Brian Chesky is drawing intently on a napkin. We’re sitting in the President’s Room at Airbnb’s airy, ultra-chic headquarters in the SoMa neighborhood of San Francisco. Other meeting spaces in the historic building, which the company moved to in 2013, are designed to replicate an Airbnb rental in Fiji or the war room from the movie Dr. Strangelove. With its wood-paneled walls, leather club chairs, and a model of a ship on the coffee table, the President’s Room retains the feel of the original executive quarters from 1917, when the building was built to house a battery factory. After a moment of serious sketching, Chesky holds up the napkin to show me his picture: It’s a boat. And, it must be said, for a graduate of the Rhode Island School of Design it’s a rudimentary-looking vessel. But the quality of the drawing is not the point. I’ve just asked Chesky how his management style has evolved, and the boat is his answer.
“If you think about it, Airbnb is like a giant ship,” he says, holding up the napkin. “And as CEO I’m the captain of the ship. But I really have two jobs: The first job is, I have to worry about everything below the waterline; anything that can sink the ship.” He points to the scribbled line of waves that cuts the boat in half, and below that, two holes with water rushing in.
“Beyond that,” he continues, “I have to focus on two to three areas that I’m deeply passionate about—that aren’t below the waterline but that I focus on because I can add unique value, I’m truly passionate about them, and they can truly transform the company if they go well.” The three areas he’s picked: product, brand, and culture. “I’m pretty hands-on with those three,” he says. “And with the others I really try to empower leaders and get involved only when there are holes below the waterline.”
It’s a high-level, strategic way of thinking about management, something that sounds more out of the playbook of Jim Collins or Peter Drucker than a 33-year-old first-time CEO. And in fact there is an outside source for this bit of wisdom, but it’s not what you might expect. Chesky learned the boat theory from George Tenet, the director of the CIA from 1997 to 2004 and now a managing director at the investment bank Allen & Company. Chesky was introduced to Tenet a few years ago and asked to set up a meeting.
It may seem odd for Chesky, the CEO of the company that, along with ride-sharing giant Uber, has become the poster child for the so-called sharing economy, to seek advice from the man who signed off on the intelligence that led to the 2003 U.S. invasion of Iraq. But Tenet is just one of a long list of leaders Chesky has sought out since co-founding the home-rental website—some inside the box and some very far outside it. Others he’s reached out to for lessons include Berkshire Hathaway’s BRK.A -0.89% Warren Buffett and Disney DIS -2.46% CEO Bob Iger; a long list of tech luminaries that includes Apple’s APPL 0.00% Jony Ive, LinkedIn’s LNKD -0.64% Jeff Weiner, and Salesforce.com’s CRM -3.68% Marc Benioff; and a separate group he’s taken posthumous lessons from, including Steve Jobs, Walt Disney, George Bernard Shaw, and Dwight D. Eisenhower. “It’s kind of like the old Robert McNamara saying,” says Chesky, referencing a comment about nuclear weapons by the controversial 1960s U.S. defense secretary to explain his own voracious pursuit of management knowledge. “There’s no learning curve for people who are in war or in startups.”
It wasn’t so long ago that the preparation for running a company of that size came only one way: by working one’s way up through the ranks, demonstrating “leadership potential,” and then embarking on a years-long process of being moved through a series of CEO-in-waiting posts. But the current tech-industry climate has turned that thinking on its head. Young people with a single, powerful business idea are thrown into CEO positions by default and not by training, and it happens very, very quickly. And while no unicorn is without investors and other advisers offering plenty of opinions and advice, the CEO is largely on his own, steering the ship—and occasionally drawing it on a napkin.
Chesky, who in 2008 had never heard of an angel investor or read TechCrunch, knows this better than anyone. “It’s not natural for someone like myself to be at art school, to then be unemployed, and then five or six years later have this,” he says. “Nothing really prepares you for that.”
His solution, then, has been to hack leadership by going far and wide in search of best practices. So far, that approach seems to be working for Chesky, thanks in part to the fact that he has a temperament well-suited to the quest for mastery, as we’ll see. But the story of Chesky’s evolution as an executive also offers a window into the way the new economy has turned conventional CEO-ing upside down—and may offer a new playbook for leadership development.
Ask anyone who knows Chesky what he’s like, and he will say one of a few things: Intense. Focused. Really, really, really curious. As soon as we sit down to talk for this article—the first in-depth profile of Chesky himself, rather than the company—he starts quizzing me about the process. He’s surprised that he is actually the subject of an entire story. He wants to know how the day is going. I list the half-dozen executives I’ve already interviewed. “Wow, this feels like a 360-degree performance review,” he says. “The only difference is the whole world will read it.” He presses on: “What are the themes? Or do they come later?”
