Joe Zadeh, Former Head of Product & Head of Experiences at Airbnb
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The theme of this masterclass is How to Get Your First Users and Grow and to cover this topic we have invited none other than Joe Zadeh, one of the first employees of Airbnb where he joined as the third engineer and played a crucial role in the company's growth and development. Over the years, he rose through the ranks to become the VP of Product and eventually the head of Airbnb Experiences, a division he led from its inception in 2016 until his recent departure.
Joe has played a crucial role in building the company from a startup to a public listed company with a current market capitalization of over $93 bn.
Joe has recently moved to Bologna with his family and is currently giving back to the italian startup ecosystem by mentoring and helping different startups.
Timestamps 👇🏼
The challenges of starting Airbnb (00:00:00) The interviewee describes how Airbnb started due to founders' inability to afford rent in San Francisco and the idea of providing accommodation during a design conference.
Expanding the concept (00:01:11) The interviewee explains how Airbnb expanded to accommodate a housing crisis during the democratic national convention in 2008 and the impact of unique marketing strategies.
The comparison with couch surfing (00:02:08) The interviewee shares personal experiences with couch surfing and how it influenced the perception of Airbnb's concept.
Acquiring customers and network growth (00:04:32) The interviewee discusses Airbnb's advantage in acquiring customers and the network effect, contrasting it with other service-based businesses.
Personal experiences and customer engagement (00:05:08) The interviewee narrates personal experiences of renting out their apartment and staying at others' places, emphasizing customer engagement and feedback.
Factors contributing to Airbnb's success (00:07:37) The interviewee explains how Airbnb's affordability, local experience, and controversial nature contributed to its success, leading to significant word-of-mouth promotion.
Evolution of Airbnb's platform (00:08:33) The interviewee discusses the evolution of Airbnb's platform from targeting conferences to broader tourism and the role of customer feedback in shaping the platform.
Hands-on community engagement (00:11:33) The interviewee emphasizes the hands-on approach to community engagement, including direct interactions with hosts and the importance of customer feedback.
Innovative marketing strategies (00:16:20) The interviewee highlights early marketing strategies, including unique PR stunts and the focus on getting extremely unique properties on the platform.
Referral program and word-of-mouth (00:20:32) The interviewee discusses the impact of Airbnb's referral program and the significance of word-of-mouth promotion due to the unique and differentiated nature of the core product.
The importance of an amazing product (00:20:56) Discusses the significance of having an exceptional product that customers love and how it drives growth strategies.
Customer engagement and feedback (00:22:46) Emphasizes the value of focusing on customer engagement, feedback, and hands-on interaction even as a company scales up.
Launching new business model: Experiences (00:26:06) Explains the strategy behind launching new business models, particularly the experiences feature, and the process of simplifying and focusing on new business lines.
Advice for startups and building user base (00:28:37) Provides advice for startups on building their first user base and the importance of having a product that is ten times better than existing options.
Founder traits and taking feedback (00:32:49) Discusses the essential traits of successful founders, emphasizing the need for an unstoppable vision and the ability to incorporate feedback.
Company culture and growth (00:40:21) Describes how the company culture at Airbnb evolved as the company grew, the founders' investment in culture, and the maintenance of a strong, cohesive culture across different offices.
Directing focus to the platform (00:43:48) Addresses the decision to transition from having a website that explains the platform to directly directing users to the platform.
The evolution of the Airbnb platform (00:44:26) Discussing the continuous evolution of the Airbnb platform, combining art and science, and the challenges of educating users about new offerings.
Strategies for growing a marketplace (00:46:48) Exploring the challenges and strategies for growing a marketplace, including the cold start problem and the network effects of marketplaces.
Impactful customer conversations (00:49:39) Reflecting on a memorable customer interaction that changed the interviewee's perspective on the power of Airbnb for hosts and guests, and the meaningful impact on people's lives.
EPISODE TRANSCRIPTION
Inès Makula (00:00:00) - Can you describe the initial challenges of the Airbnb faced in acquiring its first users?
Joe Zadeh (00:00:07) - Well, first of all, thanks for thanks for having me. It's really awesome. Awesome to be here. you know, Airbnb started largely because the founders could not afford to live in San Francisco. you know, Brian Chesky, the CEO, moved to San Francisco, and the next day they discovered that they couldn't afford rent. But there was also a design conference in town, and all the hotels were fully booked for the design conference. And so they had this kind of light bulb moment, which is like, well, we have this apartment, we can't afford a rent. There's a design conference with other designers that can't, people can stay there because the hotels are sold out. Let's solve this problem and set up some air mattresses on our floor. And thus air bed and breakfast was born. And I don't think they started by thinking this was going to be the company, but what they saw was something really special, that it was cheaper to stay there, but also there was a human connection.
Joe Zadeh (00:01:11) - People liked each other. and they decided to make this the focus and keep and keep building it. And, the next thing, the next time that they thought about doing a major push to have people stay together was the Democratic National Convention in 2008. And another situation where there was a housing crisis of sorts, and that there was not enough housing, there were not enough hotels for people to attend the convention. And this sort of had an added benefit, where all of a sudden this idea that you could, that you could open up your home and put up an airbed for people and serve and breakfast, was, really interesting and start getting picked up by the news. And because it's not, it's not a typical, at least in 2008, it wasn't a typical idea.
Inès Makula (00:02:05) - I remember there used to be couch surfing. Yes. Like back in the day. Right.
Joe Zadeh (00:02:08) - And that is actually how I came to Airbnb, more or less like I in 2007. I was very active on couch surfing, so I would I once.
Joe Zadeh (00:02:18) - Yes.
