that strategy. I want to build one of the richest preference libraries of you as a person, because that would be useful to have. I want to build a social graph, but in the real world. And I want to eventually have a membership program where you get all these different benefits. So the bedrock is the person. I want to basically figure out how we can launch, like Amazon – Amazon went from books to like a hundred things. I don't want us to just have homes. I want us to have a hundred things. So we need to develop this industrialized machine of understanding, what are the atomic units or the primitives that are consistent across all these different businesses? And then the last one is AI. We have a bit of the innovator's dilemma. Plus or minus a hundred billion dollars goes through our app. I have all these visions that are, totally change it. But you're a public company, you know, and you're like giving guidance. And the difference like missing and hitting earnings is you really, But it's not just being public company, people's livelihood depends on Airbnb.
· Brian Chesky
If we mess with something, somebody could go from making a living to not making a living. So you've got to be very careful. That is not an environment for mass innovation, when you're being really careful. So I'm also exploring little sandboxes, maybe almost like a separate app. What are radically different Airbnbs? What's after Airbnb? Airbnc. What's that? What's the next? So those are the three things I'm thinking about. Number one, how do we take the atomic unit from a home to a person? Number two, how do we basically industrialize what Airbnb offers, to do 50 things, not three things. And then how do we like disrupt ourselves before someone else does with AI, without screwing over our investors and our hosts who depend on us. And so those are the kind of things I'm doing. Maybe the last thing I'm thinking – just as a CEO, I think I've reached a certain level of mastery. I've reached the mastery of product-market fit, hyper growth, profitability. I'm beginning level four. Level four is reinvent yourself, product extension. I think there's something potentially even beyond that in the age of AI, which is like – one of my strengths is all my experience. And that's also my weakness now. I'm 44 – I'm not old, but I'm not young. I'm not AI native in the same way a 22 year old is. Here's a bad example. When I started Airbnb, I was 25, 26, and we were competing against Expedia. They were on Outlook and we used Google Docs. And we were iPhone. It all seems anachronistic now, but back then that was innovative. And we were on the coolest new tools, and we just moved faster. And so also just staying young. Pablo Picasso, another quote, he said the older you get, the stronger the wind gets. And it's always in your face. You've got to stay light on your feet. You got to stay young. You got to keep reinventing yourself. You got to have curiosity. And so I don't want to become like this old school person in their groove. I've got to reinvent myself.