If you want to build a multibillion-dollar business, first make enough money to buy yourself some good ramen.
I love this email from Airbnb Cofounder Brian Chesky to his cofounders in 2009, setting out the need to get weekly fees from $734 to $1,000 in order to be “Ramen profitable.” Or put differently, to demonstrate the discipline necessary to generate more revenue than expenses, whereas the net profit is enough to provide bare sustenance.
I’ve met the unassuming Airbnb cofounder many times over the years. I’ve always been struck by the same head down attitude oozing from this email. Despite becoming a massive global company, there’s always been something very accessible about Airbnb, something raw and human. It all began with an epiphany among a group of friends in 2007 that they could rent out some airbeds in their apartment and make some extra bucks.
That’s how the best businesses start – an actionable insight born from personal experience. Through the years, Brian stayed narrowly focused on one overarching goal: fulfill an unmet need with great service and overcome the entrenched interests that were trying to preserve the status quo. There’s something wonderfully libertarian about the whole exercise. It’s my toilet; I’ll rent it out if I want to.
I remember meeting with Brian in New York City as he tried to overcome the cartel-like behavior that makes it very hard to innovate in my city. It all seemed so logical, but from my firsthand experience on the inside, government does not over index on logic.
Just a few months ago, Airbnb’s prospects were being written off as a casualty of a pandemic. And yet this morning, they IPO’d with a $47 billion valuation. What sustained them? Principles. As Ray Dalio notes, bedrock principles are both ethical and practical, enabling you to maintain a steady hand that will deliver you from the darkest times. Imagine if during each crisis, you needed an entirely new playbook? Incredibly taxing and inefficient.
Brian Chesky never wavered from the mission to provide a great service. He never treated the company as a flip – and he never forgot about the ramen.
Don’t you just love it when great people win?