Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Julian, can you share some background on your role and responsibilities at Airbnb?

I joined Airbnb in 2015, and I was there for almost five years. The first job I had was managing their Asia Pacific region. I did that for a couple of years and then migrated to work on the new business, the Experiences business. From the beginning of 2017 until I left the company, I worked as the global head of operations for Experiences. The best way I can describe Experiences is as their second album. The first album was the very successful homes business, and then they launched into Experiences.

Can you give me an example of a typical experience on Airbnb?

One of the glories of that job was you got to go to do many experiences to test them; I did a fair amount of food tours. I can give you a great example. I did a secret garden Paella experience in Barcelona where a local person taught everyone how to cook paella. We were a group of about 12 to 14 people, and we all sat down to eat together. Another example is I did a sunset cycling tour around Tokyo, led by somebody who knows the region, all through the back streets of Tokyo. You’d never imagine cycling through Tokyo, but we were doing that during sunset, and you just get to see parts of Tokyo you would never normally be able to see. In London, I did a wheelchair tennis lesson with a group of people. This with was a semi-professional wheelchair tennis player. We learned how to navigate and understand what it’s like and how difficult it is to move a wheelchair and play tennis. It was tremendous fun, and it gave you a lot of empathy for people with disabilities. So a huge range of different types of experiences.

What was the original idea from management about why this would be a good allocation of capital?

Airbnb was born in 2008; the company started during the recession. It was based on hotels not being a fantastic experience. By opening up people’s homes, you completely transform people’s idea of the experience of staying in a home. The rest is history. The business grew very quickly and became a huge platform for people to open up their own homes. You can go and stay in a single room in the city, or you can go and do a holiday home or whatever. But one thing we quickly realized was that you don't travel to stay in a home. You travel to do things. The home or the hotel is an important part of your stay, but it's not the be-all-end-all of why you’re going.

The natural evolution from staying in a home is Experiences, things to do. So Airbnb had a captive audience of people traveling in huge volumes every night, in some cases, two million people a night at the height of the year, during the Christmas and New Year period. Those people want to do things, so it became a natural extension to be able to, in some ways, upsell people and say, well, you're staying in this area, you're traveling, why not do something really interesting with the time you have?

What was the biggest challenge in driving the attach rate of Experiences?

Even when we launched Experiences back in 2016, Airbnb had become a verb and a noun for staying in a home. You're almost having to reposition what Airbnb is and make it much more broad. When people come, they don't necessarily associate Airbnb with learning how to cook paella or going on a walking tour of Barcelona. It was about a bit of repositioning. Also, you have a very successful business on the home side, and every time you start a new business, it doesn't matter what business it is, to get a bit of traction, you need to give up something about the core business. Maybe that's real estate on the home page or promotion. Incubating a smaller business within a huge business is always a challenge, but it made sense because we had so many people staying in homes at Airbnb. We only needed to convert a small percentage of those into Experiences, to ultimately create a large business.

What was the biggest challenge in driving conversion?

The biggest challenge in driving conversion was getting people to understand what an Experience was because it is a really broad, overused term. What does experience mean? Some people have the Airbnb experience with staying in a home. It's the experience of staying with someone in their house. What we're saying is, it's things to do. I think there was a communication challenge, initially, around doing that and getting people more comfortable with taking that brand extension of Airbnb from just accommodations into actual things to do.

think the most significant conversation there is education. There was a lot of effort and energy spent, initially, in the merchandising of the experiences with photography. We experimented with videos to make sure it was clear to people how we categorized the experiences, the type of experience. A lot of experimentation was happening at the beginning. A fair few things didn't work but, over time, we worked out the recipe in terms of the types of experiences people want to do, and then went to talk to them in the product, so you can then convert those people. And you didn't have to book a home to then book an Experience. Independently, people could book Experiences from homes. It just happened, and it was obvious that once you booked a home, you were a target audience to then convert to an Experience.

But I assume there are also quite different user journeys. If I'm booking an Airbnb, I don’t necessarily want to book the experiences and stuff to do each night. At the time, I'm just looking for a place to stay, and maybe a month or two later, I come back for an Experience. Do you see them as two different journeys or one part of a longer user journey?

They're certainly not part of the same user journey. It depends on the segment. If you're a holidaymaker and you booked your Airbnb three months ahead, and as part of that journey, you get a choice of Experiences to book, that can be seen as part of that flow, if you like. But it doesn't always work like that. A lot of people are booking Experiences at the last minute. Generally, you have to lay down your head and sleep when you stay somewhere, so the accommodation part is a must-buy, whereas going on a food tour is not a must-buy.

There's a certain amount of a discretionary element to experiences, which wasn't necessarily the same for accommodations. If you're going to that place, you need X number of nights to stay there. But it was hugely varied, and when launching your business, you learn a lot in the first few months. The importance of having data and understanding your customers was a critical key, and when we launched, there were some examples where things didn't work, and we had to pivot quite quickly.

What did you learn about how customers behaved around the Experiences in the early days?

