WEBVTT 00:00:00.000 --> 00:00:02.339 I want to start today's deep dive by asking you 00:00:02.339 --> 00:00:05.980 to visualize something. It's 2008. The financial 00:00:05.980 --> 00:00:08.740 world is, you know, it's basically on fire. Banks 00:00:08.740 --> 00:00:11.439 are collapsing left and right. Cold chaos. Right. 00:00:11.519 --> 00:00:13.740 And in this tiny apartment in San Francisco, 00:00:13.839 --> 00:00:16.260 you've got two guys. They're standing in their 00:00:16.260 --> 00:00:19.120 kitchen and they're holding a hot glue gun and 00:00:19.120 --> 00:00:21.640 a cardboard box. That does not sound like the 00:00:21.640 --> 00:00:24.539 beginning of a tech giant. It sounds more like 00:00:24.539 --> 00:00:26.879 an arts and crafts project. It pretty much was. 00:00:26.920 --> 00:00:30.960 They're gluing together a cereal box, but it's 00:00:30.960 --> 00:00:33.320 not just any cereal. They've designed and printed 00:00:33.320 --> 00:00:36.340 these caricatures of Barack Obama and John McCain. 00:00:36.520 --> 00:00:37.939 Oh, I remember these. Yeah, they called them 00:00:37.939 --> 00:00:40.759 Obama -Os, the breakfast of change, and Captain 00:00:40.759 --> 00:00:44.159 McCain's, which promised a maverick in every 00:00:44.159 --> 00:00:46.020 bite. That's pretty clever, you have to admit. 00:00:46.079 --> 00:00:48.359 Super clever. They literally bought the cheapest 00:00:48.359 --> 00:00:51.859 generic cereal they could find, stuffed it into 00:00:51.859 --> 00:00:53.799 these homemade boxes, and then... sold them on 00:00:53.799 --> 00:00:56.159 the street for $40 a box during the election 00:00:56.159 --> 00:00:59.179 conventions. $40 for what was probably just like 00:00:59.179 --> 00:01:02.640 generic Cheerios. Exactly. That is an insane 00:01:02.640 --> 00:01:04.579 markup. But here's the thing, and this is the 00:01:04.579 --> 00:01:07.120 crucial part. They didn't do this because they 00:01:07.120 --> 00:01:09.599 had a passion for breakfast food. No, they did 00:01:09.599 --> 00:01:11.519 it because they were desperate. Completely. They 00:01:11.519 --> 00:01:14.459 were $30 ,000 in credit card debt. They were 00:01:14.459 --> 00:01:17.719 literally eating the leftover unsold cereal for 00:01:17.719 --> 00:01:19.819 dinner because they couldn't afford to buy groceries. 00:01:20.200 --> 00:01:22.829 And that $30 ,000 they made. That was the seed 00:01:22.829 --> 00:01:24.790 money. That was the seed funding for a little 00:01:24.790 --> 00:01:27.849 company called Airbnb. It's just an incredible 00:01:27.849 --> 00:01:31.549 story to go from hot glowing cardboard boxes 00:01:31.549 --> 00:01:34.209 in your kitchen to, well, to running a company 00:01:34.209 --> 00:01:38.250 that as of today in early 2026, we know generated 00:01:38.250 --> 00:01:41.750 over $11 billion in revenue last year. $11 billion. 00:01:41.849 --> 00:01:43.670 And that's exactly what we're unpacking today. 00:01:43.750 --> 00:01:46.069 We are doing a deep dive into the complete history. 00:01:46.569 --> 00:01:49.310 of Airbnb Inc. We've gone through the archives, 00:01:49.530 --> 00:01:51.530 the financials, all the scandals, the regulatory 00:01:51.530 --> 00:01:54.769 fights, basically to figure out how a frantic 00:01:54.769 --> 00:01:57.650 attempt to make rent money turned into a global 00:01:57.650 --> 00:02:00.609 superpower. And superpower is, I think, the right 00:02:00.609 --> 00:02:02.709 word, because we're not just talking about a 00:02:02.709 --> 00:02:04.790 travel company here. We're talking about a business 00:02:04.790 --> 00:02:07.430 that fundamentally changed how we think about 00:02:07.430 --> 00:02:10.349 property. How so? Well, they created a new asset 00:02:10.349 --> 00:02:12.949 class. Really, they took your spare room or your 00:02:12.949 --> 00:02:15.129 entire apartment and turned it into a source 00:02:15.129 --> 00:02:18.500 of income. But as we're going to see, that kind 00:02:18.500 --> 00:02:21.599 of disruption, it comes with a huge price. A 00:02:21.599 --> 00:02:23.780 price for who? For the founders, for the cities 00:02:23.780 --> 00:02:26.879 they operate in, and for the very idea of what 00:02:26.879 --> 00:02:30.020 a community even is. So today is Friday, February 00:02:30.020 --> 00:02:33.740 6, 2026. Airbnb has now been a public company 00:02:33.740 --> 00:02:36.300 for, what, just over five years? It's a household 00:02:36.300 --> 00:02:39.259 name, a verb even. People say, I'm going to Airbnb 00:02:39.259 --> 00:02:41.539 a place. It's like Google or Uber. For sure. 00:02:41.680 --> 00:02:45.210 But the path to get here was just... So messy. 00:02:45.409 --> 00:02:47.650 It was full of rejection, lawsuits, and frankly, 00:02:47.729 --> 00:02:50.110 some very questionable decisions along the way. 00:02:50.250 --> 00:02:52.629 So what's our mission today? Our mission is to 00:02:52.629 --> 00:02:54.069 really get under the hood of that disruption. 00:02:54.629 --> 00:02:56.550 First, we need to understand the mechanics of 00:02:56.550 --> 00:02:57.949 the business. I mean, how do you make that much 00:02:57.949 --> 00:03:00.530 money without owning a single hotel room? And 00:03:00.530 --> 00:03:04.550 then we pivot to the externalities. The consequences. 00:03:05.009 --> 00:03:08.009 Exactly. How did their slogan, belong anywhere, 00:03:08.349 --> 00:03:12.409 somehow... Turn into a global war over housing 00:03:12.409 --> 00:03:14.930 affordability and neighborhood identity. All 00:03:14.930 --> 00:03:16.849 right, let's do it. Let's rewind the clock. It's 00:03:16.849 --> 00:03:20.569 October 2007. San Francisco. We've got our two 00:03:20.569 --> 00:03:23.770 main characters, Brian Chesky and Joe Gebbia. 00:03:24.569 --> 00:03:26.810 Roommates. Both designers from the Rhode Island 00:03:26.810 --> 00:03:30.669 School of Design, RISD. And as we said, they're 00:03:30.669 --> 00:03:33.150 completely broke. Their landlord had just raised 00:03:33.150 --> 00:03:34.930 the rent and they were scrambling. They just 00:03:34.930 --> 00:03:36.830 didn't have the cash. And it's really important 00:03:36.830 --> 00:03:40.009 to get the context here. October 2007 is just 00:03:40.009 --> 00:03:43.150 before the economy completely implodes. But in 00:03:43.150 --> 00:03:45.389 San Francisco specifically, there was something 00:03:45.389 --> 00:03:48.250 else going on. A huge industrial design conference 00:03:48.250 --> 00:03:50.009 was coming to the city. Right. And if you know 00:03:50.009 --> 00:03:52.310 anything about San Francisco, when a big conference 00:03:52.310 --> 00:03:55.110 like that hits. The hotels are gone. Capacity 00:03:55.110 --> 00:03:57.349 just hit zero. Everything was completely sold 00:03:57.349 --> 00:03:59.789 out. So this is that classic, you know, necessity 00:03:59.789 --> 00:04:03.569 is the mother of invention. They didn't start 00:04:03.569 --> 00:04:06.110 with some grand vision to democratize travel. 00:04:06.289 --> 00:04:09.210 No, they started with a math problem. A very 00:04:09.210 --> 00:04:12.789 simple math problem. We need rent money. There 00:04:12.789 --> 00:04:14.509 are people coming to town who need a place to 00:04:14.509 --> 00:04:16.870 sleep. We have a living room. But they didn't 00:04:16.870 --> 00:04:20.350 have beds, which is key. They had air mattresses. 00:04:20.410 --> 00:04:22.990 And that's where the name comes from. Air, bed, 00:04:23.170 --> 00:04:27.370 and breakfast. That specificity is so important 00:04:27.370 --> 00:04:29.569 because it shows what they were actually offering. 