How to pronounce "rental"

I want to tell you the story

about the time I almost got kidnapped

in the trunk of a red Mazda Miata.

It's the day after graduating from design school

and I'm having a yard sale.

And this guy pulls up in this red Mazda

and he starts looking through my stuff.

And he buys a piece of art that I made.

And it turns out he's alone in town for the night,

driving cross-country on a road trip

before he goes into the Peace Corps.

So I invite him out for a beer

and he tells me all about his passion

for making a difference in the world.

Now it's starting to get late,

and I'm getting pretty tired.

As I motion for the tab,

I make the mistake of asking him,

"So where are you staying tonight?"

And he makes it worse by saying,

"Actually, I don't have a place."

And I'm thinking, "Oh, man!"

What do you do?

We've all been there, right?

Do I offer to host this guy?

But, I just met him -- I mean,

he says he's going to the Peace Corps,

but I don't really know if he's going to the Peace Corps

and I don't want to end up kidnapped in the trunk of a Miata.

That's a small trunk!

So then I hear myself saying,

"Hey, I have an airbed you can stay on in my living room."

And the voice in my head goes,

"Wait, what?"

That night, I'm laying in bed,

I'm staring at the ceiling and thinking,

"Oh my god, what have I done?

There's a complete stranger sleeping in my living room.

What if he's psychotic?"

My anxiety grows so much,

I leap out of bed,

I sneak on my tiptoes to the door,

and I lock the bedroom door.

It turns out he was not psychotic.

We've kept in touch ever since.

And the piece of art he bought at the yard sale

is hanging in his classroom; he's a teacher now.

This was my first hosting experience,

and it completely changed my perspective.

Maybe the people that my childhood taught me to label as strangers

were actually friends waiting to be discovered.

The idea of hosting people on airbeds gradually became natural to me

and when I moved to San Francisco,

I brought the airbed with me.

So now it's two years later.

I'm unemployed, I'm almost broke,

my roommate moves out, and then the rent goes up.

And then I learn there's a design conference coming to town,

and all the hotels are sold out.

And I've always believed that turning fear into fun

is the gift of creativity.

So here's what I pitch my best friend and my new roommate Brian Chesky:

"Brian, thought of a way to make a few bucks --

turning our place into 'designers bed and breakfast,'

offering young designers who come to town a place to crash,

complete with wireless Internet, a small desk space,

sleeping mat, and breakfast each morning.

Ha!"

We built a basic website and Airbed and Breakfast was born.

Three lucky guests got to stay

on a 20-dollar airbed on the hardwood floor.

But they loved it, and so did we.

I swear, the ham and Swiss cheese omelets we made

tasted totally different because we made them for our guests.

We took them on adventures around the city,

and when we said goodbye to the last guest,

the door latch clicked,

Brian and I just stared at each other.

Did we just discover it was possible to make friends

while also making rent?

The wheels had started to turn.

My old roommate, Nate Blecharczyk,

joined as engineering co-founder.

And we buckled down to see

if we could turn this into a business.

Here's what we pitched investors:

"We want to build a website

where people publicly post pictures of their most intimate spaces,

their bedrooms, the bathrooms --

the kinds of rooms you usually keep closed when people come over.

And then, over the Internet,

they're going to invite complete strangers to come sleep in their homes.

It's going to be huge!"

(Laughter)

We sat back, and we waited for the rocket ship to blast off.

It did not.

No one in their right minds would invest in a service

that allows strangers to sleep in people's homes.

Why?

Because we've all been taught as kids, strangers equal danger.

Now, when you're faced with a problem, you fall back on what you know,

and all we really knew was design.

In art school, you learn that design is much more

than the look and feel of something -- it's the whole experience.

We learned to do that for objects,

but here, we were aiming to build Olympic trust

between people who had never met.

Could design make that happen?

Is it possible to design for trust?

I want to give you a sense of the flavor of trust

that we were aiming to achieve.

I've got a 30-second experiment

that will push you past your comfort zone.

If you're up for it, give me a thumbs-up.

OK, I need you to take out your phones.

Now that you have your phone out,

I'd like you to unlock your phone.

Now hand your unlocked phone to the person on your left.

(Laughter)

That tiny sense of panic you're feeling right now --

(Laughter)

is exactly how hosts feel the first time they open their home.

Because the only thing more personal than your phone

is your home.

People don't just see your messages,

they see your bedroom,

your kitchen, your toilet.

Now, how does it feel holding someone's unlocked phone?

Most of us feel really responsible.

That's how most guests feel when they stay in a home.

And it's because of this that our company can even exist.

By the way, who's holding Al Gore's phone?

(Laughter)

Would you tell Twitter he's running for President?

(Laughter)

(Applause)

OK, you can hand your phones back now.

So now that you've experienced the kind of trust challenge

we were facing,

I'd love to share a few discoveries we've made along the way.

What if we changed one small thing

about the design of that experiment?

What if your neighbor had introduced themselves first, with their name,

where they're from, the name of their kids or their dog?

