On this episode, we cover:
Why Nathan shut down his first successful software company
How to think about building a diverse “college experience”
Lessons learned from the early days of Airbnb
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00:00 Will Robbins: Hello, and welcome to Contrary Radio! I’m your host, Will Robbins. In this episode, I talk with Airbnb co-founder Nate Blecharczyk. We cover a lot of ground across Nate’s first business, his time at college. And some useful lessons learned from Airbnb. I really enjoyed the conversation and hope you do too! That said, let’s get rolling!
00:28 WR: Nate, first of all, thank you for joining.
00:31 Nathan Blecharczyk: My pleasure.
00:33 WR: Today I want to focus more on your personal experiences since the story of Airbnb has already been so well-documented. Let’s start at the beginning, how did you learn to code and start hacking on some side projects?
00:44 NB: Yeah, so growing up, like most kids, I was really into computer games, and around the age of 12, one day I was home sick from school and my dad is an electrical engineer, and so he had… Well we had a computer in the house and this was the 90’s, so that wasn’t necessarily so common. But he also had books about computers, and I just took one of his books off the shelf. And started leafing through it, and it was really tough… Instructions on how to do basic scripting. And so I got curious about that and started learning how to do that. And for Christmas that year, I asked for a book on programming and that was Q-basic, at the time, and I got one of these 500-page books. That was probably not meant to be read front to back, but I devoured it in about a month and a half, and thereafter I just kept buying more and more books and basically teaching myself how to code.
01:39 NB: And that was a hobby at the time, just tinkering really. I was uploading my work to the internet and asking people to pay me $5 dollars if they’d liked what they saw. Nobody ever paid me $5 dollars but at the age of 14, I got a phone call and somebody said, “I saw your work on the internet and I wanna pay you $1000 to create something similar for me”. And I told my dad, somebody from the internet wants to pay $1000 and he just… He laughed, he said, “Son nobody from the internet is gonna pay you $1000.” But I said,” Whatever, it’s my hobby, I’ll do it anyways.” And well, after 30 days, I got paid a 1000 bucks and I got referred to other people who needed similar things, and this began a business that I ran throughout high school, quite successfully.
02:26 WR: How did that evolve from a fun side project to a serious business? You used that to pay your college tuition, right?
02:33 NB: That’s right. So I made over the span of four and a half years, almost a million dollars. So quite a lot of course, it started off quite modestly, and grew exponentially over time. I think more important than the money though, was the lessons it taught me. I learned really two things. One is that I could teach myself all the necessary skills. Which is, I think, the amazing thing about coding is like, the tools are practically free and all the information can be gotten online. And then two, that I could build things that people really valued and were willing to pay for, and that gave me a lot of confidence and a lot of motivation and put me on the path for future entrepreneurship. More specifically about my journey though I realized… I was getting referrals and basically doing custom programming for different folks. And I started realizing they all kinda needed similar things, and so rather than doing a bunch of one-off work, I should just create a general product and sell licenses to it.
03:35 NB: And so quite organically I started to learn lessons like, you don’t build what the customer asks you to build. You try to more deeply understand their problem and then propose solutions. And then another thing I think I learned that was really valuable was trust is everything. And for me, because this was… Started out as being a hobby and because I was just a kid and I didn’t frankly need all this money, I really put the customer relationship first and so I wanted all my customers to basically love me and to trust me, and so if they weren’t happy, I’d be just happy to give them their money back and I’d always be happy to take a phone call from them and walk them through things. And so I really took care of customers. And I think that’s also a really important lesson in terms of building a business that, especially when you’re small, you really have the opportunity to take care of folks and reach out and have that personal contact. And from there, hopefully you can maintain that over time, but there’s a saying which we learned from the co-founder of Gmail, and he told us that, “It was better to have 100 users that love you, than a million users that kind of like you.” And I think I learned that lesson very young, where one-by-one, I was forming a really deep connection with each of my clients. And making sure that they really loved the product and felt like they were cared for.
05:02 WR: Let’s rewind a bit, how deliberate were you with learning how to best manage customer relationships, get better at sales, and eventually productize your service? As you know, people aren’t quite like computers in the sense that you can just read the manual. How did you refine your process?
05:16 NB: Well, it was very organic and it was just me and obviously I was young and so it really started from a place of just wanting to take care of the customer. And so what does that mean? It means, you listen to them, you try to build something that makes them happy when it doesn’t work, you walk them through it, you take the feedback to heart and you kind of iterate. So that was all very natural. There was nothing about what I was doing, that was particularly corporate or fancy, it was just pretty down-to-earth. Like, talk to your customers, make sure they’re happy, when they’re not happy, do your best to fix it and make it right.