00:04:29.930 --> 00:04:31.589 They weren't trying to be the Hilton. Not at 00:04:31.589 --> 00:04:34.490 all. They were offering a crash pad, a place 00:04:34.490 --> 00:04:36.870 to sleep, and maybe a Pop -Tart in the morning. 00:04:37.089 --> 00:04:41.470 So they threw up this super simple website, airbedanbreakfast 00:04:41.470 --> 00:04:44.310 .com, and aimed it right at the attendees of 00:04:44.310 --> 00:04:47.050 that design conference. And it actually worked. 00:04:47.170 --> 00:04:49.149 To their surprise, yeah. They got three guests, 00:04:49.410 --> 00:04:52.370 a 30 -year -old guy from India, a 35 -year -old 00:04:52.370 --> 00:04:54.689 woman from Boston, and a 45 -year -old father 00:04:54.689 --> 00:04:57.699 from Utah. They charge them 80 bucks a night. 00:04:57.819 --> 00:04:59.519 And right there, that's the proof of concept. 00:04:59.579 --> 00:05:02.019 It proved that, yes, strangers will pay to sleep 00:05:02.019 --> 00:05:04.319 on an air mattress in your living room if the 00:05:04.319 --> 00:05:06.360 price and the context are right. But, you know, 00:05:06.379 --> 00:05:08.600 proving a concept to three people is a world 00:05:08.600 --> 00:05:11.459 away from actually building a business. Absolutely. 00:05:11.699 --> 00:05:14.519 Which brings in the third co -founder. So in 00:05:14.519 --> 00:05:19.089 February 2008, they bring on Nathan. blake chersick 00:05:19.089 --> 00:05:23.050 nate he was chesky's former roommate but crucially 00:05:23.050 --> 00:05:25.649 he wasn't a designer he was the tech guy he was 00:05:25.649 --> 00:05:29.189 a coder an engineer and you absolutely need that 00:05:29.189 --> 00:05:31.850 technical architect chesky and jebbia had the 00:05:31.850 --> 00:05:35.149 vision for the brand the look the feel but to 00:05:35.149 --> 00:05:38.310 scale this thing beyond a simple web page you 00:05:38.310 --> 00:05:40.410 need a back end you need someone who can actually 00:05:40.410 --> 00:05:43.949 build it blazer sick became the cto so with him 00:05:43.949 --> 00:05:46.730 on board they do a more formal launch august 00:05:46.730 --> 00:05:49.930 2008. Nothing. Crickets. Nobody cared. And this 00:05:49.930 --> 00:05:51.949 is the part of the story that always gets glossed 00:05:51.949 --> 00:05:54.550 over in the triumphant retellings. Everyone assumes 00:05:54.550 --> 00:05:56.870 it was an overnight success. It was the opposite 00:05:56.870 --> 00:05:58.910 of an overnight success. For that first year, 00:05:59.050 --> 00:06:02.129 they were barely making $200 a week. Investors 00:06:02.129 --> 00:06:04.470 thought the idea was, frankly, insane. Well, 00:06:04.550 --> 00:06:07.269 I mean, can you blame them? It's 2008. Your pitch 00:06:07.269 --> 00:06:10.310 is, hi, I have a great idea. We're going to convince 00:06:10.310 --> 00:06:12.550 complete strangers to let other complete strangers 00:06:12.550 --> 00:06:14.509 sleep in their home. It just sounds like a recipe 00:06:14.509 --> 00:06:16.790 for getting robbed or murdered. It really does. 00:06:17.050 --> 00:06:19.069 It breaks the first rule your parents ever teach 00:06:19.069 --> 00:06:21.829 you. Don't talk to strangers and for God's sake, 00:06:21.910 --> 00:06:23.889 don't let them sleep in your house. Silicon Valley 00:06:23.889 --> 00:06:27.569 investors at the time, they wanted scalable software. 00:06:27.810 --> 00:06:31.250 They didn't want real world liability. So they 00:06:31.250 --> 00:06:34.389 got rejected by everyone. Which brings us right 00:06:34.389 --> 00:06:36.529 back around to the cereal boxes. The hustle. 00:06:36.709 --> 00:06:38.629 They needed money just to keep the lights on. 00:06:38.709 --> 00:06:41.550 So they did the Obama owes thing. But that stunt. 00:06:42.160 --> 00:06:44.300 It did something more important than just making 00:06:44.300 --> 00:06:46.800 them 30 grand. It got them a meeting. With Paul 00:06:46.800 --> 00:06:49.199 Graham at Y Combinator. And for anyone who doesn't 00:06:49.199 --> 00:06:52.360 know, Y Combinator or YC is basically the Harvard 00:06:52.360 --> 00:06:55.980 of startup incubators. Paul Graham is a living 00:06:55.980 --> 00:06:58.759 legend in Silicon Valley. And the story goes 00:06:58.759 --> 00:07:02.000 that Graham, he actually hated the idea. He thought 00:07:02.000 --> 00:07:03.680 it was weird. He thought it was a terrible idea. 00:07:03.779 --> 00:07:05.360 He just couldn't imagine why anyone would ever 00:07:05.360 --> 00:07:08.240 use this service. But as the meeting was ending 00:07:08.240 --> 00:07:11.750 and, you know, it was not going well. Chesky 00:07:11.750 --> 00:07:13.990 pulls out a box of Obama O's. He just had one 00:07:13.990 --> 00:07:16.470 with him. Yeah, he had a box. And he tells Paul 00:07:16.470 --> 00:07:19.250 Graham the story of how they funded the company 00:07:19.250 --> 00:07:22.269 so far by selling these things for 40 bucks a 00:07:22.269 --> 00:07:24.610 pop. And that's what flipped the switch for Graham. 00:07:24.750 --> 00:07:27.230 Completely. Graham later said something like, 00:07:27.290 --> 00:07:30.490 if you can convince people to pay $40 for a $4 00:07:30.490 --> 00:07:33.850 box of cereal, maybe you can convince them to 00:07:33.850 --> 00:07:36.649 sleep on each other's air mattresses. So he wasn't 00:07:36.649 --> 00:07:39.790 investing in the idea at all. No, he was investing 00:07:39.790 --> 00:07:42.930 in them. and their sheer tenacity. He famously 00:07:42.930 --> 00:07:45.290 called them cockroaches, which he meant as a 00:07:45.290 --> 00:07:47.310 compliment. Meaning you just can't kill them. 00:07:47.509 --> 00:07:49.449 You can't kill them. They will find a way to 00:07:49.449 --> 00:07:53.850 survive. So YC accepts them. January 2009, they 00:07:53.850 --> 00:07:57.149 get $20 ,000 for a 6 % stake in the company. 00:07:57.310 --> 00:08:00.649 Wow, a $20 ,000 investment for 6%. That valuation 00:08:00.649 --> 00:08:02.829 is, I mean, it's just laughable today. It's nothing 00:08:02.829 --> 00:08:06.509 now, but back then it was a lifeline. But YC 00:08:06.509 --> 00:08:08.850 gave them something even more valuable than the 00:08:08.850 --> 00:08:11.069 money. Paul Graham gave him a piece of advice. 00:08:11.189 --> 00:08:14.209 He said, go do things that don't scale. What 00:08:14.209 --> 00:08:16.569 does that even mean in this context? It means 00:08:16.569 --> 00:08:20.509 stop trying to be a huge tech company. Stop trying 00:08:20.509 --> 00:08:22.910 to write code that solves every problem for a 00:08:22.910 --> 00:08:24.990 million users you don't even have yet. He told 00:08:24.990 --> 00:08:28.310 them, go meet the 10 users you do have. And they 00:08:28.310 --> 00:08:31.009 took that literally? They did. Chesky and the 00:08:31.009 --> 00:08:33.230 team, they flew to New York City, which was their 00:08:33.230 --> 00:08:34.809 biggest market at the time. They just started 00:08:34.809 --> 00:08:37.350 knocking on the doors of their hosts. To do what? 00:08:37.370 --> 00:08:40.309 Just to say hi? To get feedback. To fix the product. 00:08:40.549 --> 00:08:43.169 Yeah. Because they realized once they were inside 00:08:43.169 --> 00:08:45.370 these apartments that the photos on the website 00:08:45.370 --> 00:08:48.450 were awful. Oh, right. These are just like blurry 00:08:48.450 --> 00:08:51.629 flip phone pictures. Exactly. Dark corners, unmade 00:08:51.629 --> 00:08:54.690 beds. It looked terrible. So they rented a professional 00:08:54.690 --> 00:08:57.409 camera and Chesky and Jevia, the founders, went 00:08:57.409 --> 00:09:00.490 door to door themselves and took beautiful, high 00:09:00.490 --> 00:09:02.429 resolution photos of their hosts' apartments. 