In the early days, we probably made them too rigid. We had experiences where the price point was perhaps a bit too high. We were pushing experiences that were like $200, $250. They were fantastic experiences, like learning how to be a samurai with a samurai expert in Tokyo. They were over three days, three hours on the first day, two hours on the second day. The problem with that was they were almost cinematic. They followed this kind of story of the journey. But if you're going to Tokyo for three or four days, do you have those precise times available? No. So I think we went down the route of being too cinematic initially, and we adapted very quickly to make them more bite-sized. But a three-hour Experience for $50 or $40 will get people involved, make them easier to book, and be more accessible. That was the key learning in the first three months. We pivoted to those types of Experiences without losing the quality and excitement around the overall experience you get from the host.

Did the users book the Experiences, typically, before arriving at a destination or during the stay?

It varied. It depended on what the booking window was on accommodations. We had a lot of repeat bookings, who didn't book accommodations because you could book in your own locality. So if you lived in London, you could book all the Experiences. You don’t necessarily need to be traveling or staying in an Airbnb.

One of the things we tried which were phenomenal Experiences were concerts. We did these small concerts that were 30 or 50 people in size. I remember the Hidden Jazz Club was a classic one. There were several of these worldwide done by Airbnb, with 40 or 50 people in an unusual place and high-quality jazz musicians for a couple of hours. There were drinks and a bar there, and it was nicely done. In those sorts of things, I think 50% of the people that went to those were locals. They weren't traveling. So it was a mixed bag. The goal was to get people traveling on an Airbnb to try an Experience, and then when they go back to their hometown, or they've got friends coming into town, they'd encourage them to try an Experience as well.

How did you acquire the customers that weren't booking a room? Is it brand affinity and word of mouth? They just know Airbnb, and they're visiting organically?

Yes, by word of mouth. We did marketing; PR was a big thing we did. We had some remarkable and interesting Experiences, unusual stuff on the platform. Don’t forget it’s an open marketplace in some sense, so people could apply to list, and there would be a stringent vetting process. Because we didn't mandate what we were looking for and allowed stuff to come to the platform, we got some unusual and talkable experiences.

I remember a guy in LA doing an OJ Simpson, in a white Bronco, drive at sunset, which was quite a controversial Experience on the platform, but it was really interesting, with one of the world's leading experts in the OJ case. There was also PR around all sorts of weird and wonderful experiences on the platform, which also sparked interest in some of the concerts we did. There was a taxidermy experience with a vegan taxidermist. We were aiming for a supply that wasn't run of the mill. Sure, you have your walking tours, food tours, and vanilla stuff, but you always had that kind of real interest, talkability type of Experience. It wasn't always just a walking tour walking up the Eiffel Tower and jumping the queue. We weren't aiming for that kind of positioning.

You have GetYourGuide, which does the same thing standalone. What challenges do you think Airbnb faces? I know you mentioned the education point, but are there any other challenges where you have two different products or Experiences on one platform?

Some of it is you don’t want to confuse the overall user. You have a very big, strong core business that you don’t want to weaken by having a new product. You don’t want to plaster the Experience with this new product to the detriment of the existing Experience. You have a big userbase that's used to Airbnb being primarily an accommodations business and you have to evolve into this. Initially, I think that was a big challenge until we got up and running and it became a bit more of the norm.

When we first started getting people talking about it organically on the radio in the US, it was, oh, I've been on one of these Airbnb Experiences, and I did X, Y, and Z. When it starts to create a life of its own, you've hit a rich vein. But until that point, it's really about that education. It's also the choice in terms of where you launch. We decided Airbnb accommodations was a completely open platform, and we had accommodations in about 40,000 homes and about 40,000 cities. When we launched Experiences, we launched in 12 cities. It was much more of a curated marketplace than a completely open marketplace for homes. You can be more deliberate about where you target your marketing to get that recipe exactly right and get that supply mix correct.

Was that mainly because of the challenges in getting the supply side right and only focusing on certain cities?

We had a view of what a good supply mix was. I keep making an example of Barcelona. If you go to Barcelona, it's a very historic city, it's known for its food, its sport to some degree, football. We had a cool experience where you could go and play football with a load of locals for like 9€ or something. It was just a simple thing. How else would you do that when you’re traveling in Barcelona? Having those experiences in the US, just replicating them, didn't make sense. So each city had its unique product mix that we wanted to create. We curated that initially, then allowed it to breathe a little bit, and then allowed for competition over time. We used to call that the paella problem because you don't want to end up having 50 paella experiences in Barcelona. You've got to have the right mix so you’re not overwhelmed with almost the clichés of the city. You want to have a mix but not be strictly adhering to the cultural norms; you may want to throw in some other stuff as well.

It could be a valuable position as the only paella host on Airbnb in Barcelona.

It could be. I think some of the hosts were making very good money. If you get a winning formula and get great reviews and word of mouth, it becomes quite big. We found that someone on the first day of their trip might take a great walking tour, and since the hosts got to know each other – there's that sense of community – they’d recommend each other. You’d get multiple bookings on that trip because the hosts would talk to each other and recommend each other’s experiences. For us, part of the recipe was creating a community, and we invested a lot of money, effort, and time in developing those communities in real life. On the ground, in the communities, we had meet-ups and things like that and online.

How would you describe the difference on the supply side with Airbnb versus the other competitors, like GetYourGuide and some of the standalone experience platforms?