Inès Makula (00:02:19) - Here.
Joe Zadeh (00:02:19) - well, no, I go to other people's houses. So I was a grad student getting my PhD. And in the United States, you know, your PhD is paid for in sciences but doesn't pay so well. and so I traveled I would have to, use couchsurfing, and so I would sleep on random people's floors. one time I slept on someone's floor in Spain and Salamanca, Spain, and they didn't even have a pillow. But it was free. But it was so fun. And it was some of the best travel experiences of my life that I had this epiphany that you know, how much you spend on your accommodations doesn't necessarily equate to how good of a travel experience you're going to have. And so when everybody was saying the news was saying that, you know, Airbnb is a crazy idea, I knew, well, no, it's not crazy. But also what's nice is that if I pay to stay in someone's house, they'll probably have a pillow. They'll probably have a bed and sleep on the floor.
Joe Zadeh (00:03:18) - I'll wash the bed sheets. Yes. Yeah. So all those. So it added the it kept the, kept the, the community of couchsurfing. But it added that level of accountability with reviews and payment. And you know Airbnb holds the money between the transaction. So so it was a much better version of couchsurfing. And so I got I was very excited. Everybody said it was crazy. yeah. And I think in the early days, a lot of Airbnb's focus was on these sold out events where the hotels were sold out. and I think, you know, these, these sort of marketing events or press events or being on the news helped for very short period of time and then it drops. And so but they kept going at it and going at it and going at it. And you know, Airbnb is a network business where the bigger the network gets, the more people it attracts, the more people it attracts, the bigger the network gets. And I think that one of the advantages I think Airbnb had in acquiring customers over, say, Uber or, you know, just eat or DoorDash or something is that we would see that, you know, people travel from Paris to New York City.
Joe Zadeh (00:04:32) - New York was the first big initial market. and they'll stay in the they'll stay in New York and they'll realize, hey, my house in Paris is open, and a lot of people want to go to Paris. Why don't I open my house next time I travel? And then all of a sudden, the idea moves to Paris and the idea moves to London. The idea moves to Los Angeles. and it's a little different because when I, when I get in Uber, by definition, I need a ride, and I'm, I don't get out of the car thinking, oh, I'm going to go become an Uber driver now. But that's not the case with.
Inès Makula (00:05:03) - You can be actually the guest and also and a host and the host. Yeah.
Joe Zadeh (00:05:08) - I believe at the same time and, I think I really annoyed my girlfriend, who's now my wife. It's surprising after this that she's my wife. I, I convinced her because I was in a bit of credit card debt. San Francisco is very expensive.
Joe Zadeh (00:05:24) - and so I was a bit of credit card debt, and I joined the company. I wanted to try the product. So I convinced her that we should rent our our apartment out, which was in a good location for, like, $250 a night. and then we would go sleep on someone's in someone's living room on an air mattress for $50 a night. and so I would make the $200 a little a little inner city arbitrage, and, and we made, you know, I was able to, you know, pay back my credit card bills by renting my place out and staying somewhere else. And, you know, at first she was not excited about this idea, But then what was cool is that we just started staying in different parts of the city and exploring, like a new coffee shop on the way to work or new restaurants or, and also making new friends. Like, we, we've met some really cool people and had good conversations with them and just saw a different sort of glimpse into other people's lives in the same city, which were completely different than ours.
Joe Zadeh (00:06:31) - And and she became a big fan very quickly, thankfully. And, you know, still decided to marry me. so yeah, it was, really exciting time. But I also think, you know, Airbnb, you know, people are always looking for what is the thing that Airbnb did? What kind of growth hacking techniques? What is the thing that made a grow so fast? Like what did you do? Was it paid marketing? Was it some kind of hack? And the reality is, it's like what made Airbnb very successful was that it was a ten product, that it was half the price of a hotel four times the space, and it was way more local and it was extremely differentiated. Now, you know, at the time, and whenever you have something that's bigger, half the price and more local, you know, and people talk about their travel experiences, we don't we tend not to talk about the car we took to come here or the Uber, the taxi. But, you know, after a holiday, you talk about where you stayed and the house was super cool, or the place we stayed was super cool.
Joe Zadeh (00:07:37) - You got to check it out. Had an enormous word of mouth. And I think the fact that it also was considered somewhat of a controversial idea also helped it. Word of mouth. People couldn't believe that that you can do this. all those things together, I think, gave Airbnb this momentum, that, you know, allowed it to attract hosts, attract guests. And also, we were born in the, you know, financial recession of, in a sort of financial crisis, 2008, 2009, where people needed the extra money to, to save their home, to save their mortgage. So.
Inès Makula (00:08:14) - So, so you started with the target audience at the beginning was this conference was targeting these places that were going to go super expensive because of of a particular event. And then what was the next step then to kind of go into more like tourism, as you said, you know, like, did it happen naturally? Like that's how people started using the platform. They just started hosting in pairs.
Inès Makula (00:08:33) - Or was it something that you thought of long term, like, okay, this is the strategy. This is the vision that we're seeing. Like how much was it thought through or and how much do you let the platform kind of live and evolve on its own? Yeah.
Joe Zadeh (00:08:46) - And to be fair, I wasn't there during like those conference days. So, you know, what I share is more and more what I want to understand second hand. The founders did was I think they realized pretty soon that if this was just a platform for conferences, it would be a really tiny market. or it just turned out that those were good. Those were good points to, you know, rally people and get more get more houses on the platform and get people excited and and fulfill demand. But yeah, they're not always happening. too often. I think that they just when they would, when they would spend more time with their customers, they would they would learn more about how to help them, like how to make the supply, how to make the homes more appealing.
