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What Airbnb’s CEO Learned From a Bitter Fight With His Hometown

July 12, 2016, 11:15 PM UTC

Airbnb is now so popular that, this weekend alone, more than 1.5 million travelers will book a room through the home rental service. Today, the company is operating in over 44,000 cities in 190 countries.

How ironic then that the place Airbnb might be least welcome is its hometown of San Francisco, where residents and city officials are waging a pitched battle to curtail its operations. Airbnb CEO Brian Chesky is aware of this irony, and you can tell it bothers him.

Speaking on Tuesday at Fortune’s Brainstorm Tech in Aspen, Colo., Chesky tried to downplay regulatory conflicts with San Francisco and New York City, noting the two towns amount to just a smidgen of the Airbnb’s overall revenue.

But Chesky also acknowledged that the ongoing disputes—which turn on registration requirements and other regulatory demands—matter a lot because San Francisco and New York are especially dear to the community of hosts that he views as Airbnb’s soul. It feels personal in other words.

The experience, however, has served as a hard-earned lesson for Chesky, and has helped pave the way for Airbnb’s expansion to other cities.

“My initial instinct was to avoid cities where we would have conflict,” he said, but then came to understand, based on what happened in San Francisco and New York, that it was better for Airbnb to introduce itself early, and explain its mission to city governments.

The other alternative, Chesky had found out, was to try to explain Airbnb’s community vision after the company’s opponents had got there first—a much more difficult proposition.

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Today, as a result of engaging rather than ducking possible opposition, Airbnb has been able to forge collaborations that turn city governments into partners.

Belinda Johnson, Airbnb’s chief business affairs and legal officer, pointed to tax collection and disaster relief planning as examples of collaborations with cities.

In the long run, Chesky hopes more city governments, including those in San Francisco and New York, are able to see beyond a binary view of regulation that classifies everyone as private citizens or businesses, and instead recognize “people as businesses.”

Making peace with his hometown is unlikely to come soon, however, as San Francisco has recently launched a new legal campaign to crack down on short-term rentals, and many citizens continue to blame Airbnb for exacerbating the city’s housing shortage. It remains to be seen how many outside Airbnb will buy into the company’s vision of a giant urban community.

You can learn about Chesky and Johnson’s view of regulations and future business challenges in the video above.