00:09:03.120 --> 00:09:06.879 For free. That seems so manual, so time consuming. 00:09:06.940 --> 00:09:09.600 Like the CEO is playing the part of a real estate 00:09:09.600 --> 00:09:12.059 photographer. It was completely unscalable, but 00:09:12.059 --> 00:09:13.759 it worked. Their revenue in New York doubled 00:09:13.759 --> 00:09:16.299 almost immediately. Wow. Just from better pictures. 00:09:16.620 --> 00:09:19.320 Just from better pictures. Because you have to 00:09:19.320 --> 00:09:22.960 remember, in hospitality, the photos are the 00:09:22.960 --> 00:09:25.899 promise. If a photo looks bright and clean and 00:09:25.899 --> 00:09:28.460 professional, you trust the host. You trust the 00:09:28.460 --> 00:09:30.159 space. And if it looks like it was taken on a 00:09:30.159 --> 00:09:31.919 potato, you assume the place smells like cat 00:09:31.919 --> 00:09:34.799 food. Exactly. So they figured out that trust 00:09:34.799 --> 00:09:37.399 was the real product and photography was the 00:09:37.399 --> 00:09:39.720 way to build it. And around that same time, March 00:09:39.720 --> 00:09:43.120 2009, they made another big change. They finally 00:09:43.120 --> 00:09:45.519 dropped the airbed part of the name. Right. They 00:09:45.519 --> 00:09:49.000 became just Airbnb. It was a huge strategic shift. 00:09:49.480 --> 00:09:51.559 They realized their market wasn't just conference 00:09:51.559 --> 00:09:54.039 goers looking for a crash pad. It was people 00:09:54.039 --> 00:09:56.779 looking for a room, an apartment, a castle, a 00:09:56.779 --> 00:09:59.639 treehouse, a villa. They needed a name that didn't 00:09:59.639 --> 00:10:01.720 literally imply you'd be sleeping on a bag of 00:10:01.720 --> 00:10:04.240 plastic. Precisely. So they have the new name. 00:10:04.340 --> 00:10:05.940 They have a model that's starting to work and 00:10:05.940 --> 00:10:08.559 they have these professional photos. Now the 00:10:08.559 --> 00:10:10.980 rocket ship phase begins. OK, so let's get into 00:10:10.980 --> 00:10:13.360 the financials, because the jump from surviving 00:10:13.360 --> 00:10:17.000 on leftover cereal to billionaire status happens. 00:10:17.100 --> 00:10:19.720 I mean, it's frighteningly fast. It really is 00:10:19.720 --> 00:10:23.320 a classic hockey stick growth curve. Once they 00:10:23.320 --> 00:10:25.759 cracked that code of trust, which was a combination 00:10:25.759 --> 00:10:29.779 of the photos and a two -way review system, the 00:10:29.779 --> 00:10:32.860 network effects just took over. Can you explain 00:10:32.860 --> 00:10:35.440 that term for a second? Network effects? Sure. 00:10:35.759 --> 00:10:37.820 It's the core of any successful marketplace. 00:10:38.179 --> 00:10:40.860 It's a two -sided platform. The more hosts you 00:10:40.860 --> 00:10:43.120 have, the more attractive the platform is to 00:10:43.120 --> 00:10:45.100 guests. Because there's more choice. And the 00:10:45.100 --> 00:10:46.899 more guests you have? The more attractive it 00:10:46.899 --> 00:10:49.200 is to host because there's more demand. It creates 00:10:49.200 --> 00:10:51.279 this self -reinforcing flywheel. It just spins 00:10:51.279 --> 00:10:53.379 faster and faster on its own. And the venture 00:10:53.379 --> 00:10:55.940 capitalists saw that flywheel starting to spin. 00:10:56.139 --> 00:10:59.340 Oh, yeah. By 2011, they're raising a huge round 00:10:59.340 --> 00:11:01.220 from Sequoia Capital and Andreessen Horowitz. 00:11:01.700 --> 00:11:04.320 Even Ashton Kutcher got in on that round. Kutcher 00:11:04.320 --> 00:11:06.620 seems to pop up in every major tech story. He 00:11:06.620 --> 00:11:08.679 does. But his involvement was actually really 00:11:08.679 --> 00:11:10.820 important for the brand. It helped make Airbnb 00:11:10.820 --> 00:11:13.879 feel cool and mainstream, not just some weird 00:11:13.879 --> 00:11:15.799 thing for budget travelers. So the valuation 00:11:15.799 --> 00:11:18.759 just starts exploding. Exponentially. By 2014, 00:11:19.039 --> 00:11:22.240 they hit a $10 billion valuation. By 2017, it 00:11:22.240 --> 00:11:24.940 was $31 billion. But the real main event, the 00:11:24.940 --> 00:11:30.139 big payday, is the IPO, December 2020. I want 00:11:30.139 --> 00:11:32.500 to pause on that date because it seems like the 00:11:32.500 --> 00:11:35.019 single worst time in modern history to take a 00:11:35.019 --> 00:11:37.620 travel company public. It was an incredible gamble. 00:11:37.820 --> 00:11:42.320 Yeah. December 2020. The world was still deep 00:11:42.320 --> 00:11:45.519 in lockdown mode. International travel had completely 00:11:45.519 --> 00:11:48.139 vanished just six, seven months earlier. They 00:11:48.139 --> 00:11:50.870 must have been terrified. They were. But they 00:11:50.870 --> 00:11:52.610 had also noticed a really interesting trend. 00:11:52.830 --> 00:11:55.049 There was a huge rebound in domestic travel. 00:11:55.250 --> 00:11:57.909 People were renting cabins for a month to escape 00:11:57.909 --> 00:12:00.529 the city. The work from anywhere thing was starting. 00:12:00.669 --> 00:12:03.070 Exactly. So they bet that the market would see 00:12:03.070 --> 00:12:05.750 their resilience, not just their weakness. And 00:12:05.750 --> 00:12:07.450 they were absolutely right. They raised $3 .5 00:12:07.450 --> 00:12:10.269 billion. And the stock just took off. It doubled 00:12:10.269 --> 00:12:12.730 on the first day of trading. It valued the company 00:12:12.730 --> 00:12:16.389 initially at over $100 billion. Which is just 00:12:16.389 --> 00:12:18.970 staggering. And didn't they do something unusual 00:12:18.970 --> 00:12:21.269 with the IPO stock, something for the hosts? 00:12:21.529 --> 00:12:23.929 They did. This was a really fascinating move. 00:12:24.490 --> 00:12:27.269 Normally, when a company goes public, the shares 00:12:27.269 --> 00:12:29.809 at the IPO price are reserved for big institutional 00:12:29.809 --> 00:12:32.710 investors. You know, banks, hedge funds. The 00:12:32.710 --> 00:12:34.970 little guy can't get in until it's already trading. 00:12:35.149 --> 00:12:38.450 Right. But Airbnb set aside about 9 million shares. 00:12:39.379 --> 00:12:41.460 specifically for their hosts. So if you were 00:12:41.460 --> 00:12:43.519 a longtime host, you could actually buy stock 00:12:43.519 --> 00:12:45.679 at the opening price. Exactly. You could buy 00:12:45.679 --> 00:12:48.460 in at $68 a share. It was a really smart gesture, 00:12:48.559 --> 00:12:51.080 a way to acknowledge that fundamentally Airbnb 00:12:51.080 --> 00:12:55.200 owns nothing. Their entire global inventory of 00:12:55.200 --> 00:12:58.259 rooms is owned by these individuals. If the hosts 00:12:58.259 --> 00:13:00.639 all decide to leave tomorrow, the company is 00:13:00.639 --> 00:13:02.960 worthless. It's worth zero. So it was a clever 00:13:02.960 --> 00:13:05.200 way to buy some loyalty and share the upside. 00:13:05.639 --> 00:13:07.620 OK, let's fast forward to the present day. We're 00:13:07.620 --> 00:13:09.820 looking back at the full year financials for 00:13:09.820 --> 00:13:13.519 2024. How big is this machine now? It is massive. 