This came from the leadership of the company, we had a very fixed and clear view of what we wanted to be and what we didn't want to be. That's not to degrade other competitors. Although we knew we would sell many tickets to jump the queue for the Eiffel Tower, that's not primarily what we wanted. We want authentic host-led experiences. This came from the fact that with the very best experiences, people remember not necessarily the experience but the host. We see that come through in the reviews. We'd see many reviews where they name the person like Bob or Jane did X, Y, and Z. The overwhelming feeling was, in a year or two, they won't remember which food tour they did or the spots they stopped at when cycling, but they'll remember the other guests and the host and how they made them feel. We were differentiating ourselves in that way.

We did a lot of host training, and we didn't accept everything on the platform. We had stringent quality metrics that we looked at when we were onboarding supply. We had a clear view, and we probably lost some sales from that perspective because we didn't sell just what was popular. We were trying to broaden the canvas of how people felt they could be spending their time; introducing them to new things and getting them to be a little bit more daring.

Roughly what percentage of experience hosts are also room hosts?

It's a surprising amount. It was 25% as far as I can remember. You thought, these are all home hosts who have become Experience hosts. But, no; the minority are home hosts. It's a rich vein of opportunity to have all these home hosts. You have to remember that before we launched Experiences, many home hosts were doing these things organically anyway. You might go and stay with someone, and there's a sizeable percentage of people who say, I'm going down to the riverside to do some yoga, do you want to come with me, or whatever experiences it is. Or I'm a photographer, or I'm a designer, and I'm going out to take some photos, do you want to come with me. These things have been happening since the inception of Airbnb, to some degree.

I think what happened when we launched the actual Experiences brand, as a business unit, was we were kind of codifying that. But the vast majority of hosts were new to the platform; they weren't even home hosts, which is encouraging because we're looking for people with talent they want to share. A lot of people wanted to do it infrequently, once a month. Some people wanted to do it daily or twice a day and make more businesses out of it; it's a real mixed bag.

What about the mix between individual hosts and the professional hosts, such as the professional company visiting the Eiffel Tower?

The majority of hosts were individuals, and there’s always a place for professional hosts on the platform, of course. We weren’t turning away hosts. But there’s something authentic about an individual who has a real interest. I remember going on a history tour in London with a guy named Dave. It was a really interesting two to three-hour history walk. He's an amateur historian, with a huge amount of knowledge in the area. Locals and travelers were coming on his tours. Is it a business? I think he makes money from it, but it's a real passion for him. We didn’t want to flood the supply just with professional companies. Not that there’s anything wrong with that because a lot of them provide a great experience. I think the personality and dimensions of a great experience often dictate some consistency to the experience, and that's coming from the host most of the time.

The things we looked at in terms of thinking about quality – what we call hastiness – was how does that host interact with the guests? Do they introduce everyone to each other initially? Do they get the group to bond, make you feel good about what you're doing, are they helpful? Then there's the type of access they can give you. Are you getting something you can’t get somewhere else? That was something really important. And then what was their expertise. You've got someone teaching you sushi-making who's just learned how to do it a week before. There was quite a vetting process by the person responsible for the supply with our team to get the supply onboarded. This slowed down the onboarding of supply, but it made sure the quality was there.

The company's leadership always used to say, quality drives growth and not the other way around, and I think that's a good thing to take into any business. People will talk about it if you provide a quality product, and growth will come naturally. But if you do things just to get the growth, often, you'll degrade the quality.

What percentage of the hosts do you reckon are exclusive to Airbnb versus the others?

I don't know. We had a lot of hosts who were pretty loyal to what we were doing because we were doing it in a certain way. We were extremely supportive to the hosts; we dedicated resources in the community. Especially those who were there from the beginnings or the early stages, they grew with us, which was encouraging. Of course, there were a lot of platforms there, but they would send the Airbnb people a huge amount of traffic and opportunity for them to grow; grow their business or their passion.

When we look at Airbnb, obviously the rooms business, it's clear that they have the somewhat unlocked capacity in the travel business with residential homes, which are typically not on or any other professional vacation rental home platform. But it seems easier for someone doing yoga or a history tour to also go on GetYourGuide or TripAdvisor or any other platform that’s looking at this stuff. How do you look at the potential stickiness or exclusivity of the experience hosts versus the room hosts?

There are other platforms for accommodations and experiences. We found a couple of dimensions here. We found that Experience hosts, in particular, really like the Airbnb guest. They saw something different in the Airbnb guest. This is a mass generalization here, but we heard it a lot. The guests tend to be a bit more adventurous, maybe easier to get on with, more social; that was a plus point. That's what made a lot of hosts gravitate toward us. They liked the quality of the guests they had, who were staying in Airbnbs.

Don’t forget, in the early stage of Airbnb, staying in an Airbnb was quite a big thing to do. It seems like it's become the norm; it wasn't always so. The other thing is with Experience hosts, you can list on 25 platforms, but do you want to manage 25 calendar tours. It gets to be a big mess, so there's a law of diminishing returns on some of these platforms. It's not an easy way to aggregate across Airbnb and all the others. There's always that danger, in these situations, of becoming commodified. There were enough differences in what we were trying to do that a large percentage of the hosts wanted to work with us.