By now, the story of Airbnb’s origin is lore in Silicon Valley and beyond: In October 2007, Chesky and Joe Gebbia, two unemployed RISD graduates, were broke and staring at their rent due date. So they came up with the idea to pull some of Gebbia’s air mattresses out of the closet and sell sleeping space in their apartment to attendees of a sold-out design trade show. They called it the Air Bed and Breakfast. (The “continental breakfast” consisted of untoasted Pop-Tarts.) Three people bunked with them that weekend, and the idea got some attention on design blogs. A few months later their engineer friend Nathan Blecharczyk joined Chesky and Gebbia as the third co-founder, and in August 2008 the site debuted as Airbedandbreakfast.com, an online platform for people to rent out space in their homes. Chesky gravitated naturally to the role of leader, with Gebbia focused on design and Blecharczyk on technology.
Many experts and Silicon Valley luminaries were highly skeptical of the Airbnb concept at first. But the idea took hold, and the following spring the founders were accepted into the prestigious startup incubator Y Combinator, run by venture capitalist Paul Graham. They soon shortened the name to Airbnb and expanded from offering shared spaces to properties including entire homes and apartments, castles, boats, and tree houses. In November 2010 the trio got their first round of VC funding. Today Airbnb has roughly 2,000 employees operating out of 21 offices worldwide, and offers its service in 34,000 cities.
Ask Chesky what he didn’t know about management in the early days, and he barely knows where to start. “It’s kind of like, what did I know?” he says. But he had no choice but to plunge in; the company couldn’t wait for him. Chesky says he learned two ways: first by trial and error (“it’s the old adage about jumping off a cliff and assembling the airplane on the way down”), and second by teaching himself how to go deep on subjects fast—specifically, by using a process he calls “going to the source.”
Rather than trying to learn every single aspect of a particular topic, Chesky found that it was more efficient to spend his time researching and identifying the single best source in that area, then going straight to that person. “If you pick the right source, you can fast-forward,” he says. It’s an approach that has served him again and again.
Chesky and his co-founders’ first “sources” were their earliest advisers, tech entrepreneur Michael Seibel and Y Combinator’s Graham. Reading was also an early part of the regimen. For Chesky, a source may come in the form of a biography of a business hero such as Steve Jobs or Walt Disney. His primary book source on management technique is Andy Grove’s High Output Management. To learn the ins and outs of hospitality, he went to the Cornell Hospitality Quarterly, a scholarly journal published by the Cornell University School of Hotel Administration.
As the company became more prominent, so did Chesky’s sources. Soon came meetings with Facebook’s FB -3.24% Mark Zuckerberg, Amazon’s AMZN -3.37% Jeff Bezos, and eBay EBAY -2.12% CEO John Donahoe. He went to Bob Iger and Marc Benioff to ask how they push their executive teams to do more. From Facebook’s Sheryl Sandberg he picked up tips about efficiency in scaling internationally.
A key aspect of Chesky’s sourcing theory is what he calls “synthesizing divergent ideas”—basically, going to unexpected sources for insight. To learn how to become an elite recruiter, for example, Chesky might skip talking to an HR exec and instead seek out a sports agent, whose business lives and dies by attracting talent.
Similarly, Chesky reached out to Tenet not for tips on global security, but for corporate culture: How do you create an open and transparent atmosphere when you’re in the business of secrets? From their conversation, he took away the importance of “walking the park,” Walt Disney’s theory of being a visible manager. Tenet told Chesky he would eat lunch in the cafeteria every day and sit at a different seat. Chesky says Tenet also taught him the importance of sending handwritten notes to employees. The former CIA chief told him that some of the most meaningful moments in his job were when he’d see a card he wrote an employee years ago still tacked on to his or her wall. And, of course, he gave Chesky the boat theory.
One of Chesky’s biggest source triumphs was his audience with Buffett. A little over a year ago, Chesky reached out and asked if he could travel to Omaha to have lunch, in part to talk about how Airbnb might help expand the number of rooms available in town during Berkshire’s annual meeting weekend. The discussion ended up lasting 4½ hours. Chesky’s biggest takeaway: the value of not getting caught up in the noise. “He’s literally in the center of Omaha,” Chesky says. “There’s no TVs anywhere. He spends all day reading. He takes maybe one meeting a day, and he thinks so deeply.” The experience made such an impact on Chesky that he went to the airport, and, afraid he would forget the conversation, immediately wrote a 3,600-word report and sent it to his team. For his part, Buffett says he sensed in Chesky a genuine passion for building his company: “I think he would be doing what he’s doing if he didn’t get paid a dime for it.” Buffett’s take on Airbnb? “I wish I’d thought of it.”
