- The speaker discusses the importance of culture in scaling a business and building a high-performance team.
- Culture is defined as the values, behaviors, and actions of each team member in pursuit of the company's mission.
- A strong culture provides stability, trust, and guidance for decision-making.
- It also helps in retaining the right employees and has a positive impact on stock market returns.
- Creating a set of core values starts with the leader's personal values and the values important to the business.
- The values should support the mission and be credible and uniquely tied to it.
- It is important to dive deeper into the values and consider how they relate to teamwork and accountability.
- Incorporating the mission into the values and interviewing for culture fit are also important best practices.

- Many companies focus on technical skills and competency during the hiring process, but neglect to consider cultural fit and alignment with the company's mission.
- Building a strong culture requires making it a daily habit, just like customer service or fitness.
- The founders of Airbnb initially started the company as a way to pay the rent, but it became their big idea along the way.
- The success of Airbnb was due in part to the founders building a talented team that pushed them to raise their own game.
- The founders worked together closely in the early days, creating a strong sense of family and accountability.
- They realized the importance of building a company with a clear mission and values that would endure over time.
- The founders learned from companies like Apple and Zappos about the importance of intentional culture design.
- Airbnb wrote down their core values before hiring their first employee, recognizing the importance of hiring people who shared those values.
- Airbnb has six core values, including championing the mission and hiring people who believe in it.

- The speaker discusses the importance of friendship and belonging in the Airbnb community
- They share a story about a host who received calls from previous guests during a time of crisis before his own mother called
- Airbnb aims to bring the world together and create a sense of belonging for travelers
- The speaker emphasizes the importance of hiring people who champion the mission and believe in it
- They share a story about funding the company with credit cards and selling breakfast cereal to generate revenue
- The speaker highlights the value of being creative and frugal in the company's culture
- They discuss the challenges of building a strong culture and the long-term benefits it brings to the company
- The speaker emphasizes the importance of hiring world-class talent and constantly raising the bar in hiring decisions.

- The core values of engineers are important in interviews, but engineers are not the ones conducting the interviews to avoid bias.
- Airbnb had a difficult decision when a company called the Samwer Brothers cloned their business and threatened to destroy them if they didn't sell. Despite the pragmatic decision to acquire them, Airbnb chose not to because they didn't like the culture and believed in outlasting their competitors.
- Culture and brand are two sides of the same coin. A strong culture and clear mission are crucial for both internal alignment and external brand perception.
- Communicating Airbnb's vision and values was done through storytelling and articulating the vision repeatedly. The CEO's role is to articulate the vision, develop a strategy, and hire people who fit the culture.
- Ensuring hosts reinforce the culture of Airbnb has been a learning process. Initially, anyone could be a host, but now Airbnb focuses on attracting hosts who align with their values and has implemented programs to reinforce and reward those values.
- Airbnb believes in contributing to the open-source community and fostering a sense of giving back and making communities stronger. Communication is open and transparent within the company, except for matters of privacy.

- The speaker believes in open communication within the company, except for matters of employee and customer privacy.
- The company prioritizes providing the best user experience and having a large network over keeping certain technologies exclusive.
- The speaker emphasizes the importance of having a small group of passionate users rather than a large number of indifferent ones.
- The company initially gained users by personally meeting and staying with them, providing a perfect experience for each individual.
- The speaker addresses the perception that the company is more of a marketing company than a technology company, highlighting the various challenges they face in different areas such as international expansion, payments, trust and safety, regulations, and search and discovery.

- The speaker emphasizes the need to convince governments that having internet access in neighborhoods is beneficial.
- Trust and safety, as well as secure payment handling, are important factors to address.
- The speaker mentions that culture is also a significant aspect to consider.
- Great companies excel in all areas, particularly in hiring top engineers and technical talent.
- The speaker does not see their company as a marketing-focused one.

The speaker discusses the importance of culture in scaling a business and building a high-performance team. They emphasize the role of values, behaviors, and actions in creating a strong culture. The founders of Airbnb learned from companies like Apple and Zappos about intentional culture design. Airbnb prioritizes hiring people who champion the mission and believe in it. They value creativity and frugality in their culture. The speaker highlights the challenges and long-term benefits of building a strong culture. They also discuss the importance of communication, user experience, and addressing various challenges in different areas of the business.

How to Start a Startup is a series of video lectures, initially given at Stanford in Fall 2014.

Lecture Transcript: http://www.tech.genius.com/Alfred-lin-lecture-10-company-culture-and-building-a-team-part-i-annotated

Brian Chesky, Founder of Airbnb, and Alfred Lin, Former COO of Zappos and Partner at Sequoia Capital discuss how to build a great company culture.