Joe Zadeh (00:09:39) - but the reality was is that you have markets like New York City where, you know, hotels were at the time so priced, it's priced so high that people couldn't afford to stay there. And people I think people, especially during the financial crisis, really needed, an alternative accommodation that was a lot more expensive and just turns out that it was in a lot of cases it was better. It was, as I said, half the price in four times the space. And and also, you know, and you look at a city like San Francisco, where my apartment was, was an amazing location. It was near the train. It was near mission. It was near everywhere that people wanted to be who were visiting. If you look at where the hotels are located and the hotel districts in the city, they're not really where locals ever go. It's not really like the real San Francisco in those areas. And so I think, you know, we had the added benefit that all of a sudden all these other coffee shops and stuff are getting more tourism dollars that usually just go to the the tourist areas of the city.
Joe Zadeh (00:10:46) - Now that now the tourism is getting distributed more broadly throughout the city.
Inès Makula (00:10:50) - And in terms of the community, I mean, it was so when Airbnb started, it was it was also kind of the start of Facebook. I think Instagram wasn't even there. You know, what were some of the community like engagement things that you were doing to to foster that, those initial first, let's say crazy early users because obviously like now Airbnb and obviously it's like a we think hotels or or BNB and most people rent out their entire flat. But sharing, you know, going in and sharing the room with somebody that not the room, but maybe being a part of the people if you've never met, that was it. The whole safety thing, that barrier. So how did you or how were you like fostering the community back in the day when it was just at the beginning of social media, like, were you doing events or.
Joe Zadeh (00:11:33) - Absolutely. It was very hands on. even in Y Combinator, like, you know, company went through.
Joe Zadeh (00:11:40) - Were you part of the. team? Okay, I can just try it after. Yeah. there was a time where, you know, Paul Graham was leading that was talking to the founders, and I think they were saying, you know, talking about some other challenges and kept, you know, telling them, listen, your hosts are in New York, but you're here in San Francisco, your hosts are in New York, but you're here in San Francisco, like you, you get the message? Like, go to New York and they would go to New York and they would be very hands on with the customers, have meetups, get to know all the all the hosts. and that's when they discovered, oh, like, the photographs aren't very nice on some of these. And that doesn't really create trust, as you were saying. And so they would they were they were designers. They had been trained at, professional design school. So why not? They just went and rented their own professional cameras and went and took the photos and uploaded them on behalf of the host.
Joe Zadeh (00:12:38) - And all of a sudden the place looks more interesting, the whole platform looks more trusted, and that also helps kind of grease the wheels and get it and get the the marketplace going. And I think those are the kinds of things that you may not understand if you're not there with your customers and, you know. Yeah. Airbnb also started with idea like, oh, we'll do air mattress as a breakfast or private rooms. And then one day there was, there's a musical artist, Barry Manilow, really big in the United States. I'm not these big in Italy. and his drummer would rent the place on Airbnb, but the drummer would be frustrated being like, when I go on tour with Barry Manilow, I want to rent my whole house out. And so I think that they hacked the system to allow Barry Manilow's drummer to rent the whole house.
Inès Makula (00:13:27) - Because at the beginning it was you can only rent the room, only.
Joe Zadeh (00:13:29) - Rent the room, or a shared space. So I think so.
Inès Makula (00:13:33) - He was the first he changed the platform.
Inès Makula (00:13:35) - Yeah.
Joe Zadeh (00:13:35) - It's actually it's really interesting how so many of the core Airbnb features were inspired by just talking to customers. Like, you know, Brian Wood used to tell a story where the first time, one of the first times he was staying on Airbnb, I think it was at South by Southwest in Austin. we, you know, the platform didn't even have a payment system yet. And so you'd be there and like, there comes a time where they have to discuss, okay, so how are you going to pay for this? And you get a checkbook out, write a check and hand the check over. And it was just awkward. and that was a big impetus for the payment system, which ends up being a big part of the business model and a big part of how of trust and safety. so I think that, you know, really being hands on with customers, I think in the tech world, a lot of folks are. Don't talk to customers. Don't look at customers. You look at numbers and metrics.
Joe Zadeh (00:14:35) - But when you're starting something new, your numbers and metrics are pretty meaningless. The best thing you can do, I think, is you really spend time with the customers. And so, you know, I was I started as an engineer and then I was the head of product for several years. And then, Ryan and I, we started the Airbnb experiences business, the tourist activities business, and we were very hands on and I was very hands on with, even when we were in a thousand cities, I would be doing an experience every week. I think I had more I've done more experiences on the platform, but not think anybody on the platform. Just spending time with guests, spending time with hosts, understanding all the problems with the platform. And I just, I think that there is a, there is a tendency to believe that all the answers are in the data. And I don't think that's true. I think that data tells you a lot, but I think that there's just some things you can't see in the data, because data is not perfect.
Joe Zadeh (00:15:32) - Data can't capture that. You'll see when you are really, really hands on. And that's a lot of feedback we give to yeah.
Inès Makula (00:15:40) - It's super relevant. And you know obviously Airbnb with Airbnb was started in 2008. So you can't apply everything to to now. But talking to your users, it seems like such a basic thing. But as you mentioned, not a lot of people do it or you tend to put it on the side. Yeah, that's like going to be taking like quite a big chunk of your time during the week. Yeah. or experience it firsthand how, you know, the users are experiencing it. And in terms of marketing strategies, because obviously getting from from zero to where over to where Airbnb has gotten there must have been also some like huge marketing campaigns or things that you've tried and tested. What were some of the most effective ones in growing?
Joe Zadeh (00:16:20) - Well, I mean, you know, as I mentioned, there was a lot of, a lot of like, early times.
