6 valuable lessons for entrepreneurs designing startups from Airbnb’s Joe Gebbia

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Date:
06-Nov-2013
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1002.MP3

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Session: The Rise of the Designer Founder

Chris Albrecht
Katie Fehrenbacher
Joe Gebbia

Chris Albrecht 00:00
All right, thank you Stacey. I recently tried putting a room up on Airbnb, but surprisingly no-one is interested in sharing a space with a toddler who likes to wake up at 2AM every morning. Their loss. But right now we’ve got Joe Gebbia, he is the co-founder and chief product officer for Airbnb, he’s going to be talking with Katie Fehrenbacher about the reign of the designer-founder. Welcome Katie and Joe to the stage, please.

[music]
Katie Fehrenbacher 00:31
And like Chris was saying, this is Joe Gebbia. We met many years ago. Joe obviously is the co-founder and chief product officer for Airbnb, and he works on user experience and the product in general. Some of you may know this story, but Airbnb was created back in 2007 because him and his roommate – he’s an industrial and graphic designer from RISD – and he and his roommate, Brian Cheskey from RISD threw together Airbnb for a design conference in San Francisco as a way to make rent, and rented out air mattresses and served breakfast to their customers. That’s his original founding story, but we wanted to pick his brain about, even way back then, you guys were envisioning not just a product, you were envisioning this whole experience that you’ve created. You make someone breakfast, you give them a subway pass, even a map. How did you think up that concept of creating this whole experience out of Airbnb even back then?
Joe Gebbia 01:43
Well, it’s funny, it’s 2007, Brian and I, our backs are against the wall, it’s like “How do we make rent in a couple of days?” The design conference comes to San Francisco, the hotels sell out, and we look at the extra space in the living room and the two ideas come together. What if we blew up the air bed, rent it out to designer? As we started to think about well, if you are a designer coming to San Francisco, you’re coming off the plane. From the minute that you land, what could we do to make that a comfortable transition into the city? Maybe you’ve never been here before. We started to think through – even at that point- this end-to-end experience for a guest. So that would be airport pickup, okay, we’ll go pick up guests from the airport. They get to the apartment, what do we want them to smell or see when they open the door for the first time? It should smell fresh and clean, so we’ll schedule a cleaner to come right before they get there. Maybe we’ll light a candle as well, just to put an aroma in the air. Then, as they see the bed, what can we do to provide a little delight? Maybe a mint on the pillow, or some fresh towels, maybe have the breakfast goodies in the kitchen so they can see the gourmet pop tarts and the cheerios and the bananas. Even from the very beginning, we’re thinking of the end-to-end journey for the guests. That’s something that’s driven us all the way to here, five and a half years later.
Katie Fehrenbacher 03:08
Why is that so important to you, why did you do that from the very start?
Joe Gebbia 03:12
Well, I think if you asked any designer, they would probably tell you something along the lines of design being more than just the way something looks. It’s the experience or the emotion that you create for somebody. For us coming from industrial design, it’s all about crafting the product experience. It’s less about what something looks like, or the material looks like, it’s what did it look like on the shelf? What was it like when you unpackaged it? What was it like when you used it? What was it like when you disposed of it? It’s about looking at the whole life-cycle of the experience of whatever that product or service is.
Katie Fehrenbacher 03:49
And the Airbnb’s served what, nine million guests in total. In the first four years it was four million, and then the last nine months five million. A lot of that is word of mouth, right, it’s other people recommending the service to other people. It seems like your growth is directly based on that emotional connection.
Joe Gebbia 04:08
I remember a piece of advice I got one time in the early days, which was first of all, make something people want, that came from Paul Graham. He’s so focused on having us build a product and a service that people actually want, that actually solved a problem for them. In the early days of any idea, there’s a thousand directions you can go. Actually, it can be very overwhelming. You have this initial idea, you can have a couple of proof points or evidence, but how do you really know which of the thousands of paths to go down? For us, it was fairly overwhelming in the early days, trying to figure out– we had this experience, we think we’re on to something, how the heck do we take this to the next step? Paul Graham really drove us to figure out something people really wanted. His advice, which is probably the single greatest piece of advice we ever got, was “Go meet your people”. What he meant was get out of the comfort of our office, go out into the world and interact and talk with the customers, the people using Airbnb. It was in those conversations that we saw the right path. We went from a thousand paths to one or two very clear paths in terms of how to evolve our product, how to make it consumable for the right audience that we were designing for, and it was in those moments that we moved from this thousands of paths approach to talking to people in New York or DC or Miami, we understood their needs, let’s go design for that.
Katie Fehrenbacher 05:51
What are some of the key transcendent moments where you realized, “This is the path we want to go on”. What were some of those key decisions you guys made?
Joe Gebbia 06:02