05:53 NB: During this time, I never really had employees, it was literally just me in the basement making it happen. And so, from that perspective, there’s a lot of things I didn’t necessarily learn that I’ve subsequently learned with Airbnb, about leadership, and hiring, and stuff like that. That was all stuff, for me, that came later. This was really more an experience in building self-confidence for me, that I could, again, build a business and teach myself skills. And it’s basically out of this that I learned that entrepreneurship was my calling. That being said, it still left a lot of territory to cover later on with Airbnb.
06:38 WR: Totally. So then you get to college, you know what you wanna do long-term, but then you’re suddenly surrounded by a lot of new interesting people, and plus you have real homework to get done, right? How’d you juggle all of that and try to design the right college experience?
06:53 NB: Yeah, so this whole graduating high school and the first year of college presented a lot of significant questions for me. On the one hand, my business was booming, I was making a lot of money. I think right around this time I was probably doing about $40,000 a month, and so it was really growing exponentially. And this is just me, by the way, so I had almost no expenses. And my dad even suggested that maybe college isn’t the right path, maybe I should keep working on my business and growing that, considering how well it was doing. But, for me, that was never really something I considered too seriously. I was doing very well academically. I got into Harvard and MIT, and so I had some great opportunities before me, and I just felt like that was the natural path, and that those opportunities were… I don’t… I’m gonna say, “finite,” but I guess my business was finite, too, but I felt like there would be future business opportunities, and so I didn’t wanna sacrifice having that kind of the Harvard experience. So I went into there, freshman year was frankly, fairly easy, but by sophomore year it got really hard, because that’s when you’re really starting to get into new territory.
08:14 NB: Nothing in high school really applies once you get past the first year. And so that’s when the difficulty got cranked up, and that’s when it became really hard to balance having a business, trying to do the academics, and still try to have fun, too, of course. And within two months of sophomore year, it was too much, and I’d said, “You know what? Something’s gotta give,” and I decided to basically shut down my business. And, again, I didn’t have any employees, so there wasn’t really anything I could sell, I just basically decided to shut it all down. And I told myself, “There’ll always be later opportunities to do this again, I’m confident that this is not the last time I’ll be making $40,000 a month, or whatever.” Not to say that… To be taken for granted, but, again, I did have a lot of confidence in my skills, and I thought there’d be a time and a place for that, and, right now, that I should focus on just having the Harvard experience and having both a social life and trying to do okay, academically.
09:14 WR: I can relate. You mentioned this idea of an “experience” which is made up of many things, what’d you really focus on and try to get out of college?
09:28 NB: Well, I just… I had a lot of great friends that I made in college. And people came from all over the US and all over the world and were terrifically talented. Again, I went to Harvard and so there was just amazing people from amazingly different backgrounds, and there was actually a strong computer science program at Harvard, but there’s also, of course, people who come there to do many other things, too. And so I just enjoyed the group of friends that I had there and wanted to have fun on the weekends. That being said, the academics Monday through Friday were quite demanding. And I studied computer science at Harvard, I almost changed, actually, after sophomore year. I was a little bit not excited about some of the more theoretical computer science stuff, the theory and the proofs and that kind of stuff, which is a part of the curriculum, but I made it through that and I enjoyed the rest of the program.
10:40 NB: And I enjoyed learning about computer hardware, and going deep into that and machine language and stuff, and deeply understanding how networks work and these different kind of areas that I hadn’t really gotten exposure to on my own. So when I was teaching myself, I was teaching myself very practical things, and so that’s still left a lot of gaps in my knowledge. And I feel like at Harvard, in studying computer science, I really, for the first time, understood the full stack, right down to the transistor level and the ones and the zeros, right up to networking and all the practical application stuff. So I, even now, still really value having that kind of broad understanding of how everything works, even if some of that stuff isn’t necessarily used on a day-to-day basis.
11:36 WR: Plus that full stack understanding really gives you the confidence to be a true generalist and deal with whatever comes up. So anyway, at Contrary we see a lot of different types of schools, some have really active entrepreneurial scenes, some are entirely made up of people who do research and build side projects with friends. And you were in school before Facebook became the classic dorm room start up, and founding a company was really a thing that people even did. Tell me more about the startup scene, there, what was there for you?