Joe Zadeh (00:16:26) - PR the founders were really clever in their ability to get news coverage. I remember when I joined, like my first or second week, the iPhone four came out and, this was still one. There was a lot of excitement about the new iPhone coming out, and people would camp out, wait in lines. And so it was like 10:00 at night in the middle of the office, and we're still working. And we had this idea. Why don't we go put on a tent in front of the iPhone store or an Apple store, and then rent the tent out on Airbnb for someone to stay in the tent, to be first in line to buy an iPhone. Wow, I.
Inès Makula (00:17:04) - Didn't know this story.
Joe Zadeh (00:17:05) - I mean, it wasn't a big, wasn't big, but it definitely it definitely needed to do. Yeah, right. there was just always, always interesting things. Or we had our community team would be going around the world and doing doing the news and stuff. And the other thing, and this is actually what got me interested in the company was one of the early marketing pushes was, you know, the company didn't have a lot of money for like, any kind of campaigns or brand campaigns and stuff, and it didn't spend that much on paid on paid growth on Google or whatever.
Joe Zadeh (00:17:35) - But one of the things that they did was that they really focused on getting extremely unique properties on the platform. And so when I was first told about Airbnb, I went to the website and the first thing I saw was a Frank Lloyd Wright house, which is like a very famous American architect, Frank Lloyd Wright house that you could rent for less than a hotel. And I was obsessed with Frank Lloyd Wright. I was obsessed with architecture. And I had lived in Los Angeles near a Frank Lloyd Wright house that was closed to the public. I was always feeling very sad that I would never get to go in to go in it. And now all of a sudden, I see one of the platform for 300 bucks a night. And, you know, they I never stayed there, but it definitely brought me into the platform. The idea that you could go stay, in a large house made, like a large shoe house made in, you know, in Australia or something. I think all these types of very unique properties that, you know, it's not just this, you know, bedroom somewhere, it's it could be a castle, it could be an island.
Joe Zadeh (00:18:43) - It could be, a place where giraffes put their head through, you know, through the through the window and have breakfast with you. you know, in itself, it could be an experience, And I think that created a large amount of virality, for the company. And I think that Brian in particular is incredible at these kinds of sort of marketing, marketing ideas. I think even to this day, they still Airbnb's, you know, has, you know, when the Barbie movie comes out, it's like, okay, well, you can now rent the Barbie house and it's just you should Google it. It's amazing. It's this gigantic home in Malibu that is completely designed to look like a retrofitted look, like the Barbie house. And it's it's amazing. and I think that that nugget, you know, has been, in my opinion, one of the, one of the marketing approaches that their movie takes that doesn't seem to have a shelf life. It could go on forever.
Inès Makula (00:19:45) - Yeah, it's so interesting because it's not about the marketing spend, as you said.
Inès Makula (00:19:49) - It's not about the big campaign. It's really about making something. And then like, for example, having something a unique house, obviously you're going to take your phone and you're going to take a picture of that house and you're going to tag your Airbnb, or people are going to ask you, where do you where are you? Because I've seen it. I've been a user myself. And when you find exceptional places like people they want to know and to make it, to make your customers, basically your your ambassadors. And in addition to that, another thing that's been really, I guess, prominent in growing your your user base has been the referral program. Right. how big, how much, how much was the referral program like in terms of new users coming through the platform? What would you say the percentage was coming from the referral program? I couldn't I.
Joe Zadeh (00:20:32) - Couldn't say and I couldn't remember. But what I'll say is that, you know, coming back to this idea that the core product was so differentiated and so different and so unique and it, you know, didn't agree with conventional wisdom, that people talked about it by the word of mouth.
Joe Zadeh (00:20:56) - By far, was the majority of dominant way that Airbnb grew. And, you know, different people have different approaches to to startups or investing with the companies I work with. That is what I focus on is, you know, if you don't my opinion, if you don't have that core nugget of an amazing product that people like love to use and they want to talk to their friends about it, and you don't really have very much. And I think that things like a referral program or an advertising, I see them as, you know, icing on the cake or a way to add fuel to the fire, to something that's already, has a lot of potential, was already loved and already even, you know, there's a saying, I think it came out of Y Combinator that it's better to have 100 customers love you than a million customers kind of like you. And I think that's 100% true. And I, I love to invest in companies, even if they're tiny. They only have like a handful of transactions, almost no revenue.
Joe Zadeh (00:22:07) - But you see, you know, I've invested in a company recently at their center with me. Some of the stories that they're hearing from the customers, that customers are so emotional about it, they're already in love with it. And they're like one of ten customers. I am way more excited about that than a company that has figured out how to like, you know, bring their, you know, you know, CPA down to some number. And, you know, I think you can always scale something that is really special. It is, much harder to make something that is not so special go on forever.
Inès Makula (00:22:46) - And especially at the beginning, I think PolyGram said this like to focus on things that don't scale necessarily at the beginning, right? To get those ten years to really like, absolutely like love your products are talking about it, raving about it, rather than focusing immediately on how to scale this business. and you, your role was VP of product. So you're obviously listening to a lot of consumer feedback.
Inès Makula (00:23:06) - But when you grow, you know, it's it's easy. The beginning may be, you know, you have less users. You can call them on the phone, like where you as you started growing and you became like a proper like scale up company. how were you tracking user feedback to then incorporate that into product development and changes that you were making to. Yeah. Yeah.