00:13:13.679 --> 00:13:17.919 The revenue for 2024 was $11 .1 billion. And 00:13:17.919 --> 00:13:21.299 the net income, so the actual profit, was $2 00:13:21.299 --> 00:13:24.700 .65 billion. That is a very, very healthy profit 00:13:24.700 --> 00:13:27.820 margin. It's huge. And you have to understand 00:13:27.820 --> 00:13:31.899 why it's so high compared to, say, a traditional 00:13:31.899 --> 00:13:34.019 hotel chain like Hilton or Marriott. Because 00:13:34.019 --> 00:13:35.620 they don't own the buildings. They own nothing. 00:13:36.039 --> 00:13:38.039 Hilton has to pay for the building, the mortgage, 00:13:38.240 --> 00:13:40.279 the electricity, the cleaning staff, the person 00:13:40.279 --> 00:13:43.960 at the front desk. Airbnb pays for servers and 00:13:43.960 --> 00:13:47.379 marketing. The asset light business model. Precisely. 00:13:47.419 --> 00:13:49.440 They're a software company that just happens 00:13:49.440 --> 00:13:52.620 to be playing in the travel industry. Their take 00:13:52.620 --> 00:13:55.200 rate, the percentage they keep from every booking, 00:13:55.320 --> 00:13:58.440 is their lifeblood. How does that work? Well, 00:13:58.500 --> 00:14:00.419 they take a small cut from the host, usually 00:14:00.419 --> 00:14:03.259 around 3%, but then they charge the guest a service 00:14:03.259 --> 00:14:06.440 fee that can be, you know, 14 % or even higher. 00:14:06.980 --> 00:14:10.580 So on a $1 ,000 booking, Airbnb might walk away 00:14:10.580 --> 00:14:13.639 with $170 just for being the middleman. Nice 00:14:13.639 --> 00:14:16.019 work if you can get it. It's a fantastic model. 00:14:16.220 --> 00:14:18.860 And they're using that cash to expand aggressively. 00:14:19.279 --> 00:14:21.039 They're not just waiting for people to list more 00:14:21.039 --> 00:14:23.320 homes. They're out there buying companies. What's 00:14:23.320 --> 00:14:25.259 their acquisition strategy look like? Who are 00:14:25.259 --> 00:14:27.230 they buying? Well, back in the day, they would 00:14:27.230 --> 00:14:29.850 buy smaller local competitors just to shut them 00:14:29.850 --> 00:14:33.470 down. Companies like Accolio in Germany or Crashpatter 00:14:33.470 --> 00:14:35.730 in the UK. Just take them off the board. But 00:14:35.730 --> 00:14:38.269 the strategy's changed now. It's much more sophisticated. 00:14:38.570 --> 00:14:41.309 In 2019, they bought Hotel Tonight. Which felt 00:14:41.309 --> 00:14:43.529 like a total contradiction at the time. We're 00:14:43.529 --> 00:14:45.870 the anti -hotel company and we just bought a 00:14:45.870 --> 00:14:48.269 hotel booking app. It was a smart hedge. They 00:14:48.269 --> 00:14:50.269 realized they were weak on last -minute bookings. 00:14:50.570 --> 00:14:53.529 An Airbnb host often needs a day or two of notice 00:14:53.529 --> 00:14:56.210 to get a place ready. Hotels are built for instant 00:14:56.210 --> 00:14:58.690 booking, so Hotel Tonight filled that gap. But 00:14:58.690 --> 00:15:01.289 what's been the most interesting recent acquisition? 00:15:01.710 --> 00:15:04.970 For me, it was November 2023. They bought a small 00:15:04.970 --> 00:15:08.110 company called GamePlanner .ai. Oh, of course, 00:15:08.289 --> 00:15:11.429 the obligatory AI pivot. Every tech company in 00:15:11.429 --> 00:15:14.389 the 2020s has to have an AI story. It's true, 00:15:14.549 --> 00:15:17.450 but for Airbnb, it actually makes a ton of sense. 00:15:17.909 --> 00:15:20.190 Brian Chesky has been talking for years about 00:15:20.190 --> 00:15:22.909 creating the ultimate concierge. What does that 00:15:22.909 --> 00:15:26.509 mean? It means going beyond just booking a room. 00:15:27.649 --> 00:15:30.610 Imagine an AI that can plan your entire trip. 00:15:30.789 --> 00:15:33.669 You just say, find me a quiet place in Tuscany 00:15:33.669 --> 00:15:35.970 near a good vineyard that's friendly for a family 00:15:35.970 --> 00:15:39.330 with a toddler, and also book us a pasta -making 00:15:39.330 --> 00:15:41.950 class for Tuesday afternoon. So they want to 00:15:41.950 --> 00:15:43.850 be the travel agent, not just the booking engine. 00:15:43.990 --> 00:15:45.649 We want to own the entire travel experience, 00:15:45.950 --> 00:15:47.909 from the moment you start dreaming about a trip 00:15:47.909 --> 00:15:50.340 to the moment you check out. that's the holy 00:15:50.340 --> 00:15:52.500 grail for them but this is where the story starts 00:15:52.500 --> 00:15:55.000 to get complicated because you can't just grow 00:15:55.000 --> 00:15:57.539 to an 11 billion dollar company with millions 00:15:57.539 --> 00:16:01.029 of listings all over the world without bumping 00:16:01.029 --> 00:16:03.149 into the real world. Without bumping into the 00:16:03.149 --> 00:16:05.169 neighbors. Right. And this brings us to what 00:16:05.169 --> 00:16:07.629 we've called the Airbnb effect. And depending 00:16:07.629 --> 00:16:10.690 on who you talk to, this effect is either a brilliant 00:16:10.690 --> 00:16:13.789 liberation of capital for homeowners or it's 00:16:13.789 --> 00:16:16.149 the complete destruction of local communities. 00:16:16.370 --> 00:16:18.830 And the debate gets very heated very quickly. 00:16:18.970 --> 00:16:20.730 So let's break down the core economics of it, 00:16:20.769 --> 00:16:22.210 because that's really the root of the entire 00:16:22.210 --> 00:16:25.549 conflict. Why does Airbnb make rent go up for 00:16:25.549 --> 00:16:28.309 everyone else in a city? It comes down to a concept 00:16:28.309 --> 00:16:31.049 called the yield gap. It's just a fancy term 00:16:31.049 --> 00:16:33.190 for a simple choice. Okay, give me an example. 00:16:33.490 --> 00:16:35.669 Let's say you own an apartment in a popular city 00:16:35.669 --> 00:16:38.529 like Barcelona. You have two options. Option 00:16:38.529 --> 00:16:43.049 one, you can rent it to a local family on a long 00:16:43.049 --> 00:16:46.590 -term lease for, say, 1 ,000 euros a month. Okay, 00:16:46.649 --> 00:16:49.809 stable income. Stable, predictable. Option two, 00:16:49.990 --> 00:16:54.269 you can put that same apartment on Airbnb for 00:16:54.269 --> 00:16:57.570 150 euros a night. So if you rent it for just... 00:16:57.799 --> 00:16:59.700 10 nights in a month, you've already beaten the 00:16:59.700 --> 00:17:01.779 long -term rent. You've beaten it. And if you 00:17:01.779 --> 00:17:03.559 read it for 20 nights, you've doubled your money. 00:17:03.840 --> 00:17:05.680 As a rational property owner, what are you going 00:17:05.680 --> 00:17:07.279 to do? You're going to chase the higher yield. 00:17:07.400 --> 00:17:09.900 You kick out the local family and turn your apartment 00:17:09.900 --> 00:17:12.980 into a full -time, unregulated hotel. Exactly. 00:17:13.460 --> 00:17:15.839 But when thousands of landlords in a city all 00:17:15.839 --> 00:17:17.700 make that same rational decision at the same 00:17:17.700 --> 00:17:20.240 time, you suddenly remove thousands of housing 00:17:20.240 --> 00:17:22.509 units from the long -term rental market. Supply 00:17:22.509 --> 00:17:25.329 goes way down, demand from locals stays the same. 00:17:25.529 --> 00:17:27.450 And prices for the remaining apartments go through 00:17:27.450 --> 00:17:29.930 the roof. And suddenly, the barista who serves 00:17:29.930 --> 00:17:32.710 coffee to the tourists can't afford to live in 00:17:32.710 --> 00:17:35.450 the city anymore. That's the accusation. And 00:17:35.450 --> 00:17:37.509 we've seen this play out in major cities all 00:17:37.509 --> 00:17:40.130 over the globe, which of course led to a massive 00:17:40.130 --> 00:17:43.049 regulatory backlash. The city started fighting 00:17:43.049 --> 00:17:45.710 back. It feels like a global game of whack -a 00:17:45.710 --> 00:17:49.400 -mole. Let's take a quick tour of that battlefield. 