Of course, the proof is in the pudding. If you don't deliver guests and bookings, you don't deserve to be exclusive. But the Experience hosts weren't necessarily all professionals, so some of them might do it once a month or once every two weeks for three houses, and they might have six guests. It depended on the host and the sector and, in some cases, the country or the region.

How did you onboard and find the hosts?

Initially, when we were seeding each market, we had a view of what we wanted to see. We might want 50, 80, or 100 quality experiences in the market to start with. We might say, we want 30% of these in the food area, 20% in the historic monuments area, 30% in the activities or sporting side and so on. Initially, what you do is a lot of pounding the pavement type work, on digital as well. Not necessarily knocking on doors, but using networks, using a lot of desk research, contacting people, doing the hard work to kind of seed the market. Over time, word gets around, and once you launch a market, people can see economic activity and value, not just economic value but also pleasure.

Many Experiences hosts love hosting and sharing; a lot of them love sharing what their skill or passion is. If they can make money on it, great. Once that starts to happen, you start to see this kind of natural growth where you get thousands of people every week applying to become Experience hosts. We would open up a market, get people to apply, and then vet the Experience. But going online with an Experience, it doesn't matter what platform you're doing, there’s a certain amount of work you need to get your Experience up. A picture paints a thousand words, so you need enticing visual images of that Experience. You need to set your price, your calendar, have a good description. You need to make sure, when necessary, you've got the right licenses to do what you say you're doing. A lot of checks went on in the background, so initially, it's a very rigorous process to get people onboarded, and then, over time, it creates a life of its own.

Looking now at Airbnb for London, in terms of Experiences, there aren't that many. What's the rough number that you'd have? For example, I'm here, in London, on April 17, there are 24 experiences for tours only. That seems quite low. Are we looking in the hundreds for the experiences? Have you got a dense enough product?

A combination's a bit of a false proxy. Generally speaking, you could stay at a place that can have two or three people, and it's one night. Whereas a tour, you might have 12 or 15 people, and they might do it twice a day, so you might have 10X or 15X the number of opportunity slots to run on the experience. If you have too many Experiences of the same experience, you completely commodify, and then it's just a race to the bottom in terms of pricing. You want that nice balance where you want your hosts to fill out, and for them to make it economically viable; you don't want everyone having one person on their tour.

You generate this natural equilibrium and this balance between the right amount of supply and the right amount of demand in the market. Then there is seasonality that comes into play. I haven't looked for a while, but it's post-Covid. International tourism has declined. A lot of Experiences went online; I think Airbnb did a lot of digital online Experience, which makes sense, but I think as we're coming out of this period, that's going to change.

That could certainly be a factor. It's post-Covid, and we're just getting back to face-to-face contact. I think merchandising is particularly interesting. If we look at a scaled Experience product – take London for example – would you pick one or two hosts for specific history walks around certain areas, and that becomes more like an exclusive position for that person? Because you don't want to have the commoditization effect. How did you think about merchandising certain cities?

This is where reviews become really important. What you don't want to do is overprescribe what the user wants. Although I said there's a supply mix, this is a generalized view. If you have 100 or 200 experiences in Barcelona and only have one food experience, that's probably not right. It should 30% there. You have some general thoughts about the right supply mix and the types of categories that will be more important than others. But outside of that, you need to allow a bit more organic nature to happen because you will have some real hits here. You're going to have some things that really take off.

I remember one of the biggest Experiences in the world for us was in Seattle; it was walking with the wolves. This guy, a couple of hours outside of Seattle, had a wolf sanctuary. You could literally walk with them in the forest, and they were experts on wolves. It was an amazing, Instagrammable kind of experience, and people would fly into to do it. Nobody said, okay, we need a wolf-walking experience in the business. These things applied and happened, and all that was organic.

We had a significant amount of people who worked with the hosts and worked in the cities, who'd be city experts, and they'd work with the hosts on development. It was a little bit organic and a little bit structured to start with, and then more organic, and then what comes on the platform builds traction. This highlighted the importance of the reviews because, like most ecommerce products, whether it's Amazon,, or Airbnb, the review is critical so we put a lot of effort into the review system.

Coming back to your point about merchandising, we made sure we put in front of people, not just the most popular, but also a mix of noteworthy popular things. Things that didn't necessarily have mass appeal but would brand the Airbnb Experience as something a bit different. You could always go there and find your walking tours and typical things in London, but then there'd be one or two really unusual things that people want to go on. So it's catering to a broad audience.

And you can tell that when you're on the site versus GetYourGuide or others. Airbnb highlights the hosts specifically; they drive the Experience.

Yes, the host is really central to this. That's why it's really important and one of the things we looked at to make sure the hosts don't fatigue. If somebody’s doing the same thing three times a day for months on end, that can inevitably be degraded. There wasn't a huge push to open up every single day. What was important was that people had a brilliant experience. You’re thinking about the customer's lifetime value, and them recommending these Airbnb Experiences. What we were trying to do is scale quality, which is a big challenge for many businesses. Usually, you can have scale, but you can't have quality, so trying to do both simultaneously became a kind of the business growth challenge.