Joe Zadeh (00:23:27) - I mean, first of all, we made it. We always made it so that, all employees could use the product. One of the things that was difficult was especially when you stay in a home, is that it wasn't necessarily easy to test, like, like I said, everybody use their product. There's one of the more complicated products to use because you're not always traveling, you know, especially as Americans. Americans don't travel all that much. and, you know, I would sometimes be jealous of companies like Facebook because everybody in Facebook is using Facebook, everybody, Instagram is using Instagram, everybody works on Airbnb, is using Airbnb, like organically, like three times a year.
Joe Zadeh (00:24:08) - but we still provided, travel credits, all employees. And we would encourage people. But I would say, you know, as I, as I worked with the company, the longer and longer I went back more back to the roots of being very hands on with customers and getting to know them myself like Like there were probably times early on where I was afraid to give customers my email. So I'm like, okay, I don't know how much, how many bugs and how many requests I'm going to get. You know, when I was running experiences, I would be giving my email out left to right, to all the hosts. I wanted to know every detail. And some people say, oh, it's just a focus group of one. You know, I would do these. I would do these tours like through Europe and through Asia, like, like every, every day, a different city. And I would meet with hosts. I would meet with hosts in Kyoto, in, in Osaka.
Joe Zadeh (00:25:03) - And then I would go to Shanghai, and then I got to go to Beijing and I would go to, you know, you know, Portugal, you know, everywhere, back to back. And yet I heard a thousand different things, but I also heard like the same three things every day from lots of people, and it became very clear what the major issues were and what the what the area of the prioritization was to be. and I think in retrospect, I could have done a much better job of that earlier. and I think, like many, I found that track by thinking that the data is going to tell me everything, but I think you'd be surprised that if, you know, even talking to as few as five customers, you can get a very good point of view of what the major issues are.
Inès Makula (00:25:49) - And then you launch an experience which is obviously a whole new business model for Airbnb. if people don't know, it's it's about basically going on tours or, experiencing local museums, right.
Inès Makula (00:26:06) - Or, or things like that. What was the strategy behind launching experience? Was it a way? Because at some point you grew so launched that, you know, obviously growth at the beginning is like this and that as you become huge, but growth isn't as maybe significant. Was it, was it because of that? Like, how did it, how did the idea come about and launching like a whole new business for for you?
Joe Zadeh (00:26:26) - I mean, the idea idea goes back to 2011? I mean, we we finished the, you know, the end. The year was coming, and we were realizing that, you know, this is a really Airbnb is a good idea. You know, what is Airbnb's future? This is this is stolen by today's standards when Airbnb is tiny. And so we have this idea that we would expand into the whole travel experience and that we would apply what made Airbnb home successful. We would apply it to the entire, travel experience, and it took us a number of years to get anything off the ground, and a bunch of ideas.
Joe Zadeh (00:27:12) - And even when we launched experiences, we launched alongside several other ideas like audio tours or guidebooks or, you know, maybe Airbnb will get transportation and flights. One day. We got into all this stuff and then we saw that, like the that the number one thing that our customers were gravitating towards that we thought captured what Airbnb could uniquely do best for these experiences. Because they were hosted there, were community driven there. On the surface, most similar to our homes business, although in practice they worked very differently. and so we decided, okay, focus. Another thing I tell a lot of companies is the most important thing you can do is simplify, cut, cut, cut. And we really focused on, on making experiences work. And, and certainly, you know, most companies, as they grow, they have to continuously innovate and create new business lines and keep expanding your, their business. Not only, you know, not only if a company's core business is slowing, but it also creates an ecosystem around the product.
Joe Zadeh (00:28:27) - And, you know, the biggest source of people taking experiences are people staying in homes. So it's made sense. They work very well together and.
Inès Makula (00:28:37) - Obviously there's a lot of founders in in the audience. What advice would you give? Would you give startups today who are looking to build out their first user base and grow it?
Joe Zadeh (00:28:47) - Yeah, I mean, so I. So yeah, now I'm a full time angel investor living in Bologna. I invest in music globally, so I'm one of the only music technology investors in the world. I don't know if that's a good idea because I investors tend not to like music, but I love music. So it's I describe it as my version of opening up a restaurant. Maybe it's a bad idea, but I love it anyway.
Inès Makula (00:29:13) - there's a few people who make it even in the restaurant world.
Joe Zadeh (00:29:15) - Yeah, yeah. I'm very involved with with music, Spanish here in Italy. I'm on the board and like and it's, you know, there's so many interesting companies especially now in pay.
Joe Zadeh (00:29:26) - So I do music investing globally. But then I'm also heavily involved in the Italian tech system. So I've invested in 12 tech companies and one bakery in Italy so far. and I, I spent a lot of time with Italian founders. I find myself kind of going back to the same piece of advice again and again. Again. The first thing is this idea of this ten x idea, this ten x product where the founders would come to me with an idea and it's good, it's a good idea, it's a cool market, but it's maybe like 10 or 20% better than what it already exists. And there's no way that's going to be successful. It needs to be, in my opinion, ten x better like Airbnb was initially started. And, I think it's often very difficult for founders to judge that for themselves because it's their special baby. It's their passion. They think, yeah, it's like, you know, it's like how every, every mom and every dad think that their baby is the cutest.
Joe Zadeh (00:30:35) - They all can't be the cutest, right? so.
Inès Makula (00:30:40) - Like, how do you measure that, though? Because, you know, when you can make, like. We all know that, like the startups at the beginning, they kind of make up a little bit of the numbers, you know, like, oh, we're going to do this. It's $1 billion business. Like how do you personally, as an angel investor kind of judge whether it's a ten year or ten times better?