See the slides and readings at http://www.startupclass.samaltman.com/courses/lec10

Discuss this lecture: http://www.startupclass.co/courses/how-to-start-a-startup/lectures/64039

The main stage is gonna be with Brian when he comes up and talks about how he built the Airbnb culture.

So you're here, I've been following the presentations and so now you know how to get started.

You've built a team, you started to sort of build your product.

It's off the ground, it's growing, people love it.

You figured out how to create a very special 1 of the kind company with monopoly powers that's big.

And the market that you're chasing after is slightly bigger than the paper airplane business.

So we're here to submit that actually culture is the thing that's gonna be very, very important for you to be able to scale the business as well as your team.

And hopefully after this talk you'll be able to know what, what is culture?

How to sort of create your core values and think about elements that sort of fit together for the core values and the culture that create a high performance team.

And get some best practices for the culture.

Anybody have a, want to take a guess at what, how 1 should define this?

You, did you look that up on the because you had a computer and internet connection, you just look it up.

So these are some definitions that you'll find in, in Webster's dictionary and, but that, that, we're at Stanford.

The real question is, what is company culture gonna be?

You know, culture that we can generally talk about society, about groups, about places or things.

Here we're talking about company culture.

And so, How do we want to define company culture?

We can take the previous definition and modify it a little bit.

And so, every, this is a hint of how we may want to define company culture.

Every day, blank and blank of each member of the team in pursuit of our company blank.

And some people have filled these in with different sort of things.

A, the first blank could be assumptions, beliefs, values.

The second blank for the B blank, people have said behaviors.

My favorite sort of answer to that is real action.

And in pursuit of goals, that's kind of weak.

In, in, in pursuit of big and hairy, audacious goals, that's a little stronger.

But a better definition is in pursuit of the mission.

So, now that sort of we have that definition, what do we do with it?

This is a quote from Gandhi, your beliefs become your thoughts, your thoughts become your words, your words become your actions, and your, your actions become your habits, and your habits becomes your values, and your values become your destiny.

If you don't have a good culture in the company, you can't pursue your destiny.

Why it matters is it, it becomes the first principles that you sort of go back to when you make decisions.

Becomes a way to align people on values that matter to the company.

It provides a certain level of stability to fall back on.

And it provides a level of trust that people can sort of trust each other with.

It also gives you a list of things that you should be able to figure out what to do and what not to do.

And what the more important thing about that is what not to do.

And then finally, the other thing that is important is it allows you to retain the right employees.

There are people in this world that are not gonna be a fit for your company, but if you have good strong culture and good strong core values, you'll know who you wanna retain and who you do not wanna retain.

And if you took the, take the first words first letter of those, it happens to help you move faster.

Another reason, you're thinking, that's like all mushy stuff.

So here are indices for, from 1997 to 2003 of stock market index of companies in the S&P 500, in the Russell 3000, and then for the Fortune 100 best companies to work for.

They survey all these companies out there and they've picked out companies that they believe are the best companies to work for.

And the returns, the stock market returns of those companies happens to be 11.8%, 11.08%, which is almost twice that of the other 2 indices.

And so there's real power in companies that treat their employees well, where there's a lot of trust and where there's a lot of cult, strong culture.

So, how do you sort of create a, a set of values and, and sort of define the culture, etc?

You gotta start with the leader of the company, the founder.

And sort of ask yourself, what are the personal values that are most important to you?

What are those things that are most important to the business?

Who are the types of people you like working with And what are their values?

And through that, you sort of distill together what a set of values are.

Then think about all the people that you've never liked working with.

Think of that, the opposite of that, and maybe those should be considered values for, for your company.

And finally, remember, this, the values have to support your mission.

And if it doesn't support your mission, you're missing something.

And, and then the last final checks are cre, they have to be credible and they have to be uniquely tied to your mission.

So at Zappos, in terms of uniquely applied to the mission, we were focused on creating a culture that was gonna provide great customer service.

So the first core value we had was to deliver wow through service.

We were very specific that we wanted to deliver great customer service and was going to be a wow experience.

And then below that we want to sort of, had a paragraph supporting that, talking about exactly what we mean by that.

Want to support them deliver wow through service and support people such as our employees, our customers, and our brand partners, and our investors.

On terms of the opposite thing, we generally didn't like working with arrogant people.

So 1 of our core values at Zappos was to be humble.

So those are 2 examples where we sort of created core values in a way that sort of, sort of became credible and uniquely tied to our mission.

