Name: Brainstorm Tech 2024: How To Put Housing Back On Solid Ground
Uploaded: 2024-07-16
Duration: 16 min 44 s
Description: Joe Gebbia, Co-founder, Airbnb, Samara Interviewer: Jessica Mathews, Fortune

Joe Gebbia, Co-founder, Airbnb, Samara Interviewer: Jessica Mathews, Fortune

Brainstorm Tech 2024: How To Put Housing Back On Solid Ground

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Hello, Joe, how are you? You're getting some cheers that I'm not getting, which is a little disappointing. So the first thing that I have to know is, are you staying in an airbnb tonight or are you at the hotel? I wish I could stay the night. I have to get back for some family obligations, but obviously I would stay at an airbnb tonight. You'd stay in an airbnb if you are on the board of airbnb, are you even allowed to stay in a hotel? Only for competitive research? Ok. Got it. Well, glad we cleared that up. Well, the reason that most people know your name in this room and throughout Silicon Valley and the tech industry is because you are one of the co founders of Airbnb, which has been one of the most successful well known consumer tech companies. Um And you, but we're here today to talk about your new start up that you actually started working on while you were at airbnb. Um So your start up makes these small buildings called a these small little houses in people's backyards. Tell us what exactly is an ad and how did you form a company around it. Sure. And there's actually a lot of overlaps between the approach at airbnb and the approach at Samara, which we'll get to. But for those who don't know, an ad stands for accessory dwelling units, you may have heard of it. It's called a Granny Suite in law flat Casita guest house. There's a lot of names for it and A DS are, are all the rage in California and most people either have one or know someone that has one, a neighbor or a friend or coworker. And it is a um it's the fastest growing form factor of housing in, in the state. Uh One in five permits in California for a house was one of these. It's crazy. Um They range from 400 to 800 square feet and as we'll get into, people use them for all kinds of things. And so yeah, back at airbnb, I had this R and D group, we called Sara and we were exploring new business ventures, new, new paths uh for the company. And, and we stumbled on to this ideas of ad U uh large in part because hosts were renting them out and I saw this on our site and I go, what is this? Who's going to stay in someone's backyard? However, you could see it proliferate on the site and host actually renting out the spaces in their backyards for short term. And now for long term stays, uh the second thing that, that I noticed back in 2017, 2018 is the state of California started passing hundreds of laws to enable A US throughout the state. Why do they do that? Well, a couple of reasons, the first is that California needs more housing. And so as they looked across all the different form factors, they saw that like a US just had the most restrictive policies that you could imagine, you 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. So they got rid of things. Like you'd add a second mailbox and a new address, you'd add two additional parking spots and about 100 of the things that just kind of didn't make sense in 2020 2018, 2019. Um And so the third thing is back in this time, I was actually in the market for an adu uh specifically Prefab, you know, as a designer, I kind of had this, uh you know, sort of fantasy of like, oh, you know, you kind of love the Prefab design factory made. Uh And when I went out to search for a unit, I was just completely underwhelmed by what was on the market from a design perspective. And I thought surely at some point, someone is going to make the, the iphone or the tesla of this, this form factor. And another year went by another year went by and nothing was emerging. I said, you know what we're going to do this, I'm going to solve this problem uh for myself and for other people. So Samara raised its series a round $41 million led by Josh Kushner at thrive capital. This was last fall. So since then you've bought a manufacturing facility in Mexico. How else are you planning to spend the money? Um Yeah, I think as they showed on the screen moments ago, the way it works is people go and order online like you would a Tesla, uh, you pay online, you put down your deposit and you configure and you hit order. And part of the innovation is not just the design, but it's the fact that we handle everything for the homeowner. Homeowners are not experts in construction nor should they be. Uh, and a lot of people as we went doing our research said, you know, I want this extra space in my life. I have a dozen different uses for it, but I, I quit, uh, two steps into the process because it's too much. You know, I don't have time for this. I'm busy. And so we just said, well, why don't we take that on and actually handle everything for the homeowner and the consumer. And actually, so when you, when you buy online, you're buying not only the unit but everything else. Our construction management, we handle the permitting, which is a huge hang up for people. We handle the soil samples, the utility hookups and about 100 other things that have to get done. Um And so, you know, being able to uh handle all that means that we're responsible not only for the manufacturing uh at our facility for the delivery. As you saw, we, we put it on a truck and we ship it and when it arrives to the uh the location, there's a crane waiting and we have what we call crane