Joe Gebbia, Co-founder, Airbnb, Samara Interviewer: Jessica Mathews, Fortune
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00:00Hello, Joe. Hey, Jessica. How are you? I'm wonderful. You're getting some cheers that I'm not getting which is a little disappointing
00:07So the first thing that I have to know is are you saying in an Airbnb tonight or are you at the hotel?
00:13I wish I could stay the night
00:14I have to get back for some family obligations
00:16But obviously I would say in an Airbnb tonight you say an Airbnb if you are on the board of Airbnb
00:20Are you even allowed to stay in a hotel?
00:23Only for competitive research. Okay. Okay. Got it. Well glad we cleared that up
00:27Well, the reason that most people know your name in this room and throughout Silicon Valley and the tech industry is because you are
00:35One of the co-founders of Airbnb, which has been one of the most successful
00:39well-known consumer tech companies
00:42and
00:44You but we're here today to talk about your new startup that you actually started working on while you were at Airbnb
00:52so
00:53Your startup makes these small buildings called ad use these small little houses in people's backyards
01:01Tell us what exactly is an ad you and how did you form a company around it?
01:07Sure, and there's actually a lot of overlaps between the approach to Airbnb and the approach at Samara, which we'll get to
01:13but for those who don't know an ad you
01:15Stands for accessory dwelling unit. You may have heard of it. It's called a granny suite in law flat a casita a guest house
01:21there's a lot of names for it and
01:24By show of hands who's from, California?
01:27Okay, keep your hand up if you've heard of an ad you
01:31Thank you. Okay. I didn't even need to ask that question
01:35Adds are all the rage in California
01:37most people either have one or know someone that has one a neighbor or a friend or co-worker and it is a
01:43It's the fastest growing form factor of housing in in the state
01:47One in five permits in California for a house was one of these
01:52It's crazy
01:54they range from 400 to 800 square feet and
01:57As we'll get into people use them for all kinds of things. And so
02:00Yeah back at Airbnb. I had this R&D group. We called Samara and we were exploring
02:05New business ventures new new paths for the company and and we stumbled onto this ideas of ad use
02:11Large in part because hosts were renting them out
02:14And I saw this on our site and I go what is this? Who's gonna stay in someone's backyard?
02:20However
02:21You could see it proliferate on the site and hosts actually renting out the spaces in their backyards for short term and now for long-term
02:28stays
02:29The second thing that that I noticed back in 2017 2018 is the state of California started passing
02:36hundreds of laws to enable
02:39ADUs throughout the state
02:41Why do they do that?
02:42Well a couple reasons the first is that California needs more housing and so as they looked across all the different form factors
02:49they saw that like
02:50ADUs just had the most restrictive policies that you could imagine
02:55You know things that were archaic from decades ago that didn't make any sense today if they wanted to stimulate growth of housing in the state
03:02So they got rid of things like get out of a second mailbox in a new address
03:05You had to add two additional parking spots and about a hundred of the things that just kind of didn't make sense in
03:112020 2018 2019
03:14and so
03:16The third thing is back in this time. I was actually in the market for an ADU
03:21Specifically prefab, you know as a designer I kind of had this
03:25You know sort of fantasy of like, oh, you know, you kind of love the the prefab design factory made
03:31and when I went out to search for a
03:34Unit, I was just completely
03:37underwhelmed by what was on the market from a design perspective and I thought surely at some point someone is gonna make the the
03:44iPhone or the Tesla of this this form factor and
03:48Another year went by another year went by and nothing was emerging. I said, you know what we're gonna do this
03:53I'm gonna solve this problem
03:54for myself and for other people
03:56So Samara raised its series a round
04:0041 million dollars led by Josh Kushner at Thrive Capital. This was last fall
04:06So since then you've bought a manufacturing facility in Mexico. How else are you planning to spend the money?
04:12Yeah, I think as they showed on the screen
04:15Moments ago the way it works is people go and order online like you would a Tesla
04:21You pay online
04:22You put down your deposit and you configure and you hit order and part of the innovation is not just the design
04:31But it's the fact that that we handle everything for the homeowner
04:35Homeowners are not experts in construction nor should they be
04:39And a lot of people as we went doing our research said, you know, I want this extra space in my life
04:44I have a dozen different uses for it, but I
04:47quit
04:48Two steps into the process because it's too much. You know, I don't have time for this
04:51I'm busy. And so we just said well, why don't we take that on and actually handle everything?