Communicating the various pieces of wisdom he picks up as he learns them is a key part of Chesky’s management style. Earlier this year he started a “Sunday night series,” a weekly all-company email summarizing a principle or lesson he’d learned. A recent three-part series focused on—fittingly—how to learn.
Chesky has been obsessive about his pursuits since childhood. “From a very young age, you could see that he didn’t just dabble in something,” says his mother, Deb Chesky. Brian grew up in Niskayuna, N.Y., outside Albany, the son of two social workers. (His sister Allison, five years his junior, is a fashion editor at Real Simple, which is owned by Fortune’s parent, Time Inc.) Chesky’s first passion was hockey. After he got a full set of gear for Christmas one year, he insisted on sleeping in it—pads, skates, stick, and helmet. Later a hobby of drawing and redesigning Nike sneakers grew into a passion for art. He would disappear to the local museum for hours to draw replicas of the paintings.
His natural leadership potential surfaced at RISD, where he served as the captain of the hockey team and was eventually selected to be the commencement speaker at his graduation. Chesky threw himself into the task, studying every commencement speech he could find; to make the experience less intimidating, the night before his address he stood at the podium and watched as the staff set up 6,000 chairs one by one. “Who does that?” muses Deb Chesky.
After graduation, Chesky’s friend and classmate Gebbia told him that he had a premonition they were going to launch a business together. “I said, ‘Before you get on the plane, there’s something I need to tell you,’ ” says Gebbia. “ ‘We’re going to start a company one day, and they’re going to write a book about it.’ ” Chesky first moved to L.A. to become an industrial designer, but soon decided to join Gebbia in San Francisco. Eventually, they ran short of rent money, and inspiration struck.
The biggest leadership lesson for Chesky so far came from the company’s most significant crisis to date. It started when a San Francisco host’s home was burglarized and ransacked by renters in June 2011. The company initially put forth a lackluster response from Chesky, but the host—a woman known as “EJ”—rebutted in a blog post his claims that the company had done everything it could to help her. Then Airbnb went silent, and the story got louder.
Inside Airbnb everyone had a different opinion on how to handle it. Some argued that taking responsibility would just open the door to more complaints; others said to put the truth out there; still others said the company should stay totally quiet. The situation dragged on for weeks. “I finally had this really dark moment and I got to the point where I wouldn’t say I stopped caring, but my priorities completely changed,” says Chesky. “And I basically said I should stop managing for the outcome and just manage to the principle.” He needed to apologize, Chesky felt, even if it might hurt the company.
Chesky composed a strongly worded letter accepting responsibility. “Over the last four weeks, we have really screwed things up,” he wrote. He not only said he was sorry but also announced that the company would be implementing a $50,000 guarantee. “All of this was against advice,” Chesky says. “People were like, ‘We need to discuss this, we need to do testing,’ and I said, ‘No, we’re doing this.’ ” He did have a key assist from one major source. Marc Andreessen, co-founder of VC firm Andreessen Horowitz and an investor in Airbnb, added a zero to the amount of the guarantee, which Chesky had first set at $5,000.
Chesky’s primary takeaway from the experience was to stop making decisions by consensus. “A consensus decision in a moment of crisis is very often going to be the middle of the road, and they’re usually the worst decisions,” he says. “Usually in a crisis you have to go left or right.”
For his team, it was a defining moment in their confidence in him as a leader. “That’s when I really saw what Brian was made of,” says Joe Zadeh, head of product management. “That was the turning point where I had 100% confidence in this company’s leadership and was ready to take any challenge the world threw at us.”
Despite its rapid growth, Airbnb has endured plenty of challenges. The service runs afoul of local laws and regulations in many cities in which it operates. In its hometown of San Francisco, until recently, all short-term residential rentals without a permit were banned. Landlords, co-op boards, and urban neighbors are often hostile.
New York, which passed a bill in 2010 saying that owners or tenants can’t legally rent their apartment out for less than 30 days unless they’re living in the same space, has been a particularly tough battleground. The attacks on Airbnb got so bad in 2013 that Chesky went on a charm tour, meeting with dozens of politicians, hoteliers, real estate moguls, and influential members of the press. The tenor of the conversation in New York changed after the tour, but the city hasn’t budged on the law. Other markets, though, have been opening up: A new law in San Francisco legalizing short-term rentals went into effect in February. Nashville, Philadelphia, and San Jose have announced similar legislation, as have London and France. “I think we’re moving away from the divisive era into the more mainstream era,” Chesky says.