00:17:49.759 --> 00:17:52.920 New York City seems to be ground zero for the 00:17:52.920 --> 00:17:55.799 war against Airbnb. New York went for the jugular. 00:17:56.220 --> 00:17:59.240 For years, it was a legal gray area, but with 00:17:59.240 --> 00:18:02.279 a rule called Local Law 18, which really came 00:18:02.279 --> 00:18:05.799 into force in 2023 and 2024, they effectively 00:18:05.799 --> 00:18:09.279 banned the core Airbnb business model for most 00:18:09.279 --> 00:18:11.640 departments. How did they do that? What are the 00:18:11.640 --> 00:18:14.480 rules now? The rules are incredibly strict. For 00:18:14.480 --> 00:18:18.099 any rental under 30 days, the host, the owner 00:18:18.099 --> 00:18:20.500 or primary tenant, must be physically present 00:18:20.500 --> 00:18:22.759 in the apartment during the entire stay. So you 00:18:22.759 --> 00:18:24.220 can't just rent out your empty apartment while 00:18:24.220 --> 00:18:26.480 you're on vacation. No. You can only rent out 00:18:26.480 --> 00:18:28.299 a spare room while you're there sleeping down 00:18:28.299 --> 00:18:30.019 the hall. And you can't have more than two guests. 00:18:30.299 --> 00:18:32.660 That immediately kills the professional host 00:18:32.660 --> 00:18:34.819 model, the people running dozens of investment 00:18:34.819 --> 00:18:37.660 properties. It obliterates it. And on top of 00:18:37.660 --> 00:18:39.779 that, you have to register with the city to get 00:18:39.779 --> 00:18:42.539 a license. And the process is designed to be 00:18:42.539 --> 00:18:46.000 very difficult. The number of legal Airbnb listings 00:18:46.000 --> 00:18:49.740 in New York City fell from over 10 ,000 to just 00:18:49.740 --> 00:18:53.160 a few hundred almost overnight. Wow. A huge blow 00:18:53.160 --> 00:18:55.140 to their biggest market. What about in Europe? 00:18:55.180 --> 00:18:57.640 I know Berlin was famously aggressive. Berlin 00:18:57.640 --> 00:19:01.660 had a law with a fantastic German name. The Zweck 00:19:01.660 --> 00:19:05.609 und Femdungsverbot. Which means roughly the prohibition 00:19:05.609 --> 00:19:09.170 of misuse. They legally defined taking a residential 00:19:09.170 --> 00:19:12.150 apartment and using it for tourism as a misuse 00:19:12.150 --> 00:19:14.920 of the city's housing stock. They've tweaked 00:19:14.920 --> 00:19:17.160 the rules over the years, but generally renting 00:19:17.160 --> 00:19:19.500 out an entire apartment short term requires a 00:19:19.500 --> 00:19:21.779 very hard to get permit. And Barcelona was another 00:19:21.779 --> 00:19:23.500 hospital, right? Barcelona is probably the most 00:19:23.500 --> 00:19:25.980 hostile city to Airbnb in the world. They completely 00:19:25.980 --> 00:19:28.319 stopped issuing new licenses for tourist apartments 00:19:28.319 --> 00:19:31.180 years ago and have teams of inspectors who hunt 00:19:31.180 --> 00:19:33.519 down illegal listings and issue massive fines. 00:19:34.059 --> 00:19:36.079 They're trying to reclaim the city for residents. 00:19:36.319 --> 00:19:39.369 Now. Airbnb's defense in all of this is always 00:19:39.369 --> 00:19:41.750 the same. They paint themselves as the victim 00:19:41.750 --> 00:19:45.849 of the big, bad hotel lobby. Is there any truth 00:19:45.849 --> 00:19:48.250 to that argument? Oh, absolutely. There was a 00:19:48.250 --> 00:19:51.329 shadow war going on. The hotel industry, represented 00:19:51.329 --> 00:19:53.349 by groups like the American Hotel and Lodging 00:19:53.349 --> 00:19:57.289 Association, saw Airbnb as a direct existential 00:19:57.289 --> 00:20:00.549 threat. So they lobbied city governments? Aggressively. 00:20:00.910 --> 00:20:03.289 But their public argument was never, they're 00:20:03.289 --> 00:20:05.509 taking our customers. That's a weak argument. 00:20:05.690 --> 00:20:08.460 So what was their... Angle? Their angle was about 00:20:08.460 --> 00:20:11.019 fairness and safety. They would go to city councils 00:20:11.019 --> 00:20:13.940 and say, look, a hotel has to install fire sprinklers, 00:20:14.079 --> 00:20:17.039 pay millions in occupancy taxes, follow disability 00:20:17.039 --> 00:20:20.420 access laws, and carry extensive insurance. These 00:20:20.420 --> 00:20:22.299 Airbnb hosts are doing none of that. They're 00:20:22.299 --> 00:20:24.680 running mini hotels without any of the costs 00:20:24.680 --> 00:20:26.779 or regulations. If it walks like a hotel and 00:20:26.779 --> 00:20:29.759 quacks like a hotel, that was the argument. And 00:20:29.759 --> 00:20:32.819 Airbnb's counterargument for years was Section 00:20:32.819 --> 00:20:35.779 230 of the Communications Decency Act. The shield 00:20:35.779 --> 00:20:38.069 of the internet. The Shield. They said, we're 00:20:38.069 --> 00:20:40.289 not a hotel company, we're just a website. We're 00:20:40.289 --> 00:20:42.630 a platform, a bulletin board. What the hosts 00:20:42.630 --> 00:20:45.829 do on our site is their business, not ours. But 00:20:45.829 --> 00:20:47.630 that legal shield has been getting weaker and 00:20:47.630 --> 00:20:51.009 weaker lately. It's crumbling. More and more, 00:20:51.130 --> 00:20:53.549 courts and regulators are saying that platforms 00:20:53.549 --> 00:20:55.910 are responsible for what happens on their platform. 00:20:56.230 --> 00:20:59.150 Which brings us to probably the darkest part 00:20:59.150 --> 00:21:02.480 of this whole story. Safety. Because when you 00:21:02.480 --> 00:21:05.200 check into a Marriott, you have a baseline assumption 00:21:05.200 --> 00:21:08.160 of safety. There's a front desk, security, a 00:21:08.160 --> 00:21:10.920 brand to protect. But when you check into a stranger's 00:21:10.920 --> 00:21:13.680 guest house, you're basically on your own. And 00:21:13.680 --> 00:21:16.180 that lack of any standardized safety protocol 00:21:16.180 --> 00:21:19.660 has led to some truly horrific situations. The 00:21:19.660 --> 00:21:21.720 one that always goes viral, the one that taps 00:21:21.720 --> 00:21:23.900 into this primal fear, is the hidden camera. 00:21:24.160 --> 00:21:25.859 This is the thing that creeps people out more 00:21:25.859 --> 00:21:27.920 than anything else. For sure. And we're not talking 00:21:27.920 --> 00:21:30.299 about one or two isolated incidents. There have 00:21:30.299 --> 00:21:32.579 been... Thousands of reports over the years, 00:21:32.680 --> 00:21:35.299 people finding cameras hidden in smoke detectors, 00:21:35.440 --> 00:21:38.420 in digital clocks, even inside shampoo bottles 00:21:38.420 --> 00:21:40.819 in the shower. It's a complete violation of privacy. 00:21:41.039 --> 00:21:43.640 And for a long time, Airbnb's official stance 00:21:43.640 --> 00:21:47.460 on this was confusing, to say the least. What 00:21:47.460 --> 00:21:50.500 was their policy? Well, up until early 2024, 00:21:50.940 --> 00:21:54.180 they actually allowed cameras. in common areas, 00:21:54.359 --> 00:21:56.539 like a living room or a hallway, as long as the 00:21:56.539 --> 00:21:58.299 host disclosed it in the listing. But nobody 00:21:58.299 --> 00:22:00.240 wants that. It feels like you're on a reality 00:22:00.240 --> 00:22:03.779 TV show. Guests hated it. And then came the CNN 00:22:03.779 --> 00:22:06.660 investigation in July of 2024. And that was a 00:22:06.660 --> 00:22:09.980 bombshell. It was. The report, based on internal 00:22:09.980 --> 00:22:12.680 documents and whistleblowers, revealed that when 00:22:12.680 --> 00:22:15.619 a guest reported finding a hidden camera, Airbnb's 00:22:15.619 --> 00:22:18.339 internal safety team didn't have a standard procedure 00:22:18.339 --> 00:22:20.599 to call the police. They didn't call the police. 