04:58for the homeowner and the consumer
05:00and actually
05:02So when you when you buy online, you're buying not only the unit but everything else our construction management
05:07We handle the permitting which is a huge hang-up for people
05:09We handle the soil samples utility hookups and about a hundred other things that have to get done
05:15and so, you know being able to
05:19Handle all that means that we're responsible not only for the manufacturing at our facility
05:23for the delivery as you saw we we put it on a truck and we ship it and
05:27when it arrives to the
05:30the location
05:31There's a crane waiting and we have we call crane day
05:35Which actually really fun because all the neighbors come out people put out lawn chairs
05:38Everyone's taking pictures and we decided at some point like let's just make this a neighborhood block party
05:44so in a couple of our recent ones
05:46we have music and taco trucks show up and it actually becomes a really fun event because it's
05:51it's actually kind of magical Jessica to watch a home float through the air and
05:57land in its intended location
06:00and
06:02when it lands in that location, we've actually developed a
06:06Patented system on the foundation that allows so when it comes down and it touches the ground on our foundation it takes about
06:1520 minutes to secure eight bolts underneath and that's all you need
06:19and so we've reduced the construction process for one of these units if traditional construction from
06:26Upwards of 12 plus months, you know
06:28Raise your hand if you've ever done a project with a general contractor renovation
06:33Keep your hands up. It was on time
06:36Every hand almost went down you got lucky, sir
06:39So we're really proud that we're able to deliver
06:42on a fixed timeline
06:44With a fixed price, by the way, what you pay online is what you pay in actuality. There's no haggling
06:51There's no back and forth. It's like buying a device online
06:55So I'm assuming since it was a series a round that there was some revenue coming into the company already
07:01So, can you tell us how many ad use that you've sold at this point? I was still a private company
07:06so we don't disclose that but
07:08Just to give some perspective last year in California. Well since 2017 in, California
07:15Permit applications for ad use have gone up 20x in
07:19five years
07:21And so in last year there were
07:2325,000 permits issued for ad use throughout the entire state just to give you a sense of scale and this is a big purchase
07:28This is you know north of 200 250 three hundred thousand dollars. And did you make about half of those or?
07:35eventually
07:37So to say our factories is
07:40We're set up to do anywhere between 500 to a thousand units a year. Okay, and when do you think you'll be at capacity?
07:48I'll let you know
07:50So one thing I wanted to ask you about was Reuters reported a couple months ago that you had made a personal decision
07:58To step off of a special committee at the board of Tesla that had been set up after the state of Delaware
08:06Invalidated his compensation package and Tesla was deciding whether it was going to move the company's domicile to Austin
08:13And you had been on that committee you decided to step off of it voluntarily
08:18For what you said was specifically because there was a potential business transaction between Samara and Elon Musk
08:25So, can you tell us what is that potential business traction and has it come?
08:29Transaction and has it come to fruition?
08:32Nothing to add on that that hasn't already been reported
08:35you know, I stepped down as abundance of caution and
08:38Yeah, he was interested in potentially getting a house
08:41So did he get a house? We'll let you know
08:44I
08:46Know that you were not specifically on the compensation committee when
08:51When his compensation was approved and you weren't even on the board of directors at that point
08:55But do you think it should have been approved? I have nothing to say about it. Okay. Okay. Got it. So
09:01Going back to Samara. So I want to ask you about your business model in particular
09:07It's kind of unusual in tech that you are really excited about regulation
09:15But you really are because in the state of, California
09:19They've made a lot of changes to legislation to make it actually easier for
09:23Residents to get permits to have these ADUs on their property, which has actually been a huge benefit to your business
09:30so I was wondering who which other states besides the state of California are considering legislations like this and
09:37Are you talking with them in any capacity with lobbyists or anything of the sort?
09:42I think it's interesting here is that oftentimes
09:44California can actually, you know get things right and be at the forefront of things, you know
09:48We can credit them with smoking ban in restaurants, you know decades ago
09:52That is now of course national and so I think as California solves a housing crisis other states that also have a similar problem
09:59are looking to see how California is solving this issue and
10:05There's many states is about eight states that are looking at some of them are actually modeling California's legislation
10:12Some that are you know moving this along Colorado, New Jersey, there's been some action in New York State actually on this topic
10:20Texas has some action on this topic as well. And really I think you can just follow follow the the trend
10:26Anywhere, there's a housing crisis as it gets hotter and hotter
10:29You'll see the government's and policies try to adopt
10:34Clear solutions that are working in California
10:37So which states would you be interested in expanding and that's a great question
10:42You know
10:42we have a form field on Samara comm where people can put in their zip code where they want us to expand to next and
10:47It's I wish I could tell you. Oh, it's these three states
10:50It's actually everywhere like we have people in all, you know, other 49 states including Hawaii and Alaska that want a Samara unit
10:59You know be able to put in their backyard
11:01What are you seeing with legislation particularly here in the state of Utah since that's where we are right now
11:06Oh my gosh, you got me there. I haven't I didn't research that before I came but
11:11Again, if there's a housing issue in Utah, I'm sure there are policymakers talking about it
11:15So one thing that I wanted to ask you about is that there are some concerns here specifically in the city of Salt Lake
11:23About whether there is going to be legislation proposed around 80 use just because people are concerned
11:29Will this lead to more short-term rentals in our neighborhoods?