Joe Zadeh (00:30:58) - There's a there's I'll tell you the things I don't look at. anytime somebody shows me one of those charts with, like, the checkboxes, I just tune out of the conversation because I once saw a cool picture that compared, a Ferrari hypercar to, like, a used, Ford minivan and the Ford minivan had the most textboxes. And I'm like, okay, like that, there's you can construct those things to me, anything. So I, I, you know, when a, when a pre-seed startup that has no traction is talking about size, it's, it's like a pointless, almost like a pointless exercise.
Joe Zadeh (00:31:37) - what I'm really, really looking for is an amazing founder. when I had a team at my, product management team at Airbnb. All the all the all the teams inside of Airbnb at some point had these, like, cute mascots. And the mascot of my team was the honey badger. which I think translates in Italian as a tassel being, like a tassel, like a badger, like. And they're considered the most fearless animal in the animal kingdom. And there's like, documentaries on them. And it just break out of every enclosure, and they fight with cobras, and the cobra attacks them with the venom. They fall asleep and they wake up and keep eating the cobra. And it's it's just unstoppable animals, incredible amount of grit. Even a lion can't, can't penetrate. And skin and skin is so thick. That's what I looked for in the founder. And to me, yeah, founders should be smart, but I'd rather have somebody who's a little less smart but super honey badger than than somebody who's, you know, so smart, but it's paralyzed and put it in a perfectionist.
Joe Zadeh (00:32:49) - and I and so I think I look for those kinds of founders and that, to me, matters more than, you know, what? They put on a slide about what the market size is. And also, you know, also, I do my own homework, but I think the number one trait that a founder needs and it's actually it's kind of an art. They need to be able to take that feedback. that hey, maybe you're maybe your product is interesting, but it's not differentiated enough to really make a difference to the industry. and I think a good founder is this artistic mix of completely unstoppable, borderline arrogant, extremely confident, but at the same time, they're able to take feedback. And some of the most successful founders I know are like that. They're unstoppable in their vision, but they also listen to feedback and they can incorporate it into their ideas. And, you know, I think the founders of Airbnb that way, there's been a number of successful companies that have are alumni of Airbnb.
Joe Zadeh (00:33:54) - Airbnb employees started companies. The ones that I'm aware of that have been very successful. They all have that trait of, you know, unstoppable vision, but with the ability to incorporate feedback. And I think that inability to incorporate the feedback is where I see some founders not being able to succeed.
Inès Makula (00:34:14) - It's such a fine line right between like not using kind of, you know, the path or the vision that you have. And also, you know, you feedback. Everybody gives you feedback. Right? So, so taking the right feedback from the right person that maybe knows a little bit more about. So that's the tricky part for a founder as well, right? Which feedback do you listen to when you're pitching to investors? And everyone's giving me a different answer. Yeah, but that's probably where the art or the magic. Yeah.
Joe Zadeh (00:34:41) - And I think, you know, sometimes it's complicated and sometimes it's not. Like I mentioned, I would get 1000 pieces of feedback, but everybody has the thing that they want.
Joe Zadeh (00:34:51) - But also everybody kind of said the same three things over and over again. And that's true. So if you hear kind of the same, I think really spending time with customers is the best way to get unstuck.
Inès Makula (00:35:02) - Thank you Joanna. We're going to we have 15 minutes left. So opening it up to the audience. Anybody want to ask to a question. There's always like that first person who needs to start with that right there. I don't know the name of everybody in the audience, by the way. And can you give a where's the microphone. Yeah. But just because we're going to record it, we're going to record here.
Speaker 3 (00:35:29) - Let's get it right. Thank you so much. I have a question. So as you mentioned, Airbnb started because it was cheaper and people needed to find a place for a cheaper stay. But then it became, as you were describing, like a very luxury experience. It can be also this way. So it's really interesting for me to understand how a company can migrate from a like low cost to sort of like a luxury experience as well, and sort of incorporate those a little bit more high end experiences and, and keep the same brand and sort of accommodate everybody because it's not always a easy way.
Joe Zadeh (00:36:09) - No, I mean, I, I agree with you. It's, it's and I think what makes it really challenging is that I think sometimes it's even easier for the public than it is for the internal employees. Right. Because the internal employees have a finite amount of time to spend on the platform. And it's like, who are you building for? you know, for me, it didn't seem like a big stretch. already, even if you're looking for a budget, accommodations, if you're staying in Paris for two weeks, even if you're staying in the budget place, it's still still a high ticket item. Airbnb was sort of always not like a $5 item. It was always something that was, for most people was expensive. And, and for a lot of people tended to be a once in a lifetime type of thing, even if they were on the lower end of the market. So I didn't I didn't foresee it being so different. certainly some people book very nice properties on the platform. and, but there there are some customers who say no, when I book something I want, you know, every little detail personalized.
Joe Zadeh (00:37:15) - I want people on staff or the concierge there and we think, and maybe there's a point in which, you know, Airbnb is not the right, not the right platform for them. Or the other thing is, sometimes you can find a host who will do those things for you. and so what was interesting about Airbnb was that, you know, you need it to work. You need to have a certain level of reliability. I mentioned, in contrast to couchsurfing, Sometimes I wait for two hours for my couchsurfing clothes to come get me. I didn't have a cell phone at the time and you can't have them here. You have to have clean towels or a clean bed, all these things. So you have to have that level of accountability and reliability. But that's not what makes Airbnb special. The other layer makes it special that everything is extremely unique. And so to me, the fact that you could have a million properties at any level that are all completely different is more the mind boggling thing than having different sort of price tiers.
Joe Zadeh (00:38:14) - And that to me was never really a stretch. But I think we also know that there's a level of customer, the kind of customer who, you know, is spending an incredible amount of money every night that, you know, maybe.
Speaker 4 (00:38:26) - They might be.
