Invest Like the Best with Patrick O'Shaughnessy
· Brian Chesky
[00:00:00] S1: Weirdly, bodybuilding taught me so much that I could apply to Silicon Valley. It taught me two important principles. My dad was really into ice hockey, wanted me to be an ice hockey player. Unfortunately, I was very skinny. I hit puberty really late, and I went to a sports Academy for hockey. When I was 13, I thought I could be a really good hockey player, but by the time I was 14 – I didn't hit puberty till I was like 15 or 16, and that's a death sentence in hockey. Because suddenly, I went from like first or second line to third or fourth line. I went from thinking I'd be a division one athlete to a division three athlete, and I'm like, okay, it's not really going to work out for me. And so I started weightlifting. I was 135 pounds, and I told my friends, I'm going to be one of the top bodybuilders in the country by the time I'm 19. And they thought I was out of my mind. I ended up, by 19, competing at the national level. I competed at teenage nationals. The first lesson I learned from bodybuilding was, if you can change your body, you can change your life. It was actually the most fundamental thing to change. Everyone wants to change things around them, but what if you changed you first physically? And I even think, if you could start somewhere – a lot of people say change your thoughts. I would change your body first. Change your physical biology. If you can change your body, you can change your life. It was the ultimate expression of empowerment. Okay, now I changed my body, what else can I change? It's a metaphor for eventually you can design the world around you. I can change my body, I can change my environment. Eventually I can change the world. It's like, you just go inside-out. But the other thing it taught me, which might be even more helpful, is that you can't get in shape in one day. And if you go to the gym and work out for 20 hours, you're not going to get in better shape. In fact, you're going to overtrain. And the way you get stronger is through an adaptation from progressive overload. You basically stress the body – the body doesn't get stronger during exercise, it actually breaks the muscles down. And it's an adaptive response, like an immune system, it gets stronger. You just keep doing it. The basic idea is that you can't get in shape in one day, and it's about 1% better every single day.
· Brian Chesky, Patrick O'Shaughnessy
And if you compound 1% a day, you can actually have massive gains. And so it's really about discipline. And it's also very analytical. Bodybuilding is this wonderful thing where it's judged. It's a subjective sport that you judge visually, but you measure it scientifically. You weigh your food, you have to put yourself in the right caloric deficit. You have to write down your training. You have to write down your weights. It's extremely analytical. It taught me to be very analytical, metrics driven, and that it's really about discipline and consistency. And I think that's important because I think a lot of founders just give up too early. It's about discipline. And it's about – if you train for a month, you take a month off, you're starting over. And that's the key. You never quit. You just keep going. [00:00:00] S0: One of the nice things about it is the visual feedback. It's judged visually, you can literally see it. You can look in the mirror. Other people can look at you and say you've been working out. Probably some of the skills that you would want to apply the same progressive overload thing to as a leader are very invisible. How do you figure out the objective function? How do you apply that same thing to something else that other people can't see?
· Brian Chesky
[00:00:00] S1: I've stopped trying to focus on how good of a company Airbnb is and I take it to projects. So I'll give you one example of a project I focus on. One is I want to build the best team possible. Twice a year we do this like giant thing we call roadmap review and there's the top hundred people in the room and I see the quality of people in the room. And we did one in the last two days. And then one of my most important jobs – the most important job I do at Airbnb is hiring. That's a whole separate topic. And the visual feedback is, every twice a year I get the top hundred people in the room and I can see the quality of the people in the conversation. So in other words, there's many metrics that you use and I obsess over it. Maybe it's the app and I just look at the design of the app. Maybe it's how well the company operates and I look at decision-making. So I try to break the problem down to something that's observable, that I can observe either measure with data or even subjectively look at and observe. So it's always about breaking the problem down to something that's observable and measurable. By the way, just on this, because this is a really important point. Basically as a leader, you can choose if you want to spend time hiring or managing. One or the other. The better the people, the less they need to be managed. The more time you spend on recruiting, the less time you have to spend on management. It's one-to-one. I remember when I was starting Airbnb, Sam Altman – who obviously everyone knows now from OpenAI – I was like one of the first Sequoia-funded companies. Before me were two people that had ever been funded by Sequoia from Y Combinator. Drew Houston from Dropbox. But the first one was Sam Altman and his company called Loopt. It was like a kind of like a way to see your friends on a phone before the iPhone. I remember him telling me – I was like 27 or 28, Sequoia had just funded us, $600,000 at a $3 million post-money valuation. Highest valuation in Y Combinator, now the average valuation is 30 million. And he said, you're gonna spend 50% of your time on hiring. I never did, by the way. It was my death blow, not spending more time on hiring. The less time I spent on hiring, the more time I spent managing. And I started learning my number one job was hiring. Every day I wake up, the first person I call is my recruiter.