Imagine that they had 150 reviews of people saying,

"They're great at holding unlocked phones!"

(Laughter)

Now how would you feel about handing your phone over?

It turns out,

a well-designed reputation system is key for building trust.

And we didn't actually get it right the first time.

It's hard for people to leave bad reviews.

Eventually, we learned to wait until both guests and hosts

left the review before we reveal them.

Now, here's a discovery we made just last week.

We did a joint study with Stanford,

where we looked at people's willingness to trust someone

based on how similar they are in age, location and geography.

The research showed, not surprisingly,

we prefer people who are like us.

The more different somebody is,

the less we trust them.

Now, that's a natural social bias.

But what's interesting is what happens

when you add reputation into the mix,

in this case, with reviews.

Now, if you've got less than three reviews,

nothing changes.

But if you've got more than 10,

everything changes.

High reputation beats high similarity.

The right design can actually help us overcome

one of our most deeply rooted biases.

Now we also learned that building the right amount of trust

takes the right amount of disclosure.

This is what happens when a guest first messages a host.

If you share too little, like, "Yo,"

acceptance rates go down.

And if you share too much, like,

"I'm having issues with my mother,"

(Laughter)

acceptance rates also go down.

But there's a zone that's just right,

like, "Love the artwork in your place. Coming for vacation with my family."

So how do we design for just the right amount of disclosure?

We use the size of the box to suggest the right length,

and we guide them with prompts to encourage sharing.

We bet our whole company

on the hope that,

with the right design,

people would be willing to overcome the stranger-danger bias.

What we didn't realize

is just how many people

were ready and waiting to put the bias aside.

This is a graph that shows our rate of adoption.

There's three things happening here.

The first, an unbelievable amount of luck.

The second is the efforts of our team.

And third is the existence of a previously unsatisfied need.

Now, things have been going pretty well.

Obviously, there are times when things don't work out.

Guests have thrown unauthorized parties

and trashed homes.

Hosts have left guests stranded in the rain.

In the early days, I was customer service,

and those calls came right to my cell phone.

I was at the front lines of trust breaking.

And there's nothing worse than those calls,

it hurts to even think about them.

And the disappointment in the sound of someone's voice

was and, I would say, still is

our single greatest motivator to keep improving.

Thankfully, out of the 123 million nights we've ever hosted,

less than a fraction of a percent have been problematic.

Turns out, people are justified in their trust.

And when trust works out right,

it can be absolutely magical.

We had a guest stay with a host in Uruguay,

and he suffered a heart attack.

The host rushed him to the hospital.

They donated their own blood for his operation.

Let me read you his review.

(Laughter)

"Excellent house for sedentary travelers

prone to myocardial infarctions.

(Laughter)

The area is beautiful and has direct access to the best hospitals.

(Laughter)

Javier and Alejandra instantly become guardian angels

who will save your life without even knowing you.

They will rush you to the hospital in their own car while you're dying

and stay in the waiting room while the doctors give you a bypass.

They don't want you to feel lonely, they bring you books to read.

And they let you stay at their house extra nights without charging you.

Highly recommended!"

(Applause)

Of course, not every stay is like that.

But this connection beyond the transaction

is exactly what the sharing economy is aiming for.

Now, when I heard that term,

I have to admit, it tripped me up.

How do sharing and transactions go together?

So let's be clear; it is about commerce.

But if you just called it the rental economy,

it would be incomplete.

The sharing economy is commerce with the promise of human connection.

People share a part of themselves,

and that changes everything.

You know how most travel today is, like,

I think of it like fast food --

it's efficient and consistent,

at the cost of local and authentic.

What if travel were like a magnificent buffet

of local experiences?

What if anywhere you visited,

there was a central marketplace of locals

offering to get you thoroughly drunk

on a pub crawl in neighborhoods you didn't even know existed.

Or learning to cook from the chef of a five-star restaurant?

Today, homes are designed around the idea of privacy and separation.

What if homes were designed to be shared from the ground up?

What would that look like?

What if cities embraced a culture of sharing?

I see a future of shared cities that bring us community and connection

instead of isolation and separation.

In South Korea, in the city of Seoul,

they've actually even started this.

They've repurposed hundreds of government parking spots

to be shared by residents.

They're connecting students who need a place to live

with empty-nesters who have extra rooms.

And they've started an incubator to help fund the next generation

of sharing economy start-ups.

Tonight, just on our service,

785,000 people

in 191 countries

will either stay in a stranger's home

or welcome one into theirs.

Clearly, it's not as crazy as we were taught.

We didn't invent anything new.

Hospitality has been around forever.

There's been many other websites like ours.

So, why did ours eventually take off?

Luck and timing aside,

I've learned that you can take the components of trust,

and you can design for that.

Design can overcome our most deeply rooted

stranger-danger bias.

And that's amazing to me.

It blows my mind.

I think about this every time I see a red Miata go by.

Now, we know design won't solve all the world's problems.

But if it can help out with this one,

if it can make a dent in this,

it makes me wonder, what else can we design for next?

Thank you.

(Applause)