Joe Zadeh (00:38:27) - Better served, somewhere else. But, you know, you'd be surprised the kind of things people like. So. Yeah, I think at this stage, because, the way that, you know, network works, if you have a, if you have a property that you want to rent, whether it's a, it's a jungle hut in Costa Rica, which I've stayed in or if it's a, you know, gigantic villa in Tuscany, you have to be on a really. top.
Speaker 3 (00:38:55) - Yeah. Went the other way. Right. They went luxury town. Yeah.
Joe Zadeh (00:39:00) - Yeah.
Speaker 3 (00:39:01) - Uber is this other way.
Joe Zadeh (00:39:04) - That's a good point that you're repeating that you know Uber went the other direction where it got more standardized. You know Uber was always standardized but Uber does not have that layer of uniqueness.
Joe Zadeh (00:39:18) - And that's I think the fact that an Airbnb from day one could be a Frank Lloyd Wright could be sharing a room with Barry Manilow's drummer. Like the fact that those two things existed from the start, is, Ward more different than than the difference is Berkeley.
Inès Makula (00:39:39) - Any other questions?
Speaker 5 (00:39:48) - So.
Speaker 6 (00:39:49) - So first of all, thank you so much for sharing the story. And that was also living in S.F. in 2011 to 13. And I joined the opening party of the BNP I think was Brandon Street. Like yes, yeah, extremism is a radical and.
Joe Zadeh (00:40:03) - Our party has tended to be pretty good. Yes, I.
Speaker 6 (00:40:05) - Remember. So I would love to hear how the company culture changed. You changed as the company grew, as you open more offices internationally, and how you really managed to keep the core of, you know, what made PMP team special?
Joe Zadeh (00:40:21) - Yeah. And if you had come to a company party, especially around that time, you probably would have felt that it was a fun, a fun culture.
Joe Zadeh (00:40:32) - you know, I think the founders of Airbnb should get a lot of credit. they were very. I think they were very inspired by Zappos, who were one of the first companies. Zappos is, I guess Zalando would be the clone of Zappos that exists in Europe. they were really big on company culture, and they were they inspired the founders to really invest big on culture. And when I joined, we were like nine people. When it got bigger, you know, the founders would invest a ton of money, time and also money into the culture of getting people together and getting people to know each other, work together. having way more interviews than any other company to make sure that, that people have the same. You know, we want a diversity in terms of thinking, but also want to make sure we have enough shared values where we can move in the same direction. The founders just put a tremendous amount of effort, and even along the way, there'd be people who would be critics saying like, that doesn't make sense.
Joe Zadeh (00:41:34) - Where is the ROI on this? Why are you doing this? But the founders were maniacal about investing in the culture. And because of that, when we got bigger and bigger, the culture didn't dilute. It got stronger because you have these people that have, you know, our missionaries that have the same, have similar values kind of rubbing against each other. And it's it amplifies and amplifies. So I would say that like, five years in, the culture felt stronger than it did in the nine people. It was at that point also was articulate and clear. The founders did a great job of articulating the culture, which should not be outsourced to, you know, consulting firm. No, no. No offense. yeah, but it should be done by the founders. And also the founders had a good relationship. And I tend to think that, for better or for worse, most cultures will, start to reflect the relationships at the top. and the good and the bad. And there's always good and there's always bad.
Joe Zadeh (00:42:41) - so yeah, I think I think that was good. Also, when it comes to other offices. We were very we we did expand very quickly.
Speaker 4 (00:42:50) - But we.
Joe Zadeh (00:42:52) - Put a lot of effort into making sure that those offices, they, you know, you could walk into those offices and you feel like you're back in San Francisco and vice versa. and that was not by accident that there were people dedicated to making sure that that everything felt Airbnb, no matter where you go in terms of the people you work with, in terms of and in some ways when I go visit the offices, the culture would even be stronger in some of these places because the teams were the teams were smaller. So, so I couldn't comment on what, you know, I left Airbnb right before it went public, so I couldn't comment on I know how being public has changed the culture or whatnot, but, but certainly I would bet it's one of the better cultures to be a part of in the tech industry.
Inès Makula (00:43:42) - And. house.
Inès Makula (00:43:46) - Oh, sorry. The microphone.
Speaker 5 (00:43:48) - Hello? just one question. It's a detail. Airbnb? It is just directly. The platform has never been. It has never been, if I remember correctly. A website that explains what is Airbnb but is direct to the platform so you can directly search. Do you add the time in which if you wrote airbnb.com or whatever it was, the website, and why do you decide to move from the West? But the website explaining what that maybe is to directly the platform? Do you make a change at some point, or do you directly decide to go into the platform?
Joe Zadeh (00:44:26) - I think almost as long as I've been a part of it, it was almost always, you see, inventory immediately we've got we had gone through different iterations where you might have a more inspiring home page, where you might have more education up front, but I think, you know, you know, taking a step back, zooming up a little bit, I think that the best products are made from this combination of art and science.
Joe Zadeh (00:44:56) - And so when we have ideas like this, we would rigorously tested with like a B testing and stuff. And so I think I am sure that there are several engineers on the team that could have the exact, precise answer about why it is the way it is. and I think that that changes over time. I mean, I'm pretty sure right now most of you talk to most people on the streets, especially here in Milan. Like they'll know what Airbnb is. And if and if you're trying to do extra education, you might be getting in the way of people just trying to do what they want to do, which is to find the right platform for them. on experiences, we it was a bit different because there was a lot of education needed because it was a new type of business And I think if you were to go out in the streets and ask people like, hey, do you know that Airbnb offers tours and activities, most people would not know that. and so and so and how do you do that on one platform with two different offerings where one doesn't distract from the other is a very complicated, very complicated problem.