11:33and I'm wondering if you think there's any credence to those concerns Airbnb is an investor in Samara and
11:40you know how I'm wondering whether there are going to be more Airbnb the Airbnb rentals in some of these neighborhoods where
11:47You're putting in these small homes. Oh, yeah, so people get why do people get an ADU?
11:52Why do they need 400 800 square feet in their backyard?
11:55And there's a lot of reasons one is to earn income and to rent it out and
12:00By and large anywhere you go in the country where there's a to use there's a 30 plus
12:06night, you know
12:08Limit on those on those those bookings. So they're for long-term stays. Let's be clear about that. Okay?
12:14second is people house family and
12:16What kind of family well as parents age? This is a great way to keep the grandparents nearby
12:22They can keep the cat and be close to the grandkids
12:25It's a great place for Johnny to stay when he comes home from college
12:27and so there's actually a lot of people who get an ADU to keep their kids close by as they you know,
12:32graduate and come back home and then there's other things like
12:36Working from home, you know 41% of Americans still have a hybrid work situation and are looking for productive quiet places
12:44To work from home. And of course, there's a lot of personal uses that people do the home gym the yoga studio, etc
12:51But I think what's most interesting is this
12:54The average homeowner in California has their home for about 16 years
12:58So over the course of 16 years, you will likely use your ADU for all of those things
13:05Because it becomes this flex space that allows you to live life
13:08Allows you to adapt if there's a if there's a pandemic it allows you to adapt
13:11With your parents getting older allows you to adapt with your kids as they grow up
13:15As your interests change as you need more income, you can turn it on
13:18For income the next year you can turn it off. Use it for personal use and
13:23In thinking about this for the last couple of years. It kind of strikes me that
13:27We've all had the space in our lives
13:29Before in the 20th century. We just didn't know it. It's called the garage
13:35The garage was this flex space. That's where you put the car, but then it became a lot more than that
13:40It was the place with the band practice
13:43You turn into the kids playroom the place to make you know
13:46Carpentry and a wood shop turn it into an apartment or start a company out of it
13:51And so I really see ADUs as this century's version of that flex space to live life
13:58How you how you need it?
14:00So you're you're envisioning these ADUs to be long-term rentals though at Samara. Yes. Okay. Got it
14:07So we're gonna open it up to audience questions here in a second. So go ahead and prepare
14:13your questions
14:14But I forgot one other stat absolutely fascinating when you think about multi-generational living
14:20In that use case whether it's older or younger
14:24One in four homes in the United States has two adult generations living together
14:31That's crazy. Like homes were not designed for that a single-family home is for a single family
14:36and so I really see this as like this addition to help people actually adapt to
14:42You know this new relationship that we have with our home post Cove it
14:46so the thing I want to ask you before we open it up to audience questions is we have
14:50Some people in the audience who are starting their own companies. You obviously have a lot of experience scaling one
14:56And so what are some of the lessons that you have taken away from Airbnb that you've applied to Samara?
15:05the first one that comes to mind is
15:07Having great co-founders. I got really lucky at Airbnb
15:12With Brian Chesky our CEO and Nate Busch Arzik who runs strategy for us
15:18We did a personality assessment at one one point in the history of Airbnb and they plotted
15:23Our results on these concentric circles and we had a dot here a dot here and a dot here
15:29And the facilitator was like, oh my god. I've never seen this before you guys are an equilateral triangle
15:35I think that's what one of the many reasons why
15:38You know the company is what it is today
15:40Is that we often joke that like we had three legs of a stool and if you took one of the legs away
15:46When it's when it stayed up
15:49And so I think having complimentary co-founders is absolutely critical, you know, find the person that that compliments you
15:55What are you not so great at what are your weaknesses go find the person who's has those strengths?
16:00How does Mike compliment you at Samara Mike is amazing Mike McNamara?
16:04He was the CEO of flex, which is one of the largest contract manufacturers on the planet
16:08it's a 25 billion dollar company 200,000 employees in 13 plus countries and he brings a level of expertise around
16:16building things supply chains
16:18manufacturing sales process and
16:21Between him and I he handles that domain and I get to handle the things that I'm good at which is brand building
16:27user experience design architecture
16:30And I think what you've seen so far through Samara's is a direct result of that
16:35Duality between the two of us working really well together
16:37Okay, unfortunately, I just got the flag that we have to wrap things up. And so I'm not gonna go to audience questions
16:43I apologize, but Joe, thank you so much. Really appreciate you being here. Thank you