It could also be detrimental to the rooms business if you don't get it right; same with the quality.

Yes, that’s an issue whenever a brand launches a second or third business. When Amazon moved out of books, I'm sure there was that worry.

It's also harder because you've got more variables. You’ve got the host’s mood when they wake up in the morning or had a bad night's sleep, whereas at least a room you can tidy it and it's a fixed structure. It seems much harder to get the quality or manage the moving parts of the Experiences versus the rooms business.

That's a good observation. Most Airbnb Experiences are almost more Airbnb than the accommodations because it was about staying with the host in a single room and getting to know them in the early stages of Airbnb. And then, over time, it just blew out into a very large business. More often than not, you never see the host. When you get back to Experiences, the host is the Experience; you're not spending time on your own. And the other guests matter, but the Experience host determines how successful that will be. When you're on a trip, you remember how you spent your time there, and if you have a negative experience, you will look at the brand that provided that. It was really important that we spend a lot of effort and energy on the hosts, having the right host, and having the right training in place. However, it was obviously an open platform.

What was the biggest challenge scaling the supply side for Experiences?

Often, the more mundane things are more challenging. Getting people with really good images. Even in the homes business, it doesn't matter if it's, hotels, or whatever, if the picture's not very good, you make a lot of judgments about the image versus the actual experience. It's having the right content and making sure the images reflect the experience and you can go down the user-generated content line. The quality isn't always there, but it's a little more authentic.

How do you get the right kind of balance where you're not overselling what the experience is? It needs to be accurate, but it also needs to be inspiring. We needed to get that right, get the copy right, get the descriptors right, and get it on the platform in a presentable way given that these are not employees. They're hosts; they're not people we can tell what to do. It's a platform that they're joining; they're independent. Encouraging them to spend the time and energy to represent themselves best on the platform was probably one of the biggest challenges.

What about finding new hosts?

Not so much of a problem. As we delivered more and more users. One of the reasons to join Airbnb Experiences is you've got all these people starting in the homes and I think you have a natural gravitational pull. We weren't short of people applying to be hosts once we got going. There's often initially a backlog of people we need to talk to. There's a submission process.

What was the acceptance rate, roughly, if I apply to be a host?

Initially, it was very low because we were heavily curating what was on there, and we had a backlog. But as we learned more about the business, and what worked and what didn't, the acceptance stepped up. Obviously, it varied compared to the beginning and then over time how it played out in each market.

How do you compare Airbnb Experience versus the alternative? One alternative is just organically visiting a city and going about and booking stuff in the town or city, at the kiosk or whatever it may be; the organic approach versus, call it the head-to-head competitors, GetYourGuide, and other players who offer similar offerings on the surface.

I don't work for Airbnb now, so I'm not speaking for them as a company now but I don’t recall us thinking heavily about this. We weren't defining ourselves by the competitors, which is important for any business. We needed to understand what the competitors were doing, but we saw ourselves building a different type of business. To some degree, we were missing out on some of the low-hanging fruit of many monuments and landmarks. When we did landmarks, we wanted to do them in a very different way. As competitors, we were trying to be the best version of ourselves, which was the biggest challenge of what we thought we could be versus comparing with competitors.

But the consumer works in the dynamic of the whole market, so we know there are competitors. We also knew that experiences as a whole – you've seen the graphs of the experiences, not things, concept – is just huge. There is plenty of unspent time. People generally go to a restaurant or a pub or a sports game or watch Netflix. So there's a whole unexploited area where you can entice people into doing unusual things. The market was well big enough, but we were less worried about competitors and more worried about having high-quality experiences.

In terms of organically, it’s an offline industry generally. I didn’t realize how big an offline industry it was. Even having people who were providing experiences previously and offering them that platform, where there's insurance and customer service and access to a load of users and community, was also a big thing. I think that helped the idea of moving an offline market online. We weren't as arrogant to say we were the only company to do that, but we were offering a key way for people to be able to go online and then be successful. There were Experiences types; they didn't necessarily want to run a business online or run websites. We were their home online, and in return for the fees, they generated large amounts of business with us and shared their passion, which is positive.

What was the revenue model, between the takeaway of the guest and the host for Experiences?

At the time, we were charging hosts 20%; I think that's still the case for the hosts. We take the payment charges, have the customer service, do the marketing, have the toolset, the calendar and so on. If you were running an experience and it was $100 or 100£, we'd charge 20 of that, and then we'd take the funds from the guests, and 24 hours after the Experience is run, we'd remit that payment back to the host. It was also good we didn't keep the host waiting too long for their money, but we also protected the guest to make sure it was good.

No guest fee then?


Why didn't you charge the guests when you charged the guest for the room?

Fees have changed in the accommodations business. There used to be a bit of a guest fee and host fee on both sides. These businesses are different animals. When we look at the Experiences business, obviously we do look at competitors sometimes because we have to look at what the norms are, and then can you justify that percentage for the value you're going to bring. But we didn't anchor it around what we did around homes; we anchored it around what was the norm, perhaps, in the experiences industry.

I also guess Airbnb can afford to not charge a guest fee because, on a lifetime perspective, the value is when you're looking at rooms, you look at them both holistically. They filter into each other where the other experiences players don't have a rooms business like Airbnb.