Well, our very first payment system that we introduced was rather kludgy. It took eight steps to get through the checkout flow, and it was almost like an obstacle course just to book a room. Brian and I said, Okay, how can we simplify it down to three clicks to get to the “Book it” button? That was our mantra back in the day. How do we simplify this to the point where it’s three clicks to book it? In the course of doing that we really cut away all of the unnecessary elements and components of the service, and we really got right to the essence of search to listing to listing page with the “Book it” button.
Katie Fehrenbacher 06:49
How many designers do you work with? How did you build that?
Joe Gebbia 06:56
As any founder who comes from a design background would probably relate, there’s the transition point where you go from being an individual contributor to then overseeing a team of designers. There’s a very distinctive moment where you kind of hand the baton off, where it went from being your creation to now it’s the creation of many people. That was definitely a lesson for me, was getting to that point where you can build up trust in very talented and capable designers to fulfill a vision for what the service could be.
Katie Fehrenbacher 07:34
Letting go a little bit.
Joe Gebbia 07:34
Yeah, you’ve got to let go a little bit. That’s one of the things they didn’t necessarily– in a book about entrepreneurship or starting a company they don’t necessarily talk about that. It’s one of those things I kind of discovered along the way, you have to figure it out for yourself, you find mentors to talk about it with and other peers and colleagues.
Katie Fehrenbacher 07:52
And you have a lot of techniques to help your design team work on the product and be inspired, can you talk a little bit those?
Joe Gebbia 08:01
Well, I think it’s super important that if we’re going to ask our team to stay inspired and invent with their design that we help get out of the building. We go out into the world and we see and learn from some really inspiring touch points. The Eames have a special place in my path as a designer and have a lot of influence in how we think about things internally. If anything, the way that the Eames democratized design, we believe that we’re democratizing travel. We’re making it more accessible to people in more neighborhoods and local places worldwide. Earlier this year we actually had the chance to take the entire design team and go to the Eames house down in Los Angeles. We had a chance to actually immerse ourselves in the classic example of an experience. You approach the house, the smell that you get when you walk inside, it truly was an end-to-end example. The other things that we do, we do film nights. Earlier this year we went out and took the whole team to see the movie Jiro Dreams of Sushi, which to me is such a classic example of a master of their craft. Jiro is so obsessed with crafting the perfect piece of Sushi so it lands in your mouth just the right way with the right amount of rice. I think there’s actually a lot of analogies to the craft that we have with our design.
Katie Fehrenbacher 09:40
You spent a lot of time working with reducing friction in the Airbnb system. What are the biggest points of friction now that you’re focused on getting rid of?
Joe Gebbia 09:49
I think one of the biggest points of friction is something that actually a lot of services are facing right now, which is, as the internet has matured, now we’re in what I call the third act of the internet – the first was about getting people online, the second was about connecting them when they’re online, and now this decade people are going back offline. We’ve seen a lot of services where you consume the service through an app, or the web, and then you end up actually completing the arc of the service offline. I think there’s something really special in that transition. That’s something we’re thinking a lot about right now, is how to reduce that friction.
Katie Fehrenbacher 10:33
I know one of the things that the point of friction where sometimes I find it sometimes frustrating is the key pass. I don’t know, anything with a smart-locking type system, maybe something like that?
Joe Gebbia 10:49
There’s a lot of interesting things happening in that space.
Katie Fehrenbacher 10:51
I thought it was interesting that back when you were raising venture funding, the venture capitalists you talked to saw it as a liability to have two co-founders, designers on your team. Now there are some venture firms that are created fully around finding the designer founder. Tell us about your experience back then and how it’s changed.
Joe Gebbia 11:21
Wow, talk about demoralizing. In 2008 we went out to raise some money, and we had a couple of proof points behind us, we could see exactly how we’d spend the money to grow the team, our numbers were up and to the right. They were very small numbers, but they were going up and to the right. We thought, Let’s go and start to build the team up. We got introduced to a very notable group of investors in Silicon Valley, and every single person said no. You know how demoralizing that is, when you’re so passionate about your idea, and very credible people who have picked big winners in the past, tell you that you’re crazy, that this will never work, that people will not see each other’s homes at scale. I feel like I saw rejection in its purest form.
Katie Fehrenbacher 12:13
[chuckles] Was Paul Graham the first one to–
Joe Gebbia 12:16
He was the first to believe in us. In those days I feel that the way Brian and I interpreted that rejection was kind of as invitation to keep going. Every rejection that we got was an invitation to keep going. We got a lot of invitations. To be honest with you it was just personally demoralizing. Probably any entrepreneur that’s trying to get their idea off the ground inevitably will face rejection somewhere along the way, and for us it was just about reframing it. I distinctly remember this one moment, we were at University cafe in Palo Alto, pitching to an investor over their smoothies that they make down there, and about half way through, he just left.