day, which was actually really fun because all the neighbors come out, people put out lawn chairs, everyone's taking pictures. And we decided at some point like let's just make this a neighborhood block party. Um So in a couple of our recent ones, we have music and taco trucks show up and it actually becomes a really fun event because it's, it's actually kind of magical Jessica to watch a home float through the air and land in its intended location. Um And when it lands in that location, we've actually developed a patented system on the foundation that allows. So when it comes down and it touches the ground on our foundation, it takes about 20 minutes to secure eight bolts underneath and that's all you need. And so we've reduced the construction process for one of these units, traditional construction from upwards of 12 plus months, you know, raise your hand if you've ever done a kind of a project with a general contractor, renovation, keep your hands up. It was on time. Every hand almost went down. You got lucky, sir. Um So we're, we're really proud that we're able to deliver on a fixed timeline with a fixed price. By the way, what you pay online is what you pay in actuality. There's no haggling, there's no back and forth. It's like buying a device online. So I'm assuming since it was a series a round that there was some revenue coming into the company already. So can you tell us how many 80 us that you've sold at this point? Well, it's still a private company. So uh we don't disclose that. But um just to give some perspective, uh last year in California, well, since 2017 in California, permit applications for AD US have gone up 20 X in five years. Uh And so in last year, there were 25,000 permits issued for ad us throughout the entire state just to give you a sense of scale. And this is a big purchase. This is, you know, north of 202 153 $100,000. And did you make about half of those or eventually? Um So, well, to say our factories is uh we're set up to do anywhere between 500 to 1000 units a year. Ok. And when do you think you'll be at capacity? Uh I'll let you know, ok, we'll talk, we'll talk. So one thing I wanted to ask you about was Reuters reported a couple months ago that you had made a personal decision to step off of a special committee at the board of Tesla that had been set up after the state of Delaware invalidated his compensation package and Tesla was deciding whether was going to move the company's domicile to Austin. And you had been on that committee, you decided to step off of it voluntarily for what you said was specifically because there was a potential business transaction between Samara and Elon Musk. So can you tell us what is that potential business traction and has it come transaction and has it come to fruition? Nothing to add on that. That hasn't already been reported. You know, I stepped down as a bunch of caution and yeah, he was interested in potentially getting a house. So did he get a house? Uh we'll let you know we'll follow up on that too. I know that you were not specifically on the compensation committee when um when his compensation was approved and you weren't even on the board of directors at that point. But do you think it should have been approved? Nothing to say about it? Ok. Ok. Got it. So going back to Samara, so I want to ask you about your business model in particular, it's kind of unusual in tech that you are really excited about regulation but, but you really are because in the state of California. Um, they've made a lot of changes to legislation to make it actually easier for residents to get permits to have these ads on their property, which has actually been a huge benefit to your business. So I was wondering who, which other states besides the State of California for, are considering legislation like this? And are you talking with them in any capacity with lobbyists or anything of the sort? I think it's interesting here is that, um, oftentimes California can actually, you know, get, get things right and be at the forefront of things, you know, we can credit them with smoky ban in restaurants, uh you know, decades ago. That is now, of course, national. Um And so I think as California solve the housing crisis, other states that also have a similar problem are looking to see how California is solving this issue. And uh there's many states, there's about eight states that are, uh looking at, some of them are actually modeling California's legislation. Um uh some that are, are, you know, moving us along Colorado, uh, New Jersey, there's been some action in New York State actually on this topic, um Texas has some action on this topic as well. And really, I think you can just follow, follow the, the, the trend anywhere there's a housing crisis as it gets hotter and hotter. You'll see the governments and policies try to adopt clear solutions that, that are working in California So which states would you be interested in expanding into? That's a great question. Um You know, we have a form field on, on samarra.com where people can put in their zip code where they want us to expand to next. And it's, I wish I could tell you, oh, it's these three states, it's actually everywhere. Like we have people in all, you know, other 49 states including Hawaii and Alaska that want uh a Sarra unit, uh you know, be, be able to put in their backyard. What are you seeing with legislation particularly here in the state of Utah? Since that's where we are right now? Oh my gosh. Um You got me there. I haven't, I didn't research that before I came. But um again, if there's a housing issue in