There's more than one way to skin a cat. Different companies do it in different ways. We didn't want to put any inhibitors on the guests, and if you provide value to the host and bring them business, you can justify the fee and takeaway you have.

It was just a scaling thing in the early days, and not charging the guest to drive more demand get more people doing it.

Yes, word of mouth in the experiences business is important.

The reason I ask is that it seems as if the Experience business – obviously, the rooms business is unique – is also equally unique in terms of some of the stuff that's been offered here. It seems like as a guest, I'd be willing to pay for sourcing and finding those people, just as much as I'd be willing to pay for a room. It seems in the long run, there could be an opportunity to charge the guest a token 3% or 4%.

Yes, who knows. It’s not my call anymore.

On the take rate, how did you think about optimizing the guest versus the host fee when running the core rooms business?

I think you can make mistakes when you optimize for revenue when you’ve got a fast-growing business. Yes, you have to pay attention to revenue and bills, and you have shareholders; it doesn't matter what business you're in. But if you optimize for a quality experience, repeat bookings, and the lifetime value of the customer, that's the key. For Experiences, the metrics we were looking for were mostly around the quality and reviews we got. That was important for us. We watched the reviews carefully because we were trying to create unique experiences for people. We looked at these different dimensions of quality that remeasured. It was really important that we didn't optimize revenue because if you build a big enough scaled business that everyone loves, there is plenty of time later to look at the revenue. It was about getting traction and upping the volume of great experiences that people have as denoted by the quality that they see.

There have been lots of discussions now in public, and when I book at Airbnb, of the addon fees that are showing up. Service, cleaning, but obviously, the cleaning feature in Covid will be higher. How did you think about the core room rate and all the addons on top? Is it the host’s decision to charge those?

Yes, you want to encourage the host to provide good value, and that's why having competition is good; if you have a large volume of places, it naturally brings down the prices into something of value. But it wasn't for us to mandate what the cleaning fees would be for people. For one thing, cleaning costs vary massively by the country. As a marketplace, the home host sets their price, deciding what fees to charge, aside from the Airbnb fees.

How did you see those take rates evolving for the host? I understand now it's 3%, 4% for individual hosts and 15%, on average, for professionals.

It's changed a lot since I was last there. Some public accounts and files tell you all that information now. When I was there, we were mostly focused on the quality of the experience. What was most important to us was people getting good reviews. Especially when it was quite new to people generally, there'd be people sitting around a dinner table and saying, have you tried Airbnb. They'll say, I don't know, I don't know if it could stay in someone else’s house. Then someone will say well, it was a brilliant experience, I had my own kitchen, it was clean, the host was friendly. I'll never get a hotel again. I have two kids, I didn’t have to get two hotel rooms. There are a lot of upsides to Airbnb, and you wanted to mitigate some of the perceived downsides, so it was all about making sure the quality and word of mouth were there and people had a good first experience.

Looking at the rooms business specifically, how important do you think the professional inventory is for Airbnb?

Now I think it’s important for vacation rentals. I’ve just been looking at a holiday with my family, a holiday destination in Greece. There's some great inventory there, and a lot of it is professionalized. Still, it happens to be a location where most of the accommodations on that island are professionalized, so you could expect that. It does vary by market. I think it has an important dimension in place. I think Airbnb has always been a broad church. There's always been that one room you can stay in where you can do yoga with the host and eat muesli in the morning; those experiences still exist. Or if you’re a business traveler, when business travel was a thing, you would stay in a flat for a week instead of a hotel, and have a kitchen. And then there's the professional vacation supplier. I think it's always been a broad church.

Was it challenging to onboard the professional vacation rentals versus VRBO or HomeAway?

Yes, there are different expectations in terms of how you manage those folks. You have to set up account management teams and work with them. How does the bidding work, what is the expectation on the tooling? There is Airbnb for Work, and there the expectation is slightly different if you're a company and you're usually making a hotel booking, and now you've got a combination booking. But they were things that got worked through. The point I'm making here is that there was always a large amount of business travel supply there. We found a lot of people, particularly the younger ones – what we used to call millennials, I guess Gen Y now. 10 years ago, we used to call them millennials as if they were young, but millennials aren’t young anymore – who were just going and using Airbnb anyway, regardless of what the policy was for their company. Then the company would say, you can't do that, and that would instigate a discussion with Airbnb, and then they'd implement Airbnb for Work. That would give them a bit more comfort around how it's organized.

These things were happening organically on the platform, and then they got more codified at the time. But I think there was always a reasonable amount of that going on over the whole platform. A lot of people travel for business and use Airbnb because they just find it more convenient. If you're a consultant and going for a two-month consultancy in a foreign country, you don't want to be in a hotel for two months. A lot of that was happening anyway.

That's a different kind of journey. I'm talking specifically about you shopping for a holiday with your family. Typical vacation rental, two weeks, 10 days, typically a beach resort, Greece. How differentiated can Airbnb get for those locations?