· Brian Chesky
I think people should think about their first employee being a recruiter, not an engineer. They are the most important person, because they are the ones that get you every other person. I mean, a company is as good as its people. And the difference between the good companies and the great companies are the people. And I think AI kind of makes that clear now, that it's all about the people. But I obsess. I obsess over recruiting. I spend hours a day. And I don't just recruit executives, I recruit two, three layers deep. Here's how you hire good people. Do not do searches, generally. Do not do searches, generally. What you want to do is build pipelines. So here's the mistake people make when they hire. They go, "I need to hire a blank." So they do a search, and they hire a search firm. And the search firm scans, they give you 50 profiles. You cull it down to ten people, you contact ten, and you pick the best one, who you hire. And a year later you realize if they're good or bad. And if they're bad, uh oh, they've already hired their own team. That is the wrong way to do it. So the best way to do it is pipeline recruiting. You're constantly recruiting, you're constantly meeting people. So this is what you do. Try to map out all the best people in the Valley. So let's say I need to hire really good engineers. I don't do searches. I just informationally meet the best engineers in the world. Every meeting, the job is to get the next meeting, meet someone else. So if I were to meet you and I'd say hey, who are the best people you know? Can you introduce me to two or three people? So what you're doing is you're constantly meeting people, in advance of searches. And you're just building your pipeline, you just need to know lots of talent. And all of it is referral based. The two ways to find out if people are good – I mean, one way is you're just good at assessing talent. But the two best ways is to start with the results and work backwards to the people. So a lot of people say like, oh, I want a really good marketer. I'm going to go to Nike. They do really good marketing. No no, don't do that. Find an ad you like and figure out who made that ad. Start with the results. Work backwards to people. Don't start with the resume. The other thing to do is just keep asking people to build your Rolodex. And so I'm constantly building a Rolodex.
· Brian Chesky
And the moment I find somebody that's really good, I ask them who all the best people they know are. And I basically build these little mafias. Every company's got a little mafia of talent. So Uber's got an Ops mafia. Apple's got a design mafia. And then build these little ecosystems and they tell you who the other good people are, and you're constantly finding more people, more people. And what I do is I am the co-hiring manager for the top 200 people in the company. This is very radical. A lot of CEOs think it's their job to hire their executive team, and their executive team hires their team. I think that is fatal. I mean, theoretically, yes. Theoretically, you should live in a world where you have such good people, they can all hire their own people. Most entrepreneurs, if they have ten executives, would be lucky if two or three are able to do that without any support or help. In other words, you always want to be like marrying up, hiring people of the future. I sometimes used to say, my executives should hire people so good, they would never work for them without my help. In other words, it should be like we're reaching. If you can hire them without my help, we're not reaching far enough. You want to hire the very best person you can. So I'm constantly meeting people, constantly interviewing. The first and last call I make every day is the recruiting team. Still. I probably spend two, three hours a day on it. Every day, every year I spend more time on recruiting than less. By the way, in the 2000s I didn't. I thought it was all about having a good idea, having a recruiting machine, managing people. The great thing is I don't manage this much anymore. The more time you spend recruiting, the less time you spend on management because the really good people just are self-managing. This is amazing. And if you have to manage people, then maybe you should think about upgrading the talent.
· Patrick O'Shaughnessy, Brian Chesky
[00:00:00] S0: You said before that founders are born, you think, and CEOs can be more shaped? [00:00:00] S1: For the most part. And maybe the caveat to that is just like, maybe founders aren't born, but we spend our whole life tinkering and building. But you can't simulate being a CEO. [00:00:00] S0: I was going to ask whether or not you think they're activated in some way – maybe there's the raw material, but then some event happens. Shyam from Palantir would call this the Bruce Banner gamma rays thing or something. What have you learned about activating talent? [00:00:00] S1: I think the activation is giving someone a challenge. Our founding story is we couldn't afford to pay rent. But of course, I have 50 stories before that, of challenges I had. It's just Airbnb, that story activated something on a scale I'd never done before. But it wasn't the first thing I made. I was making things my whole life. I think the way to activate somebody is to give them a problem or opportunity and see if they can do it. I think the people that have a high level of agency are going to do it. I don't know how to teach motivation. I don't know if it can be taught, by the way. I don't know if you can teach it. I think you can motivate people, but I don't think you can make a person who's not motivated, motivated. But I think all entrepreneurs have the trait that they're self-motivated. And so it's really about giving them a challenge and then it's up to them to step in and activate.