00:00It was never meant to be a business. How could you trust a stranger ever in your own home?
00:03This was really the insight that turned everything around when we were on the verge of quitting.
00:13Welcome to this special live edition of The Big Question from Brussels. I'm Angela Barnes.
00:20Now on The Big Question, we dive deep into some of the biggest topics on today's business agenda.
00:27It is my great pleasure to please welcome our special guest, Nathan Placharczyk, who is the co-founder and chief
00:35strategy officer at Airbnb.
00:38I would love to get started with talking about Airbnb's backstory because, of course, you co-founded Airbnb in 2008.
00:46Did you expect it, first of all, to become as big as it has become now today?
00:51In the early days, folks didn't even like the idea for the most part.
00:55They said, how can you trust a stranger ever in your own home?
00:57Well, today, fast forward, we have 9 million homes on the platform in 220 countries and territories across 150,000
01:05different cities.
01:06More than 2.5 billion people have stayed in other people's homes.
01:09I think it's amazing how we've created the trust necessary to create this kind of exchange at global scale.
01:16And last year, for example, 92 billion was transacted on the platform.
01:21And the majority of that income went to the individuals hosting their homes.
01:30What was your original inspiration for Airbnb?
01:34When it began, it was never meant to be a business.
01:36I was in San Francisco with my two other roommates, and we were just trying to solve our own problem,
01:41which is how to pay the rent one weekend.
01:43You see, the rent on our apartment had just been raised 25%.
01:46And I said, that's too expensive. I'm moving out here.
01:48The two other guys wanted to stay.
01:51But they had just quit their jobs to become entrepreneurs.
01:54They didn't have the money to pay the rent either.
01:56But they're both designers by background.
01:58And they saw that a design conference was coming to San Francisco.
02:01And they noticed that all the hotels were sold out.
02:03And so they decided to rent out the extra bedroom in the apartment to designers who might need a place
02:08to stay that weekend.
02:09And this bedroom was empty. It had no bed.
02:11So they set up an air bed.
02:13So instead of calling it a bed and breakfast, they called it an air bed and breakfast.
02:16So Airbnb is short for air bed and breakfast.
02:18And they ended up hosting three designers that weekend who got an affordable place to stay.
02:22Joe and Brian made enough money to pay their rent that month.
02:26And all five of them, I guess, went to the conference together and had a great time.
02:30And so it was really a win-win.
02:32And it was out of that that we thought to ourselves, why don't we make it just as easy to
02:35book someone's home as a hotel?
02:37And we set off to do that in 2008.
02:39But it wasn't until 2009 that things changed.
02:41Did you all just say, well, this is becoming a really big deal now?
02:44Was that the turning point in 2009?
02:47Well, basically, at the end of 2008, we were on the verge of quitting.
02:49And we joined an accelerator program called Y Combinator.
02:52And long story short, at the end of the 12 weeks, instead of deciding to quit, we had actually turned
02:58around the trajectory of the company and were successful in raising our first venture capital money.
03:03I saw a quote from you where you said, it's better to have 100 users that love you than 1
03:09,000 users that like you.
03:11Find your evangelists and build for them.
03:14Can you just talk us through this philosophy and essentially how you followed it at Airbnb and why it's so
03:21important?
03:22This was really the insight that turned everything around at the start of 2009 when we were on the verge
03:27of quitting.
03:27It was basically that you need to focus on finding what the Internet and tech world is known as product
03:34market fit.
03:35But the way you do that is by focusing on finding a few people and turning them into your evangelists.
03:39The advice we got was go meet your users.
03:41We would fly to New York and meet our users.
03:43But how do you meet your users when you're an Internet company?
03:46We noticed that a lot of them didn't have very good photos of their homes.
03:50So we thought to ourselves, why don't we offer them free professional photography?
03:55So we'd call and say, would you like a professional photographer to come to your home?
03:58And people would say, well, they're a little surprised, but they say, sure.
04:01Well, knock, knock on the door is actually my co-founder showing up to take the pictures.
04:05Well, in the home, they would also provide a tutorial on how to use the website, gather product feedback.
04:10Through that interaction, we formed a bond with these first 50 hosts in New York.
04:17And they wanted us at that point to succeed.
04:19We had in New York City apartments that had great photos, great prices.
04:25And these hosts would host somebody from Paris, let's say.
04:29They'd make $500.
04:30They would then tell their friends.
04:32Their friends would sign up.
04:33They would see the high standards on our site in terms of the photography and the effort people had put
04:37in.
04:38And they'd look to emulate that.
04:39And so that just got the flywheel spinning.
04:41And after that, it started growing.
04:44We've seen some cities ban or place heavy restrictions on short-term rentals.
04:50How has that affected your business?
04:53At this point, after 18 years, Airbnb is heavily regulated.
04:56If you look at our top 200 markets, 80% of them have regulation in place, oftentimes for more than
05:01a decade.
05:02And despite that, we've still had very successful growth.
05:06Our general approach has been to partner with cities and be supportive of their desire to regulate.
05:11The trick of any regulation is finding the right balance to focus on the objective and root that in data
05:18without over-regulating in such a way that prevents economic growth or opportunity.
05:24We've had examples of over-regulation, like Amsterdam in 2019 passed regulation that resulted in 54% of the listings
05:33on Airbnb being removed.
05:35The motivation for that was housing costs.
05:38But what played out over the next five years, although the number of listings dropped in half, the rents increased
05:42by one-third.
05:44And so there was no impact by that regulation on the cost of housing.
05:48And we've started to see some cities realize that and evolve.
05:51So, for example, Edinburgh had a similar experience where they kind of over-regulated, didn't see the impact on housing
05:57prices,
05:57and then pulled back some of the regulation.
06:00Same in Lisbon.
06:00Nathan, what do you think, what can you say to policy stakeholders about how Airbnb customers can positively contribute to
06:07local communities?
06:09Tourism in general is a huge driver of the economy generally and local economies.
06:13In the EU, we estimate Airbnb's impact is about 149 billion euros to GDP, supporting 2.1 million jobs.
06:22Of course, if all that tourism is going to one place, that can lead to an over-concentration.
06:27But one of the special things about Airbnb is how we can disperse tourism.
06:31All these homes are not just in one neighborhood downtown.
06:34They're throughout a city and actually throughout the country.
06:37If you look at our business in Europe, 60% of the nights booked are not in cities at all.
06:41They're actually in rural areas.
06:43Many of these small towns don't even have hotels.
06:45They didn't have accommodation.
06:46They weren't able to support tourism.
06:48And now visitors can have more local, more authentic experiences.
06:53And these small towns are eager for it.
06:54If you were to pinpoint one of your proudest moments, what would that be, Nathan?
06:58I think, in general, what I'm most proud of is empowering people economically.
07:01But a specific moment that I'm most proud of, one of the creative ways in which we've used our platform
07:08more recently is to help displace people during natural disasters or other times of need.
07:13When the war in Ukraine broke out, the Airbnb host community opened up their homes, along with the help of
07:18donors, to host those who were displaced.
07:21And over this subsequent, let's say, 18 months or so, the Airbnb community hosted 140,000 refugees from Ukraine in
07:30their homes around the world.
07:32So, you know, that kind of capability just wasn't even possible in the world.
07:36There wasn't enough infrastructure.
07:37But we've crowdsourced and made a community.
07:40And in times of need, the community has really stepped up.
07:43Thank you so much, Nathan, for joining us on the question.
07:46It's been a pleasure.
07:48Thank you very much.
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