I'm not sure that the actual accommodation will be hugely differentiated because these might be listed in multiple places. But then I've got the choice. I'm an ex-employee, but I've got the choice of a place I was looking at. To book it directly, I'll book it through Airbnb. I'm probably going to book it through Airbnb because of the reviews, the insurance; it's on the platform, I understand it. People go off the platform and book directly with some of these companies if it's listed in multiple places, but I think bringing together the experience in one place, if you're a consistent user of Airbnb, makes a lot of sense.

I think the big change, recently, has been not so much that people haven't been going on holiday, it's more that long stays have been something that the company, as I understand it, is really focused on. It was always cool. Even before Covid, I knew quite a few people who lived on Airbnb. They sold their house. There are quite a few stories, if you Google them. People we know who came in and did some internships at the company. They wrote a book about it. These senior interns came in their 50s or 60s, sold their house, lived on Airbnb, and went from city to city. That was always happening, and I think maybe Covid has accelerated that with the more flexible working environments. People are, I think, measuring it as 28 and 30 days.

That’s 25% of bookings now, I think Chesky said.

I think it’s probably more than that amount. I didn’t look at the last numbers, and I think it's gone up.

Do you think that’s sustainable?

It might actually be a really sweet spot for the company because no one wants to spend 28 days in a hotel. Airbnb – being the strong player in this market – has the biggest, boldest opportunity. It's an opinion, but I don't believe that we will go back to a complete five days in the office for the foreseeable future. As an example, many companies, including the company I'm at now, have the policy that you can work anywhere in the world for six weeks of the year. If you're going to work anywhere in the world for six weeks, Airbnb is a great opportunity to book. I think it opens up a whole new ground for them for bookings, and I think that's showing up in the numbers now, longer stays. But I don't think it will go away any time soon, from what I can see.

I'm just thinking of the competition. For example, I was searching for booking a stag do, and looking for a typical house, 15 or 20 people. I did go on Airbnb, VRBO, Homeaway, all these different platforms, and they are all similar. They have similar inventory, maybe slightly different availability. Do you just assume that's commoditized inventory and that's going to be on all the platforms in those beach resort areas? There's not much room to differentiate in the long run, there. How do you look at Airbnb’s opportunity to differentiate the professional inventory for vacationers?

Probably, there are other services you could potentially add at the time, whether it’s Experiences or transportation even. How do you get to the home? What do you do when you're there? Where do you stay? There was always a vision. Brian Chesky was always very public about saying the end-to-end trip is very important, pre-Covid anyway. Airbnb is uniquely positioned to offer that end-to-end trip. Post-pandemic, it's something that many companies would be interested in. When you're providing multiple products on that wallet, you can add an extra dimension to that, so the whole is greater than the sum of the parts.

They closed down flights.

I think flights closed down, globally. I think transportation now is something that, with the world coming alive again, touch wood, you can see this huge pent-up demand to travel. Maybe travel has changed, or maybe there will be more distributed travel. People have become more used to getting to know their own country a little more, as well. It's not just about people going to Paris or New York, but some smaller towns across these markets. A lot more distributed localized travel plays into Airbnb's strengths. If you look at any sort of heat map of where the inventory is – it's probably true in certain holiday spots – a lot of the inventory is quite similar, but if you go further off the beaten track, you see where Airbnb has a lot of inventory.

How did you see that evolving? Take the APAC region; there are certain hotspots like Bali in Asia, that typically always have demand.

It becomes distributed at a user level, so what you see is probably two dimensions. One is distributed, and the other is domestic. Take Sydney; Sydney was always a big adopter when they went abroad using Airbnb; Australian mentality, we'll give it a go. I seem to remember going to Sydney on any given Qantas flight from Paris; many people were staying on Airbnb. Those people would maybe try Airbnb in Paris, the romantic view of staying in a pied-à-terre in the center of Paris. When they got back, they would then take a trip to Melbourne, or their mother-in-law would come and stay, and they want to rent an Airbnb. They start to use it more domestically. Over time, you saw a shift from people using Airbnb internationally to having that experience and then saying, well, when traveling locally – which is many more of your trips than international – you would start to use it there in other cities. We’ve all seen that behavior.

In the second dimension, it becomes more distributed. Maybe it's not just between the major cities; we start to see critical mass. Early on in the homes business, and this is obviously before my time, one of the founders, Nate, used to say that once you get to 300 homes in a town or a city, you start to see a tipping point where it takes a life of its own. You need to see the critical mass there. Just like early on, we talked about how many walking tours you can see in London on April 17. If you go to a place on any marketplace platform and don't see any content or inventory, you know it’s a ghost town. You’re not going to be able to do it. That’s the big challenge of building any marketplace.

I was reading this book, The Cold Start Problem problem. I don't know if you looked at that. The guy who wrote that worked at Uber; same sort of problem. It's the classic challenge of building a marketplace. But once you build that and get that flywheel going, it becomes incredibly powerful. I think that's what happened with Airbnb; it went global instantaneously when it only started in a couple of spots. We used to have this presentation which showed, every year, the amount of Airbnbs around the world, and you saw – it's an old analogy now – it was almost like a virus effect. It's amazing because you just see the network effect in action. It’s one of the most networked businesses there are. You can see that happening. The natural distribution to having a critical mass in many of these lesser-known markets, was quite big.