12:00 NB: Yeah, I’d say… not much, frankly. Entrepreneurship was pretty dead during these years and at Harvard, at this time, and it’s changed a lot. But I was in college 2001 through 2005, and this was right after the dot com boom. And so there was a big drop in computer science enrollment, and there really wasn’t any entrepreneurship happening. And so frankly, that was hard, and for me, during these years, I wasn’t doing anything entrepreneurial.
12:34 NB: And it wasn’t really until after Harvard, that I started tinkering again and I got back into the entrepreneurship thing. But I think there’s a time and a place for everything, and just because you stop practicing it for a period doesn’t mean you lose interest long-term. And I’ve always had the point of view that it’s important to experience different things, and to be challenged. And so, for example, one summer I did an internship at Microsoft. And upon graduating, I got a relatively normal software engineering job and my outlook was like, “This is gonna be very different than what I’ve done in the past, it’s maybe not what I wanna do long-term, but at least I’ll see what this is like and I’ll probably learn something new and the minute I’m not learning, I should probably move on and do something else.”
13:25 NB: But I wasn’t thinking about it so narrowly, like I have to just always be doing startups and always starting my own company and… Even when I did tinker, and of course, many of those times, things didn’t work out as well and I would abandon projects, but I think as long as you’re always learning, whether it’s something you’re doing in entrepreneurship and it doesn’t work out, or you’re doing like a bigger company kind of experience, as long as you’re learning, that’s all good and that’s stuff that you can use down the road. And if you’re not learning, then you should probably think about doing something else.
13:56 WR: Totally. And you even passed up a chance to work at Facebook, which was just getting rolling when you were there, right?
14:02 NB: Yeah, it’s a little funny… So as everyone knows, Mark Zuckerberg went to Harvard. He was a year younger than me, and so I remember four or five months after he created The Facebook which everybody on campus was using, he posted an ad on the campus network that he was looking for a couple of engineers to go out to Palo Alto with him. And so, I thought that was kind of cool. And so I told my roommate that this seemed cool and he’s like, “Yah, No, that’s stupid. Don’t do that.” And so my roommate basically talked me out of going to Palo Alto with Mark. And of course, in subsequent years, I looked back and I was like, “That was a really stupid decision, I could have practically been a co-founder, and then even a few years later, a lot of my friends had gone to Facebook to work and at this point and it’s like 2007 now, there’s 40 engineers at Facebook and a bunch of them are Harvard guys who are friends of mine. And so they were kind of pinging me and saying, “You should join Facebook and I was like, “Well, what is there to do now?” Because you’re already ubiquitous at all the universities and all the high schools, you’ve kind of made it right and… So I didn’t see… I didn’t see the vision, I didn’t see the potential and I frankly probably wasn’t curious enough. That was a mistake of mine, and of course a few months later they announced the Facebook platform and they started their march to a billion users. So in retrospect, that was also still super early if you could have been like, engineer number 40. That would have been a good thing. But of course if I had gone down that path, I probably wouldn’t have started Airbnb either.
16:00 NB: And so, I think my lesson here is two things: One is, there’s many different possible paths in life, so don’t over-stress about going down one road versus another, ’cause there’ll be many future forks too, so there’s more than one way. And then two is, when evaluating opportunities always ask the question, “What’s the vision where is this gonna be in three or five years? Because I think it’s really easy to look at something new and think about it narrowly, and be dismissive, but in fact, most founders and most young companies have really big dreams and I think it’s worth taking the time to understand that and to see if that excites you. But back then, those were maybe some mistakes I made.
16:30 WR: And I guess that just ties back into the importance of communicating your vision. I assume that when Airbnb was 40 employees, you probably had potential hires who thought, “Okay, you’ve got homes now.” And wouldn’t even think about your international expansion, ongoing policy challenges, Airbnb experiences, and all that stuff.
16:46 NB: Oh, absolutely, actually folks were really dismissive in the early days. Especially engineers, they were like… What hard problems do you have and are you really a tech company? And it seems like the platform works. So what more is there to do? So, it’s funny ’cause now we have over 1000 engineers, and we have really tough problems, and like I’d say we have a world class team. Yeah, I think that’s another example of people being dismissive. And just assuming that what you see today is like the end state, And of course it’s usually just the beginning.
17:21 WR: Absolutely. So, one other thing I want to talk about is the diversity of roles you’ve taken on. You started out as a sole developer, then led the engineering org, and now you’re managing strategy and Airbnb’s expansion to China. What about your background and work style helped develop new skills over time?
