Do things that don't scale

REID HOFFMAN:
Welcome back. It's Day 4 of the Mindset of Scale. Take a seat, or if you like, stretch your legs and make this a walking lesson. We're here to cultivate the mindset of scale. And what I want to share with you today is one of the most counter-intuitive truths of entrepreneurship: In order to scale, you first have to do things that don't scale at all.

Today's Daily Practice features Brian Chesky, co-founder and CEO of Airbnb. In this story, Brian and his cofounders are just starting out. They've just been accepted into Y-Combinator, the startup incubator in Silicon Valley, founded by Paul Graham. Brian is about to receive some unexpected advice. Let's listen, and I'll catch you on the other side.


HOFFMAN:
Brian was admitted into Y Combinator in 2009, and his first meeting with Paul was confounding. Paul tends to stump people with deceptively simple questions.


CHESKY:
And he asked us, "Where's your business?"

And I go, "What do you mean?"

"Where's your traction?"

And I go, "Well, we don't have a lot of traction."

He goes, "People must be using it."

I said, "There's a few people in New York using it." And he said something I'll never forget. He said, "So your users are in New York, and you're still in Mountain View."

I said, "Yeah."

And he said, "What are you still doing here?"

And I go, "What do you mean?"

He said, "Go to your users. Get to know them. Get your customers one by one."

And I said, "But that won't scale. If we're huge and we have millions of customers, we can't meet every customer."

And he said, "That's exactly why you should do it now, because this is the only time you'll ever be small enough that you can meet all your customers, get to know them, and make something directly for them."


HOFFMAN:
Brian and his co-founders followed his advice to the letter.


CHESKY:
We literally commuted to New York from Mountain View. So we would be in Y Combinator for Tuesday-night dinners and then Wednesday Joe and I would go to New York. We literally would knock on the doors of all of our hosts. We had their addresses and we'd say, "Knock knock. Hello. Hey, this is Brian, Joe, we're founders and we just want to meet you."


HOFFMAN:
It's a little creepy to just knock on the door unannounced.


CHESKY:
We needed an excuse to get into their home.


HOFFMAN:
So they came up with an offer that hosts couldn't refuse.


CHESKY:
We'd send a professional photographer to your home and photograph your home. Of course, we didn't have any money, and we couldn't employ photographers. So Joe and I, we'd show up at their door, and they're like, "Wow. This company is pretty small."


HOFFMAN:
These home visits became Airbnb's secret weapon. It's how they learned what people loved.


CHESKY:
It's really hard to get even 10 people to love anything, but it's not hard if you spend a ton of time with them. If I want to make something amazing, I just spend time with you. And I'm like, "Well, what if I did this, what if I did this, what if I did this?"


HOFFMAN:
From those questions, a handcrafted experience is born.


CHESKY:
We'd find out: "Hey, I don't feel comfortable with the guest. I don't know who they are." "Well, what if we had profiles?" "Great!" "Well, what do you want in your profile?" "Well, I want a photo." "Great. What else?" "I want to know where they work, where they went to school." "OK." So you add that stuff. And then you literally start designing touchpoint by touchpoint. The creation of the peer-review system, customer support, all these things came from us literally – we didn't just meet our users, we lived with them. And I used to joke that when you bought an iPhone, Steve Jobs didn't come sleep on your couch, but I did.


HOFFMAN:
Yes. Was there a particular experience that really stuck in your mind?


CHESKY:
I remember we met with a couple hosts. It's winter. It's snowing outside and we're in snow boots. We walk up to the apartment and we went there to photograph the home. And we're like, "I'll upload your photos to the website. Do you have any other feedback?"

He comes back with a book, it's a binder, and he's got dozens of pages of notes. He ends up creating a product roadmap for us, we should have this, this, this, this, and this, and we're like, "Oh my god, this is our roadmap because he's the customer." I think that always stuck in our mind. The roadmap often exists in the minds of the users you're designing things for.


HOFFMAN:
It is typical to get very detailed feedback from some of your early users. And if you're not getting some people who say, "This is super important to me. I love this. I really need this to work well," it usually means you're off track. Passionate feedback is a clue that your product really matters to someone. And one passionate user can turn into many, if you listen to them carefully. It's essential to get this kind of feedback early, while you're still defining the product. It's like setting a foundation as an architect. You wouldn't build a skyscraper before you've built a solid foundation. User feedback ensures you won't build a dozen floors on an unstable swamp. Brian has a simple method for extracting detailed feedback from users. He doesn't ask about the product he already built. He asks about the product of their dreams.


CHESKY:
We'd ask these questions like, "What can we do to surprise you? What can we do, not to make this better, but to make you tell everyone about it?" And that answer is different. If I say, "What can I do to make this better?" They'll say something small. If I were to say, "Reid, what would it take for me to design something that you would literally tell every single person you've ever encountered?" You start to ask these questions, and it really helps you think through this problem.


HOFFMAN:
As Brian will tell you, he misses the handcrafted work. He has a surprising message for entrepreneurs who have only a handful of users to serve.


CHESKY:
I tell a lot of entrepreneurs who don't have traction, I miss those times. Yes, it's exciting to have traction, to have a company that's huge scale, but the biggest leaps you ever get is when you're small. Another way of saying it is, your product changes less the bigger you get because there's bigger, more customers, more blowback, more systems, more legacy. The most innovative leaps you'll ever make, often especially if you're a network, are going to be when you're really, really small. You can change the product entirely in a week. Try doing that at LinkedIn or Airbnb today. It would be a huge disaster. So I think taking advantage of that subscale, designing the perfect experience, asking yourself what you can do, is amazing.


HOFFMAN:
The handcrafted work in those early days really paid off. Airbnb grew to be valued at $31 billion before Covid hit – a crisis that cost the company 25% of its workforce and nearly 50% freefall in valuation. But crisis begets opportunity. The pandemic ushered in a second wave of handcrafting for Airbnb in its pivot to offer virtual experiences for the quarantine era.

What I want you to take away here is that nothing creates more long-term value than the hand-crafted work you do in the early days: the time you spend in real time with your customers, really hearing what they need, want, and love. They'll tell you everything you need to know to get the product market fit right.

And note: There's a temptation in the early days to say, "We can't do that. It won't scale." So you'll have to learn to tell the difference between the hand-crafted work that will keep you from scale and the handcrafted work that will allow you to scale.

One rule of thumb: It's almost always worth the time to hear directly from your early customers. You can turn those insights into a new product – or a better product.

So here's today's exercise: You're going to talk to a customer. Just one customer. That's it. Choose a 30-minute window in your day, and schedule a call with a customer. Any customer. Choose one who wrote in to customer service, someone who visited your store, or someone who wrote a review.

What to ask them? Three things: (1) What problem is your product solving for them? (2) What's one thing they wish you would change about it? (3) What's one thing you could do or add that would make them want to tell everyone they know about it?

Then ask followup questions, and most important: LISTEN. Talking to customers is a simple act, but it has profound consequences if you make a habit of it. Which I hope you will.

Because wherever you are on your entrepreneurial journey, it's never too late to get your hands in the clay. As the Sicilian proverb goes: Whoever cultivates clay, harvests silk.

Tomorrow on the Mindset of Scale: Decisions – and why you need to make them quickly. See you then.

In the meantime, watch for our email with a summary of today's Daily Practice and this exercise. It's here in the app too.

See you tomorrow, for Day 5.