That’s what I think is also so unique about Airbnb specifically, is that it's also growing like Uber; it's growing the market; it’s growing capacity. It’s unlocking new supply. Like you said, my residential property, in outer London, is a new accommodation. How much do those matter, though? If we look at the total travel pie, even though it's going to grow, I think they mentioned $1 trillion in short-term stay. How much of that percentage was roughly if you do traditional city breaks, vacation resort breaks, versus how much does my residential property matter in the long run?

It depends on segment. Because Airbnb is such a broad church, many of these segments are embedded. They flex up or down depending on market conditions. When I say market conditions, it could be seasonality. Obviously, in the summer, in the northern hemisphere, vacation will be huge. You just take off. In the southern hemisphere, not so much. And then in typical times of business travel, huge. Another dimension is events. We used to see it; it could be an event like Mobile World Congress in Barcelona or Golden Week in China or the Cherry Blossom used to be a big one in Japan, that April, May period. You'd see ups and downs of supply and demand happening.

Because Airbnb wasn't built on one niche – maybe it was initially with designers staying in each other's homes – it quickly became mainstream. It means that as things dial-up and down, you're kind of protected as a business a little bit. Even though international travel right now is still down, even now as we speak, it's made up for the fact that people are staying 30 days plus more often than they used to because the dynamics have changed. You have this kind of evening out, this robustness in the model.

Airbnb is such a great business because it was born in a recession. As people become more constrained and need money more, they host more. If people get squeezed by inflation and costs and have this spare room; rent it out. Why don't you host a couple of times a month? I'm not saying it's completely recession-proof, but the company was born in difficult times after the financial crisis. And as difficult times happen again and you get those ebbs and flows, it's pretty robust. Although the demand side might not be growing as quickly, you've got the supply side to make up for that by creating more inventory.

I think of my own experiences using it. If we’re going on a traditional vacation once or twice a year, I’ll search on Airbnb or use Airbnb, but it’s whenever I want to try something different domestically, that’s when Airbnb comes into its own. Because the inventory is not there, unless I want to choose a budget hotel in a town in England. It’s almost as if Airbnb doesn’t have to be that differentiated from the traditional resorts.

I think it’s selection. There’s nothing wrong with having the same selection in some marketplace areas, in my opinion.

Could they lose it, though? Could VRBO come in and say look, I just want a wall of the best professional inventory, and I'm going to discount my rate and take off all of the good villas in Greece from Airbnb. That could be quite a big problem.

I think there are a lot of niche players who have got unique inventory in a couple of places in Europe. There will always be bespoke, very different types of inventory that maybe people specialize in. And those companies have all got the marketing costs as well. I think Airbnb did a good job building a brand that people go to directly often, so they don't have to spend the same amount of money.

They could just cut their cost then, if they had to?

Yes. Again, the company's mentality has always been around trying to build experiences – experiences with a small ‘e’ – making people want to come back naturally, seeing value for it versus how can we up the fee by X, Y, and Z. It's about longevity; it's about in 100 years. How can we make this company still be around in 100 years and relevant for people? We'll have to adapt and change.

Looking forward to the next 10 years, people are estimating $100 billion GMV in five years. What are the potential limitations for growth, in your eyes, for this company?

There's a theoretical limitation regarding the population, days per year, and homes in the world. There is a theoretical limitation, but it's less than probably 1% of that. There’s a lot of potential upside from there. I think 10 years is a long time, and the company is only 14 years old. There are opportunities to go horizontally, booking things to do which are Experiences which is started, somewhat interrupted by Covid, and the whole travel industry and hopefully rekindling in those areas. The transportation side is really interesting. Taking that share of wallet that people spend on that trip and then looking at where Airbnb can play a part by adding extra value would seem obvious.

What about on the room side of things? If you were running Airbnb, would you be focused on any particular type of inventory?

I think where they are starting to focus is these longer-term stays. Then there’s another interesting area. Maybe this is shortsighted and we'll laugh at my comment now in five years, but there is a hybrid of work, home working; let's just see if it stays for a while. The number of people working from home, sitting in their bedroom, getting depressed, is this an opportunity to give these people a chance with these more flexible distributed working, a chance to have a different type of condition? Maybe there's a crossbreed between somewhere you stay and work. Just as offices are changing, maybe homes are changing and being repurposed. Hotels are changing and being repurposed. The blurring of lines between living and working probably offers an opportunity in some form. This may be manifesting itself in these longer-term stays, and people are probably using the platform for that anyway. But what other services would they want the ability to have?

What’s the typical journey for these long-term stays? Are they typically groups? Bigger properties? Or is it a mix?

For sure, it's a mix.

So people on business, individuals staying in small apartments versus bigger groups doing a week in a villa.

Certainly, for some people who can work from an office, not to be an office and to be working from somewhere else. Many companies have just permanently decided that they're okay with distributed working, and productivity, in some cases, has gone up. I know not everyone is working as hard, but some people are probably working too hard because they can't get away from work at home. If the overall average is the same, then there are costs to be reduced from people's lives and businesses, in terms of commuting. This is a much talked about subject, which I'm not an expert on. But if you see it all around us, there must be an opportunity there for people to tailor services for those types of people. Airbnb is in a prime position to be able to do that.