00:22:20.700 --> 00:22:22.539 What did they do? They would conduct an internal 00:22:22.539 --> 00:22:24.680 investigation. They'd call the host, ask them 00:22:24.680 --> 00:22:27.099 about it, which, you know, critics argued just 00:22:27.099 --> 00:22:29.259 gave the host time to remove the camera and destroy 00:22:29.259 --> 00:22:31.299 any evidence. The report basically suggested 00:22:31.299 --> 00:22:34.420 they prioritized avoiding bad press and potential 00:22:34.420 --> 00:22:36.640 lawsuits over making sure the host was actually 00:22:36.640 --> 00:22:39.900 prosecuted. That was the implication. And after 00:22:39.900 --> 00:22:43.140 all that public pressure in March 2024, they 00:22:43.140 --> 00:22:45.940 finally changed the policy. They banned all indoor 00:22:45.940 --> 00:22:48.819 cameras. Period. No exceptions. Living rooms, 00:22:48.859 --> 00:22:50.700 hallways, doesn't matter. If it's inside the 00:22:50.700 --> 00:22:52.839 property, it's banned. Better late than never, 00:22:52.900 --> 00:22:55.119 I suppose. But there's another kind of safety 00:22:55.119 --> 00:22:57.039 issue that plagued them for years, and that's 00:22:57.039 --> 00:22:59.720 safety from discrimination. The whole Airbnb 00:22:59.720 --> 00:23:03.460 while black hashtag. This issue really strikes 00:23:03.460 --> 00:23:05.859 at the core of the platform's original design, 00:23:06.079 --> 00:23:08.839 because in the early days, your profile photo 00:23:08.839 --> 00:23:11.420 was front and center. The host saw your face. 00:23:11.579 --> 00:23:13.819 The guest saw the host's face. Everything was 00:23:13.819 --> 00:23:15.920 visible before the booking. And that led to bias. 00:23:16.200 --> 00:23:18.940 Massive bias. A Harvard study famously found 00:23:18.940 --> 00:23:20.680 that guests with distinctly African -American 00:23:20.680 --> 00:23:23.339 sounding names were about 16 percent less likely 00:23:23.339 --> 00:23:26.079 to be accepted for a booking than identical guests 00:23:26.079 --> 00:23:28.579 with white sounding names. Sixteen percent. That 00:23:28.579 --> 00:23:30.960 is a staggering gap. It completely shattered 00:23:30.960 --> 00:23:34.500 their marketing slogan of belong anywhere. It 00:23:34.500 --> 00:23:36.339 proved that if you just give individuals the 00:23:36.339 --> 00:23:38.660 power to be gatekeepers, they will bring all 00:23:38.660 --> 00:23:40.859 of their implicit and explicit biases with them. 00:23:40.940 --> 00:23:43.700 So how do you fix a problem like that? You can't 00:23:43.700 --> 00:23:45.759 just send an email telling millions of hosts 00:23:45.759 --> 00:23:48.299 to stop being racist. You can't. You have to 00:23:48.299 --> 00:23:50.829 change the system. They brought in some heavy 00:23:50.829 --> 00:23:53.150 hitters like former U .S. Attorney General Eric 00:23:53.150 --> 00:23:55.809 Holder to help them craft new anti -discrimination 00:23:55.809 --> 00:23:58.690 policies. But the biggest and most effective 00:23:58.690 --> 00:24:01.390 change was a product change. What did they do? 00:24:01.589 --> 00:24:05.019 They started hiding the guest's photo. Now, as 00:24:05.019 --> 00:24:07.559 a host, you don't see what the guest looks like 00:24:07.559 --> 00:24:09.839 until after you have officially accepted their 00:24:09.839 --> 00:24:11.900 booking request. So you have to say yes to the 00:24:11.900 --> 00:24:13.740 transaction before you can see the person's face. 00:24:13.880 --> 00:24:17.299 Exactly. It forces the decision to be based on 00:24:17.299 --> 00:24:19.539 the guest's reviews, their profile information, 00:24:19.880 --> 00:24:22.940 and the economics of the stay, not on their appearance 00:24:22.940 --> 00:24:25.819 or perceived race. It hasn't solved the problem 00:24:25.819 --> 00:24:28.259 completely, but it was a major step. We should 00:24:28.259 --> 00:24:30.400 also touch on the party house era because for 00:24:30.400 --> 00:24:32.400 a while there, especially in places like L .A. 00:24:32.460 --> 00:24:35.190 or Miami, It felt like every weekend there was 00:24:35.190 --> 00:24:37.589 a news story about a huge out -of -control party 00:24:37.589 --> 00:24:40.910 at an Airbnb that ended badly. This was a huge 00:24:40.910 --> 00:24:43.309 liability for them. People were renting these 00:24:43.309 --> 00:24:46.589 massive mansions specifically to throw ticketed 00:24:46.589 --> 00:24:49.269 events, and it was a nightmare. The neighbors 00:24:49.269 --> 00:24:51.430 were furious about the noise and the traffic, 00:24:51.529 --> 00:24:54.109 but worse, people were getting hurt. There were 00:24:54.109 --> 00:24:57.490 shootings, even murders, at some of these unauthorized 00:24:57.490 --> 00:25:00.069 parties. So they just banned parties. They did. 00:25:00.460 --> 00:25:02.940 It actually started as a temporary measure during 00:25:02.940 --> 00:25:05.720 COVID to discourage gatherings, but they made 00:25:05.720 --> 00:25:10.019 the ban permanent and global in June 2022. But 00:25:10.019 --> 00:25:12.339 they didn't just publish a new rule. They built 00:25:12.339 --> 00:25:15.059 technology to try and enforce it. How can an 00:25:15.059 --> 00:25:17.240 algorithm know if I'm planning to throw a party? 00:25:17.500 --> 00:25:20.579 It looks for a combination of risk factors. It 00:25:20.579 --> 00:25:23.299 analyzes things like the age of the user, how 00:25:23.299 --> 00:25:25.539 far they live from the listing, the length of 00:25:25.539 --> 00:25:27.529 the stay, and the day of the week. So if you're 00:25:27.529 --> 00:25:29.410 like 21 years old, you live in the same city 00:25:29.410 --> 00:25:31.069 and you're trying to book a 10 bedroom house 00:25:31.069 --> 00:25:33.970 for one night on New Year's Eve. The computer 00:25:33.970 --> 00:25:37.069 says no. The algorithm flags it as a high risk 00:25:37.069 --> 00:25:39.789 booking and automatically blocks it before it 00:25:39.789 --> 00:25:41.710 can even be sent to the host. It knows you're 00:25:41.710 --> 00:25:44.049 looking for a venue, not just a place to sleep. 00:25:44.589 --> 00:25:47.210 Precisely. It's about preventing the problem. 00:25:47.710 --> 00:25:49.710 Before it happens. OK, let's zoom out a bit. 00:25:49.789 --> 00:25:51.450 We've talked about neighborhoods. Let's talk 00:25:51.450 --> 00:25:54.069 about nations, geopolitics. Because when you 00:25:54.069 --> 00:25:57.089 operate in nearly every country on Earth, you 00:25:57.089 --> 00:25:59.890 inevitably get dragged into international conflicts. 00:26:00.289 --> 00:26:02.750 It's the curse of being a truly global company. 00:26:02.890 --> 00:26:05.630 You can't stay neutral. You have to make choices. 00:26:05.829 --> 00:26:08.170 And every choice you make is going to anger someone. 