The Airbnbs

“They went there in person to visit their hosts and help them make their listings more attractive. A big part of that was better pictures. So Joe and Brian rented a professional camera and took pictures of the hosts' places themselves. This didn't just make the listings better. It also taught them about their hosts.”— Paul Graham

Operations & Execution · Business & Entrepreneurship · Leadership & Management

DUR_ENDURING

Manual work yields product improvement and customer insight

“When you talked to the Airbnbs, they took notes. If you suggested an idea to them in office hours, the next time you talked to them they'd not only have implemented it, but also implemented two new ideas they had in the process.”— Paul Graham

Operations & Execution · Leadership & Management

DUR_ENDURING

Implementation speed creates innovation flywheel

“Airbnb's goal during YC was to reach what we call ramen profitability, which means making enough money that the company can pay the founders' living expenses, if they live on ramen noodles. Ramen profitability is not, obviously, the end goal of any startup, but it's the most important threshold on the way, because this is the point where you're airborne. This is the point where you no longer need investors' permission to continue existing.”— Paul Graham

Business & Entrepreneurship · Strategy & Decision Making · Economics & Markets

DUR_ENDURING

Ramen profitability equals investor independence

“The way to get growth started in something like Airbnb is to focus on the hottest subset of the market. If you can get growth started there, it will spread to the rest. When I asked the Airbnbs where there was most demand, they knew from searches: New York City. So they focused on New York.”— Paul Graham

Strategy & Decision Making · Business & Entrepreneurship

DUR_ENDURING

Target hottest subset; growth spreads from there

“People, like matter, reveal their nature under extreme conditions. One thing that's clear is that they weren't doing this just for the money. As a money-making scheme, this was pretty lousy: a year's work and all they had to show for it was a binder full of maxed-out credit cards. So why were they still working on this startup? Because of the experience they'd had as the first hosts.”— Paul Graham

Psychology & Behavior · Business & Entrepreneurship · Philosophy & Reasoning

DUR_ENDURING

Extreme conditions reveal true motivation

“Jessica and I had dinner with Brian in the summer of 2018, just the three of us. By this point the company is ten years old. He took a page of notes about ideas for new things Airbnb could do.”— Paul Graham

Leadership & Management · Psychology & Behavior

DUR_ENDURING

Same note-taking habit after ten years

“When they first tried renting out airbeds on their floor during a design convention, all they were hoping for was to make enough money to pay their rent that month. But something surprising happened: they enjoyed having those first three guests staying with them. And the guests enjoyed it too. Both they and the guests had done it because they were in a sense forced to, and yet they'd all had a great experience.”— Paul Graham

Creativity & Innovation · Psychology & Behavior · Business & Entrepreneurship

DUR_ENDURING

Financial constraint forced discovery of new market

“That experience was why the Airbnbs didn't give up. They knew they'd discovered something. They'd seen a glimpse of the future, and they couldn't let it go. They knew that once people tried staying in what is now called 'an airbnb,' they would also realize that this was the future. But only if they tried it, and they weren't. That was the problem during Y Combinator: to get growth started.”— Paul Graham

Strategy & Decision Making · Business & Entrepreneurship · Psychology & Behavior

DUR_ENDURING

Experience proves value; trial is bottleneck

“After working on the company for a year and getting no growth, they'd agreed to give it one last shot. They'd try this Y Combinator thing, and if the company still didn't take off, they'd give up. Any normal person would have given up already. They'd been funding the company with credit cards. They had a binder full of credit cards they'd maxed out.”— Paul Graham

Psychology & Behavior · Business & Entrepreneurship

DUR_ENDURING

Binder of maxed credit cards at quit point

“When they came back from their first trip to New York, I asked what they'd noticed about hosts that surprised them, and they said the biggest surprise was how many of the hosts were in the same position they'd been in: they needed this money to pay their rent. This was, remember, the worst recession in decades, and it had hit New York first. It definitely added to the Airbnbs' sense of mission to feel that people needed them.”— Paul Graham

Psychology & Behavior · Leadership & Management

DUR_ENDURING

Shared struggle creates mission amplification

“For the Airbnbs, ramen profitability was $4000 a month: $3500 for rent, and $500 for food. They taped this goal to the mirror in the bathroom of their apartment.”— Paul Graham

Psychology & Behavior · Operations & Execution

DUR_CONTEXTUAL

Concrete goal posted in visible location

“What was special about the Airbnbs was how earnest they were. They did nothing half-way, and we could sense this even in the interview. Sometimes after we interviewed a startup we'd be uncertain what to do, and have to talk it over. Other times we'd just look at one another and smile. The Airbnbs' interview was that kind.”— Paul Graham

Psychology & Behavior · Leadership & Management

DUR_ENDURING

Total commitment visible in first meeting