So, you go through this process, you come up with a few core values.

These might be some of them, whether it's honesty, integrity, service, teamwork, and there might be a list of, you might start with 3, you might end up with a list of 10, you might list, list of 30, it's a good start.

And when Zappos went through this process, we started with like, We asked all the employees at the time what core values they want to identify with.

We initially, we sort of whittled that down to about 10.

That's a long time and you might want to ask why.

Well, if you just come up with the word honesty, I mean give me a break, everybody wants the culture to be honest.

No, nobody is going to say I want to be lied to every day.

There's gotta be a lot more depth in this than that.

And nobody, everybody talks about teamwork.

But there's a difference in level of teamwork that you see in an intramural sports team as versus a baseball team.

And so, how do you sort of dive deeper into teamwork?

What are the things that don't work on for a team?

A lot of it has to do with communications.

A lot of it has to do with things that people have studied.

And you might want to go deeper into that.

At Zappos we thought about, well, there are a lot of smart people in this room.

When they're fighting with each other and trying to figure out who's right and who's not, it's probably not the best use of time.

And we wanted everybody to sort of riff off each other and help each other make any idea better.

The result is that the company gets a better idea, not that any individual person is right.

So we wanted to instill this idea that it's company first, then your department, then your team, then yourself.

There's another, there's a great sort of sort of element of high performing teams that I really like, which is this pyramid that was created by Patrick Lissioni and he wrote this book, The 5 Dysfunctions of a team.

And the reason this is interesting, he talks about the breakdowns of a team.

First of all, if you don't, a lot of teams break down because they don't have any trust.

Then, even if you had trust, why do you need trust?

Well then, if you have trust, you can actually have debates and conflict and get to the right answer.

People are just, it's the blind leading the blind.

How do you know you actually got to the right answer before you sort of commit to something?

So people are not actually willing to commit.

And so let's say you get to the next level and you're actually able to commit.

It's usually because people are not held accountable to things that they committed to.

And if people are not held accountable to the things that they've committed to, then they can't get results.

And I would submit to you, if you think about the company as a black box, and results, whether it's financial, whether you produce a great product, or anything like that as the output, 1 of the major inputs is the culture of the company.

So some other best practices we're going to actually talk about during Q&A because I think this is going to blend into the conversation is that you want to incorporate your mission to values.

You gotta think harder, deeper, longer about your values than you might initially think you need to do.

1 of the things that I think a lot of companies don't actually do is they interview for technical fit or skill fit or competency in that realm, but they don't actually interview for the culture fit and whether someone will actually believe and follow the mission.

Like I think you can have the smartest engineer in the world, but if they don't believe in your mission, they're not gonna put the, pour their heart and soul into it.

And that's 1 of the things that where, if you actually sort of start thinking about culture from the interview process to performance reviews, to making sure that it's a daily habit, you'll get a lot further with, with making a great culture.

The final point on making a daily habit, I think culture, just like customer service or fitness, is like motherhood and apple pie, everybody wants to provide great customer service.

Every company wants to have a great culture.

What they fail to do is make it a daily habit.

You just can't be fit if you're, if you don't do it as a daily habit.

Eventually you get out of shape, then you get fat.

And then you're like, oh, I gotta go on a crash diet to sort of get back into shape.

And the same is true with something like culture.

So, I think we've checked all of these off, so we can go into Q&A with Brian.

Nothing worse than like a room full of people really, really quiet staring at you, but now I feel better.

So Brian, could you talk about how, the process by which you came to understand the culture was important to Airbnb and in building the company?

Yeah, so I think 1 of the things we realize is, so just to give you, I won't tell the full story of Airbnb and some of you may know it.

But the very short version of the story was that Airbnb wasn't meant to be like the company we were trying to start.

1 day I drove to San Francisco, became roommates with my friend from college.

I went to Rhode Island School of Design, Joe Gebbia.

And I had $1,000 to bank and the rent was $1,150.

So that weekend this international design conference was coming to San Francisco.

We had this idea, let's just turn our house into a bed and breakfast for the conference.

I probably told that story 10,000 times, by the way.

And I didn't think I'd ever tell that a second time.

When, I, I remember growing up I, I also went to college and my parents were social workers and they had kind of been nervous about me going to art school.

They kind of worried that maybe I would like not get a job after college, which I'm sure a lot of parents are worried about, so she said, make sure you promise me you get a job with health insurance.

I ended up starting airbedandbreakfast.com, was the original name.

She remember her telling me, I guess you never got that job with health insurance.

Airbnb was never meant to be the big idea.

It was meant to be the thing to pay the rent so we could think of the big idea.