Joe Zadeh (00:46:01) - It just requires people.
Speaker 7 (00:46:04) - Really.
Joe Zadeh (00:46:05) - Designers and engineers and folks working very closely together, having strong hypotheses, testing them, iterating, and then making prioritization calls and judgments. There's never any there's never there's never any perfect homepage. Yeah. And I think even even Amazon heavily, heavily a B testing driven. But you know, for a long time I think Jeff Bezos had had the final say on what goes where.
Inès Makula (00:46:36) - Okay. I think we have time for one more question. Oh, there's a let me see the time. Maybe two more. Okay. And then the last one would be.
Speaker 8 (00:46:48) - I thank you so much for your presentation. My name is currently. And my question to you is like in the initial phase that you were in, in the starting point. On one hand, you need a lot of hosts, and on the other hand, on the other hand, you need a lot of guests and not of all of the guest hosts. So how did you manage this part? How did you manage like what was the strategy to grow really fast on both of these? On both sides?
Joe Zadeh (00:47:11) - Yeah, I think, this is this is a major this is what makes the network effects of marketplaces make them very powerful.
Joe Zadeh (00:47:21) - But it also makes it very complicated and very hard or very hard and complex to start. I guess it's called cold start problem. How do you get a new marketplace? How do you get a new marketplace, going? and as I said, I wasn't there through the initial initial parts of it. but I think in retrospect, I believe one thing that helped Was that the most the supply on the platform was going to be empty anyway. Like your extra bedroom, your extra home was going to be empty anyway. And there wasn't necessarily. I think that host probably had a bit of patience for the demand to sort of catch up. That's why I couldn't say that with certainty, but that's what I think happened. I think when you have different marketplaces like imagine someone joins Uber and it's just like sitting there for five hours waiting for a ride. Not getting paid when you start monetizing your time and not your, you know, asset that is just going unused. I think I think the marketplace works differently.
Joe Zadeh (00:48:21) - So I think there was some I think that there was some tolerance for, hey, I this is my place on Airbnb, but I haven't been booked at the same time as that. As I mentioned earlier, I think there was an incredible amount of demand because people wanted cheaper places to stay in better parts of the city, and it just didn't exist. And I think, when it comes time for like especially, you know, if you're American, you don't take many trips, that comes time to your annual family trip. You spent a lot of time during research, a lot of time googling, a lot of time talking to friends. And I think that that that really helped. But I mean, the short answer, the short answer, shortest answer I can give you is that Airbnb had a fundamentally better product that drove a lot of work out, and I think that was true not only for the guests, but for the hosts, especially at a time when people were struggling to pay their mortgages and pay their bills on their homes.
Joe Zadeh (00:49:21) - So I think that at the end of the day, that was it. But I think that Airbnb is a marketplace. It's more forgiving than that in some other places.
Inès Makula (00:49:33) - Okay, so last question.
Speaker 8 (00:49:39) - So among the 1000 probably customer conversations that you had. Which one changed you the most and the way you worked at Airbnb and why? I have a thousand.
Joe Zadeh (00:49:50) - Company conversations I had. I'll tell you, the first popped out of my brain. It was when I was interviewing, actually. so I yeah. So I interviewed, first of all for my interview. I didn't realize that that Airbnb was in an apartment, so I was coming from a corporate job and which I had been doing for like three months and did not like. And so I remember leaving my corporate job and then driving to the Airbnb offices and looking at the address, and I was like, wait, is this right? This is an apartment. And then I get upstairs and then they say, okay, take your shoes off.
Joe Zadeh (00:50:30) - I have never been asked to take pictures off. during an interview before, especially for a company. But I was already like, okay, I want to be a part of this. And then, and then and then they took me to this other apartment in the same building, and they interviewed me. But first they put the fireplace on before we have the interview with their shoes off. And I was like, what is this company? I remember during that day I was waiting for one of my interviews to start, and I was like, in the room where all the engineering happens and I'm just waiting for the interview to start. And there's a email from a customer on the wall, and the email was like, thank you, Airbnb, for staying in my house and the financial crisis. and not only that, I've been able to, you know, I can't remember exactly the email, but like, the I've been able to pay off my pay my mortgage bills and and still pay for my children's education.
Joe Zadeh (00:51:26) - And up until that point, I had only focused on the customer side, on the on the guest side of the guests. I used to couch there, I get it. but I had never understood how powerful.
Speaker 7 (00:51:39) - They could.
Joe Zadeh (00:51:39) - Be.
Speaker 7 (00:51:40) - For the.
Joe Zadeh (00:51:40) - Host and how it could really save people's lives in terms of, you know, financial, you know, your home is one of your most important assets and how, you know, hard times can, you know, can be a lifeline during hard times. And I think that was a very, very meaningful because that was the moment I was like, I absolutely want to be a part of this. Not only it's good for guests, it's good for host. The business model works when the two sides find each other. It's nice to be working on a business model that's not advertising. You don't have to get in people's way. You actually help them find each other. And then only when they find each other, you make money. so that that was a that was a turning point.
Joe Zadeh (00:52:23) - That was a, a turning point for me. But we we had tons of stories where people would come, would get on a bus for if Brian was going to be in a meet up in France, I think. I think somebody came from Milan by bus to a meet up in France. Like, I don't know how many hours that is, but it's probably more than ten. just just to say hello and attend to meet up. And, you can see signs of that in very early companies. And, you know, I mentioned I'm investing in some companies where, you know, every other investor I talked to says there's no way this idea will work. There's no market this and that. But I've seen people who are fanatical about the company in that kind of way, and I care a lot more about that than I do any data or anything any other investor says.