[laughter]
Katie Fehrenbacher 13:03
Are you serious?
Joe Gebbia 13:05
The smoothie’s still on the table, this is our very first pitch.
Katie Fehrenbacher 13:14
Did you send him a xerox copy of your $2.5 billion valuation from last year?
Joe Gebbia 13:19
I remember looking at Brian and just thinking “Is this what pitching to investors is supposed to be like? We had no idea. Each experience had its own quirk or moment of rejection, that one was really hard. We just kept going, we were so passionate about this. We earnestly believed that one day, there would be millions of people around the world sharing their homes with each other. We just had to keep going until we could get that break.
Katie Fehrenbacher 13:47
One of the liabilities was that you were designer-founder, but nowadays it seems that’s not only celebrated, but it seems that investors are actually looking for those people now.
Joe Gebbia 13:57
I think it’s come a long way, and maybe because of what John Mehta talked about yesterday, which was that things are moving from– the speed of computers is less important now than the experience that is created for the customer. I think designers are just naturally inclined and trained to think an end-to-end experience. I remember distinctly a moment at RISD when we were in the industrial design department, we were working a medical device, and the place that we started the project was not actually in the studios, it was in the Rhode Island hospital. We went as a class to the hospital, we had a chance to talk with doctors, talk with nurses, talk with patients, and then the pivotal moment was when we actually laid down in the hospital bed. We had the existing device applied to us and thought “Wow, that’s really uncomfortable.” It was in that moment where we were married to the problem, we felt it first-hand and we could empathize with the person we were designing for, with the audience. That level of empathy can form you in such interesting ways. That’s a thread that we’ve carried through even to the comfort of the office, and go out into the world and actually meet your customers, talk to them first-hand. We knew our first 30 or 40 hosts on a first-name basis. Some of them we even knew their birthdays. Some of them are still on my cellphone. That’s how closely we were connected to our customers in the early days. Again, the thousand paths, they helped us narrow in on something that was truly valuable to them, and that’s what we built.
Katie Fehrenbacher 15:52
How do you maintain that connection to your customer and maintain that type of experience when you scale to something so large?
Joe Gebbia 16:02
Well, I think there’s one thing that’s also a constant thread, everyone on the team is also a customer. We blur the line of the community, it’s actually a broad line. Everybody in the company is a guest, everyone’s used the service as a traveler, we provide a stipend every quarter for our team members to go out into the world and travel, and actually about a third of the company are active hosts on Airbnb. I can’t tell you how many bugs we’ve found, how many product ideas have come up, simply by using the product ourselves. At the end of the day, it gives us a deeper, more profound sense of empathy for the audience we’re designing for.
Katie Fehrenbacher 16:50
One thing about the experience of the sharing economy is trust obviously, it plays a huge role obviously, part of that entire experience. Are there things that you guys have built into the product over the years, maybe the less obvious things, about maintaining that type of trust?
Joe Gebbia 17:04
Certainly starting off, it was really hard. We have a two-sided marketplace. You have buyers and sellers, guests and hosts, and you have to grow both simultaneously, you can’t really have one without the other. In the case of our business, trust is the lubricant that makes it all work. I think of the service as like a car engine. It has all these moving parts, the pistons, the valves, the hoses, the belts, and the thing that makes it move forward, the lubricant, is trust. That’s what moves our business forward. We think a lot about this. In the early days– well, there’s actually three things that make it work. There’s reviews, there’s profiles, and there’s the payment system. We’re able to allow people to transact safely and securely, we allow them to see who they’re mutual friends with, we have a feature on the site called “Social Connections”. You can actually browse through Airbnb, and just stay with people who are mutual friends, or people that graduated from the same place you did. I think ultimately the biggest thing is social proof. If you see your friends using a service, you trust it more.
Katie Fehrenbacher 18:16
We were talking about this a little bit backstage, less about design but the whole policy issue that’s going on with Airbnb in various places right now, in New York specifically. What’s your take on that, is Airbnb rolling out different types of solutions in New York, how are you guys dealing with that?
Joe Gebbia 18:37
I think it’s an example of an innovation entering the world that is ahead of where policies were drafted. Actually, history is full of examples of this. One thing I discovered is that when ATM machines came out in the 1970s, they were actually illegal in many states. It took almost a decade for ATMs to become a commonplace convenience. Same thing for VCRs, the first VCR patent was in the 1950s, and it took a couple of decades for the VCR to get past the movie industry and actually become a commonplace everyday thing. I think this is par for the course.
Katie Fehrenbacher 19:15
My final question for you, do you think designers make better founders?
Joe Gebbia 19:20
I think Brian and I alone would have designed a really interesting company, without Nate, our technical co-founder, it would have been an incomplete family.
Katie Fehrenbacher 19:31
So yes maybe? Thank you so much Joe, that was great.

[applause]