00:26:08.710 --> 00:26:11.029 The Israeli settlements in the West Bank are 00:26:11.029 --> 00:26:13.170 probably the most contentious example of this. 00:26:13.369 --> 00:26:14.990 Walk us through that whole flip -flop. It was 00:26:14.990 --> 00:26:18.750 pretty confusing. It was. So in November 2018, 00:26:19.009 --> 00:26:21.650 under immense pressure from human rights groups, 00:26:22.009 --> 00:26:25.609 Airbnb announced they would delist 200 properties 00:26:25.609 --> 00:26:27.849 in Israeli settlements in the occupied West Bank. 00:26:27.970 --> 00:26:30.430 They took a moral stance. They did. Their statement 00:26:30.430 --> 00:26:32.250 said that they concluded these settlements were 00:26:32.250 --> 00:26:34.609 at the core of the dispute between Israelis and 00:26:34.609 --> 00:26:37.990 Palestinians. But then the backlash to the backlash 00:26:37.990 --> 00:26:41.329 began. The lawsuit started. Hosts in the settlements 00:26:41.329 --> 00:26:44.509 sued them. Several U .S. states threatened to 00:26:44.509 --> 00:26:47.230 divest their pension funds from Airbnb, accusing 00:26:47.230 --> 00:26:49.789 them of boycotting Israel. So in April 2019, 00:26:50.170 --> 00:26:52.329 they completely reversed the decision. They put 00:26:52.329 --> 00:26:55.470 the listings back online. But they didn't keep 00:26:55.470 --> 00:26:57.569 the money from those listings. That was their 00:26:57.569 --> 00:26:59.549 attempted compromise. They announced that they 00:26:59.549 --> 00:27:01.730 would allow the bookings to continue, but that 00:27:01.730 --> 00:27:04.970 they would donate all of Airbnb's profits from 00:27:04.970 --> 00:27:07.920 those specific listings. two humanitarian aid 00:27:07.920 --> 00:27:10.119 organizations. An attempt to please everyone 00:27:10.119 --> 00:27:12.579 that probably ended up pleasing no one. That's 00:27:12.579 --> 00:27:14.460 usually how those things go. And then you have 00:27:14.460 --> 00:27:17.099 China. This is such a fascinating business case 00:27:17.099 --> 00:27:20.319 study. So many American tech giants have tried 00:27:20.319 --> 00:27:22.900 and failed to crack the Chinese market. Google, 00:27:23.039 --> 00:27:25.900 Uber, the list goes on. Airbnb really, really 00:27:25.900 --> 00:27:28.359 tried. They tried so hard. They created a whole 00:27:28.359 --> 00:27:32.079 separate Chinese brand name, A -Bing, which translates 00:27:32.079 --> 00:27:33.900 to something like... welcome each other with 00:27:33.900 --> 00:27:36.920 love. They stored Chinese user data on servers 00:27:36.920 --> 00:27:39.559 within China. They bent over backwards. But in 00:27:39.559 --> 00:27:42.200 May of 2022, they just pulled the plug, shut 00:27:42.200 --> 00:27:44.859 down the whole domestic business. Why? It was 00:27:44.859 --> 00:27:47.380 a combination of things. On the one hand, the 00:27:47.380 --> 00:27:50.200 constant zero COVID lockdowns at the time were 00:27:50.200 --> 00:27:53.559 making domestic travel in China impossible. So 00:27:53.559 --> 00:27:55.359 the business was suffering anyway. But there 00:27:55.359 --> 00:27:58.180 was a deeper issue, wasn't there? Yes. The market 00:27:58.180 --> 00:28:00.759 structure is just different. In China, users 00:28:00.759 --> 00:28:04.369 live on super apps like MeTuan or Ctrip. They 00:28:04.369 --> 00:28:06.849 want one app for their travel, food delivery, 00:28:07.089 --> 00:28:10.390 movie tickets, everything. A standalone app like 00:28:10.390 --> 00:28:12.789 Airbnb was always going to be a niche player. 00:28:13.049 --> 00:28:15.089 And the regulatory environment there must have 00:28:15.089 --> 00:28:17.450 been a nightmare. Extremely invasive. The Chinese 00:28:17.450 --> 00:28:19.910 government requires travel and hospitality companies 00:28:19.910 --> 00:28:22.769 to share guest data with them in real time. Who 00:28:22.769 --> 00:28:25.210 is staying where, when, their passport information. 00:28:26.079 --> 00:28:28.299 Airbnb had to comply with that, and it created 00:28:28.299 --> 00:28:30.619 a huge privacy headache. And for all that trouble, 00:28:30.720 --> 00:28:32.619 how much money were they actually making there? 00:28:32.839 --> 00:28:35.079 And that's the kicker. For all that effort and 00:28:35.079 --> 00:28:37.420 all those compromises, the domestic China business 00:28:37.420 --> 00:28:40.039 accounted for less than 1 % of their global revenue. 00:28:40.339 --> 00:28:43.480 1%. That's a shocking statistic. It really is. 00:28:43.559 --> 00:28:46.160 It shows that sometimes the total addressable 00:28:46.160 --> 00:28:48.579 market you see on a spreadsheet doesn't reflect 00:28:48.579 --> 00:28:51.000 the on -the -ground reality. It just wasn't worth 00:28:51.000 --> 00:28:53.740 the cost. OK, let's pivot now to the modern era, 00:28:53.859 --> 00:28:56.900 post scandals, post China exit. We mentioned 00:28:56.900 --> 00:28:58.920 COVID earlier, but I don't think people really 00:28:58.920 --> 00:29:03.019 grasp how close Airbnb came to completely collapsing 00:29:03.019 --> 00:29:05.980 in 2020. It was a true near death experience, 00:29:06.279 --> 00:29:09.289 an existential crisis for the company. In early 00:29:09.289 --> 00:29:12.430 2020, as the world shut down, they lost a billion 00:29:12.430 --> 00:29:14.329 dollars worth of bookings practically overnight. 00:29:14.630 --> 00:29:17.430 Their revenue dropped by 80 percent in just a 00:29:17.430 --> 00:29:18.990 matter of weeks. And that's when the layoffs 00:29:18.990 --> 00:29:20.890 happened. A quarter of the entire workforce, 00:29:21.269 --> 00:29:24.509 1 ,900 people, were let go in a single day in 00:29:24.509 --> 00:29:27.849 May 2020. It was brutal. Brian Chesky wrote this 00:29:27.849 --> 00:29:30.130 very emotional, very famous letter explaining 00:29:30.130 --> 00:29:32.690 the cuts, but it was still a bloodbath. But then 00:29:32.690 --> 00:29:35.369 something unexpected happened. The great reshuffling 00:29:35.369 --> 00:29:37.869 began. The work from home revolution. Exactly. 00:29:38.210 --> 00:29:40.930 White collar workers realized, hey, if my job 00:29:40.930 --> 00:29:43.490 is just on my laptop, why am I paying $4 ,000 00:29:43.490 --> 00:29:45.869 a month for a tiny apartment in New York or San 00:29:45.869 --> 00:29:47.410 Francisco? They started looking for escapes. 00:29:47.809 --> 00:29:50.750 And they started booking Airbnbs. But not for 00:29:50.750 --> 00:29:52.650 a weekend. They were booking them for a month, 00:29:52.670 --> 00:29:55.210 two months, three months at a time in a cabin 00:29:55.210 --> 00:29:57.769 in the woods or a house by the beach. So long 00:29:57.769 --> 00:30:00.809 term stays became their new growth engine. It 00:30:00.809 --> 00:30:03.150 became their fastest growing category by a huge 00:30:03.150 --> 00:30:07.650 margin. Stays of 28 days or longer. Airbnb suddenly 00:30:07.650 --> 00:30:09.829 wasn't just for vacations anymore. It was for 00:30:09.829 --> 00:30:12.849 living. And the company itself really leaned 00:30:12.849 --> 00:30:16.390 into this shift. In April 2022, they made a huge 00:30:16.390 --> 00:30:18.970 announcement for their own employees. They told 00:30:18.970 --> 00:30:21.410 them they could live and work from anywhere forever. 00:30:21.750 --> 00:30:24.230 No pay cut if you move from San Francisco to 00:30:24.230 --> 00:30:26.900 a cheaper city. It was a radical move. They started 00:30:26.900 --> 00:30:29.119 living the lifestyle that their product enables. 