17:36 NB: Yeah, well first off, I love to build things, and I love to build things through code, and so I do have real passion for that. And it’s definitely sad a little bit not to be able to do that anymore. But on the other hand, because I love to build things, like I really want this company to be successful, and we have big dreams and so ultimately I want to help the company succeed however I can best do that. And when you’re going through hyper-growth, there’s just a lot of things that are un-owned, where you have to be a generalist, and you have to kinda step in and take things over. And so for me, in the early days, besides just coding, I had a… In my email footer, I put my title as “All things technical guy.”
18:26 NB: And in practice, what that meant was not just writing code, but doing all the data analytics and doing some of our financials and if we were to go to investors, I would do all the modeling for them and it also then meant doing all the fraud detection and trust and safety stuff for a couple of years, and all the money movement between accounts, between guest and hosts and managing all that infrastructure, and keeping the accounts balanced, that was all stuff I did personally for many years, until we could actually hire people to do these things. And it just kinda kept going like that.
19:03 NB: So when we started expanding internationally, in 2011, we didn’t have people to help us in Europe. And so it was really kind of all hands-on-deck moment and all three of us co-founders went over there and I was launching Airbnb into Spain, into Germany, basically flying to different countries and doing press interviews. And by the way, I’m an engineer, I was not comfortable doing press interviews, but somebody’s gotta be the face of the company and that kind of falls on first and foremost on the co-founders who can most authentically tell it, even if it’s not your strength or comfort area. And you know what, practice helps a lot, and so over time you get better.
19:43 NB: So, I guess, I just ask myself what is important to the company, and what can I uniquely do? And over the years, the answer to those two questions has changed quite a bit. And today, that’s the reason why I’m overseeing China. It’s because it’s really important to the company. And in China, it’s really important to empower the local team. And so it’s really important that either the CEO or someone else who’s really empowered, oversee it directly. Our CEO doesn’t have enough time to be on the ground every month in China. But I can make the time to do that. And as a co-founder, I have kind of the authority across the company, even though not everyone reports to me, I am still very influential. And I can go into any team and say, explain the situation in China, and ask for their support. And they will rally and support it. So, as a co-founder, you have a ton of soft power. And it doesn’t really matter if it’s not… Running China, for example, is not an area of deep expertise for me, but I’m still uniquely qualified to do it because of my soft power as a co-founder.
20:54 WR: Yeah, that makes a lot of sense. Just to rewind a bit, you mentioned being so generalist in the early days. One thing we see a lot with founders is that they’ll often have a burning problem that needs fixing, and then they’ll be tempted to hire a specialist to take care of it. But that person will need to move on to other problems eventually, and you’ll risk them being a bad fit. How did you think about hiring in the early days when you had a lot of inter-related challenges with product, engineering growth and so on?
21:16 NB: Well, a few things, I think one is, it’s always good to start by doing the job yourself. That way, you really understand what the skill set is you need. And you also get to set the direction, and make sure you understand that aspect of the business. It’s very easy when you’re starting a company, and as it’s growing, to become disconnected from different components. And so I think it’s good to just start by doing it yourself. And at some point, it becomes too overwhelming. And you have to up level yourself and hire someone else. And the early days in general, I think you’re looking for generalists, people who can… Who maybe aren’t the best at any one thing, but are versatile and can do a lot of things. And I think that’s really good for the first 50 employees to have someone like a generalist in finance, and a generalist software engineers, and generalist customer support person.
22:12 NB: Once you start getting over 50 or 100 folks, you’re probably gonna start needing specialists. You’re gonna need somebody who has actual management experience. And has actually like, for customer service, set up call centers and stuff like that. But in the early days, you really just need kind of athletes. Folks who are willing to work super hard, role up their sleeves, and just figure it out, and be relentless. Which is exciting actually, for young people because that really typically ended up being a young person. With, actually, frankly not a lot of experience, but just really good kind of raw intellect, and a lot of hunger. Because they’re young, they’re just out of college, they don’t have other commitments in their lives yet. And so they could just really really go hard.
23:04 WR: Well, Nate that’s all the time we have today. So again, thank you for telling your story, I had a lot of fun chatting!
23:08 NB: I really enjoyed it, thanks for having me.
23:13 WR: And that’s it! Thanks for taking your time to listen. Contrary is building the definitive platform for all things university entrepreneurship. If you’re hacking on a project, or have any friends who might want to join a start up, feel free to let us know. We’re at contrarycap.com, and on social media @contrarycapital. Have a good one!