And along the way by solving our own problem, it became the big idea.

So alongside that and I'm not gonna talk about like, kinda how we built the product.

That's probably another conversation that some other people are talking about.

You have to build a team and a great company.

And in the early days, we had 3 co-founders, Joe, Nate, and myself.

And I kind of think of 1 of the reasons we're successful was I was really lucky.

And I don't think I was really lucky because we came up with the idea of Airbnb.

I don't think we were really lucky that we became successful once we had the team.

I think we could have come up with a lot of ideas and been somewhat successful.

I think I was lucky because I found 2 great people that I wanted to start a company with.

People I admired that almost intimidated me how talented, how smart they were.

And I think that's 1 of the first things, you gotta build a team that is so talented that they kind of almost make you slightly uncomfortable because they know by being with them, you're going to have to raise your game to be with them.

And then when we were working together in the early days, this is like 2008.

The first thing is we, we were like a family.

Founders are like parents and the company's a child.

And the child will manifest in many ways behaviors that parents have between their relationship.

If the parents are dysfunctional, they're not working together, then the child's gonna be, frankly, pretty fucked up.

And so, Jone and I were like, total, a total family in the beginning.

We, we worked 18 hours a day, 7 days a week.

We like worked together, we like ate food together, we like even went to the gym together.

We may as well have gotten jumpsuits, we didn't go that far.

But we were like, It was like we were a mission.

I felt like we were like a special forces or something.

And we had this like amazing shared way of doing things, with amazing accountability.

And then we realized, that was like the DNA of the company.

And then we started thinking, at some point you go from building the product to phase 2, which is building the company that builds the product.

And so a lot of the talk is about how do you build a product, how do you get product market fit.

Once people start doing that, now you've gotta build a company.

And it doesn't matter how great your original product or idea is, if you can't build a great company, then your product will not endure.

And so we thought about this, and 1 of the things we realized is we want to build a company for the long term.

The last thing I want is to build something, I mean, think about it this way.

If your, if your company's like your child, a parent wants this child to outlive him or her.

It would be a tragedy to outlive your child.

It also, I felt, like, be a tragedy for us to outlive our company and just watch it rise and fall.

And so to do that, we started noticing companies have something in common.

Companies that were around for a really long time had a clear mission.

They had a shared way of doing something that was unique to them and was really, really special.

And so then Jony and I, when we were 3 people, decided to look around companies.

I noticed Apple, you know, Steve Jobs talked about his core value was that he believed people with passion could change the world.

And he said our products change but our value never had.

And we learned about Amazon, we learned about Nike, we learned about companies in the early days.

You can even use this to talk about organizations, you know, even like a founding of a, a nation has a strong values and a declaration, then the country might endure longer.

And so we started realizing like we need to have intention.

And that's kind of how we got connected is because you know, when we were funded by Sequoia, Alfred Lin had just joined from Zappos Sequoia.

And I was told Zappos had an amazing culture and we went to Las Vegas and met up with Tony and we learned about it.

I, the fir, the thing we learned, and we were 3 people, was you need to have, like, if culture's a shared way of doing things, there's really 2 parts.

1 is behaviors, and those can kind of change, and maybe 50 years from now, there will be rituals and behaviors that will change, be different.

But there have to be some things that never change.

Some principles, some ideas that endure that make you, you.

And I think of core values as integrity, honesty.

Those aren't core values, because they're values everyone should have.

But there have to be like 356 things that are unique to you.

And you could probably think about this in your life.

What is different about you than every single other person?

If you could only tell somebody 3 or 4 things, what do you want them to know about you?

And we realized that when Zappos was 100 employees, they wrote down these 9 core, is it 09:10.

And the only thing I learned from Tony is he said, I wish I didn't wait until I was 100 employees.

So, I think I was talking to Sam, he says, he thinks we're 1 of the only companies that wrote our core values down before we hired anyone.

How long did it take you to hire your first employee?

So, our first employee was our first engineer.

And I think we looked for him for 4 or 5 months.

And I probably interviewed, I probably looked through thousands of people and interviewed hundreds of people.

And by then, when you hired the, when did you write it?

So did you write it on day 1 or did you, it was in

I think we started working on it around the time of Y Combinator, which would have been January 2009.

And it was probably a process that evolved over the course of 6 to 7 months.

I think we hired our first engineer in July, something like that.

And the re, but some people ask like, why did you spend so much time on like, hiring your first engineer?

See all Y Combinator transcripts on Youtube

Culture with Brian Chesky and Alfred Lin (How to Start a Startup 2014: Lecture 10)