00:30:29.500 --> 00:30:31.500 They perfectly aligned their corporate culture 00:30:31.500 --> 00:30:33.099 with their product. It was a brilliant marketing 00:30:33.099 --> 00:30:35.359 move, but it also just acknowledged the new reality 00:30:35.359 --> 00:30:37.700 of the modern workforce. And now in this more 00:30:37.700 --> 00:30:40.059 mature phase, they're trying to cement their 00:30:40.059 --> 00:30:43.039 status as a permanent blue chip company through 00:30:43.039 --> 00:30:45.819 these massive global sponsorships, the Olympics, 00:30:45.940 --> 00:30:49.299 for example. And now the FIFA World Cup. That 00:30:49.299 --> 00:30:52.599 partnership is enormous. They're a major sponsor 00:30:52.599 --> 00:30:55.400 of the Club World Cup in 2025, and then the big 00:30:55.400 --> 00:30:58.880 one, the 2026 World Cup across the U .S., Canada, 00:30:59.059 --> 00:31:01.839 and Mexico. Just think about the logistics of 00:31:01.839 --> 00:31:04.980 that 2026 tournament. Millions of fans will be 00:31:04.980 --> 00:31:07.960 moving between dozens of cities across three 00:31:07.960 --> 00:31:10.619 countries. The hotels can't possibly handle that 00:31:10.619 --> 00:31:13.279 volume of people. So Airbnb is positioning itself 00:31:13.279 --> 00:31:16.740 as the official default overflow housing solution 00:31:16.740 --> 00:31:18.740 for the biggest sporting event on the planet. 00:31:18.880 --> 00:31:22.380 It's a huge step for legitimacy. It says we aren't 00:31:22.380 --> 00:31:25.299 a disruptive startup anymore. We are global infrastructure. 00:31:26.029 --> 00:31:28.190 But even as they become part of the establishment, 00:31:28.490 --> 00:31:31.049 they can't seem to escape controversy. We have 00:31:31.049 --> 00:31:33.869 to mention the recent DOGE news from last year. 00:31:34.009 --> 00:31:36.369 Right. In February 2025, it was announced that 00:31:36.369 --> 00:31:38.230 co -founder Joe Jebbia had joined the Department 00:31:38.230 --> 00:31:40.609 of Government Efficiency. This is the new government 00:31:40.609 --> 00:31:42.990 reform initiative, the one led by Elon Musk. 00:31:43.130 --> 00:31:45.869 Correct. And Jebbia, a tech billionaire, stepping 00:31:45.869 --> 00:31:48.549 into a powerful role focused on efficiency and 00:31:48.549 --> 00:31:50.869 cutting red tape sparked a lot of debate. It 00:31:50.869 --> 00:31:53.029 blurs the line between Silicon Valley and Washington. 00:31:53.390 --> 00:31:56.579 It does. And critics immediately raise concerns, 00:31:56.819 --> 00:31:59.500 worrying about tech moguls being put in charge 00:31:59.500 --> 00:32:03.019 of dismantling the very regulations that, well, 00:32:03.099 --> 00:32:04.960 often restrict the power of companies like Airbnb. 00:32:05.279 --> 00:32:07.680 A pretty clear conflict of interest, potentially. 00:32:07.880 --> 00:32:10.039 Or a synergy, depending on your political perspective. 00:32:10.359 --> 00:32:12.680 But it shows that the founders of Airbnb are 00:32:12.680 --> 00:32:14.619 no longer just business leaders. They are now 00:32:14.619 --> 00:32:17.640 major players on the political stage. OK. So 00:32:17.640 --> 00:32:20.000 we've gone from the cereal boxes to the boardrooms, 00:32:20.000 --> 00:32:23.240 from the IPO to the AI. I want to try and synthesize 00:32:23.240 --> 00:32:25.819 all of this because, honestly, I feel really 00:32:25.819 --> 00:32:28.579 conflicted. I use Airbnb. I love staying in a 00:32:28.579 --> 00:32:30.819 cool house somewhere new. We all do. But I also 00:32:30.819 --> 00:32:33.119 hate what I see happening to the character of 00:32:33.119 --> 00:32:35.660 cities I love, seeing whole neighborhoods turn 00:32:35.660 --> 00:32:38.599 into essentially tourist -only zones. And that 00:32:38.599 --> 00:32:41.539 is the central paradox of this company. On one 00:32:41.539 --> 00:32:45.170 hand, Airbnb genuinely democratized travel. It 00:32:45.170 --> 00:32:47.430 made it possible for an ordinary person to stay 00:32:47.430 --> 00:32:50.089 in a treehouse in Costa Rica or a houseboat in 00:32:50.089 --> 00:32:52.769 Amsterdam for the price of a generic, boring 00:32:52.769 --> 00:32:55.750 hotel room. That is a real innovation. But the 00:32:55.750 --> 00:32:57.710 cost of that innovation was the commodification 00:32:57.710 --> 00:33:00.369 of the home. You've nailed it. They took the 00:33:00.369 --> 00:33:04.289 most personal, intimate asset we have, our home, 00:33:04.410 --> 00:33:06.829 and they turned it into a financial instrument. 00:33:07.170 --> 00:33:10.299 They made every homeowner... a potential CEO, 00:33:10.599 --> 00:33:13.880 and every spare room, a potential hotel. And 00:33:13.880 --> 00:33:15.839 it's interesting. Unlike a hotel, they have no 00:33:15.839 --> 00:33:18.000 loyalty program. I've always found that so strange. 00:33:18.200 --> 00:33:21.079 Marriott has Bonvoy. Hilton has Honors. Why no 00:33:21.079 --> 00:33:24.000 Airbnb points? It's because of that individual 00:33:24.000 --> 00:33:27.519 decentralized nature. A hotel chain wants you 00:33:27.519 --> 00:33:30.640 to be loyal to their brand. Airbnb isn't a brand 00:33:30.640 --> 00:33:33.240 in the same way. It's just a connector. Their 00:33:33.240 --> 00:33:35.690 competitive advantage, their moat. isn't loyalty, 00:33:35.869 --> 00:33:38.210 it's liquidity. Meaning? They just have the most 00:33:38.210 --> 00:33:40.210 hosts and the most guests. That's the network 00:33:40.210 --> 00:33:42.349 effect we talked about. It's incredibly difficult 00:33:42.349 --> 00:33:44.750 for a competitor to break that cycle. So as we 00:33:44.750 --> 00:33:46.849 wrap this up, what's the final takeaway? If you're 00:33:46.849 --> 00:33:48.089 listening to this right now and you're about 00:33:48.089 --> 00:33:49.970 to go book your summer vacation, what should 00:33:49.970 --> 00:33:51.609 you be thinking about? I think you just have 00:33:51.609 --> 00:33:54.390 to be a conscious consumer. You have to understand 00:33:54.390 --> 00:33:57.430 that your booking has a real tangible impact 00:33:57.430 --> 00:34:00.190 on the neighborhood you're visiting. Read the 00:34:00.190 --> 00:34:02.829 reviews, not just for whether the place was clean, 00:34:03.029 --> 00:34:06.849 but for clues. About the host. Is this a person 00:34:06.849 --> 00:34:09.369 renting out their spare room or a corporation 00:34:09.369 --> 00:34:12.130 running 50 -scarrel apartments? And maybe give 00:34:12.130 --> 00:34:13.929 the smoke detector a quick look when you check 00:34:13.929 --> 00:34:16.090 in. Definitely check the smoke detector. I want 00:34:16.090 --> 00:34:18.789 to leave you with one final thought. The genius 00:34:18.789 --> 00:34:21.590 of Airbnb was proving that trust could be designed 00:34:21.590 --> 00:34:24.250 and that it could be scaled. They proved that 00:34:24.250 --> 00:34:26.329 deep down we are willing to trust strangers with 00:34:26.329 --> 00:34:29.429 our keys, our homes, and our safety. But as the 00:34:29.429 --> 00:34:32.010 company continues to grow and automate, the question 00:34:32.010 --> 00:34:35.230 becomes, Can they maintain that delicate trust 00:34:35.230 --> 00:34:37.630 when the financial transaction starts to feel 00:34:37.630 --> 00:34:39.929 more important than the human connection? That 00:34:39.929 --> 00:34:41.869 really is the billion -dollar question for them. 00:34:41.949 --> 00:34:44.489 If it just becomes another faceless transactional 00:34:44.489 --> 00:34:46.730 booking site, it loses all the magic that made 00:34:46.730 --> 00:34:48.949 it special in the first place. But if they can 00:34:48.949 --> 00:34:51.369 somehow keep that original spirit of hosting 00:34:51.369 --> 00:34:54.110 alive, they might just survive the regulators 00:34:54.110 --> 00:34:56.630 and the backlash. It's a fascinating story of 00:34:56.630 --> 00:35:00.349 serial censors and sleeping on a stranger's floor. 00:35:01.539 --> 00:35:03.420 Thanks for listening to The Deep Dive. We'll 00:35:03.420 --> 00:35:05.000 see you next time. Stay curious, everyone.