Airbnb is often seen as a competitor to the major hotel chains. Chesky challenges that view and insists that hotels have continued to thrive even as Airbnb has grown. He says that these days Airbnb has a “pretty healthy relationship” with the likes of Marriott, Hilton HLT -1.31% , and Starwood HOT -1.41% . In 2013, Chesky recruited Chip Conley, founder of the Joie de Vivre hotel chain and a respected figure in the industry, to focus on hospitality. Conley says executives from four of the six biggest hotel chains have come to the Airbnb headquarters for a day of “immersion.”
But the more Airbnb grows, the more it has the capacity to take business from hotels. Last year the company launched Instant Book, a new category of listings that don’t require approval from the host and allow for immediate, hotel-like booking. Now Airbnb is making a push into business travel, including a partnership with travel management company Concur that has seen Airbnb land some 150 corporate accounts so far. It’s likely that the mainstream era will be just as competitive as the one Airbnb is leaving behind.
It’s a Wednesday in early February, and Chesky is standing on a stage at Pier 48 in San Francisco. This is One Airbnb, the company’s weeklong annual all-hands confab, and more than 1,800 employees are packed into the venue for Chesky’s keynote address. He talks about the importance of being “crazy”—of not “editing your imagination,” not listening to the voices that say something’s not possible. Safety questions, legal challenges, competitors—none of those things can destroy Airbnb. “The thing that will destroy Airbnb,” he says to thunderous applause, “is if we stop being crazy.”
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Chesky is particularly obsessive when it comes to culture. In 2012, he asked another key source—the iconoclastic investor Peter Thiel—for the best advice he could offer. Thiel’s immediate answer: “Don’t fuck up the culture.” Thiel said it was almost inevitable that the culture would go awry once a company reached a certain size. So Chesky doubled down on his focus. “If you break the culture, you break the machine that creates your products,” he wrote shortly thereafter in a missive to employees. He welcomes new hires each week with an hour-long Q&A session in which he encourages them to be bold and to be “crazy.” His passion for his product occasionally verges on evangelism, such as when he tells employees they are there to “design the future world we want to live in.”
After years of his own executive education, Chesky has collected a cabinet full of philosophies, opinions, truisms—and a healthy dose of jargon. Chesky talks a lot about “up-leveling,” or pushing himself and others to think bigger. That’s not to be confused with “skip-leveling”—the process of talking to people at all levels of the organization. Chesky is also fond of discussing “step changes,” or single moves that have a great effect.
But Chesky is quick to acknowledge that he still has weak points. He takes too long to hire executives, he says, and also too long to acknowledge when things aren’t working out. Another skill he’s still perfecting: the art of listening. Chesky says that when he was 6 years old his parents had his hearing tested. “They thought I had a hearing problem,” he says. “Apparently I just had a listening problem.” Chesky is working on it, but says that he has so much energy and is so “action-oriented” that it can appear that he isn’t listening when he is. Investor Graham says Chesky’s approach may not be out of the Harvard Business School playbook, but it’s effective. “He’s sort of missing all the stuff they teach at HBS,” says Graham. “But he’s the kind of leader who leads people to do things that he himself believes in.”
In Andreessen’s view, Chesky’s biggest challenge is the sheer amount of information he has to process while growing such a fast-moving organization. “Some people lean into that,” says Andreessen. “Brian loves it. One of the things that makes him distinctive is he’s up for the challenge.” Andreessen says he views him as “one of the best new CEOs since Mark Zuckerberg.”
This has been something of a breakout year for Chesky. In April, he was on the Time 100, and his presence at the White House Correspondents’ Dinner (seated at Fortune’s table) made headlines as a symbol of Silicon Valley’s growing presence in Washington. In May, President Obama appointed Chesky a presidential ambassador for global entrepreneurship.
Chesky and girlfriend Elissa Patel at the Time 100 in April.
Photograph by Taylor Hill—Getty Images
Even as his profile rises, however, Chesky has been working on a new project: finding balance. He has learned that if he is going to stay in his job for the long run, he must develop techniques to “refill the reservoir.” The key source in that effort is Elissa Patel, his girlfriend of two years (they met on Tinder), who recently left photo app Frontback to start her own venture. They do yoga together every Thursday morning. And since Chesky’s apartment is still listed on Airbnb—yes, you can Airbnb the CEO’s pad—the occasional guest joins in. He and Elissa often do “staycations,” booking an Airbnb in a different neighborhood just to experience it.
Looking to the future, Chesky says that not a single one of Airbnb’s investors has pressured him to take the company public anytime soon. But he’s well aware of the expectation that an IPO will happen eventually. And he does offer a little hint on timing. “If we decided we wanted to go public, we’d want to give ourselves a couple years to really prepare, to have that runway,” he explains. “I always thought of it as a two-year project. And we won’t start thinking of that for at least a year, and maybe two years.”
That should give him plenty of time to get his sources lined up.
NOTE CREDIT: http://fortune.com/brian-chesky-airbnb/