Utah, I'm sure there are policymakers talking about it. So one thing that I wanted to ask you about is that there are some concerns here specifically in the city of Salt Lake. Um about whether there is going to be legislation proposed around a just because people are concerned, will this lead to more short term rentals in our neighborhoods? And I'm wondering if you think there's any credence to those concerns airbnb is an investor in Samara and you know, I'm wondering whether there are going to be more airbnb airbnb rentals in some of these neighborhoods where you're putting in these small homes. Well, yeah, so people get, why do people get in a why do they need 400 to 800 square feet in their backyard? And there's a lot of reasons one is to income and to rent it out and uh by and large anywhere you go in the country where there's a, there's a 30 plus uh night, you know, uh uh limit on those, on those, those bookings. So there's four long term stays. Let's be clear about that. Um Second is people house family and what kind of family? Well, as parents age, this is a great way to keep the grandparents nearby. Um They can keep the cat and be close to the grandkids. Uh It's a great place for Johnny to stay when he comes home from college. And so there's actually a lot of people who get in a to keep their kids close by as they, you know, graduate and come back home. And then there's other things like, uh working from home, you know, 41% of Americans still have a hybrid work situation and are looking for productive, quiet places to work from home. And of course, there's a lot of personal uses that people do the home gym, the yoga studio, et cetera. But I think what's most interesting is this the average homeowner in California has their home for about 16 years. So over the course of 16 years, you will likely use your ad U for all of those things because it becomes a flex space that allows you to live life allows you to adapt. If there's a, if there's a pandemic, it allows you to adapt with your parents getting older, it allows you to adapt with your kids as they grow up, as your interests change as you need more income, you can turn it on uh for income the next year, you can turn it off, use it for personal use. And in thinking about this for the last couple of years, it kind of strikes me that we've all had the space in our lives before in the 20th century. We just didn't know it called the Garage. The garage was the flex space. That's where you put the car. But then it became a lot more than that. It was the place where the band practiced. You turned into the kids' playroom, the place to make, you know, carpentry and a wood shop, turn it into an apartment or start a company out of it. And so I really see ad us as this century's version of that flex space to live life, how you, how you need it. So you're, you're envisioning these ad us to be long term rentals though at Samara. Yes. OK. Got it. So we're gonna open it up to audience questions here in a second. So go ahead and prepare your questions. Um I forgot one of the stats I think is absolutely fascinating when you think about multi generational living. Um in that use case, whether it's older or younger. Um One in four homes in the United States has two adult generations living together. That's crazy. Like homes were not designed for that, a single family home, it's for a single family. And so I really see this as like this addition to help people actually adapt to, you know, this new relationship that we have with our home post COVID. So the thing I wanna ask you before we open it up to audience questions is we, we have some people in the audience who are starting their own companies, you obviously have a lot of experience scaling one. And so what are some of the lessons that you have taken away from airbnb that you've applied to Samara? The first one that comes to mind is um having great co founders. I got really lucky at Airbnb uh with Brian Chesky, our, our CEO and Nate Bus Shazi uh who runs strategy for us. Um We did a personality assessment at 11 point in the history of Airbnb and they plotted our results on these concentric circles and we had a dot here a dot Here and a dot Here and the facilitator was like, oh my God, I've never seen this before. You guys are an e collateral triangle. Um I think that's what one of the many reasons why uh you know, the company is what it is today is that we, we often joke that like we had three legs of a stool and if you took one of the legs away when it, when it stayed up. Um And so I think having complimentary co founders is absolutely critical, you know, find the person that, that complements you. What, what are you not so great at? What are your weaknesses? Go find the person who has those strengths. How does Mike compliment you, Mike is amazing. Mike mcnamara. He was the CEO of Flex, which is one of the largest contract manufacturers on the planet. It's a $25 billion company, 200,000 employees in 13 plus countries. And he brings a level of expertise around building things, supply chain, manufacturing sales process. And between him and I, he handles that domain and I get to handle the things that I'm good at which is brand building user experience, design, architecture. Um And I think what you've seen so far through Samara is a direct result of that duality between the two of us working really well together. OK. Unfortunately, I just got the flag that we have to wrap things up. And so I'm not gonna go to audience questions. I apologize, but Joe, thank you so much. Really appreciate you being here. Thank you, everybody.